UNITED STATES 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 June 30, 2003
                                        _____________

         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
                        _________

                        WESTCOAST HOSPITALITY CORPORATION
     _______________________________________________________________________
             (Exact name of registrant as specified in its charter)


                                   Washington
     _______________________________________________________________________
         (State or other jurisdiction of incorporation or organization)

                                   91-1032187
     _______________________________________________________________________
                      (I.R.S. Employer Identification No.)


         201 W. North River Drive, Suite 100, Spokane, Washington 99201
     _______________________________________________________________________
               (Address of principal executive offices) (Zip Code)


                                 (509) 459-6100
     _______________________________________________________________________
              (Registrant's telephone number, including area code)

Indicated  by check  mark  whether  the  registrant  (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  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     |X|       No
      ______         ______

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes               No  |X|
      ______         ______

As of August 8, 2003 there were  13,004,657  shares of the  Registrant's  common
stock outstanding.

                                       1

                       WESTCOAST HOSPITALITY CORPORATION

                                    Form 10-Q
                       For the Quarter Ended June 30, 2003

                                      INDEX

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements: (unaudited)

     Consolidated Balance Sheets
          June 30, 2003 and December 31, 2002                                  3

     Consolidated Statements of Operations
          Three Months and Six Months Ended June 30, 2003 and 2002             4

     Consolidated Statements of Cash Flows
          Six months Ended June 30, 2003 and 2002                            5-6

     Condensed Notes to Consolidated Financial Statements                   7-12

Item 2. Management's Discussion and Analysis of Financial

     Condition and Results of Operations                                   13-24

Item 3. Quantitative and Qualitative Disclosures About Market Risk            25

Item 4. Controls and Procedures                                               25

PART II - OTHER INFORMATION

Item 1. Legal Proceedings                                                    (a)

Item 2. Changes in Securities and Use of Proceeds                            (a)

Item 3. Defaults Upon Senior Securities                                      (a)

Item 4. Submission of Matters to a Vote of Security Holders                   25

Item 5. Other Information                                                    (a)

Item 6. Exhibits and Reports on Form 8-K                                      26

Signatures                                                                    27

(a) Item is  omitted  as it is not  applicable  for the  period  covered by this
report.

                                       2

PART I -FINANCIAL INFORMATION
Item 1. Financial Statements

WestCoast Hospitality Corporation
Consolidated Balance Sheets (unaudited)
June 30, 2003 and December 31, 2002
($ in thousands, except share data)


                                                                                June 30,           December 31,
                                                                                  2003                 2002
                                                                                                  
Assets:
    Current assets:
      Cash and cash equivalents                                             $      3,518         $        752
      Restricted cash                                                              3,310                1,949
      Accounts receivable, net                                                    10,701                9,559
      Inventories                                                                  1,919                2,040
      Assets held for sale                                                        21,705               34,408
      Prepaid expenses and other                                                   4,758                2,693
                                                                            ------------------   ------------------
             Total current assets                                                 45,911               51,401
                                                                            ------------------   ------------------
    Property and equipment, net                                                  250,008              241,255
    Goodwill                                                                      28,042               28,042
    Other intangible assets, net                                                  14,804               15,188
    Other assets, net                                                             19,916               20,824
                                                                            ------------------   ------------------
             Total assets                                                   $    358,681         $    356,710
                                                                            ==================   ==================

Liabilities:
    Current liabilities:
      Accounts payable                                                      $     7,865          $     6,773
      Accrued payroll and related benefits                                        4,788                6,173
      Accrued interest payable                                                      640                  695
      Advanced deposits                                                             408                  198
      Other accrued expenses                                                     10,515                8,494
      Notes payable to bank                                                           -               52,100
      Long-term debt, due within one year                                         5,804                4,889
      Capital lease obligations, due within one year                                 84                  268
                                                                            ------------------   ------------------
             Total current liabilities                                           30,104               79,590
                                                                            ------------------   ------------------
    Long-term debt, due after one year                                          153,708              101,206
    Deferred revenue                                                              2,483                2,626
    Deferred income taxes                                                        16,961               16,261
    Minority interest in partnerships                                             2,780                2,911
                                                                            ------------------   ------------------
             Total liabilities                                                  206,036              202,594
                                                                            ------------------   ------------------

Commitments and contingencies

Stockholders' equity:
    Preferred stock - 5,000,000 shares authorized; $0.01 par value;
    $50 per share liquidation value:
      Series A - 298,569 and 301,315 shares issued and outstanding                    3                    3
      Series B - 298,569 and 301,315 shares issued and outstanding                    3                    3
    Additional paid-in capital, preferred stock                                  29,851               30,125
    Common stock - 50,000,000 shares authorized; $0.01 par value;
      12,994,163 and 12,981,878 shares issued and outstanding                       130                  130
    Additional paid-in capital, common stock                                     84,142               84,083
    Retained earnings                                                            38,516               39,772
                                                                            ------------------   ------------------
             Total stockholders' equity                                         152,645              154,116
                                                                            ------------------   ------------------
             Total liabilities and stockholders' equity                     $   358,681         $    356,710
                                                                            ==================   ==================

The accompanying notes are an integral part of the consolidated financial statements.


                                       3

WestCoast Hospitality Corporation
Consolidated Statements of Operations (unaudited)
For the Three Months and Six Months Ended June 30, 2003 and 2002
(in thousands, except per share data)



                                                                            Three Months                        Six Months
                                                                           Ended June 30,                     Ended June 30,
                                                                                                                
                                                                      2003               2002             2003              2002

Revenues:
      Hotels and restaurants                                    $   43,346         $   46,736      $    77,442        $   83,941
      Franchise, central services and development                      888              1,183            1,978             1,934
      Entertainment                                                  1,384              1,493            3,985             3,472
      Real estate                                                    2,363              2,139            4,665             4,611
      Corporate services                                                87                 72              174               134
                                                                ---------------    --------------  ---------------    --------------
             Total revenues                                         48,068             51,623           88,244            94,092
                                                                ---------------    --------------  ---------------    --------------

Operating expenses:
        Hotels and restaurants                                      35,124             37,174           67,755            71,694
        Franchise, central services and development                    413                568              892             1,019
        Entertainment                                                1,291              1,467            3,481             2,911
        Real estate                                                  1,216              1,030            2,434             2,242
        Corporate services                                              83                 53              160               101
        Depreciation and amortization                                3,157              2,659            5,764             5,376
        (Gain) loss on asset dispositions including recoveries         364               (83)              696           (3,097)
        Conversion expenses                                             79                  6              367                 7
                                                                ---------------    --------------  ---------------    -------------
             Total direct expenses                                  41,727             42,874           81,549            80,253
      Undistributed corporate expenses                                 587                332            1,327               905
                                                                ---------------    --------------  ---------------    -------------
             Total expenses                                         42,314             43,206           82,876            81,158
                                                                ---------------    --------------  ---------------    -------------
Operating income                                                     5,754              8,417            5,368            12,934

Other income (expense):
      Interest expense, net of amounts capitalized                 (2,713)            (2,655)          (5,355)           (5,522)
      Interest income                                                  103                116              207               158
      Other income (expense)                                         (312)                  9            (293)                 4
      Equity income (loss) in investments                               21                 16               80              (12)
      Minority interest in partnerships                                 18               (61)              131              (66)
                                                                ---------------    --------------  ---------------    -------------
Income before income taxes                                           2,871              5,842              138             7,496
Income tax expense                                                   1,078              2,062              113             2,646
                                                                ---------------    --------------  ---------------    -------------
Net income                                                           1,793              3,780               25             4,850
Preferred stock dividend                                             (640)              (645)          (1,281)           (1,291)
                                                                ---------------    --------------  ---------------    -------------
Net income (loss) to common stockholders                        $    1,153         $    3,135      $   (1,256)        $    3,559
                                                                ===============    ==============  ===============    =============

Net earnings (loss) per share:
      Basic                                                     $     0.09         $     0.24      $    (0.10)        $     0.27
      Diluted                                                   $     0.09         $     0.24      $    (0.10)        $     0.27

Weighted average shares outstanding - basic                         12,994             12,970           12,993            12,970
                                                                ===============    ==============  ===============    =============
Weighted average shares outstanding - diluted                       13,280             13,315           12,993            13,319
                                                                ===============    ==============  ===============    =============

The accompanying notes are an integral part of the consolidated financial statements.


                                       4

WestCoast Hospitality Corporation
Consolidated Statements of Cash Flows (unaudited)
For the Six Months Ended June 30, 2003 and 2002
($ in thousands)


                                                                                Six Months Ended June 30,
                                                                                  2003            2002
                                                                                            
Operating activities:
    Net income                                                                $     25       $   4,850
      Adjustments to reconcile net income to net cash provided
        by operating activities:
           Depreciation and amortization                                         5,764           5,376
           (Gain) loss on disposition of property, equipment
             and other assets                                                      696         (3,097)
           Non-cash reduction of preferred stock resulting in gain               (230)               -
           Write-off of deferred loan fees                                         790               -
           Deferred income tax provision                                           700             200
           Minority interest in partnerships                                     (131)              66
           Equity in investments                                                  (80)              12
           Compensation expense related to stock issuance                            5               7
           Provision for doubtful accounts                                         189             111
           Change in current assets and liabilities:
             Restricted cash                                                   (1,361)           (594)
             Accounts receivable                                               (1,209)         (1,112)
             Inventories                                                           121            (81)
             Prepaid expenses and other                                        (2,070)         (1,676)
             Accounts payable                                                    1,068           3,972
             Accrued payroll and related benefits                              (1,385)             875
             Accrued interest payable                                             (55)            (36)
             Other accrued expenses and advance deposits                         1,596           1,495
                                                                           --------------  --------------
               Net cash provided by operating activities                         4,433          10,368
                                                                           --------------  --------------

Investing activities:
    Purchases of property and equipment                                        (4,117)         (2,468)
    Proceeds from disposition of property and equipment                             17           1,828
    Proceeds from disposition of investment                                        350               -
    Other, net                                                                      69             142
                                                                           --------------  --------------
               Net cash used in investing activities                           (3,681)           (498)
                                                                           --------------  --------------

The accompanying notes are an integral part of the consolidated financial statements.


                                       5

WestCoast Hospitality Corporation
Consolidated Statements of Cash Flows (unaudited), continued
For the Six Months Ended June 30, 2003 and 2002
($ in thousands)


                                                                                Six Months Ended June 30,
                                                                                  2003            2002
                                                                                             
Financing activities:
    Proceeds from note payable to bank                                          35,300               -
    Repayment of note payable to bank                                         (87,400)         (7,650)
    Proceeds from long-term debt                                                55,200               -
    Proceeds from short-term debt                                                2,658               -
    Repayment of long-term debt                                                (1,783)         (1,563)
    Proceeds from issuance of common stock under employee
      stock purchase plan                                                           54              49
    Preferred stock dividend payments                                            (646)           (645)
    Principal payments on capital lease obligations                              (184)           (187)
    Additions to deferred financing costs                                      (1,185)            (19)
                                                                           --------------  --------------
               Net cash provided by (used in) financing activities               2,014         (10,015)
                                                                           --------------  --------------

Change in cash and cash equivalents:
    Net increase (decrease) in cash and cash equivalents                         2,766           (145)
    Cash and cash equivalents at beginning of period                               752           4,613
                                                                           --------------  --------------
    Cash and cash equivalents at end of period                               $   3,518       $   4,468
                                                                           ==============  ==============

Supplemental disclosure of cash flow information:

    Cash paid during the period for:
      Interest                                                               $   5,410       $   5,558
      Income taxes                                                           $      93       $     801

    Non-cash investing and financing activities:
      Preferred stock dividends accrued                                      $   1,281       $   1,291
      Sale-operating leaseback of equipment                                  $   2,658       $       -
      Non-cash reduction of working capital for
        preferred stock                                                      $      44       $       -
      Reclassification of assets held for sale to property
        and equipment                                                        $  12,978       $       -
      Addition of note receivable on sale of building                        $       -       $   2,607
      Investment in real estate venture                                      $       -       $   1,194
      Assignment of debt to purchaser of building                            $       -       $   7,198

The accompanying notes are an integral part of the consolidated financial statements.


                                       6

WestCoast Hospitality Corporation
Condensed Notes to Consolidated Financial Statements

1.       NATURE OF BUSINESS AND ORGANIZATION

WestCoast  Hospitality  Corporation  ("the Company" or "WestCoast") is primarily
engaged in the ownership, management, development, and franchising of mid-scale,
full service hotels.  As of June 30, 2003, the system contained 73 properties in
12 states  and one  Canandian  province,  totaling  over  12,700  rooms and over
583,700  square feet of meeting  space.  At June 30, 2003,  the Company owned an
interest in and operated 28 hotels,  leased 14 hotels,  managed six hotels owned
by others and  franchised  25 hotels  owned and operated by third  parties.  The
Company's hotel brands include WestCoast(R) and RedLion(R).

The  Company is also  engaged in  activities  related  or  supplementary  to the
operation of hotels.  These activities include  computerized  ticketing services
and presenting entertainment  productions through its entertainment division and
owning,  leasing,  developing and managing commercial and residential properties
through its real estate services division.

The Company was  incorporated  in the State of  Washington  on April 25, 1978. A
substantial  portion of the Company's  assets are held in WestCoast  Hospitality
Limited  Partnership  ("WHLP").  WHLP was  formed  in the State of  Delaware  on
October 23, 1997. The Company is the sole general partner and  approximately 98%
owner of WHLP and manages its operations.

The  consolidated   financial  statements  include  the  accounts  of  WestCoast
Hospitality Corporation, its wholly owned subsidiaries,  its general and limited
partnership  interests in WHLP, a 50% interest in a limited  partnership and its
equity  basis  investment  in  other  limited   partnerships.   All  significant
inter-company transactions and accounts have been eliminated in the consolidated
financial statements.

2.         BASIS OF PRESENTATION

The  unaudited  consolidated  financial  statements  included  herein  have been
prepared by WestCoast  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, 2002 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 year ended December 31, 2002 previously filed with the SEC
on Form 10-K.

In the opinion of management,  these unaudited consolidated financial statements
contain all of the  adjustments  of a normal and recurring  nature  necessary to
present fairly the  consolidated  financial  position of the Company at June 30,
2003 and the  consolidated  results of operations and cash flows for the periods
ended  June 30,  2003 and  2002.  The  results  of  operations  for the  periods
presented may not be indicative of those which may be expected for a full year.

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities as of the date of the financial statements,  the reported amounts of
revenues  and  expenses  during  the  reporting  period and the  disclosures  of
contingent  liabilities.  Accordingly,  ultimate results could differ materially
from those estimates.

                                       7

3.       DEBT REFINANCE

On June 27, 2003, the Company  completed the  refinance of its  revolving credit
facility by securing term debt of $55.2 million from a finance company under ten
separate  promissory  notes.  The  notes are  collateralized  by  certain  hotel
properties.  The notes bear interest at 6.7% and utilize a 25-year  amortization
period,  but are due in full on July 11, 2013. In connection  with securing this
term debt, the Company  incurred loan fees and other costs totaling $1.1 million
which have been  capitalized and will be amortized using the effective  interest
method over the ten year period of the underlying  promissory notes. Proceeds of
$1.7  million  have been set aside in reserve  accounts  for  taxes,  insurance,
repairs and other reserves.

A portion  of the  proceeds  from the new  borrowings  were used to pay down the
$51.5 million  outstanding  balance on the Company's  primary  revolving  credit
facility.  The credit  facility  agreement was then amended  effective  June 27,
2003, reducing the maximum borrowing amount to $4.0 million. The credit facility
is  collateralized  by certain  property and  equipment and interest is computed
based upon either the bank's prime rate or certain  LIBOR rates at the Company's
option.  At June 30,  2003,  the Company had no  outstanding  balance  under the
credit facility. The agreement contains certain restrictions and covenants,  the
most restrictive of which require the Company to maintain a minimum fixed charge
ratio and a maximum debt to equity ratio.  At June 30, 2003,  the Company was in
compliance with all covenants  under the agreement.  The amended credit facility
does not require any  principal  payments  until its  maturity  date of June 30,
2005. As a result,  any possible future borrowings in 2003 would be reflected as
a long-term liability.

As of the  date  of the  amendment  to  the  credit  facility,  the  balance  of
unamortized deferred finance costs associated with the existing revolving credit
facility  was $848  thousand.  The  amendment  resulted  in a 92%  reduction  of
borrowing  capacity under the revolving credit  facility.  As such, in June 2003
the Company  recorded a  proportionate  write-off of the existing  deferred loan
costs of $790 thousand.

4.       SALE AND SUBSEQUENT LEASEBACK OF EQUIPMENT

In June  2003,  WestCoast  completed  the sale to a finance  company  of certain
capitalized   software  and  equipment   previously   included  in  construction
in-process.  The proceeds of  approximately  $2.7 million were used to repay the
outstanding  balance on an interim  note  payable to the finance  company in the
same amount.  Certain other costs directly related to the software and equipment
were paid for directly by the finance company, totaling $451 thousand. WestCoast
then entered into an operating  lease  agreement with the finance  company which
expires  in June  2005  and  requires  monthly  payments  of  approximately  $52
thousand.  At the option of  WestCoast,  the lease term is  renewable  for three
one-year terms. No gain or loss was recorded on this sale-leaseback transaction.

5.       BUSINESS SEGMENTS

The  Company  has four  operating  segments:  (1)  hotels and  restaurants;  (2)
franchise,  central services and development;  (3)  entertainment;  and (4) real
estate.  In addition,  corporate  services  consists  primarily of miscellaneous
revenues  and  expenses,  cash and cash  equivalents,  certain  receivables  and
certain property and equipment,  which are not  specifically  associated with an
operating  segment.  Management  reviews and evaluates  the  operating  segments
exclusive of interest  expense,  income tax expense,  and other income (expense)
items. Therefore, these items are not allocated to the segments.

                                       8

Selected  information  with  respect  to  the  segments  is  as  follows
($ in thousands):


                                                              Three Months Ended June 30,             Six Months Ended June 30,
                                                               2003                2002                 2003             2002
                                                                                                             
Revenues:
    Hotels and restaurants                                  $ 43,346           $ 46,736             $ 77,442         $ 83,941
    Franchise, central services and development                  888              1,183                1,978            1,934
    Entertainment                                              1,384              1,493                3,985            3,472
    Real estate                                                2,363              2,139                4,665            4,611
    Corporate services                                            87                 72                  174              134
                                                          --------------    ---------------       -------------   ------------
                                                            $ 48,068           $ 51,623             $ 88,244         $ 94,092
                                                          ==============    ===============       =============   ============

Operating income (loss):
    Hotels and restaurants                                  $  4,960           $  7,386             $  3,539         $  7,899
    Franchise, central services and development                  399                534                  935              742
    Entertainment                                                 10               (54)                  345              405
    Real estate                                                1,195              1,016                2,327            2,119
    Corporate services                                         (810)              (465)              (1,778)            1,769
                                                          --------------    ---------------       -------------   ------------
                                                            $  5,754           $  8,417             $  5,368         $ 12,934
                                                          ==============    ===============       =============   ============


6.       EARNINGS (LOSS) PER SHARE

The following table presents a reconciliation of the numerators and denominators
used in the basic and diluted  earnings per share  computations ($ in thousands,
except per share amounts):


                                                                Three Months Ended June 30,             Six Months Ended June 30,
                                                                 2003                2002                 2003             2002
                                                                                                               
Numerator:
    Net income                                                 $ 1,793            $ 3,780           $     25           $  4,850
    Preferred stock dividend                                     (640)              (645)            (1,281)            (1,291)
                                                            --------------    ---------------     -------------      ------------
Net income (loss) to common stockholders - basic                 1,153              3,135            (1,256)              3,559

    Effect of dilutive OP units (a)                                  7                 31                  -                 56
                                                            --------------    ---------------     -------------      ------------
Net income (loss) to common stockholders - diluted             $ 1,160            $ 3,166           $(1,256)           $  3,615
                                                            ==============    ===============     =============      ============
Denominator:
Weighted average shares outstanding - basic                     12,994             12,970             12,993             12,970
    Effect of dilutive OP units                                    286                286                  -                286
    Effect of dilutive common stock options and
      convertible notes (a)                                          -                 59                  -                 63
                                                            --------------    ---------------     -------------      ------------
Weighted average shares outstanding - diluted                   13,280             13,315             12,993             13,319
                                                            ==============    ===============     =============      ============
Net earnings (loss) per share - basic and diluted              $  0.09            $  0.24           $ (0.10)           $   0.27
                                                            ==============    ===============     =============      ============

(a) At June 30, 2003, 827,604 stock options were outstanding. The effects of the shares which would be issuable upon exercise of
these options have been excluded from the  calculation of diluted  earnings per share for the three month and six month periods
ending June 30, 2003 because they are  anti-dilutive.  At June 30, 2002,  1,232,341 stock options were outstanding,  of which
872,568 were excluded from the  calculation of diluted  earnings per share for the three month and six month periods ending
June 30, 2002 because they are anti-dilutive. The operating partnership   ("OP")  units  are  excluded  from  the   weighted-average
share calculation  for the six month  period  ending  June 30, 2003  because  they are anti-dilutive.  Convertible notes are
excluded from the  weighted-average  share calculation for all periods presented as they are anti-dilutive.


                                       9

7.           DISPOSITION OF INVESMENT

Effective  April 2003,  the Company  sold its  ownership  investment  in a hotel
venture to an  unrelated  party for $350  thousand.  In  addition,  the  Company
assigned its interest in the management  agreement to the same party in exchange
for a structured payment arrangement  totaling  approximately $141 thousand with
payments through January 2004. The carrying value of the Company's investment at
the date of sale was $934  thousand,  resulting in a loss on the  transaction of
$443  thousand,  which  is  included  as a loss  on  asset  dispositions  in the
accompanying statement of operations.

8.           ASSETS HELD FOR SALE

At June 30, 2003,  assets held for sale consists of two office  buildings with a
net carrying value of $21.7 million.  One additional  property was held for sale
at December 31, 2002, making the balance $34.4 million at that date.

As  previously  disclosed,  the  Company had  entered  into a purchase  and sale
agreement with a potential  buyer for the WestCoast  Kalispell  Center Hotel and
Mall. The Company and the buyer subsequently terminated this agreement, at which
time the  Company  determined  that it was no  longer  in its best  interest  to
continue to market the property for sale. As a result of this decision,  the net
book  value of the  related  assets  of  approximately  $13.0  million  has been
reclassified from assets held for sale to property and equipment. A depreciation
adjustment  of $520  thousand  was  recorded in June 2003,  reflecting  non-cash
expenses that would have been  recognized had the assets been classified as held
and used since July 2002.

Depreciation of the other two assets remains suspended.  Management is committed
to the sale of the assets and is actively marketing the properties.  Both of the
properties  are  available  for  sale  in  their  present  condition  at  prices
management  believes  reasonable  compared to their  respective  estimated  fair
values. Management believes it is unlikely that significant changes to its plans
for sale of these properties will be made.

9.       STOCK BASED COMPENSATION

In June 2003, the Company granted 60,468 options to purchase its common stock to
certain  employees at an exercise  price of $5.98 under the Company's 1998 stock
incentive  plan.  The market value of the Company's  common stock on the date of
grant was $4.41 per  share.  The  options  vest 50% in June 2007 and 50% in June
2008,  subject to  accelerated  vesting in the event of  certain  target  market
prices for the Company's  common stock are reached.  The options  expire in June
2013.

In July 2002,  the Company  offered  eligible  common stock  option  holders the
opportunity  to exchange  certain  common  stock  options  for new common  stock
options.  The new common  stock  options  offered  were to be issued at the fair
market value of the stock on or after the first  business day that is six months
and one day after the date the original  options were cancelled in the exchange.
On July 31, 2002,  571,661  options were cancelled  pursuant to the terms of the
offer.  The Company  granted  261,251 new options in February 2003. The terms of
the transaction  are disclosed in a Schedule TO and amendments  thereto filed in
July and August 2002.

As permitted by Statement of Financial  Accounting Standards No. 123 "Accounting
for  Stock-Based  Compensation"  ("SFAS No.  123"),  the  Company  has chosen to
measure compensation cost for stock-based employee  compensation plans using the
intrinsic value method of accounting  prescribed by Accounting  Principles Board
Opinion No. 25,  "Accounting  for Stock Issued to Employees"  and to provide the
disclosure  only  requirements  of SFAS No.  123.  On  December  31,  2002,  the
Financial  Accounting  Standards  Board  ("FASB")  amended  the  transition  and
disclosure  requirements  of SFAS No. 123 through the  issuance of  Statement of
Financial Accounting Standards No. 148 "Accounting for Stock-Based  Compensation
- - Transition and Disclosure"  ("SFAS No. 148"). SFAS No. 148 amends the existing
disclosures  to make more  frequent  and  prominent  disclosure  of  stock-based
compensation  expense  beginning  with  financial  statements for fiscal periods
ending after December 15, 2002.

                                       10

The  Company  has chosen  not to record  compensation  expense  using fair value
measurement provisions in the statement of operations. Had compensation cost for
plan been determined based on the fair value at the grant dates for awards under
the plans,  reported net income or loss and earnings (loss) per share would have
been changed to the pro forma amounts  indicated  below
($ in thousands,  except per share amounts):


                                                                       Three Months Ended June 30,      Six Months Ended June 30,
                                                                          2003            2002           2003             2002
                                                                                                                
   Reported net income (loss) applicable to common stockholders          $ 1,153         $ 3,135       $ (1,256)        $ 3,559
        Add back: stock based employee compensation
          expense, net of related tax effects                                  -               -               3             10
        Deduct: Total stock-based employee compensation
          expense determined under fair valued based
          method for all awards, net of related tax effects                (128)               -           (465)          (202)
                                                                       -------------   -------------  -------------  ------------
   Pro forma net income (loss) applicable to common stockholders         $ 1,025         $ 3,135      $ (1,718)         $ 3,367
                                                                       =============   =============  =============  ============
   Basic and diluted net earnings (loss) per share:
     Reported net earnings (loss) per share                              $  0.09         $  0.24      $  (0.10)         $  0.27
     Stock-based employee compensation, fair value                        (0.01)               -         (0.03)          (0.02)
                                                                       -------------   -------------  -------------  ------------
   Pro forma basic and diluted net earnings (loss) per share             $  0.08         $  0.24      $  (0.13)         $  0.25
                                                                       =============   =============  =============  ============

10.       PREFERRED STOCK

In June 2003, the Company  entered into a termination  agreement with one of its
franchised  properties.  As  consideration  for  the  early  termination  of the
franchise  agreement  totaling $274 thousand,  the Company received 2,746 shares
each of its own Series A and Series B preferred stock with a stated value of $50
per share.  A termination  gain of $230 thousand was recorded by the Company and
is included in revenues for franchise, central services, and development.

The Company is no longer  restricted  from the payment of dividends.  On July 3,
2003, the Company paid a dividend to the  shareholders  of record as of June 30,
2003 of its Series A and Series B preferred  stock totaling  approximately  $1.3
million,  which  represented  all  current  dividends  and  dividends  that were
previously accrued under the preferred stock agreement.

                                       11

11.       RECENT ACCOUNTING PRONOUNCEMENTS

In January 2003, the FASB issued FASB  Interpretation No. 46,  "Consolidation of
Variable Interest  Entities,  an interpretation of Accounting  Research Bulletin
No. 51, Consolidated  Financial Statements" ("FIN No. 46"). FIN No. 46 clarifies
the application of Accounting  Research  Bulletin No. 51 to certain  entities in
which  equity  investors  do  not  have  the  characteristics  of a  controlling
financial  interest or do not have  sufficient  equity at risk for the entity to
finance its activities  without additional  subordinated  financial support from
other parties.  FIN No. 46 is effective for WestCoast  starting July 1, 2003 and
is not  expected  to  have a  material  effect  on  the  Company's  consolidated
financial statements.

In April 2003,  the FASB issued SFAS No. 149,  "Amendment  of  Statement  133 on
Derivative  Instruments and Hedging  Activities"  ("SFAS No. 149"). SFAS No. 149
amends  and  clarifies   financial   accounting  and  reporting  for  derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts  (collectively  referred to as derivatives) and for hedging activities
under FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities".  SFAS No. 149 is effective  for all  contracts  created or modified
after June 30, 2003 except for hedging  relationships  designated after June 30,
2003. In addition, except as stated below, all provisions of SFAS No. 149 should
be applied prospectively. The provisions of SFAS No. 149 that relate to SFAS No.
133  Implementation  Issues that have been  effective  for fiscal  quarters that
began prior to June 15, 2003,  should  continue to be applied in accordance with
their respective effective dates. In addition,  paragraphs 7(a) and 23(a), which
relate  to  forward  purchases  or  sales  of  when-issued  securities  or other
securities that do not yet exist,  should be applied to both existing  contracts
and new contracts entered into after June 30, 2003. The Company does not believe
that the adoption of this standard will have a material  effect on the Company's
consolidated financial statements.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments  with  Characteristics  of both  Liabilities  and Equity" ("SFAS No.
150"). SFAS No. 150 establishes  standards on the classification and measurement
of certain financial  instruments with  characteristics  of both liabilities and
equity.  The provisions of SFAS No. 150 are effective for financial  instruments
entered into or modified  after May 31, 2003 and to all other  instruments  that
exist as of the  beginning  of the  first  interim  financial  reporting  period
beginning after June 15, 2003. The Company does not believe that the adoption of
SFAS No. 150 will have a material impact on the Company's consolidated financial
statements.

                                       12

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

                   Safe Harbor for Forward-Looking Statements

This Quarterly Report on Form 10-Q  contains  forward-looking  statements within
the meaning of Section 21E  of the Securities  Exchange Act of 1934. The Company
is including the following cautionary statement to make applicable,  and to take
advantage of, the safe harbor  provisions of the Private  Securities  Litigation
Reform Act of 1995 for any forward-looking  statements made by, or on behalf of,
the Company.  Forward-looking  statements include  statements  concerning plans,
objectives, goals, strategies,  projections of future events or performance, and
underlying  assumptions  (many  of  which  are  based,  in  turn,  upon  further
assumptions).   Forward-looking   statements  are  all  statements   other  than
statements of  historical  fact,  including  without  limitation  those that are
identified  by  the  use  of  words  such  as,  but  not  limited  to,   "will,"
"anticipates,"   "seeks  to,"  "estimates,"   "expects,"   "intends,"   "plans,"
"predicts,"  and  similar  expressions,  but the absence of these words does not
mean a  statement  is not  forward-looking.  From time to time,  the Company may
publish or otherwise make available  forward-looking  statements of this nature.
All such  subsequent  forward-looking  statements,  whether  written or oral and
whether made by or on behalf of the  Company,  are also  expressly  qualified by
these cautionary statements.

Such statements are inherently  subject to a variety of risks and  uncertainties
that could cause actual results to differ materially from those expressed.  Such
risks and uncertainties include, among others:
o magnitude and duration of international conflicts,  economic cycles, including
fluctuations in regional economic conditions and seasonality of lodging industry
o actual and threatened terrorist attacks and international conflicts, and their
impacts on travel
o changes in future demand and supply for hotel rooms
o competitive conditions in the lodging industry
o relationships with franchisees and properties
o changes in energy, healthcare, insurance and other operating expenses
o impact of government regulations
o ability to obtain financing through debt and/or equity issuance
o  ability  to sell  non-core  assets  held for sale and the  related  effect of
potential depreciation recapture
o ability to locate  lessees  for  rental  property  and  managing  and  leasing
properties owned by third parties
o dependency  upon the ability and experience of executive  officers and ability
to retain or replace such officers

The Company's expectations,  beliefs and projections are expressed in good faith
and are believed by the Company to have a reasonable  basis,  including  without
limitation  management's   examination  of  historical  operating  trends,  data
contained in the Company's  records and other data available from third parties,
but  there can be no  assurance  that the  Company's  expectations,  beliefs  or
projections will be achieved or accomplished.  Furthermore,  any forward-looking
statement  speaks only as of the date on which such  statement is made,  and the
Company  undertakes  no obligation  to update any  forward-looking  statement to
reflect  events  or  circumstances  that  occur  after  the date on  which  such
statement is made or to reflect the  occurrence  of  unanticipated  events.  New
factors  emerge from time to time,  and it is not  possible  for  management  to
predict all of such factors, nor can it assess the impact of each such factor on
the Company's business or the extent to which any such factor, or combination of
factors,  may cause actual results to differ  materially from those contained in
any forward-looking statement.

                                       13

GENERAL
_______

The following  discussion  and analysis  addresses the results of operations for
the Company for the three month and six month periods  ended June 30, 2003.  The
following  should  be  read  in  conjunction  with  the  unaudited  Consolidated
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 above in "Safe Harbor for
Forward Looking Statements".

The Company's  revenues are derived  primarily from hotels and  restaurants  and
reflect revenue from rooms, food and beverage,  third party management and other
sources,  including telephone,  guest services, banquet room rentals, gift shops
and other amenities.  Hotel and restaurants revenue accounted for 90.2% of total
revenues in the three  months  ended June 30, 2003 and  decreased  7.3% to $43.3
million  in 2003 from  $46.7  million  in 2002.  The  balance  of the  Company's
revenues  is derived  from its  franchise,  central  services  and  development,
entertainment,  real estate, and corporate services segments. These revenues are
generated from  franchise  fees,  ticket  distribution  handling fees,  internet
services,  real estate management fees, sales commissions,  development fees and
rents.  Franchise,  central  services and development  accounted for 1.8% of the
Company's  revenue  for the three  months  ended  June 30,  2003.  Entertainment
accounted for 2.9% and real estate division accounted for 4.9% of total revenues
for the same period.

As  is  typical  in  the  hospitality  industry,   revenue  per  available  room
("RevPAR"),  average  daily rate  ("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.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES
__________________________________________

A critical  accounting policy is one which is both important to the portrayal of
the  Company's  financial  condition  and  results of  operations  and  requires
management's most difficult,  subjective or complex judgments, often as a result
of the need to make  estimates  about the effect of matters that are  inherently
uncertain. All of the Company's significant accounting policies are described in
Note 2 to the 2002 consolidated  financial statements included in the Form 10-K.
The more critical accounting policies and estimates used relate to:

Revenue is generally recognized as services are performed.  Hotel and restaurant
revenues primarily represent room rental and food and beverage sales from owned,
leased and other consolidated hotels and are recognized at the time of the hotel
stay or sale of the  restaurant  services.  Hotel and  restaurant  revenues also
include  management  fees the  Company  earns from  managing  third  party owned
hotels. Franchise, central services and development fees represent fees received
in connection  with the franchise of the Company's brand name as well as central
purchasing,  development and other fees. Franchise fees are recognized as earned
in accordance with the contractual terms of the franchise agreements. Other fees
are  recognized  when the services are provided  and  collection  is  reasonably
assured.

Real estate division revenue  represents  leasing income on owned commercial and
retail properties as well as property  management  income,  development fees and
leasing and sales commissions from residential and commercial properties managed
by the Company,  typically  under  long-term  contracts with the property owner.
Lease revenues are recognized over the period of the leases. The Company records
rental income from operating  leases which contain fixed  escalation  clauses on
the  straight-line  method.  The  difference  between  income  earned  and lease
payments  received  from  the  tenants  is  included  in  other  assets  on  the
consolidated  balance  sheets.   Rental  income  from  retail  leases  which  is
contingent  upon the  lessees'  revenues  is  recorded  as income in the  period
earned.  Management  fees and leasing and sales  commissions  are  recognized as
these services are performed.

                                       14

Entertainment  derives  revenue  primarily  from  computerized  event  ticketing
services and  promotion of Broadway  shows and other special  events.  Where the
Company acts as an agent and receives a net fee or commission,  it is recognized
as revenue in the period the  services  are  performed.  When the Company is the
promoter of an event and is at risk for the  production,  revenues  and expenses
are recorded in the period of the event performance.

Property and equipment  are stated at cost less  accumulated  depreciation.  The
Company  also  has  investments  in  partnerships  that  own and  operate  hotel
properties. The assessment of long-lived assets for possible impairment requires
the Company to make judgments,  regarding real estate values,  estimated  future
cash flow from the respective  properties and other matters. The Company reviews
the  recoverability  of its  long-lived  assets  when  events  or  circumstances
indicate that the carrying amount of an asset may not be recoverable.

The Company  accounts for assets held for sale in accordance  with  Statement of
Financial  Accounting  Standards No. 144 ("SFAS No. 144").  The Company's assets
held for sale are recorded at the lower of their historical carrying value (cost
less accumulated  depreciation) or market value. Depreciation is terminated when
the asset is determined to be held for sale.  If the assets are  ultimately  not
sold within the guidelines of SFAS No. 144, depreciation would be recaptured for
the period they were classified on the balance sheet as held for sale.

The  Company's  intangible  assets  include  brands and  goodwill.  The  Company
accounts for its brands and goodwill in accordance  with  Statement of Financial
Accounting  Standards No. 142 ("SFAS No. 142").  The Company  expects to receive
future benefits from previously  acquired brands and goodwill over an indefinite
period of time and therefore, effective January 1, 2002, no longer amortizes its
brands and  goodwill  in  accordance  with SFAS No. 142.  The annual  impairment
review requires the Company to make certain  judgments,  including  estimates of
future cash flow with  respect to brands and  estimates  of the  Company's  fair
value and its components with respect to goodwill and other intangible assets.

The Company's other intangible  assets include  management,  marketing and lease
contracts.  The value of these contracts is amortized on a  straight-line  basis
over the  weighted  average  life of the  agreements.  The  assessment  of these
contracts  requires the Company to make certain judgments,  including  estimated
future cash flow from the applicable properties.

The Company reviews the ability to collect individual  accounts  receivable on a
routine basis.  The Company records an allowance for doubtful  accounts based on
specifically identified amounts that it believes to be uncollectible and amounts
that are past due beyond a certain date.  The  receivable is written off against
the allowance for doubtful  accounts if collection  attempts fail. The Company's
estimate for its  allowance  for  doubtful  accounts is impacted by, among other
things,  national and regional economic conditions,  including the magnitude and
duration of the economic downturn of the United States.

Effective January 1, 2002, the Company established the WestCoast Central Program
Fund ("CPF"), organized in accordance with various franchise agreements. The CPF
is  responsible  for  certain  advertising  services,   frequent  guest  program
administration,  reservation  services,  national sales promotions and brand and
revenue  management   services  intended  to  increase  sales  and  enhance  the
reputation of the Company and its franchise  owners  including the WestCoast and
Red Lion branded  properties.  Contributions by the Company to the CPF for owned
and managed hotels and contributions by the franchisees,  through the individual
franchise  agreements,  total  up to 5% of  room  revenue  or  can be  based  on
reservation  fees,  frequent  guest program dues and other  services.  While the
Company administers the functions of the CPF, the net assets and transactions of
the CPF are not  commingled  with the working  capital of the  Company.  The net
assets  and  transactions  of  the  CPF  are,  therefore,  not  included  in the
accompanying  consolidated  financial statements in accordance with FASB No. 45,
"Accounting for Franchise Fee Revenue".

                                       15

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities and disclosure of contingent  assets and liabilities at the dates of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting periods.  Actual results could differ materially from those
estimates.

(The remainder of this page is left intentionally blank)

                                       16

OPERATING RESULTS AND STATISTICS
________________________________

The following table sets forth selected items from the  consolidated  statements
of operations as a percent of total revenues and certain other selected data:


                                                Three Months Ended           Six Months Ended
                                                     June 30,                    June 30,
                                                 2003         2002            2003         2002
                                                                               
    Revenues:
    Hotels and restaurants                         90.2 %       90.6 %         87.8 %       89.2 %
    Franchise, central services and development     1.8          2.3            2.2          2.1
    Entertainment                                   2.9          2.9            4.5          3.7
    Real estate                                     4.9          4.1            5.3          4.9
    Corporate services                              0.2          0.1            0.2          0.1
                                                ----------   -----------    ----------    ----------
        Total revenues                            100.0 %      100.0 %        100.0 %      100.0 %
                                                ==========   ===========    ==========    ==========

    Direct expenses                                86.8 %       83.1 %         92.4 %       85.3 %
    Undistributed corporate expenses                1.2          0.6            1.5          1.0
    Operating income                               12.0         16.4            6.1         13.8
    Interest expense                                5.6          5.0            6.1          5.9
    Income tax expense                              2.2          4.1            0.1          2.8
    Net income                                      3.7 %        7.3 %          0.0 %        5.2 %

    Hotel Statistics: (1)

    Hotels open at end of period                     73           90             73           90
    Available rooms                              12,760       15,855         12,760       15,855

    RevPAR (2) (5)                              $ 41.83      $ 44.05        $ 37.28      $ 39.38
    ADR (3)                                     $ 71.14      $ 73.17        $ 69.24      $ 72.57
    Average Occupancy (4) (5)                      58.8 %       60.2 %         53.8 %       54.3 %
    EBITDA ($ in thousands)(6)                  $ 9,275     $ 10,993       $ 11,828     $ 15,213

(1)  "Hotels open at end of period" and "Available rooms" represents statistics for actual hotels owned, managed or franchised at
     June 30, 2003 and 2002.  However, RevPAR, ADR, and average occupancy statistics are calculated using statistics for
     comparable hotels (owned, managed or franchised for greater than one year by Westcoast Hospitality Corporation).
(2)  Revenue per available room ("RevPAR") represents total room and related revenues divided by total available rooms, net of rooms
     out of service due to significant renovations.
(3)  Average daily rate ("ADR") represents total room revenues divided by the total number of paid rooms occupied by hotel guests.
(4)  Average occupancy represents total paid rooms occupied divided by total available rooms.  Total available rooms represents the
     number of rooms available multiplied by the number of days in the reported period.
(5)  Rooms under renovation were excluded from RevPAR and average occupancy percentage.  Due to the short duration of renovation,
     in the opinion of management, excluding these rooms did not have a material impact on RevPAR and average occupancy.
(6)  EBITDA represents income before income taxes, interest expense, interest income, depreciation, amortization, gain/loss on asset
     dispositions, equity in investments, minority interest, and other income/expenses.  EBITDA is not intended to represent cash
     flow from operations as defined by generally accepted accounting principles and such information should not be considered as an
     alternative to net income, cash flow from operations or any other measure of performance prescribed by generally accepted
     accounting principles.  While not all companies calculate EBITDA in the same fashion and therefore EBITDA as presented may not
     be comparable to similarly titled measures of other companies, EBITDA is included herein because management believes that
     certain investors find it to be a useful tool for measuring the Company's ability to service debt and invest in property and
     equipment. EBITDA is not necessarily available for management's discretionary use due to restrictions included in the Company's
     various borrowing agreements and other considerations.  For additional details refer to the EBITDA reconciliation to cash flow
     from operations.


                                       17

The following is a  reconciliation  of EBITDA to its  comparable  measurement in
accordance with generally accepted accounting principles for each of the periods
presented ($ in thousands):


                                                             Three Months ended June 30,        Six Months ended June 30,
                                                               2003               2002            2003             2002
                                                                                                        
   EBITDA                                                   $  9,275           $ 10,993        $ 11,828          $ 15,213
     Income tax provision                                    (1,078)            (2,062)           (113)           (2,646)
     Deferred income tax provision                               350                100             700               200
     Interest expense                                        (2,713)            (2,655)         (5,355)           (5,522)
     Interest and other income, net                            (209)                125            (86)               162
     Other non-cash operating activities                         632                 95             754               118
     Change in working capital accounts                      (3,399)            (2,009)         (3,295)             2,843
                                                        ---------------   ----------------   --------------   ---------------
   Net cash provided by operating activities                $  2,858           $  4,587         $ 4,433          $ 10,368
                                                        ===============   ================   ==============   ===============

RESULTS OF OPERATIONS
_____________________

Comparison  of the Three  Months  Ended June 30, 2003 to the Three  Months Ended
June 30, 2002

Revenues
Hotel and restaurant  revenue for the three months ended June 30, 2003 was lower
than the  prior  year  comparative  period  by $3.4  million  or  7.3%.  This is
primarily due to decreases in room revenue of $1.8 million, food revenue of $1.0
million and beverage  revenue of $300  thousand.  ADR at owned and leased hotels
for the second quarter of 2003 was $70.35, lower than the prior year comparitive
period by $0.43.  Average occupancy for the three months ended June 30, 2003 for
owned and leased hotels was 58.4% versus 61.7% for the same period in 2002.  The
resulting  RevPAR  finished  $2.54 below prior year for owned and leased.  These
results are  indicative of the national  trends of a decline in business  travel
and excursion  travel  between  comparative  periods  resulting in part from the
perception of a weak national economy,  personal spending cut-backs, and certain
national  security  threats.  It is also  indicative  of a higher  percentage of
internet  channel  reservations  which generally result in a lower room rate for
the Company.  Also,  management  fee revenue for the three months ended June 30,
2003 is down $300 thousand from the comparative  prior period.  This decrease is
the  result  of both a  decline  in the  number of  hotels  managed  during  the
comparative  periods,  from 11 down to six,  and a general  decline  in the room
revenues for the managed  properties,  on which  management  fees are  primarily
based.

Franchise,  central services and development  revenue for the three months ended
June 30, 2003 of $888 thousand was lower than the prior year comparative  period
by $295 thousand or 24.9%.  This is primarily due to the lost franchise  revenue
from 14  franchise  hotels  that left the  system in 2003,  partially  offset by
revenues from three new  franchises  that entered the system in 2003. It also is
the  result of lower  room  revenues  at the  franchise  hotels,  on which  most
franchise  fees are based,  partially  offset by a $230 thousand gain related to
the termination of a franchise agreement during the period.

Entertainment  revenue for the three  months ended June 30, 2003 of $1.4 million
was lower  than the prior  year  comparative  period by $109  thousand  or 7.3%.
During  April  2002 two  Broadway  presentations  took  place,  whereas  no such
presentations took place in April 2003. This drop for the second quarter of 2003
was  partially  offset  by  increased  ticket  demand  for  TicketsWest  Eastern
Washington and Colorado.

Real estate  division  revenue for the three  months ended June 30, 2003 of $2.4
million  increased  from the prior year  comparative  period by $224 thousand or
10.5%.  This is  primarily  due to rental  income from new tenants at owned real
estate  properties and commissions  received on the sales and leasing of certain
real estate space on behalf of third parties.

                                       18

Direct Expenses
Direct expenses decreased $1.1 million,  or 2.7%, to $41.7 million in the second
quarter of 2003 from $42.9 million in 2002.  The decline is  principally  due to
savings on labor  resulting from the  adjustments  of our scalable  workforce in
both the hotels and restaurants  division and the entertainmnet  division.  This
includes  utilization of part-time  employees and reducing  reliance on overtime
hours worked by non-exempt full time  employees.  The Company is also seeing the
realization  from  purposeful cost cutting  measures  enacted early in the year.
These  gains were  offset by  commission  expense  incurred  by the real  estate
division,  recapture of non-cash  depreciation on the WestCoast  Kalispell Hotel
and  Mall  described  below,  and a loss  on the  disposition  of the  Company's
ownership interest in a hotel property of $443 thousand.

Undistributed Corporate Expenses
Total undistributed  corporate expenses for the three months ended June 30, 2003
increased  $255 thousand to $587 thousand from $332 thousand for the same period
in 2002.  This change is due to higher  employee  benefit costs and increases in
both insurance and professional services expenses experienced in 2003.

Interest Expense
Interest  expense for the second  quarter of 2003 increased 2.2% compared to the
same period in 2002 due to a slightly higher average balance  outstanding on the
Company's primary  revolving credit facility between periods,  and the existence
of the note payable to a finance company related to the sale-operating leaseback
transaction  which did not exist in 2002,  partially  offset by generally  lower
rates on other variable rate borrowings.

Income Taxes
Income tax expense for the three  months  ended June 30, 2003 of $1.1 million is
lower  than  the  comparative  period  in 2002 by $984  thousand  due to a lower
taxable income based upon the results of operations.

Other Income (Expense)
Other income (expense) for the quarter decreased from 2002 by $321 thousand. The
balance for the second quarter of 2002 was de minimis. For the second quarter of
2003 the balance is comprised of a $790 thousand loan fee  write-off,  no longer
considered extraordinary under generally accepted accounting principles,  offset
by a  contract  termination  fee of $350  thousand  and  other net gains of $128
thousand.

Net Income
Net income for the three months ended June 30, 2003  compared to the same period
in 2002 is down $2.0  million or 52.6% due  primarily  to a $1.3 million drop in
direct operating  profit for hotels and restaurants,  and $700 thousand of other
changes related to depreciation, termination fees, loan fee write-offs and other
costs based on the reasons previously discussed.

Earnings  Per Share
Earnings per share,  after the effect of preferred  stock  dividends,  decreased
$0.15 to earnings  per share of $0.09 for the second  quarter of 2003 from $0.24
per  share  for the  same  quarter  of 2002.  This is the  result  of the  lower
operating results based on the reasons previously discussed.

                                       19

Comparison  of the Six Months  Ended June 30, 2003 to the Six Months  Ended June
30, 2002

Revenues
Hotel and  restaurant  revenues  for the six months ended June 30, 2003 are down
compared to the prior year by $6.5  million or 7.7%.  The  decrease is primarily
due to  declines of about $4.0  million in room  revenue,  $1.5  million in food
revenue and $300  thousand in beverage  revenue.  ADR at owned and leased hotels
for the first six months of 2003 was $67.88,  lower than the comparative  period
in the prior year by $2.31.  Average occupancy for the six months ended June 30,
2003 at owned and leased  hotels was 52.6%  versus  54.9% for the same period in
2002.  The resulting  RevPAR  finished  $2.87 below the prior year for owned and
leased hotels. These trends are indicative of the decline in business travel and
excursion travel between  comparative periods resulting from the perception of a
weak  national  economy,  personal  spending  cut-backs,  and  certain  national
security  threats.  It is also  indicative  of a higher  percentage  of internet
channel  reservations  which  generally  result  in a lower  room  rate  for the
Company. Additionally, in the first quarter of 2002, the Company's hotel in Salt
Lake City was positively  impacted by the Winter  Olympics.  The lack of similar
activity  during the first  quarter of 2003  contributed  to $1.3 million of the
decrease in revenues. Also, management fee revenue for the six months ended June
30, 2003 is down $400 thousand from the comparative  prior period.  This drop is
the  result  of both a  decline  in the  number of  hotels  managed  during  the
comparative  periods,  from 11 down to six,  and a general  decline  in the room
revenues for the managed properties,  on which our management fees are primarily
based.  Franchise,  central services and development  revenue for the six months
ended June 30, 2003 of $2.0 million  decreased  from the prior year  comparative
period by $44  thousand or 2.3%.  This is  primarily  due to the lost  franchise
revenue from 14 franchise hotels that left the system in 2003,  partially offset
by revenues from three new  franchises  that entered the system in 2003. It also
is the result of lower room  revenues  at the  franchise  hotels,  on which most
franchise  fees are based,  partially  offset by a $230 thousand gain related to
the  termination  of  a  franchise  agreement  during  the  period  and  project
development commissions during the first quarter.

Entertainment  revenue for the six months ended June 30, 2003 increased from the
prior year comparative  period by $513 thousand,  or 14.8%.  These increases are
due to increased ticket demand for TicketsWest  Eastern Washington and Colorado,
especially during the ski lift ticket season in January and February.

Real estate  revenue for the six months ended June 30, 2003  increased  from the
prior year comparative  period by $54 thousand or 1.2%. This is primarily due to
rental income from new tenants at owned real estate  properties and  commissions
received  on the sales and  leasing of certain  real  estate  space on behalf of
third parties.  These  increases are offset by reduced lease revenue  because of
the sale of an office building which closed in March 2002.

Direct Expenses
Direct expenses increased $1.3 million or 1.6% to $81.5 million in the first six
months of 2003 from $80.3 million in 2002. Direct expenses for the first quarter
of 2002  include  a gain of $3.0  million  on the  sale of an  office  building.
Without the effect of that gain in 2002,  direct  expenses are down $1.7 million
for  the  first  six  months  of 2003  including  $443  thousand  of loss on the
disposition of the Company's  ownership  interest in a hotel property,  and $520
thousand  of  depreciation  related to the  WestCoast  Kalispell  Hotel and Mall
described  below. The drop is principally due to savings on labor resulting from
the  adjustments  of our scalable  workforce in both the hotels and  restaurants
division and the entertainment  division. This includes utilization of part-time
employees and reducing reliance on overtime hours worked by non-exempt full time
employees.  The  Company is also seeing the  realization  from  purposeful  cost
cutting  measures  early  in the  year.  These  gains  were  offset  by  certain
commissions  paid  from the  real  estate  division  and the  completion  of the
transition  of its Red Lion brand into the system by rebranding 22 of its owned,
leased and managed  hotels to Red Lion  hotels,  for which the Company  incurred
$367 thousand for various conversion activities and for the costs of new branded
amenities.

                                       20

Undistributed Corporate Expenses
Undistributed  corporate  expenses  for the  six  months  ended  June  30,  2003
increased about $422 thousand to approximately  $1.3 million from  approximately
$900 thousand for the same period in 2002. This change is due to higher employee
benefit costs and increases in both insurance and professional services expenses
experienced in 2003.

Interest Expense
Interest expense for the first six months of 2003 decreased 3.0% compared to the
same period in 2002 due to generally  lower rates on variable  rate  borrowings,
offset by the existence of the note payable to a finance  company related to the
sale-operating  leaseback transaction which did not exist in 2002 and a slightly
higher average balance  outstanding on the Company's  primary  revolving  credit
facility between periods.

Income Taxes
Income tax  expense for the six months  ended June 30, 2003 of $113  thousand is
lower than the comparative period in 2002 by $2.6 million due to a lower taxable
income based upon the results of operations.

Other Income (Expense)
Other income  (expense) for the year to date period  decreased from 2002 by $297
thousand.  The balance for the first six months of 2002 was de minimis. For year
to date of 2003 the balance is comprised of a $790 thousand loan fee  write-off,
no  longer  considered   extraordinary   under  generally  accepted   accounting
principles,  offset by a contract termination fee of $350 thousand and other net
gains of $147 thousand.

Net Income
Net income for the six months ended June 30, 2003 compared to the same period in
2002 is down $4.8  million due  primarily  to a $2.6  million  decline in direct
operating profit for hotels and  restaurants,  $3.8 million due to the change in
asset dispositions between periods, and $1.5 million of other changes related to
depreciation, termination fees, loan fee write-offs, taxes and other costs based
on the reasons previously discussed.

Earnings (Loss) Per Share
Earnings per share,  after the effect of preferred  stock  dividends,  decreased
$0.37  to a loss per  share of $0.10  for the six  months  ended  June 30,  2003
compared to $0.27  earnings  per share for the same period of 2002.  This is the
result of the lower operating results based on the reasons previously discussed.

LIQUIDITY AND CAPITAL RESOURCES
_______________________________

Overview
Net cash provided by operating activities totaled approximately $4.4 million for
the six months ended June 30, 2003 compared to $10.4 million for the same period
in 2002.  The  decrease  in 2003  compared to 2002 was  primarily  the result of
working capital variances.

Net cash used in investing  activities was $3.7 million for the first six months
of 2003  compared  to $498  thousand  of net cash used in  investing  activities
during the same period in 2002. Additions to property and equipment totaled $4.1
million in 2003 compared to $2.5 million in 2002.  Capital additions included an
investment in signage  related to rebranding  and various other  projects in the
operating  divisions.  It also  included  additions to the certain  software and
equipment  which was sold and then leased  back as  described  below.  The other
major  variances  between the two periods was the $1.8 million of proceeds  from
asset  dispositions  received  in the first  quarter  of 2002  compared  to $350
thousand received in connection with the disposition of the Company's  ownership
interest in a hotel property.

Net cash  provided by  financing  activities  totaled $2.0 million in 2003 which
generally  relates to the  short-term  borrowing  for the payment of the certain
software and equipment, the effects of the refinancing of the line of credit and
the payment of preferred stock dividends.  Net cash used in financing activities
totaled $10.0 million in the first six months of 2002 which  consists  primarily
of revolving debt repayments.

                                       21

At June 30,  2003,  the  Company had $6.8  million in cash and cash  equivalents
including $3.3 million of cash restricted under certain borrowing  arrangements.
The Company believes that its operating cash flow, revolving line-of-credit, and
proceeds  from the sale of its non-core  assets will be  sufficient  to meet its
liquidity  needs.  However,  projections of working  capital  sources and future
financial  needs  are  subject  to  uncertainty.  Refer  to  "Safe  Harbor"  for
additional  information of conditions  that could affect future  financial needs
and sources of working capital.

Financing
On June 27, 2003,  the Company  completed the refinance of its revolving  credit
facility by securing term debt of $55.2 million from a finance company under ten
separate  promissory  notes.  The  notes are  collateralized  by  certain  hotel
properties.  The notes bear interest at 6.7% and utilize a 25-year  amortization
period,  but are due in full on July 11, 2013. In connection  with securing this
term debt, the Company  incurred loan fees and other costs totaling $1.1 million
which have been  capitalized and will be amortized using the effective  interest
method over the ten year period of the underlying  promissory notes. Proceeds of
$1.7  million  have been set aside in reserve  accounts  for  taxes,  insurance,
repairs and other reserves.

A portion  of the  proceeds  from the new  borrowings  were used to pay down the
approximate $51.5 million outstanding balance on the Company's primary revolving
credit facility.  The credit facility  agreement was then amended effective June
27, 2003,  reducing the maximum  borrowing  amount to $4.0  million.  The credit
facility is  collateralized  by certain  property and  equipment and interest is
computed  based upon either the bank's prime rate or certain  LIBOR rates at the
Company's option. At June 30, 2003, the Company had no outstanding balance under
the credit facility.  The agreement contains certain restrictions and covenants,
the most  restrictive  of which  require the Company to maintain a minimum fixed
charge ratio and a maximum debt to equity ratio.  At June 30, 2003,  the Company
was in compliance  with all covenants  under the  agreement.  The amended credit
facility does not require any principal payments until its maturity date of June
30, 2005. As such, any possible future  borrowings in 2003 would be reflected as
a long-term liability.

In June  2003,  WestCoast  completed  the sale to a finance  company  of certain
capitalized   software  and  equipment   previously   included  in  construction
in-process.  The proceeds of  approximately  $2.7 million were used to repay the
outstanding  balance on the interim note  payable to the finance  company in the
same amount.  Certain other costs directly related to the software and equipment
were paid for directly by the finance company, totaling $451 thousand. WestCoast
then entered into an operating  lease  agreement with the finance  company which
expires in June 2005 requiring  monthly payments of approximately  $52 thousand.
At the option of  WestCoast,  the lease  term is  renewable  for three  one-year
terms.

In addition to the  indebtedness  noted above,  the Company has debt and capital
lease obligations of approximately  $104.4 million as of June 30, 2003 primarily
consisting   of  fixed  rate  and  variable  rate  debt  secured  by  individual
properties.

Having completed the refinance of its credit facility,  management believes that
an adequate borrowing base exists to sustain the operations of the Company.  The
Company  is also  pursuing  the sale of  certain  non-core  real  estate  assets
included in assets held for sale discussed  below.  Management  has  implemented
certain  operational  efficiencies and cost reduction plans that are expected to
improve  operating  performance.  These  actions  are  intended  to  reduce  the
Company's dependence on its credit facility.

                                       22

Assets Held for Sale
The  Company  continues  to seek  opportunities  to divest its  interest  in its
non-core assets.  At June 30, 2003,  assets held for sale consists of two office
buildings with a net carrying value of $21.7 million.  Depreciation of these two
assets remains suspended.  Management is committed to the sale of the assets and
is actively  marketing the properties.  Both of the properties are available for
sale in  their  present  condition  at  prices  management  believes  reasonable
compared to their  respective  fair values.  Management  believes it is unlikely
that significant changes to its plans for sale of these properties will be made.
There can be no  assurance  that the Company will be able to  successfully  sell
these properties.

One  additional  property was held for sale at December 31, 2002.  As previously
disclosed,  the Company had entered  into a purchase and sale  agreement  with a
potential buyer for the WestCoast  Kalispell  Center Hotel and Mall. The Company
and the buyer subsequently  terminated this agreement, at which time the Company
determined  that it was no longer in its best interest to continue to market the
property  for sale.  As a result  of this  decision,  the net book  value of the
related assets of approximately  $13.0 million has been reclassified from assets
held for sale to property  and  equipment.  A  depreciation  adjustment  of $520
thousand was recorded in June 2003, reflecting non-cash expenses that would have
been recognized had the assets been classified as held and used since July 2002.

Preferred Stock Dividends
The Company is no longer  restricted  from the payment of dividends.  On July 3,
2003 the Company  paid a dividend to the  shareholders  of record as of June 30,
2003 of its Series A and Series B preferred stock,  totaling  approximately $1.3
million,  which  represented  all  current  dividends  and  dividends  that were
previously acrrued under the preferred stock agreement.

SEASONALITY
___________

The Company's business is subject to seasonal fluctuations. Significant portions
of the Company's revenues and profits are realized from May through October. The
Company's  results for any quarter may not be indicative of the results that may
be achieved for the full fiscal year.

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 income
during the periods under review.

OTHER MATTERS
_____________

Recent Accounting Pronouncements

In January 2003, the FASB issued FASB  Interpretation No. 46,  "Consolidation of
Variable Interest  Entities,  an interpretation of Accounting  Research Bulletin
No. 51, Consolidated  Financial Statements" ("FIN No. 46"). FIN No. 46 clarifies
the application of Accounting  Research  Bulletin No. 51 to certain  entities in
which  equity  investors  do  not  have  the  characteristics  of a  controlling
financial  interest or do not have  sufficient  equity at risk for the entity to
finance its activities  without additional  subordinated  financial support from
other parties.  FIN No. 46 is effective for WestCoast  starting July 1, 2003 and
is not  expected  to  have a  material  effect  on  the  Company's  consolidated
financial statements.

                                       23

In April 2003,  the FASB issued SFAS No. 149,  "Amendment  of  Statement  133 on
Derivative  Instruments and Hedging  Activities"  ("SFAS No. 149"). SFAS No. 149
amends  and  clarifies   financial   accounting  and  reporting  for  derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts  (collectively  referred to as derivatives) and for hedging activities
under FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities".  SFAS No. 149 is effective  for all  contracts  created or modified
after June 30, 2003 except for hedging  relationships  designated after June 30,
2003. In addition, except as stated below, all provisions of SFAS No. 149 should
be applied prospectively. The provisions of SFAS No. 149 that relate to SFAS No.
133  Implementation  Issues that have been  effective  for fiscal  quarters that
began prior to June 15, 2003,  should  continue to be applied in accordance with
their respective effective dates. In addition,  paragraphs 7(a) and 23(a), which
relate  to  forward  purchases  or  sales  of  when-issued  securities  or other
securities that do not yet exist,  should be applied to both existing  contracts
and new contracts entered into after June 30, 2003. The Company does not believe
that the adoption of this standard will have a material  effect on the Company's
consolidated financial statements.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments  with  Characteristics  of both  Liabilities  and Equity" ("SFAS No.
150"). SFAS No. 150 establishes  standards on the classification and measurement
of certain financial  instruments with  characteristics  of both liabilities and
equity.  The provisions of SFAS No. 150 are effective for financial  instruments
entered into or modified  after May 31, 2003 and to all other  instruments  that
exist as of the  beginning  of the  first  interim  financial  reporting  period
beginning after June 15, 2003. The Company does not believe that the adoption of
SFAS No. 150 will have a material impact on the Company's consolidated financial
statements.

(The remainder of this page is intentionally left blank)

                                       24

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company's market risk has not changed significantly for the six months ended
June  30,  2003.  See Item 7A of the  Company's  Form  10-K  for the year  ended
December 31, 2002.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures
________________________________________________

An evaluation was performed under the supervision and with the  participation of
the Company's  management,  including the Chief  Executive  Officer  ("CEO") and
Chief  Financial  Officer  ("CFO"),  of  the  effectiveness  of the  design  and
operation of the Company's  disclosure  controls and  procedures.  Based on that
evaluation, the Company's management,  including the CEO and CFO, concluded that
the Company's  disclosure  controls and procedures were effective as of June 30,
2003.

Changes in Internal Controls
____________________________

There have been no significant  changes in the Company's internal controls or in
other factors that could  significantly  affect internal controls  subsequent to
June 30, 2003.

PART II - OTHER INFORMATION

(Items 1, 2, 3 and 5 of PART II are omitted as they are not  applicable  for the
period covered by this report.)

Item 4. Submission of Matters to a Vote of Security Holders

At the annual meeting of  stockholders  on May 16, 2003,  the following  actions
were taken with the noted results:

Total Outstanding Common Stock: 12,994,163 Shares

1.       Election of Directors

Name                  Votes For     Pct.          Votes Withhold
_________________     _________     _____         ________________

Peter F. Stanton      12,094,420    93.1%         9,047
Stephen R. Blank      12,094,420    93.1%         9,047

2.       Ratification of Auditors for the Year Ended December 31, 2003

Name                  Votes For     Pct.       Votes Against     Votes Abstained
_________________     ___________   ______     ______________    _______________

BDO Seidman, LLP      12,099,126    93.1%      2,582             1,759

                                       25

Item 6. Exhibits and Reports on Form 8-K

(a)      Exhibits

     10.1  Executive  Employment  Agreement  dated  April 13,  2003  between the
     Registrant and Arthur Coffey.

     10.2 Second  Amended and Restated  Credit  Agreement,  Dated as of June 27,
     2003, Among WestCoast  Hospitality Limited Partnership,  U.S. Bank National
     Association as  Administrative  Agent and the Other Financial  Institutions
     Party Thereto

     10.3  Promissory  Note dated effective as of June 27, 2003, in the original
     principal  amount of $5,100,000  issued by WHC807,  LLC, a Delaware limited
     liability company indirectly  controlled by the Registrant  ("WHC807"),  to
     Column Financial,  Inc.  ("Column") (the "WHC807  Promissory  Note").  Nine
     other Delaware limited  liability  companies  indirectly  controlled by the
     Registrant   (the  "Other  LLCs")   simultaneously   issued  nine  separate
     Promissory  Notes to Column in an aggregate  original  principal  amount of
     $50,100,000 and otherwise on terms and conditions  substantially similar to
     those of the  WHC807  Promissory  Note  (these  Promissory  Notes and their
     respective issuers and principal amounts are identified in Exhibit D to the
     Deed of Trust,  Assignment  of Leases and  Rents,  Security  Agreement  and
     Fixture Filing filed as Exhibit 10.4).

     10.4 Deed of Trust,  Assignment of Leases and Rents, Security Agreement and
     Fixture Filing dated  effective as of June 27, 2003, with WHC807 as grantor
     and Column as beneficiary  (the "WHC807 Deed of Trust").  Each of the Other
     LLCs simultaneously executed a separate Deed of Trust, Assignment of Leases
     and Rents,  Security Agreement and Fixture Filing as grantor with Column as
     beneficiary and otherwise on terms and conditions  substantially similar to
     those of the WHC807  Deed of Trust  (these nine other  documents  and their
     respective  grantors and the respective parcels of real property encumbered
     thereby are identified in Exhibit E to the WHC807 Deed of Trust).

     10.5 Indemnity and Guaranty  Agreement dated effective as of June 27, 2003,
     between the  Registrant  and Column with  respect to the WHC807  Promissory
     Note and the WHC807 Deed of Trust.  The  Registrant and Column have entered
     into nine  separate  Indemnity  and Guaranty  Agreements  on  substantially
     similar  terms and  conditions  with respect to the Other LLCs'  Promissory
     Notes  and Deeds of  Trust,  Assignments  of  Leases  and  Rents,  Security
     Agreements  and Fixture  Filings  referred  to in  Exhibits  10.3 and 10.4,
     respectively.

     31.1  Certification  of Chief Executive  Officer Pursuant to Section 302 of
     the Sarbanes-Oxley Act of 2002

     31.2  Certification  of Chief Financial  Officer Pursuant to Section 302 of
     the Sarbanes-Oxley Act of 2002

     32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section
     1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

     32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section
     1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

                                       26

(b)      Reports on Form 8-K

     April 8, 2003
     Item 7: WestCoast Hospitality  Corporation Names New CEO and CFO

     May 8, 2003
     Item 9: WestCoast Hospitality Corporation Announces First Quarter Financial
     Results

     June 30, 2003
     Item 9:  WestCoast  Hospitality  Corporation  Announces Completion of $55.2
     Million Mortgage Refinance


                                   SIGNATURES

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

WESTCOAST HOSPITALITY CORPORATION
(Registrant)

Date: August 14, 2003

                                                      By:  /s/ Peter P. Hausback
                          ______________________________________________________
                                                               Peter P. Hausback
                                      Vice President and Chief Financial Officer


Date: August 14, 2003

                                                   By:  /s/ Anthony F. Dombrowik
                          ______________________________________________________
                                                            Anthony F. Dombrowik
                           Corporate Controller and Principal Accounting Officer

                                       27


Exhibit 10.1
EXECUTIVE EMPLOYMENT AGREEMENT

EXECUTIVE  EMPLOYMENT  AGREEMENT,   is  executed  effective  on  April  3,  2003
("Effective  Date")  by  and  between  WestCoast  Hospitality   Corporation,   a
Washington corporation (the "Company"), and Arthur Coffey (the "Executive").

The Company  desires to employ the  Executive in the  capacities  of  President,
Chief Executive  Officer,  and, for a temporary  period of time, Chief Financial
Officer,  and the Executive desires to be so employed,  on the terms and subject
to the conditions set forth in this agreement (the "Agreement");

Now,  therefore,  in  consideration of the mutual covenants set forth herein and
other  good and  valuable  consideration  the  parties  hereto  hereby  agree as
follows:

1.       Employment; Term.
The Company  employs the Executive,  and the Executive  agrees to be employed by
the Company,  upon the terms and subject to the conditions set forth herein, for
a term  commencing on the Effective  Date and  terminating  on December 31, 2004
unless  terminated  earlier  in  accordance  with  Section 5 of this  Agreement;
provided,  that such term shall  automatically be extended from time to time for
additional  periods  of one  calendar  year  from  the  date on  which  it would
otherwise  expire  unless the  Executive,  on one hand,  or the Company,  on the
other,  gives  notice to the other party or parties not less than 120 days prior
to such  date that it elects  to  permit  the term of this  Agreement  to expire
without  extension on such date. (The initial term of this Agreement as the same
may be extended in accordance  with the terms of this  Agreement is  hereinafter
referred to as the "Term").

2.       Positions; Conduct.
(a) During the Term,  the  Executive  will hold the titles and  offices  of, and
serve in the  positions  of,  President  and/or Chief  Executive  Officer of the
Company.  Until  such  time as a  replacement  is  designated  by the  Board  of
Directors as Chief  Financial  Officer,  the Executive will continue to serve in
his former  position as Chief  Financial  Officer of the Company.  The Executive
shall  report to the Board of  Directors  of the Company and shall  perform such
specific  duties and  services  (including  service as an  officer,  director or
equivalent  position of any direct or  indirect  subsidiary  without  additional
compensation) as the Board of Directors shall reasonably request consistent with
the Executive's positions.

(b) During the Term,  the Executive  agrees to devote his full business time and
attention  to the  business  and affairs of the Company  and to  faithfully  and
diligently  perform,  to  the  best  of his  ability,  all  of  his  duties  and
responsibilities  hereunder.  Nothing  in  this  Agreement  shall  preclude  the
Executive  from devoting  reasonable  time and  attention to the following  (the
"Exempted Activities"): (i) serving, with the approval of the Board of Directors
of the Company, as an officer,  director, trustee or member of any organization,
(ii) engaging in  charitable  and community  activities  and (iii)  managing his
personal  investments  and affairs.  In no event shall the  Exempted  Activities
involve any material  conflict of interest with the interests of the Company or,
individually or collectively,  interfere  materially with the performance by the
Executive of his duties and responsibilities under this Agreement.  The Board of
Directors of the Company have approved as an Exempted  Activity the  Executive's
employment as a director and officer of Inland Northwest Corporation, previously
a wholly-owned subsidiary of the Company, for which the Company provides certain
management and administrative services.

(c) The  Executive's  office  and place of  rendering  his  services  under this
Agreement shall be in the principal executive offices of the Company. During the
Term, the Company shall provide the Executive with executive  office space,  and
administrative and secretarial  assistance and other support services consistent
with his positions and with his duties and responsibilities hereunder.

3.       Board of Directors; Committees.
It is  understood  that the right to elect  directors  of the  Company is by law
vested in the  stockholders  and  directors of the  Company,  and it is mutually
contemplated  that service on the Board of Directors or on any  committee of the
Board of Directors is not a condition of this Agreement.

4.       Salary; Additional Compensation; Perquisites and Benefits.
(a) During the Term,  the Company and the  Subsidiary  will pay the  Executive a
base salary at an annual  rate of not less than $ 285,000 per annum,  subject to
annual  review by the  Compensation  Committee  of the Board of Directors of the
Company (the "Compensation  Committee") and in the discretion of such Committee,
increased  from  time to time.  Once  increased,  such  base  salary  may not be
decreased. Such salary shall be paid in periodic installments in accordance with
the Company's standard practice, but not less frequently than semi-monthly.

(b) For each  fiscal  year during the Term,  the  Executive  will be eligible to
receive  a bonus on such  terms as may from time to time be  established  by the
Compensation Committee.

(c) During the Term, the Executive will participate in all plans now existing or
hereafter  adopted by the Company for the  management  employees  or the general
benefit  of the  their  employees,  such as  stock  option  or  other  incentive
compensation  plans,  life and health  insurance plans, or other insurance plans
and benefits on the same basis and subject to the same  qualifications  as other
senior executive  officers.  To the extent permitted by law, the Executive shall
be given  credit  for his  years of  service  to any  predecessor  entity of the
Company in determining all waiting periods and vesting periods under such plans.

(d) The Company will  reimburse the Executive,  in accordance  with its standard
policies from time to time in effect, for all out-of-pocket business expenses as
may be incurred by the  Executive  in the  performance  of his duties under this
Agreement.

(e) The Executive shall be entitled to vacation time to be credited and taken in
accordance  with the  Company's  policy  from time to time in effect  for senior
executives,  which in any event shall not be less than a total of four weeks per
calendar year.

(f) The Company shall  indemnify the Executive to the fullest  extent  permitted
under the law of the State of Washington.

5.       Termination
(a) The Term will  terminate upon the  Executive's  death or, upon notice by the
Company or the  Executive to the other,  in the case of a  determination  of the
Executive's  Disability.   As  used  herein  the  term  "Disability"  means  the
Executive's  inability  to perform  his duties and  responsibilities  under this
Agreement for a period of more than 120  consecutive  days, or for more than 180
days,  whether or not continuous,  during any 365-day period, due to physical or
mental incapacity or impairment. A determination of Disability will be made by a
physician  satisfactory to both the Executive and the Company;  provided that if
they cannot  agree as to a  physician,  then each shall  select a physician  and
these  two  together  shall  select a third  physician  whose  determination  of
Disability  shall be  binding  on the  Executive  and the  Company.  Should  the
Executive become  incapacitated,  his employment shall continue and all base and
other compensation due the Executive hereunder shall continue to be paid through
the date upon which the  Executive's  employment is terminated for Disability in
accordance with this section.

( b) The Term may be terminated by the Company upon notice to the Executive upon
the occurrence of any event constituting "Cause" as defined herein.

(c) The Term may be terminated  by the Executive  upon notice to the Company (i)
within six months of the occurrence of any event  constituting  "Good Reason" as
defined  herein or (ii)  within six months of a "Change of  Control"  as defined
herein.

6.       Severance.
(a) If the Term is terminated by the Company for Cause,  the Company will pay to
the Executive an aggregate  amount equal to the  Executive's  accrued and unpaid
base salary through the date of such termination,  additional salary payments in
lieu of the Executive's accrued and unused vacation time,  unreimbursed business
expenses,  unreimbursed  medical,  dental and other employee benefit expenses in
accordance with the applicable  plans,  and any and all other benefits  provided
under  the terms of  applicable  employee  plans to  terminated  employees  (the
"Standard Termination Payments").

(b) If the Term is terminated  upon the  Executive's  death or  Disability,  the
Company and the Subsidiary will pay to the Executive's  estate or the Executive,
as the  case  may  be,  the  Standard  Termination  Payments  and all  death  or
disability  payments or other employee  benefits  under their  employee  benefit
plans.

(c)  Subject  to  Section  6(d),  if  the  Company  terminates  the  Executive's
employment under this Agreement  without Cause other than by reason of his death
or Disability or if the Executive  terminates his employment  hereunder for Good
Reason,  the  Company  shall  (i) pay the  Executive  the  Standard  Termination
Payments,  (ii) pay the  Executive  a lump sum  payment  equal to the  twice the
Executive's  total  compensation for the previous fiscal year (but not less than
twice  $285,000)  and (iii)  continue in effect the  Executive's  benefits  with
respect to life, health and insurance plans or their equivalent for two years.

(d) If, following a Change in Control:  the Executive  terminates his employment
hereunder  within 6 months  following such Change in Control;  the Company shall
(i) pay the Executive the Standard Termination Payments,  (ii) pay the Executive
a lump sum payment equal to twice the Executive's  total cash  compensation  for
the previous  fiscal year (but in no event less than twice  $285,000)  and (iii)
continue in effect the  Executive's  benefits  with respect to life,  health and
insurance plans or their equivalent for two years.

(e) If the initial Term is not extended  pursuant to the proviso to Section 1 as
a result of the Company  giving notice  thereunder  that it elects to permit the
term of this  Agreement to expire without  extension,  the Company shall (i) pay
the Executive the Standard Termination  Payments,  (ii) pay the Executive a lump
sum payment equal to twice the Executive's  total  compensation for the previous
fiscal year (but not less than twice  $285,000) and (iii) continue in effect the
Executive's  benefits with respect to life,  health and insurance plans or their
equivalent for two years.

(f) If the Company  terminates the Executive's  employment  under this Agreement
without Cause other than by reason of his death or Disability, or if the initial
Term is not extended as a result of the Company  giving notice that it elects to
permit  the  term of this  Agreement  to  expire  without  extension,  or if the
Executive  terminates his employment  hereunder  pursuant to Section 5 (c.): all
stock options granted to the Executive shall immediately vest and be exercisable
and any stock  grant to the  Executive  shall  immediately  vest and all Company
imposed  restrictions  on  restricted  stock  issued to the  Executive  shall be
terminated.

(g) As used  herein,  the term "Cause"  means:  (i)the  Executive's  willful and
intentional failure or refusal to perform or observe any of his material duties,
responsibilities  or obligations set forth in this Agreement,  if such breach is
not cured within 30 days after notice  thereof to the  Executive by the Company,
which notice shall state that such conduct shall, without cure, constitute Cause
and  makes  specific  reference  to this  Section  6(g);  (ii) any  willful  and
intentional  act  of the  Executive  involving  fraud,  theft,  embezzlement  or
dishonesty  affecting the Company; or (iii) the Executive's  conviction of (or a
plea of nolo  contendere  to) an offense  which is a felony in the  jurisdiction
involved.

(h) As used  herein,  the term  "Good  Reason"  means:  (i.)  assignment  of the
Executive of duties materially  inconsistent  with the Executive's  positions as
described in Section 2(a), provided, however, it shall not be Good Reason if the
Company appoints a replacement for the Executive as Chief Financial  Officer or,
at the  discretion  of the Board,  separates  the  positions of Chief  Executive
Officer and  President so long as  Executive  continues to hold the position and
duties of Chief Executive Officer).;  (ii) the removal of the Executive from the
positions as described in Section 2(a), provided,  however, it shall not be Good
Reason  if the  Company  appoints  a  replacement  for the  Executive  as  Chief
Financial Officer or, at the discretion of the Board, separates the positions of
Chief Executive Officer and President so long as Executive continues to hold the
position  and  duties of Chief  Executive  Officer).;  (iii)  the  change in the
location of the Company's  principal executive offices to a location outside the
Spokane,  Washington metropolitan area without the Executive's consent which may
be  withheld  at his  sole  discretion;  or (iv)  any  material  breach  of this
Agreement by the Company which is continuing.

(i) As used herein, the term "Change in Control" means the occurrence of any one
of the  following  events:  (i.) the  majority of the Board of  Directors of the
Company consists of individuals other than Incumbent  Members,  which shall mean
the  members of such  Boards on the  Effective  Date;  provided  that any person
becoming  a  director  subsequent  to  the  Effective  Date  whose  election  or
nomination  for  election was  supported  by the  Executive or a majority of the
directors  who then  comprised the  Incumbent  Directors  shall be considered an
Incumbent Director;  (ii) the Company adopts a plan of liquidation providing for
the distribution of all or  substantially  all of the assets of the Company on a
consolidated  basis;  (iii) the Company ceases to act as the general  partner of
WestCoast  Hospitality Limited  Partnership,  provided,  however,  the foregoing
shall not  apply if  substantially  all of the  assets  of the  partnership  are
transferred to and owned by the Company or its  Affiliates.  As used herein,  an
Affiliate  of a person  or other  entity  means a person  or other  entity  that
directly or indirectly  controls,  is  controlled by or is under common  control
with the person or other entity  specified  (including  without  limitation  any
investment entity managed by the person or other entity specified or a person or
entity that  directly or indirectly  controls,  is controlled by or under common
control with the person or other entity specified).

(j) The  amounts  required  to be  paid  and the  benefits  required  to be made
available  to  the  Executive  under  this  Section  6 are  absolute.  Under  no
circumstances  shall  the  Executive,  upon the  termination  of his  employment
hereunder, be required to seek alternative employment and, in the event that the
Executive  does secure  other  employment,  no  compensation  or other  benefits
received  in  respect  of such  employment  shall be set-off or in any other way
limit or reduce the  obligations  of the Company and the  Subsidiary  under this
Section 6.

7.       Confidential Information.
(a)  The  Executive  acknowledges  that  the  Company  and its  subsidiaries  or
affiliated  ventures ("Company  Affiliates") own and have developed and compile,
and will in the future own, develop and compile certain Confidential Information
and that during the course of his rendering services to the Company Confidential
Information  has and will be disclosed  to the  Executive by the Company and its
Affiliates.  The  Executive  hereby  agrees  that,  during  the Term  (except as
required to conduct the business of the Company) and for a period of three years
thereafter,  he will not use or disclose,  furnish or make accessible to anyone,
directly  or  indirectly,  any  Confidential  Information  of the Company or its
Affiliates.

(b) As used herein, the term "Confidential Information" means any trade secrets,
confidential  or  proprietary   information,   or  other  knowledge,   know-how,
information,  documents or materials, owned, developed or possessed by a Company
Affiliate pertaining to its businesses the confidentiality of which such company
takes  reasonable  measures to  protect,  including,  but not limited to,  trade
secrets, techniques,  know-how (including designs, plans, procedures,  processes
and research records),  software, computer programs,  innovations,  discoveries,
improvements,  research,  developments,  test results, reports,  specifications,
data, formats, marketing data and business plans and strategies,  agreements and
other forms of documents,  expansion plans,  budgets,  projections,  and salary,
staffing and employment information. Notwithstanding the foregoing, Confidential
Information  shall not in any event include  information which (i) was generally
known or  generally  available  to the  public  prior to its  disclosure  to the
Executive,  (ii) becomes  generally  known or generally  available to the public
subsequent to its  disclosure  to the  Executive  through no wrongful act of the
Executive,  (iii) is or becomes  available to the  Executive  from sources other
than the Company  Affiliates  which sources are not known to the Executive to be
under any duty of confidentiality  with respect thereto or (iv) the Executive is
required to disclose by applicable law or regulation or by order of any court or
federal,  state or local  regulatory or  administrative  body (provided that the
Executive provides the Company with prior notice of the contemplated  disclosure
and reasonably  cooperates with the Company,  at the Company's sole expense,  in
seeking a protective order or other appropriate protection of such information).

8.       Restrictive Covenants.
(a) The Executive  agrees that during his employment  hereunder and for a period
of twelve months  thereafter  the Executive  will not,  directly or  indirectly,
engage or participate or make any financial investments in (other than ownership
of up to 5% of the aggregate of any class of securities  of any  corporation  if
such  securities  are listed on a national stock exchange or under section 12(g)
of the  Securities  Exchange  Act of 1934) or become  employed  by, or act as an
agent or principal  of, or render  advisory or other  management  services to or
for, any Competing Business in the Territory. As used herein the term "Competing
Business"  means any business then  conducted by the Company which produces over
10% of the  Company's  revenue and the term  "Territory"  means any state of the
United States or province of Canada or Mexico in which the Company  conducts its
business.  Notwithstanding the foregoing,  nothing in this Agreement shall limit
or prohibit the Executive from engaging in the Exempted Activities.

(b) The Executive  agrees that during his employment  hereunder and for a period
of twenty-four months thereafter he will not solicit, raid, entice or induce any
person that then is or at any time during the  twelve-month  period prior to the
end of the Term was an  employee of the  Company or a Company  Affiliate  (other
than a person whose  employment with such Company  Affiliate has been terminated
by  such  Company  Affiliate),  to  become  employed  by  any  person,  firm  or
corporation.

9.       Specific Performance.
(a) The Executive acknowledges that the services to be rendered by him hereunder
are of a special,  unique,  extraordinary  and personal  character  and that the
Company Affiliates would sustain irreparable harm in the event of a violation by
the  Executive  of Section 7 or 8 hereof.  Therefore,  in  addition to any other
remedies available, the Company shall be entitled to specific enforcement and/or
an injunction from any court of competent jurisdiction restraining the Executive
from  committing  or continuing  any such  violation of this  Agreement  without
proving actual damages or posting a bond or other security. Nothing herein shall
be  construed  as  prohibiting  the Company  from  pursuing  any other  remedies
available to it for such breach or threatened breach,  including the recovery of
damages.

(b) If any of the  restrictions  on  activities  of the  Executive  contained in
Sections  7 or  8  shall  for  any  reason  be  held  by a  court  of  competent
jurisdiction  to be  excessively  broad as to  duration,  geographical  scope or
activity of subject, such restrictions shall be construed so as thereafter to be
limited or reduced to be enforceable to the maximum extent  compatible  with the
applicable  law as it  shall  then  appear;  it  being  understood  that  by the
execution of this  Agreement  the parties  hereto  regard such  restrictions  as
reasonable and compatible with their respective rights.

(c)  Notwithstanding  anything in this  Agreement to the contrary,  in the event
that the Company  fails to make any payment of any amounts or provide any of the
benefits  to the  Executive  when due as  called  for  under  Section  6 of this
Agreement  and such  failure  shall  continue  for twenty (20) days after notice
thereof from the Executive,  all restrictions on the activities of the Executive
under Sections 7 and 8 shall be immediately and permanently terminated.

10.      Withholding.
The parties  agree that all payments to be made to the  Executive by the Company
pursuant  to the  Agreement  shall  be  subject  to all  applicable  withholding
obligations of such company.

11.      Notices.
All notices  required or  permitted  hereunder  shall be in writing and shall be
deemed  given and  received  when  delivered  personally,  four days after being
mailed if sent by registered or certified mail, postage pre-paid,  or by one day
after  delivery if sent by air courier (for next-day  delivery) with evidence of
receipt  thereof or by facsimile with receipt  confirmed by the addressee.  Such
notices shall be addressed respectively:


If to the Executive, to:
         Mr. Arthur Coffey
         13312 South Valley Chapel Road
         Valleyford, WA 99036

If to the Company,  to:
         WestCoast Hospitality Corporation
         201 W. North River Drive
         Spokane, WA  99201
         Attn:  Chairman of Board of Directors

With copy to:
         WestCoast Hospitality Corporation
         201 W. North River Drive
         Spokane, WA  99201
         Attn. Corporate Counsel

or to any other  address of which such party may have given  notice to the other
parties in the manner specified above.

12.      Miscellaneous.
(a) This  Agreement is a personal  contract  calling for the provision of unique
services by the Executive,  and the Executive's rights and obligations hereunder
may  not  be  sold,  transferred,  assigned,  pledged  or  hypothecated  by  the
Executive.  The rights and obligations of the Company  hereunder will be binding
upon and run in favor of their respective successors and assigns.

(b) This Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of Washington.

(c) Any  controversy  arising out of or relating to this Agreement or any breach
hereof  shall be settled  by  arbitration  in  Spokane,  Washington  by a single
neutral  arbitrator  who  shall be a retired  federal  or state  court  judge in
accordance  with the Commercial  Arbitration  Rules of the American  Arbitration
Association  and  judgment  upon any award  rendered may be entered in any court
having jurisdiction  thereof,  except in the event of a controversy  relating to
any alleged violation by the Executive of Section 7 or 8 hereof, the Company and
the  Subsidiary  shall be  entitled  to seek  injunctive  relief from a court of
competent jurisdiction without the requirement to seek arbitration.  In addition
to all other relief,  the  substantially  prevailing party in any arbitration or
court  action  shall be entitled  to their  reasonable  attorney  fees and costs
incurred  by reason of the  controversy  (including  any  appellate  review  and
bankruptcy or enforcement proceedings).

d) The headings of the various sections of this Agreement are for convenience of
reference  only and  shall not  define  or limit any of the terms or  provisions
hereof.

(e) The provisions of this Agreement  which by their terms call for  performance
subsequent  to the  expiration  or  termination  of the Term shall  survive such
expiration or termination.

(f) Upon the Effective Date, this Agreement  supersedes any existing  employment
agreements between the Employee and the Company and any of its Affiliates all of
which shall be terminated upon the Commencement Date of this Agreement.

IN WITNESS  WHEREOF,  the parties  hereto have executed this Agreement as of the
Effective Date first above written.

EXECUTIVE:                             COMPANY:
                                       WESTCOAST HOSPITALITY CORPORATION

/s/ Arthur M. Coffey                            /s/ Donald K. Barbieri
_______________________                by ______________________________________
Arthur M. Coffey                          On behalf of the Board of Directors

Exhibit 10.2
SECOND AMENDED AND RESTATED CREDIT AGREEMENT



                            Dated as of June 27, 2003


                                      among


                   WESTCOAST HOSPITALITY LIMITED PARTNERSHIP,


                         U.S. BANK NATIONAL ASSOCIATION
                            as Administrative Agent,


                                       and


                  THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO

                                TABLE OF CONTENTS


ARTICLE I.        DEFINITIONS..................................................1

         1.1      Certain Defined .............................................1
         1.2      Other Interpretive Provisions...............................18
         1.3      Accounting Principles.......................................19
         1.5      Amendment and Restatement of Initial Credit Agreement.......20
         1.6      Modification of Names.......................................20

ARTICLE II.       THE LOANS...................................................20

         2.1      Revolving Line of Credit....................................20
         2.2      Manner of Borrowing.........................................21
         2.3      Agent's Right to Fund.......................................21
         2.4      Loan Accounts...............................................22
         2.5      Mandatory Prepayments of Loans..............................22
                  (a)      Asset Dispositions.................................22
                  (b)      Event of Loss......................................22
                  (c)      General............................................23
         2.6      Repayment...................................................23
         2.7      Interest....................................................23
         2.8      Loan and Agency Fees........................................25
         2.9      Commitment Fees.............................................25
         2.10     Late Charge.................................................25
         2.11     Computation of Interest and Fees............................25
         2.12     Payments by the Borrower....................................26
         2.13     Sharing of Payments, Etc....................................26
         2.14     Security....................................................27
         2.15     Borrowing Base..............................................27
         2.16     No Prepayment Charges.......................................27

ARTICLE III.      REFINANCINGS................................................27

         3.1      Description of Refinancings.................................27
         3.2      Conveyance of Property and Release of Collateral............28
         3.3      No Modification of Refinancing Documents....................28
         3.4      Loans and Contributions to the LLCs.........................28
         3.5      No Further Loans; Guaranties................................28
         3.6      Required Distributions......................................29
         3.7      Waiver of Guaranties and Security Agreements................29
         3.8      Limitation on Liens.........................................29
         3.9      Contingent Obligations......................................29
         3.10     Refinancing of Eligible Real Property.......................29

ARTICLE IV.       TAXES, YIELD PROTECTION AND ILLEGALITY......................30

         4.1      Taxes.......................................................30
         4.2      Illegality..................................................31
         4.3      Increased Costs and Reduction of Return.....................31
         4.4      Inability to Determine Rates................................32
         4.5      Certificates of Lenders.....................................32
         4.6      Survival....................................................32

ARTICLE V.        CONDITIONS PRECEDENT........................................33

         5.1      Conditions of Initial Loans.................................33
                  (a)      Credit Agreement and Note..........................33
                  (b)      Resolutions; Incumbency............................33
                  (c)      Organization Documents; Good Standing..............33
                  (d)      Legal Opinions.....................................33
                  (e)      Payment of Fees....................................34
                  (f)      Collateral Documents...............................34
                  (g)      Insurance Policies.................................35
                  (h)      Certificate........................................35
                  (i)      Compliance Certificate.............................35
                  (j)      Real Property Refinancing..........................35
                  (k)      Other Documents....................................35
                  (l)      Payment of Indebtedness............................35
                  (m)      Eligible Real Property.............................36
         5.2      Conditions to Subsequent Loans..............................36
                  (a)      Interest Rate Notice...............................36
                  (b)      Notice of Borrowing; Reimbursement Agreement.......36
                  (c)      Continuation of Representations and Warranties.....36
                  (d)      No Existing Default................................36
                  (e)      Satisfaction of Previous Conditions................36
                  (f)      Further Assurances.................................36
         5.3      Conditions to Become Eligible Real Property.................37
         5.4      Existing Collateral Documents...............................39

ARTICLE VI.       REPRESENTATIONS AND WARRANTIES..............................39

         6.1      Existence and Power.........................................39
         6.2      Authorization; No Contravention.............................39
         6.3      Governmental Authorization..................................40
         6.4      Binding Effect..............................................40
         6.5      Litigation..................................................40
         6.6      No Default..................................................41
         6.7      ERISA Compliance............................................41
         6.8      Use of Proceeds; Margin Regulations.........................41
         6.9      Title to Properties.........................................42
         6.10     Taxes.......................................................42
         6.11     Financial Condition.........................................42
         6.12     Environmental Matters.......................................43
         6.13     Collateral Documents........................................43
         6.14     Regulated Entities..........................................44
         6.15     No Burdensome Restrictions..................................44
         6.16     Copyrights, Patents, Trademarks and Licenses, Etc...........44
         6.17     Subsidiaries................................................44
         6.18     Insurance...................................................45
         6.19     Solvency....................................................45
         6.20     Full Disclosure.............................................45

ARTICLE VII. AFFIRMATIVE COVENANTS............................................45

         7.1      Financial Statements........................................45
         7.2      Certificates; Other Information.............................46
         7.3      Notices.....................................................47
         7.4      Preservation of Existence, Etc..............................48
         7.5      Maintenance of Property.....................................49
         7.6      Insurance...................................................49
         7.7      Payment of Obligations......................................49
         7.8      Compliance With Laws........................................50
         7.9      Compliance With ERISA.......................................50
         7.10     Inspection of Property and Books and Records................50
         7.11     Environmental Laws..........................................50
         7.12     Use of Proceeds.............................................51
         7.13     Appraisals..................................................51
         7.14     Further Assurances..........................................51
         7.15     Minimum Number of Parcels...................................53

ARTICLE VIII.              NEGATIVE COVENANTS.................................53

         8.1      Limitation on Liens.........................................53
         8.2      Disposition of Assets.......................................55
         8.3      Consolidations and Mergers..................................56
         8.4      Loans and Investments.......................................56
         8.5      Limitation on Indebtedness..................................57
         8.6      Transactions With Affiliates................................57
         8.7      Use of Proceeds.............................................58
         8.8      Contingent Obligations......................................58
         8.9      Lease Obligations...........................................58
         8.10     Restricted Payments.........................................59
         8.11     ERISA.......................................................59
         8.12     Change in Business..........................................60
         8.13     Accounting Changes..........................................60
         8.14     Financial Covenants.........................................60
                  (a)      Recourse Funded Debt Ratio.........................60
                  (b)      Fixed Charge Coverage Ratio........................60
         8.15     Subordinated Debt...........................................60

ARTICLE IX.       EVENTS OF DEFAULT...........................................60

         9.1      Event of Default............................................60
                  (a)      Nonpayment.........................................60
                  (b)      Representation or Warranty.........................61
                  (c)      Specific Defaults..................................61
                  (d)      Other Defaults.....................................61
                  (e)      Cross-Default......................................61
                  (f)      Insolvency; Voluntary Proceedings..................62
                  (g)      Involuntary Proceedings............................62
                  (h)      ERISA..............................................62
                  (i)      Monetary Judgments.................................62
                  (j)      Nonmonetary Judgments..............................63
                  (k)      Adverse Change.....................................63
                  (l)      Invalidity of Subordination Provisions.............63
                  (m)      Collateral.........................................63
         9.2      Remedies....................................................63
         9.3      Rights Not Exclusive........................................64
         9.4      Certain Financial Covenant Defaults.........................64

ARTICLE X.        THE AGENT...................................................64

         10.1     Appointment and Authorization...............................64
         10.2     Delegation of Duties........................................65
         10.3     Liability of Agent..........................................65
         10.4     Reliance by Agent...........................................65
         10.5     Notice of Default...........................................66
         10.6     Credit Decision.............................................66
         10.7     Indemnification of Agent....................................67
         10.8     Agent in Individual Capacity................................67
         10.9     Successor Agent.............................................67
         10.10    Withholding Tax.............................................68
         10.11    Collateral Matters..........................................69

ARTICLE XI.       MISCELLANEOUS...............................................70

         11.1     Amendments and Waivers......................................70
         11.2     Notices.....................................................71
         11.3     No Waiver; Cumulative Remedies..............................71
         11.4     Costs and Expenses..........................................71
         11.5     Borrower Indemnification....................................72
         11.6     Marshalling; Payments Set Aside.............................73
         11.7     Successors and Assigns......................................73
         11.8     Assignments, Participations, Etc............................73
         11.9     Set-off.....................................................75
         11.10    Automatic Debits of Fees....................................75
         11.11    Notification of Addresses, Lending Offices, Etc.............75
         11.12    Counterparts................................................76
         11.13    Severability................................................76
         11.14    No Third Parties Benefited..................................76
         11.15    Conditions Not Fulfilled....................................76
         11.16    Governing Law and Jurisdiction..............................76
         11.17    Waiver of Jury Trial........................................77
         11.18    Statutory Notice............................................77
         11.19    Entire Agreement............................................77

SCHEDULES

Schedule 1.1         Eligible Real Property
Schedule 2.1         Commitments
Schedule 5.1(j)      Real Property to be Refinanced
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 11.2        Lending Offices, Addresses for Notices

EXHIBITS

Exhibit A         Form of Compliance Certificate
Exhibit B         Form of Interest Rate Notice
Exhibit C         Form of Note
Exhibit D         Form of Legal Opinion of Borrower's Counsel
Exhibit E         Form of Amendment to Deed of Trust
Exhibit F         Form of Assignment and Acceptance


                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

This SECOND AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of June 27,
2003,  among WESTCOAST  HOSPITALITY,  LIMITED  PARTNERSHIP,  a Delaware  limited
partnership (the "Borrower"), the 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.

                                    RECITALS

A. The  Borrower and certain of the Lenders  entered  into that  certain  Credit
Agreement dated as of May 5, 1998 (together with all amendments and restatements
to such Credit Agreement heretofore entered into, including, without limitation,
that certain  Amended and Restated  Credit  Agreement  dated as of  December 31,
1999, the "Initial Credit Agreement"),  pursuant to which such lenders agreed to
make available to the Borrower a secured  revolving loan facility upon the terms
and conditions set forth in the Initial Credit Agreement.

B. The Borrower has  requested to decrease the amount of the  commitment  of the
secured revolving loan facility provided for in the Initial Credit Agreement and
to make certain other  modifications  to the  provisions  of the Initial  Credit
Agreement.  The  purpose  of  this  Agreement  is to set  forth  the  terms  and
conditions upon which the Lenders have agreed to the Borrower's  requests and to
restate the  provisions of the Initial  Credit  Agreement in its entirety.  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,   (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,  or  (d) the  acquisition  of any  parcel  of real  property,
tenant's interest in any real property lease or ground lease, or the acquisition
of any hotel, motel or hospitality property.

"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 WHC 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.

"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  National  Association 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.

"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.

"Assignee" has the meaning specified in Section 11.8(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.
  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 Prime Rate Loans, having the same Loan Period.

"Borrowing  Base" means, on each day that any Loans are  outstanding,  an amount
equal to the lesser of (a) 60% of the Collateral  Pool Value or (b) the  Implied
Debt Service Coverage Cap.

"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.

"Cash Equivalents" means (a) 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, (b) 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  (c) 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.

"Cash Flow" means, during the relevant period, an amount equal to (a) the EBITDA
from a hotel and restaurant property that constitutes  Eligible Real Property or
with  respect  to which  the  Borrower  has  proposed  to become  Eligible  Real
Property,  less (b) a reserve for  maintenance  and capital  improvements  in an
amount equal to 4.5% of the aggregate of all amounts which,  in accordance  with
GAAP, would be included as gross revenue arising out of or related to such hotel
or restaurant property operations (including, without limitation, gross revenues
from the lease or licensing of space in such hotels or restaurants property).

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

"Closing  Date" means the date on which all  conditions  precedent  set forth in
Section 5.1 are satisfied or waived by the Agent.

"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,  WHC 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,  (a) the Security Agreements,  the
Deeds of Trust, and all other security agreements, pledge agreements, mortgages,
deeds of trust, patent and trademark assignments, lease assignments,  guarantees
and other similar agreements between the Borrower, WHC or any Subsidiary and the
Lenders or the Agent for the benefit of the Lenders now, heretofore 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,  WHC or any  Subsidiary as debtor in
favor of the  Lenders  or the Agent for the  benefit  of the  Lenders as secured
party,   and   (b) any   amendments,   supplements,   modifications,   renewals,
restatements, 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 $4,000,000.

"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 2.9,  then a
Commitment Fee Percentage of .50% shall apply:

        Level             Level I          Level II           Level III
    --------------     -------------   ---------------    -----------------
Recourse Funded Debt   less than 2.75  greater than or     greater than or
        Ratio                          equal to 2.75       equal to 3.5
                                       less than 3.5
- ----------------------- ------------- ------------------- -------------------
    Commitment Fee          .25%             .25%                .50%
      Percentage
- ----------------------- ------------- ------------------- -------------------

"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,  WHC
or a  Subsidiary  approved  by the  Agent in favor of the Agent as agent for the
Lenders pursuant to Section 5.3, in a form approved by the Agent, as well as all
amendments  to the  foregoing,  whether  any such  deed of  trust,  mortgage  or
amendment  thereto was  executed  pursuant to the Initial  Credit  Agreement  or
pursuant to this  Agreement.  The Deeds of Trust shall be in the form designated
by the Agent.

"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
Collateral.

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

"EBITDA"  means,  with respect to WHC 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
(a) Interest  Expense,  (b) federal,  state,  local and foreign income taxes and
(c) 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,  and
shall  include  expenses  that would have been  incurred  during the  applicable
period.  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 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 is described on Schedule 1.1 or that has been approved by
the Agent in writing in its sole  discretion  after the date of this  Agreement,
(b) the fee title interest of which is owned by WHC or a Subsidiary  approved by
the Agent (provided that in connection with the parcel or real property  located
in  Hillsboro,  Washington  County,  Oregon  , the  Borrower's  interest  in the
property  may be a  leasehold  interest  provided  that  the  Agent  receives  a
landlord's  consent  in a form  acceptable  to the  Agent),  (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,  (g) that  is not  encumbered  by any  Liens  other  than
Permitted  Liens,  and  (h) that  has  positive  Cash  Flow for the most  recent
trailing four fiscal quarters of the Borrower.

"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, WHC 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.

"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,  WHC 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,  WHC 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, WHC 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  property  encumbered  by a Deed of
Trust,  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 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 4.5% of the aggregate of all
amounts which, in accordance with GAAP,  would be included as gross revenue on a
consolidated  statement of income of WHC and its Subsidiaries  arising out of or
related to hotel or restaurant operations (including,  without limitation, gross
revenues  from  the  lease  or  licensing  of  space  in any of  the  hotels  or
restaurants of WHC and its Subsidiaries),  (iii) income and gross receipts taxes
paid in cash  or cash  equivalents,  (iv) Pro  Forma  Taxes,  (v) dividends  and
distributions paid in cash or cash equivalents  (including,  without limitation,
dividends paid on the Preferred Stock, but excluding  distributions of cash made
by the  Borrower  to WHC in an amount  necessary  to allow WHC to pay income and
gross receipts taxes on the taxable income of the Borrower that is recognized by
WHC for tax purposes and  excluding  distributions  made by any of the direct or
indirect  Subsidiaries of the Borrower to the Borrower or by the Tier II LLCs to
the Tier I  LLCs),  and  (vi) payments  made to redeem or otherwise  acquire for
value any partnership  units of the Borrower or shares of common stock of WHC or
any warrants,  rights or options to acquire such partnership  units or shares of
common stock to (b) for the applicable period, the sum of (i) scheduled payments
of principal on Indebtedness of WHC 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 2.5,  and (B)
balloon  payments made with the proceeds of Indebtedness  permitted  pursuant to
Section 8.5),  whether or not made,  (ii) Interest  Expense, and (iii) Pro Forma
Interest Expense.

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

"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.

"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 all guaranties  heretofore or hereafter executed by WHC and the
Subsidiaries  in favor  Agent as agent for the  Lenders in  connection  with the
Initial  Credit  Agreement or this  Agreement in forms  designated by the Agent,
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.

"Implied  Debt  Service"  means the  aggregate  amount of annual  principal  and
interest  payments that would be required to fully amortize the aggregate amount
of the  outstanding  principal  balance  of the Loans on the  measurement  date,
assuming  (a) an  interest  rate  equal to the  greater  of (i) 8%  or  (ii) the
interest rate reasonably  determined by Agent on ten-year United States Treasury
Bond  Equivalent  Yield Rate as of the  measurement  date plus 3.25%,  and (b) a
25-year amortization, with equal quarterly payments.

"Implied  Debt Service  Coverage  Cap" means the maximum  outstanding  aggregate
principal balance of the Loans such that  (a)(i) aggregate  EBITDA from Eligible
Real Property  (measured on a trailing  four-quarter  basis) less (ii) an amount
equal to 4.5% of the aggregate of all amounts  which,  in accordance  with GAAP,
would be included as gross revenue on a consolidated  statement of income of WHC
and its Subsidiaries arising out of or related to hotel or restaurant operations
of the Eligible Real Property  (including,  without  limitation,  gross revenues
from the  lease or  licensing  of space in any of the  Eligible  Real  Property)
equals or exceeds(b) Implied Debt Service by a ratio of 1.60:1.00.

"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  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 (i) all Guaranty Obligations in
respect of  indebtedness  or  obligations  of others of the kinds referred to in
clauses (a) through (g) above.

"Indemnification  Agreements" means the  indemnification  agreements executed by
WHC, the  Borrower  and/or  their  Subsidiaries  in favor Agent as agent for the
Lenders in connection with the Initial Credit Agreement or this Agreement,  in a
form designated by the Agent, together with all amendments thereto.

"Indemnified Liabilities" has the meaning specified in Section 11.5.

"Indemnified Person" has the meaning specified in Section 11.5.

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

"Interest  Differential" shall mean that sum equal to the greater of zero or the
financial loss incurred by Lenders resulting from prepayment,  calculated as the
difference  between the amount of interest  Lenders would have earned (from like
investments in the Money Markets as of the first day of the LIBOR Rate Loan) had
prepayment  not occurred and the interest  Lenders will actually earn (from like
investments  in the Money Markets as of the date of  prepayment)  as a result of
the redeployment of funds from the prepayment.

"Initial Credit Agreement" has the meaning specified in Recital 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 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 WHC 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 WHC and its  Subsidiaries),  (b) net costs or benefit under
Swap Contracts of WHC and its  Subsidiaries  and (c) the portion of any payments
made in respect of obligations  in respect of capitalized  leases of WHC 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 (a) the  default  rate as
provided  for in this  Agreement  or (b) the rate  otherwise  applicable  if the
Borrower had timely delivered its financial statements.

        Level               Level I             Level II            Level III
- -----------------------   ------------      ----------------     ---------------
 Recourse Funded Debt    less than 2.75     equal to or 2.75     equal to or
        Ratio                               greater than 2.75    greater than
                                            less than 3.5        3.5
- -----------------------   ------------      ----------------     ---------------
     Prime Margin             -0-                  25                  50
- -----------------------   ------------      ----------------     ---------------
     LIBOR Margin             250                 275                 300
- -----------------------   ------------      ----------------     ---------------

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.

"Interest  Payment Date" means, as to any Loan other than a Prime Rate Loan, the
last day of each Loan Period  applicable  to such Loan and, as to any Prime 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 Loan Period
for a LIBOR Rate Loan  exceeds  three  months,  the date that falls three months
after the  beginning  of such Loan Period and after each  Interest  Payment Date
thereafter is also an Interest Payment Date.

"Interest  Rate  Election  Date"  means  any  date  as of  which,  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 Loan  Period,  Loans
having Loan Periods expiring on such date.

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

"IRS"  means  the  Internal  Revenue  Service,  and any  Governmental  Authority
succeeding to any of its principal functions under the Code.

"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 11.2,  or such other office or offices
as the Lender may from time to time notify the Borrower and the Agent.

"LIBOR Rate Loan" has the meaning set forth in Section 2.7(a).

"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 Prime 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 Indemnification  Agreements and all
other documents delivered to the Agent or any Lender in connection herewith.

"Loan Period" means the period  commencing on the advance date of the applicable
LIBOR Rate Loan and ending on the numerically  corresponding day one, two, three
or six  months  thereafter  matching  the  interest  rate term  selected  by the
Borrower; provided, however, (a) if any Loan Period would otherwise end on a day
which is not a New York Banking Day,  then the Loan Period shall end on the next
succeeding New York Banking Day unless the next  succeeding New York Banking Day
falls in another  calendar month, in which case the Loan Period shall end on the
immediately  preceding New York Banking Day; or (b) if any Loan Period begins on
the last New York  Banking 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 the Loan
Period),  then the Loan Period shall end on the last New York Banking Day of the
calendar month at the end of such Loan Period.

"Margin Stock" means "margin stock" as such term is defined in  Regulation 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,  WHC  and its
Subsidiaries taken as a whole;  (b) a material  impairment of the ability of the
Borrower,  WHC 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,  WHC 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) June 30,  2005 and (ii) the  date the
Obligations are accelerated pursuant to Section 9.2 hereof.

"Money  Markets" refers to one or more wholesale  funding  markets  available to
U.S. Bank,  including  negotiable  certificates  of deposit,  commercial  paper,
eurodollar deposits, bank notes, federal funds, interest rate swaps or others.

"Multiemployer  Plan"  means a  "multiemployer  plan,"  within  the  meaning  of
Section 4001(a)(3)  of ERISA, to which the Borrower,  WHC 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.

"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.

"New York  Banking Day" means any day (other than a Saturday or Sunday) on which
commercial banks are open for business in New York, New York.

"Nonrecourse  Indebtedness" means Indebtedness with respect to which there is no
recourse to any of the assets of the Borrower,  WHC or any Subsidiary other than
the  assets  encumbered  by a  Permitted  Lien (as  evidenced  by  documentation
provided  to and  approved  by the  Agent),  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 C, 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,  obligations, covenants and
duties arising under any Loan or Loan Document owing by the Borrower, WHC 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.

"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 11.8(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.

"Preferred Stock" means the Series A and Series B  preferred stock issued by WHC
as a portion of the consideration paid by WHC for the Red Lion Stock Purchase.

"Prime Rate Loan" has the meaning set forth in Section 2.7(a).

"Pro  Forma  Interest  Expense"  means  Interest  Expense  that  would have been
incurred  by  WHC  or  any  of its  Subsidiaries  on  Indebtedness  incurred  in
connection with any Acquisition during the applicable period if such Acquisition
had been  completed  and such  Indebtedness  incurred  on the  first  day of the
applicable  period.  If such  Indebtedness  has a floating  or  formula  rate of
interest, for purposes of this definition,  the implied rate of interest for the
applicable period shall be determined by utilizing the rate which is or would be
in  effect  with  respect  to  such  Indebtedness  as of the  relevant  date  of
determination.

"Pro Forma  Taxes" means  income and gross  receipts  taxes that would have been
payable in cash or cash equivalents  during the applicable period by WHC and its
Subsidiaries  (including  the  acquired  Person)  on the net  income  and  gross
receipts  of any  Person  acquired  by WHC  or  any  of its  Subsidiaries  in an
Acquisition  if such  Acquisition  had been  completed  on the  first day of the
applicable period.

"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.

"Recourse Funded Debt Ratio" means the ratio of (a) the  Indebtedness of WHC and
its Subsidiaries as of the last day of the applicable period,  excluding (i) all
Subordinated   Debt,   and   (ii) all   Nonrecourse   Indebtedness,   and   less
(iii) Unrestricted  Cash to (b) EBITDA for the applicable period,  excluding all
components of EBITDA  arising from any property that is encumbered to secure the
Indebtedness described in clauses (i) and (ii) above.

"Red Lion Purchase Agreement" means that certain Purchase Agreement entered into
among WHC,  Doubletree  Corporation  and Hilton Hotels  Corporation  dated as of
December 21,  2001,  whereby  WHC  agreed  to  acquire  all  of the  issued  and
outstanding capital stock of Red Lion Hotels, Inc.

"Refinanced Properties" has the meaning specified in Section 3.2.

"Refinancings" has the meaning specified in Section 3.1.

"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 50% 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 50% 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 all security  agreements  heretofore  or hereafter
executed by the  Borrower,  WHC and the  Subsidiaries  and in favor the Agent as
agent for the  benefit of the  Lenders in  connection  with the  Initial  Credit
Agreement or this Agreement in forms designated by the Agent,  together with all
amendments and restatements of the foregoing.

"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 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 WHC which is
subordinated  to the  Obligations  of the  Borrower,  WHC 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 WHC.

"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.

"Tier I LLC" has the meaning specified in Section 3.1.

"Tier II LLC" has the meaning specified in Section 3.1.

"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 of Trust  against the real  property
described therein, in an amount equal to or greater than (a) 60% of the Approved
Appraised Value if the real property described therein is Eligible Real Property
or (b) 60% of the Agent's  estimate of fair  market  value of the real  property
described  therein,  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.

"Unrestricted  Cash" means cash and Cash  Equivalents that are not encumbered by
any Liens other than Liens for the benefit of Agent or Lenders.

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

"WHC" means WestCoast Hospitality Corporation, a Washington corporation, and its
successors.

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.

(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,  WHC 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 any Person  has  existing  Subsidiaries  (as  defined  herein).
Notwithstanding  any provisions of this  Amendment to the contrary,  each of the
Tier I LLCs  and the  Tier II  LLCs  shall  constitute  a  "Subsidiary"  for all
purposes  under the  provisions  of the  Credit  Agreement  and the  other  Loan
Documents.

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 WHC (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  WHC'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 WHC shall be deemed  to be in  compliance  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  WHC  with  the  Financial
Covenants  contained in Section 8.14  will be calculated in accordance with GAAP
as in effect immediately before such change.

1.5 Amendment and Restatement of Initial Credit Agreement
Upon  execution  of this  Agreement  and the  exhibits to this  Agreement  to be
executed concurrently with the execution of this Agreement, and the satisfaction
of the conditions  precedent to the initial  Funding under this  Agreement,  the
Initial Credit  Agreement shall be deemed amended and superseded in its entirety
by this  Agreement.  All promissory  notes signed by Borrower in connection with
the Initial Credit Agreement shall be marked "renewed" and retained by the Agent
until all of the  Loans  are  repaid  in full and the  Lenders'  commitments  to
advance additional Loans have terminated.

1.6  Modification  of Names
(a).  In  recognition  of the name  change  of  Cavanaughs  Hospitality  Limited
Partnership to WestCoast Hospitality, Limited Partnership, all references in the
Loan  Documents  to  "Cavanaughs  Hospitality  Limited  Partnership"  are hereby
amended to "WestCoast  Hospitality,  Limited  Partnership" and all references in
the Loan  Documents  to "CHC" are hereby  amended to  constitute  references  to
"WHC."

(b). In recognition of the name change of Cavanaughs Hospitality  Corporation to
WestCoast  Hospitality  Corporation,  all  references  in the Loan  Documents to
"Cavanaughs   Hospitality   Corporation"   are  hereby   amended  to  "WestCoast
Hospitality Corporation."

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  such  Lender's  Pro Rata  Share of the
Commitment.  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.

(c). The Loans advanced under this Agreement  shall  constitute a renewal of the
loans outstanding under the Initial Credit Agreement.

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
Prime 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  two  Business  Days  prior  to the  requested  date  of
borrowing.  Requests for 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.

2.4 Loan Accounts
The Loans 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. The Note is a renewal of the promissory note executed by the Borrower
in  connection  with  the  Initial  Credit  Agreement,  as well as all  renewals
thereof.

2.5 Mandatory Prepayments of Loans
(a) Asset Dispositions
If the Borrower,  WHC 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,  WHC or such  Subsidiary in respect
thereof)  and  (ii) concurrently  with  receipt  by  the  Borrower,  WHC  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.
(b) Event of Loss
If the Borrower,  WHC 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,  WHC or such  Subsidiary  in  respect  thereof)  and
(ii) promptly upon, and in no event later than two Business Days after,  receipt
by the  Borrower,  WHC 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) General
Any prepayments pursuant to this Section 2.5 shall be applied first to any Prime
Rate Loans then  outstanding and then to LIBOR Rate Loans with the shortest Loan
Periods  remaining;  provided,  however,  that if the amount of Prime 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 Loan Period therefor in an interest-bearing account pledged to the Agent for
the benefit of the Lenders  until the end of such Loan 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 2.5,  accrued
interest  on  the  amount   prepaid  and  any  amounts   required   pursuant  to
Section 2.7(a).

2.6 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 is equal to or less than the lesser
of (i) the amount of the then applicable  Commitment or (ii) the Borrowing Base.
(b). For not fewer than 30 consecutive  days during each 12-month  period during
the term of this Agreement and any extensions thereof,  the Borrower shall repay
to the Lenders from time to time such  amounts of principal  and shall take such
other steps as may be necessary to reduce the sum of the  outstanding  principal
balance of the Commitment to zero.
(c). The Borrower  shall repay the Loans in full,  together with all accrued and
unpaid interest thereon, on the Maturity Date.

2.7 Interest
(a). Interest on the outstanding  principal balance of the Loans shall accrue at
one of the following per annum rates selected by the Borrower (i) upon notice to
the Agent  (or in the event no other  selection  is made by the  Borrower),  the
Interest Margin plus the prime rate announced by the Agent from time to time, as
and when such rate changes (a "Prime Rate Loan");  or (ii) upon a minimum of two
New York Banking Days prior notice, the Interest Margin plus the one, two, three
or  six-month  LIBOR rate quoted by  U.S. Bank  from  Telerate  Page 3750 or any
successor  thereto (which shall be the LIBOR rate in effect two New York Banking
Days prior to commencement of the advance), adjusted for any reserve requirement
and any  subsequent  costs  arising from a change in  government  regulation  (a
"LIBOR Rate Loan").  No LIBOR Rate Loan may extend beyond the Maturity  Date. In
any event,  if the Loan  Period for a LIBOR  Rate Loan  should  happen to extend
beyond the Maturity  Date,  such loan must be prepaid on the Maturity Date. If a
LIBOR  Rate Loan is prepaid  prior to the end of the Loan  Period for such loan,
whether  voluntarily  or because  prepayment is required on the Maturity Date or
due to acceleration  upon an Event of Default or otherwise,  the Borrower agrees
to pay all of Lenders' costs,  expenses and Interest Differential (as determined
by the Agent) incurred as a result of such prepayment. Because of the short-term
nature of this  facility,  the Borrower  agrees that the  Interest  Differential
shall not be discounted  to its present  value.  Any  prepayment of a LIBOR Rate
Loan shall be in an amount equal to the remaining  entire  principal  balance of
such loan.

(b). In the event the Borrower  does not timely  select  another  interest  rate
option at least two New York  Banking Days before the end of the Loan Period for
a LIBOR  Rate Loan,  the Agent may at any time after the end of the Loan  Period
convert the LIBOR Rate Loan to a Prime Rate Loan, but until such conversion, the
funds advanced  under the LIBOR Rate Loan shall  continue to accrue  interest at
the same rate as the  interest  rate in effect for such LIBOR Rate Loan prior to
the end of the Loan Period.

(c).  The  Agent's  internal  records  of  applicable  interest  rates  shall be
determinative in the absence of manifest error.

(d). Each LIBOR Rate Loan shall be in a minimum principal amount of $500,000.

(e).  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.

(f).  There may not be more than four  different  Loan  Periods in effect at any
time.

(g).  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 2.5 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.

(h). 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  otherwise  applicable  under  this
Agreement.

(i).  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.

2.8 Loan and Agency Fees
The Borrower shall pay Lenders a loan fee in the amount of $25,000  concurrently
with the execution of this Agreement.

2.9 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 in the amount equal to Commitment Fee Percentage per
annum of the average unused portion of the Commitment  during each period, to be
calculated based upon the amount of the Commitment during such period,  less the
sum of the  average  outstanding  principal  balance  of all Loans  during  such
period.  The fee paid pursuant to this Section 2.9  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.

2.10 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.

2.11 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.

2.12 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,  and  shall  be made  in  dollars  and in  immediately
available  funds, no later than 10:00 a.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 a.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 "Loan  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 amounts in default on any Loan, if any;
fourth,  against interest due on any Loan; fifth, against Loan principal amounts
in default; and sixth, against Loan principal.

2.13 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 11.9)  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.

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

2.15 Borrowing Base
(a) The sum of the  outstanding  balance of  principal  of the Loans 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 $1,000,000 in the aggregate.
(c) If at any time the  outstanding  balance  of  principal  of the Loans  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.

2.16 No Prepayment Charges
Except as provided in  Section 2.7(a),  the  Borrower may pay or prepay any Loan
without charge.

ARTICLE III.      REFINANCINGS

3.1 Description of Refinancings
The  Borrower  has  refinanced  and may in the future  refinance a number of its
hotel  properties  through  special  purpose,  bankruptcy  remote  entities (the
"Refinancings"),  pursuant to which the Borrower has formed or intends to form a
Delaware limited  liability company for each of the properties to be refinanced,
each of which shall be a wholly owned  Subsidiary  of the Borrower  (the "Tier I
LLCs").  Each Tier I Subsidiary has formed or intends to form a Delaware limited
liability  company  that shall be a wholly owned  Subsidiary  of such Tier I LLC
(the  "Tier II  LLCs").  Each property  refinanced or to be refinanced  has been
contributed  or is to be contributed to the Tier I LLC formed for such property.
The Tier I  LLC formed for each  property  refinanced  or to be  refinanced  has
contributed  or is to contribute  such property to its  respective  Tier II LLC.
Each  Refinancing  loan has  been  made or is to be made to a  Tier II  LLC on a
nonrecourse  basis and secured only by the property  contributed to such Tier II
LLC.

3.2 Conveyance of Property and Release of Collateral
In order to accommodate future Refinancings, subject to the terms and conditions
of this  Agreement,  and provided that there exists no Event of Default and that
after giving effect to any proposed  Refinancing  there would no exist any Event
of Default,  the Lenders hereby consent to (a) the  reconveyance of any Deeds of
Trust  that  encumber  the  real  property  and  improvements   refinanced  (the
"Refinanced  Properties")   concurrently  with  the  refinancing  of  each  such
Refinanced Property and (b) the contribution of the Refinanced Properties by the
Borrower to the respective  Tier I LLCs and the  contribution  of the Refinanced
Properties by the Tier I LLCs to the respective  Tier II LLCs  concurrently with
or immediately  preceding the refinancing of each such Refinanced  Property.  To
the  extent  of the  contributions  described  in  clause  (b)  of the  previous
sentence, the Lenders hereby waive the provisions of Section 8.2(a), 8.4 and 8.6
of the Credit Agreement.

3.3 No Modification of Refinancing Documents
Without  the  prior  written  consent  of the  Agent,  none  of the  agreements,
instruments or other documents  arising out of any Refinancing shall be amended,
modified or replaced after the date of the initial  funding of such  Refinancing
in any manner  that  modifies  the  nonrecourse  status of such  Refinancing  or
increases the amount of the Refinancing.

3.4 Loans and Contributions to the LLCs
(a)  Unless  there  exists a Default or an Event of  Default,  the  Borrower  is
permitted to make loans or  contributions of capital to the Tier II LLCs (either
directly or  indirectly  through  the Tier I  LLCs) in amounts not to exceed the
amounts  determined  by the  Borrower  to be  reasonably  necessary  to (i) fund
working  capital  needs not met by the operating  cash flow from the  respective
property  and  (ii) fund  capital  expenditures  that  cannot  be  funded by the
operating cash flow from the respective property.
(b) Notwithstanding the provisions of Section 3.5(a), the Borrower shall not use
any proceeds of the Loans to fund loans or capital  contributions  to the Tier I
LLCs or the Tier II LLCs.

3.5 No Further Loans; Guaranties
(a) With the exception of the Refinancings and loans from the Borrower permitted
pursuant to  Section 3.4(a)  of this  Amendment,  none of the Tier I LLCs or the
Tier II LLCs shall incur any Indebtedness except  Indebtedness  incurred by each
Tier II  LLC in the  ordinary  course of its  business  and in an amount  not to
exceed 4% of the initial amount of the Refinancing made to such Tier II LLC.
(b) The  Borrower  shall  not  suffer or permit  any of the  Tier I  LLCs or the
Tier II  LLCs to,  create,  incur,  assume or  suffer  to exist  any  Contingent
Obligations.

3.6 Required Distributions
The Borrower  shall cause the Tier I LLCs and the Tier II LLCs to  distribute to
the Borrower (in the case of the Tier II  LLCs,  through the Tier I  LLCs),  not
less  frequently  than  quarterly,  all cash in excess of that  necessary in the
reasonable  opinion of the Borrower to meet short term working capital needs and
short term capital expenditure needs of the Tier II LLCs.

3.7 Waiver of Guaranties and Security Agreements
Notwithstanding the provisions of  Section 7.14(d),  (a) neither the Tier I LLCs
nor Tier II LLCs shall be required to guarantee the  obligations of the Borrower
under the this Agreement,  (b) neither the Tier I LLCs nor Tier II LLCs shall be
required to grant the Lenders a security  interest in their assets to secure the
obligations of the Borrower under the Credit  Agreement,  (c) the Borrower shall
not be required  to pledge the  membership  interests  of the Tier I LLCs to the
Lenders,  and (d) the Tier I LLCs shall not be required to pledge the membership
interests of the Tier II LLCs to the Lenders.

3.8 Limitation on Liens
Notwithstanding  the  provisions  of  Section 8.1,  the  Lenders  consent to the
Tier II LLCs  encumbering  each  Refinanced  Property in order to consummate the
Refinancing of such Refinanced Property.

3.9 Contingent Obligations
Notwithstanding  the  provisions  of  Section 8.8,  the  Lenders  consent to the
Borrower  executing  and  delivering  to the lenders  under the  Refinancings  a
guaranty of the exceptions to nonrecourse provisions under the Refinancings.

3.10 Refinancing of Eligible Real Property
The  Lenders  hereby  approve  the  refinancing  by the  Borrower of one or more
parcels  of  the  Eligible  Real  Property  and  the  concurrent  or  subsequent
reconveyance  of the  Eligible  Real  Property  refinanced  from the lien of the
respective  Deed of Trust,  provided  that (a) the Agent shall have approved all
terms and conditions of each such refinancing in writing,  (b) concurrently with
the completion of any such  refinancing,  the Borrower apply to the  outstanding
principal  balance of the Loans all proceeds from each such  refinancing  net of
the  direct   out-of-pocket   costs  to  the  Borrower  relating  to  each  such
refinancing,  and  (c) after  giving effect to each  proposed  refinancing,  the
Borrower shall be in compliance with the Borrowing Base.

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.
(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 2.7(a),  either  on the  last  day of the  Loan  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 Prime 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 Prime 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.

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 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 Loan Period with respect
to a proposed  LIBOR Rate Loan,  or that the LIBOR Rate  applicable  pursuant to
Section 2.7(a)  for any requested  Loan 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 Prime Rate Loans instead of
LIBOR Rate Loans.

4.5 Certificates of Lenders
Any Lender  claiming  reimbursement  or  compensation  under this  Article IV or
Section 2.7(a)  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.

4.6 Survival
The agreements and obligations of the Borrower in this Article IV  shall survive
this payment of all other Obligations.

ARTICLE V.        CONDITIONS PRECEDENT

5.1 Conditions of Initial Loans
The obligation of each Lender under this Agreement and the effectiveness of this
Agreement are 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,  WHC 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,  WHC
and each  Subsidiary  that may become party to a Loan  Document  certifying  the
names  and  true  signatures  of the  officers  of  the  Borrower,  WHC 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, WHC 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, WHC or such Subsidiary as of the Closing
Date; and
(ii) a good standing certificate for the Borrower, WHC and each Subsidiary party
to any  Loan  Document  from the  Secretary  of State  (or  similar,  applicable
Governmental Authority) of its state of organization as of a recent date;
(d) Legal Opinions
An opinion of counsel to the Borrower and WHC 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 D;

(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 under the Initial  Credit  Agreement
and this Agreement accrued as of 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 2.8
and 11.4;

(f) Collateral Documents
The Collateral Documents,  executed by the Borrower, WHC 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;
(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;
(vi) amendments to all Deeds of Trust  heretofore  executed and delivered to the
Agent, which amendments shall be substantially in the form of Exhibit E; and
(vii)  the  issuance  of  such  endorsements  to  each  Title  Insurance  Policy
heretofore  issued in  connection  with the  Deeds of Trust 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 the amendment
to each Deed of Trust, and in a form acceptable to the Agent.

(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; and
(iii) there has occurred since March 31, 2003, 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) Real Property Refinancing
Evidence  acceptable to the Agent that prior to or concurrently with the initial
advance to the Borrower  under the Loans,  the Borrower will have  completed the
refinancing of the real property  described in Schedule 5.1(j) on such terms and
conditions and pursuant to such  agreements and other documents that comply with
Article III and Section 5.1(l);

(k) Other Documents
Such other  approvals,  opinions,  documents  or  materials  as the Agent or any
Lender may request;

(l) Payment of Indebtedness
(i) Reduction in the sum of the outstanding principal balance of the Loans to an
amount  equal to or less than the lesser of (A) the  Borrowing  Base and (B) the
amount of the Commitment; and
(ii) Evidence that all other  Indebtedness not permitted by Section 8.5 has been
paid in full;

(m) 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,  or the Lenders to
continue or convert any Loan under Section 2.7 after the initial Loans have been
advanced 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 Loan 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 calculating the Borrowing Base;

(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 or date of Notice of Borrowing  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 or making of Loans;

(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 or Notice of Borrowing (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 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), attorneys' fees (if any) and 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;
(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,  (C) 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 as of a
recent date; and
(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.

5.4 Existing Collateral Documents
The Borrower acknowledges and agrees that all of the "Collateral  Documents" (as
such term is defined in the Initial Credit Agreement)  executed and delivered in
connection  with the Initial Credit  Agreement  shall remain in effect and shall
secure  payment and  performance  of the  obligations of the Borrower under this
Agreement,  the Loans and the Loan  Documents.  The Borrower hereby ratifies and
reaffirms all of its obligations under such "Collateral Documents."

ARTICLE VI.       REPRESENTATIONS AND WARRANTIES

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

6.1 Existence and Power
The Borrower, WHC 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,   WHC  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.

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,  WHC 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, WHC or any of
their   Subsidiaries  is  a  party  constitute  the  legal,  valid  and  binding
obligations of the Borrower,  WHC 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, WHC 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,  WHC 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,  WHC 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,  WHC nor any  Subsidiary is in default
under or with  respect  to any  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.l(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,  WHC 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, WHC
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,  WHC 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, WHC 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.

6.9 Title to Properties
The Borrower,  WHC 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,  WHC and
its Subsidiaries is subject to no Liens,  other than Permitted Liens. All assets
held in the name of WHC are held for the benefit of and the beneficial  interest
in all such assets is owned by the Borrower.

6.10 Taxes
The Borrower, WHC 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,  WHC or any
Subsidiary that would, if made, have a Material Adverse Effect.

6.11 Financial Condition
(a) The audited  consolidated  financial  statements of WHC and its Subsidiaries
dated  December 31,   2002,  and  the  consolidated   statements  of  income  or
operations,  shareholders' equity and cash flows for the fiscal quarter ended on
March 31, 2003:
(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 WHC and its  Subsidiaries as
of the dates thereof and results of operations for the periods 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, WHC
and  their  consolidated  Subsidiaries  as  of  the  dates  thereof,   including
liabilities for taxes, material commitments and Contingent Obligations.

(b) Since March 31, 2003, there has been no Material Adverse Effect.

6.12 Environmental Matters
(a) Except as specifically  disclosed in Schedule 6.12,  the on-going operations
of the Borrower,  WHC 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,  WHC 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,  WHC 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, WHC
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,  WHC or any  Subsidiary,  or arising from  operations
prior to the Closing  Date, of the  Borrower,  WHC or any of their  Subsidiaries
that would  reasonably be expected to give rive to  Environmental  Claims with a
potential  liability of the Borrower,  WHC and their  Subsidiaries  in excess of
$500,000 in the aggregate for any such condition,  circumstance or property.  In
addition,  (i) neither the Borrower,  WHC 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, WHC 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,
WHC and their  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,  WHC and any of their
Subsidiaries  party thereto  contained in the Collateral  Documents are true and
correct.

6.14 Regulated Entities
None of the Borrower,  WHC, any Person  controlling  the Borrower or WHC, 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,  WHC 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,  WHC 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,  WHC 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.

6.17 Subsidiaries
The  Borrower  and WHC  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,  WHC 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, WHC or such Subsidiary operates.

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

6.20 Full Disclosure
None of the  representations  or  warranties  made by the  Borrower,  WHC 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, WHC 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 any Loan 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:
(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,
WHC  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 BDO Seidman, LLP
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, WHC'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, WHC 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, WHC 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,  WHC 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  and each  parcel of real  property
encumbered by a Deed of Trust 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.

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 and a worksheet showing the calculation of the Financial Covenants;
(c) promptly,  copies of all financial  statements and reports that the Borrower
or WHC 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, WHC 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,  WHC 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,  WHC 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,  WHC 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, WHC or any Subsidiary (i) in which the amount
of damages  claimed is  $1,000,000  (or its  equivalent  in another  currency or
currencies)  or more if any  potential  loss is not fully  covered by  insurance
(subject to reasonable deductibles), (ii) in which the amount of damages claimed
is $5,000,000 (or its  equivalent in another  currency or currencies) or more if
any potential loss is fully covered by 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,  WHC 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,  WHC 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,  WHC 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 WHC,  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, WHC or any of its consolidated Subsidiaries.

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, WHC 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 WHC 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 WHC 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 WHC 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'  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,
WHC 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 WHC 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, WHC 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 WHC 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 WHC 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.

7.10 Inspection of Property and Books and Records
The Borrower shall  maintain and shall cause WHC 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,  WHC and such Subsidiary.  The Borrower shall permit,  and shall cause
WHC 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 WHC 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 WHC 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,  funding
operations,  and other general  business  purposes not in  contravention  of any
Requirement of Law or of any Loan Document;  provided that all proceeds shall be
used for the benefit of the Borrower.

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.

(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  WHC 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, (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 WHC 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,  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 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,  WHC
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,  WHC
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,  WHC 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, there shall be not fewer than
three parcels of Eligible Real Property.

ARTICLE VIII.     NEGATIVE COVENANTS

So long as any Lender shall have any  Commitment  to make Loans,  or any Loan 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 WHC 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 WHC),  whether  now  owned or
hereafter acquired, other than the following ("Permitted Liens"):

(a) any Lien (other than a Lien on the  Collateral)  existing on property of the
Borrower,  WHC or any  Subsidiary  on the  Closing  Date  that is  described  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,
WHC or their Subsidiaries  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, WHC 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,  WHC 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;

(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, WHC 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, WHC or any Subsidiary
to provide collateral to the depository institution;

(m) Liens on real  property  used  primarily  in the  hospitality  business  and
acquired by the Borrower,  WHC 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, (ii) such
Lien attaches solely to such real property and personal property located on such
real  property,  as well as proceeds  thereof,  and  (iii) such  Acquisition  is
approved in writing by the Required Lenders; and

(n) Liens on real  property that (i) was  acquired by the  Borrower,  WHC 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 WHC,  and  (iii) is  not
encumbered by any Deed of Trust; provided that (iv) any such Lien is approved by
the Required Lenders and (v) such Lien attaches solely to such real property and
personal property located on such real property, as well as proceeds thereof.

8.2 Disposition of Assets
(a) The Borrower shall not, and shall not suffer or permit WHC 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 2.5, to the purchase price of such replacement equipment; and
(iii) the sale of assets (including, without limitation, Eligible Real Property)
for cash at a price  equal to or  greater  than  the fair  market  value of such
assets,  provided that prior to or concurrently  with the completion of any such
sale of  Collateral,  the Borrower  shall repay the Loans in amount equal to the
Net Proceeds from such sale of assets.

(b)  Notwithstanding  the  provisions of  Section 8.2(a)  to the  contrary,  the
Borrower  shall not,  and shall not suffer or permit WHC or any  Subsidiary  to,
directly or  indirectly,  sell,  assign,  lease,  convey,  transfer or otherwise
dispose of (whether in one transaction 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 WHC 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 WHC,  provided  that the
Borrower  or WHC (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

(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 WHC 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, WHC or any Subsidiary to any direct or
indirect wholly-owned Subsidiaries of Borrower or WHC; and

(d)  investments  made  in  connection  with  and   constituting   part  of  the
consideration  paid for Acquisitions to the extent that (i) any such Acquisition
is not prohibited under  Section 8.7,  and (ii) any such Acquisition is approved
in  writing by the  Required  Lenders;  provided  that no  Acquisition  shall be
consummated  by the  Borrower,  WHC 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;  and  provided
further  that  Acquisitions  described in  Section 8.7(f)  shall not require the
written approval by the Required Lenders.

8.5 Limitation on Indebtedness
The Borrower shall not, and shall not suffer or permit WHC 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 that is described 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;

(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);

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

(h) Guaranty Obligations permitted under Section 8.4(e).

8.6 Transactions With Affiliates
The Borrower shall not, and shall not suffer or permit WHC 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,  WHC or such Subsidiary
than would obtain in a comparable arm's-length  transaction with a Person not an
Affiliate of the Borrower, WHC or such Subsidiary.

8.7 Use of Proceeds
The Borrower shall not, and shall not suffer or permit WHC 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 WHC; provided that Loan proceeds may be
used to redeem  Preferred  Stock to the extent  that WHC is not  precluded  from
redeeming  Preferred  Stock  by the  provisions  of this  Agreement  (including,
without   limitation,   Section 8.10),   (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 purpose 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,  or (f) to  finance  or  refinance  the
acquisition of any interest in real property  (including  leasehold interests in
real property and improvements) or the acquisition of any Person.

8.8 Contingent Obligations
The Borrower shall not, and shall not suffer or permit WHC 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;

(b) Swap Contracts  entered into in the ordinary course of business as bona fide
hedging transactions;

(c) Contingent  Obligations of the Borrower, WHC and their Subsidiaries existing
as of the Closing Date that are described in Schedule 8.8; and

(d) Contingent  Obligations  of the Borrower,  WHC and their  Subsidiaries  with
respect to which the  contingent  liability  of the  Borrower,  WHC and/or their
Subsidiaries  (as the  case  may be) is  supported  by a  letter  of  credit  or
indemnity  issued  to or for the  benefit  of the  Borrower,  WHC  and/or  their
Subsidiaries  (as the case may be), which letter of credit or indemnity has been
approved in writing by the Required Lenders.

8.9 Lease Obligations
The Borrower shall not, and shall not suffer or permit WHC 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,  WHC and of the  Subsidiaries to finance the
acquisition of equipment; and

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

8.10 Restricted Payments
The Borrower shall not, and shall not suffer or permit WHC 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,  partnership units or other ownership  interests
(as the case may be), or  purchase,  redeem or  otherwise  acquire for value any
shares of its capital stock partnership  units or other ownership  interests (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) WHC 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
WHC 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) WHC 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) the Agent shall have
received and approved a pro forma  calculation of the Financial  Covenants dated
as of the end of the fiscal quarter of the Borrower immediately  preceeding that
in which  the  proposed  payment  of the  dividend,  distribution,  purchase  or
redemption  is to be made  reflecting  pro forma  compliance  with the Financial
Covenants as of such date, (iv) the Agent shall have received and approved a pro
forma  calculation of the Financial  Covenants dated as of the end on the fiscal
quarter  of the  Borrower  in  which  the  proposed  payment  of  the  dividend,
distribution,  purchase  or  redemption  is  to be  made  reflecting  pro  forma
compliance with the Financial  Covenants as of such date, and  (v) purchases and
redemptions  of the common stock of WHC on and after  June 30,  2002,  shall not
exceed  $5,000,000 in the aggregate,  (d) WHC may issue stock to partners of the
Borrower in exchange for partnership units of the Borrower,  (e) any  Subsidiary
other than the Borrower may pay  dividends and make  distributions  to WHC or to
any  Subsidiary  that  owns and  controls  more  than 50% of the  voting  stock,
membership interests or other equity interests of the Person paying the dividend
or making the  distribution,  and (f) Tier I LLCs may make  distributions to the
Tier II LLCs and the Tier II LLCs may make distributions to the Borrower.

8.11 ERISA
The Borrower  shall not,  and shall not suffer or permit any ERISA  Affiliate of
the Borrower or WHC 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 WHC or any Subsidiary to,
engage in any material line of business substantially different from those lines
of business carried on by the Borrower,  WHC and their  Subsidiaries on the date
hereof.

8.13 Accounting Changes
The Borrower shall not, and shall not suffer or permit WHC 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, WHC or of
any Subsidiary.

8.14 Financial Covenants
(a) Recourse Funded Debt Ratio
As of the end of each fiscal  quarter for the four fiscal  quarters  then ended,
commencing  with the fiscal quarter ending  June 30,  2003, the Recourse  Funded
Debt Ratio shall not exceed 4.25:1.00.

(b) Fixed Charge Coverage Ratio
As of the end of each fiscal  quarter for the four fiscal  quarters  then ended,
commencing  with the fiscal  quarter  ending  June 30,  2003,  the Fixed  Charge
Coverage Ratio shall not be less than 1.15:1.00.

8.15 Subordinated Debt
Not,  and not  permit  WHC 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 that have been
approved  by the  Required  Lenders  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,  WHC 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,  WHC 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

(d) Other Defaults
The Borrower,  WHC 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,  WHC 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,  WHC 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, WHC or any Subsidiary,  or any writ, judgment,  warrant of attachment,
execution or similar process,  is issued or levied against a substantial part of
the Borrower's, WHC'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, WHC 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, WHC 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,  WHC or any  Subsidiary  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,  WHC 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,  WHC 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 $1,000,000 or more, or (ii) as to any single or related series of
transactions,  incidents or  conditions,  of  $5,000,000 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,  WHC
or any Subsidiary  which does or would reasonably be expected to have a Material
Adverse  Effect,  and 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) Adverse Change
There occurs a Material Adverse Effect; or

(l) 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

(m) Collateral
(i) Any provision of any  Collateral  Document  shall for any reason cease to be
valid and binding on or enforceable against the Borrower,  WHC or any Subsidiary
party thereto or the Borrower,  WHC 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,  or  as  otherwise  provided  for  in
Section 10.5:

(a)  declare  the  commitment  of each  Lender to make  Loans to be  terminated,
whereupon such commitments shall be terminated;

(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; and

(c)  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  shall  automatically  terminate  and the unpaid  principal
amount of all outstanding Loans, together with all interest and other amounts as
aforesaid shall automatically  become due and payable without further act of the
Agent or any Lender.

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 WHC (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 WHC  announces
publicly  that it will take,  is taking or has taken such Charge  (including  an
announcement  in 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 WHC 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,  WHC 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 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, WHC 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
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,  WHC 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,
WHC 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,  WHC  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,  WHC 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  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,  WHC 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,  WHC 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 11.4 and 11.5 shall inure to 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.

(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 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, WHC 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,  WHC 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, WHC 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 11.1(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.       MISCELLANEOUS

11.1 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,  WHC or
any applicable Subsidiary therefrom, shall be effective unless the same shall be
in writing  and signed by the  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 2.13,
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 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.

11.2 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 11.2,  and  (ii) shall  be 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 11.2;  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.

11.3 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.

11.4 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 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;
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 and
the endorsements thereto,  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).

11.5 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  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.

11.6 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.

11.7 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.

11.8 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 F
("Assignment  and  Acceptance");  and (iii) the  assignor Lender or Assignee has
paid to the Agent a processing fee in the amount of $3,500.  Notwithstanding the
foregoing,  no consent of the Borrower shall be required for any such assignment
during the existence of an Event of Default.

(b) Subject to the conditions set forth in  Section 11.8(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
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 11.1.  In the case of any such  participation,  the
Participant  shall be entitled to the benefit of Sections  4.1,  4.3 and 11.5 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.    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.

11.9 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  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.

11.10 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.

11.11 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.

11.12 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.

11.13 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.

11.14 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.

11.15 Conditions Not Fulfilled
If any requested loan is not borrowed owing to  nonfulfillment  of any condition
precedent  specified in Article V,  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, 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.

11.16 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.

11.17 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 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.

11.18 Statutory Notice
ORAL  AGREEMENTS OR ORAL  COMMITMENTS TO LOAN MONEY,  EXTEND CREDIT,  OR FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.

11.19 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.

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.

WESTCOAST HOSPITALITY, LIMITED PARTNERSHIP
By: WestCoast Hospitality Corporation,
General Partner


By

Title

U.S. BANK NATIONAL ASSOCIATION,
as Agent and Lender


By

Title

Each of the undersigned  (a) acknowledges that it has reviewed and approved this
Agreement,  (b) reaffirms its obligations under its respective  guaranty and the
other Loan  Documents to which it is a party and  (c) agrees  to the addition of
the following provisions to its guaranty:

13.11 Right of Setoff
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 Guarantor,
any such notice being waived by  Guarantor  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  Guarantor
against any and all Obligations owing to such Lender, now or hereafter existing,
irrespective  of whether or not the Agent or such Lender  shall have made demand
under this Guaranty or any Loan Document and although  such  Obligations  may be
contingent or unmatured. Each Lender agrees promptly to notify Guarantor 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.

13.12 Jury Waiver
GUARANTOR,  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 CLAIMS,  OR OTHERWISE.  GUARANTOR,  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.


WESTCOAST HOSPITALITY CORPORATION

By
Title
WESTCOAST HOTELS, INC.

By
Title
TICKETSWEST.COM, INC.

By
Title
RED LION HOTELS, INC.

By
Title
RED LION PROPERTIES, INC.


Schedule 1.1
Eligible Real Property

Aberdeen,  Washington:  Certain real  property  located in Grays Harbor  County,
Washington,  which property is owned by Red Lion Hotels, Inc., and is encumbered
by a deed of trust recorded under recording number 2002-01030065.

Bend, Oregon:  Certain real property located in Deschutes County,  Oregon, which
property is owned by Red Lion Hotels, Inc., and is encumbered by a deed of trust
recorded under recording number 2002-00427.

Kalispell,  Montana: Certain real property located in Kalispell County, Montana,
which  property is owned by Red Lion  Properties,  Inc.,  and is encumbered by a
deed of trust recorded under recording number 200200415370.

Klamath Falls, Oregon:  Certain real property located in Klamath County, Oregon,
which property is owned by Red Lion Hotels, Inc., and is encumbered by a deed of
trust recorded in Vol MO2, Pg. 444-479.

Schedule 2.1
Commitments
                                       Commitment
     Lender                              Amount             Pro Rata Share
- --------------------------------   --------------------   ----------------------
U.S. Bank National Association         $4,000,000                100%
- --------------------------------   --------------------   ----------------------
TOTAL                                  $4,000,000                100%
- --------------------------------   --------------------   ----------------------

Schedule 5.1(j)
Real Property to be Refinanced

Boise, Idaho: Certain real property located in Ada County, Idaho,  encumbered by
a deed of trust recorded under recording number 99050921.

Twin Falls,  Idaho:  Certain real property located in Twin Falls County,  Idaho,
encumbered by a deed of trust recorded under recording number 1999-022782.

Salt Lake City, Utah:  Certain real property located in Salt Lake County,  Utah,
encumbered by a deed of trust recorded under recording number 7040246.

Kennewich,   Washington:   Certain  real  property  located  in  Benton  County,
Washington,  encumbered  by a deed of  trust  recorded  under  recording  number
1998-012586.

Pasco, Washington: Certain real property located in Franklin County, Washington,
encumbered by a deed of trust recorded under recording number 1599666.

Port  Angeles,  Washington:  Certain real  property  located in Clallam  County,
Washington,  encumbered  by a deed of  trust  recorded  under  recording  number
20021076402.

Richland,   Washington:   Certain  real  property   located  in  Benton  County,
Washington,  encumbered  by a deed of  trust  recorded  under  recording  number
2002-000144.

Yakima, Washington:  Certain real property located in Yakima County, Washington,
encumbered by a deed of trust recorded under recording numbers 7057014, 7057015,
7057016, and 7057017.

Eureka,   California:   Certain  real  property   located  in  Humboldt  County,
California,  encumbered  by a deed of  trust  recorded  under  recording  number
2002-251-39.

Redding, California: Certain real property located in Shasta County, California,
encumbered by a deed of trust recorded under recording number 2002-0000841.

Schedule 6.5
Litigation

None

Schedule 6.7
ERISA

None

Schedule 6.11
Permitted Liabilities

None

Schedule 6.12
Environmental Matters

None

Schedule 6.17
Subsidiaries and Minority Interests

WestCoast  Hospitality  Corporation  is the direct or indirect sole owner of the
following corporations formed in the State of Washington:

     TicketsWest.com,  Inc
     North River Drive Company And
     WestCoast Hotels, Inc., which in turn is the sole owner of:

        Stewart Street Associates, Inc.
        WestCoast Bellevue Inn, Inc
        WestCoast E.P. Acquisitions, Inc.
        WestCoast Hotel Properties, Inc.
        WestCoast Vancouver Washington, Inc.
        WestCoast Executive Park Investment, Inc.

WestCoast  Hospitality  Corporation  is the direct or indirect sole owner of the
following corporations formed in the State of Delaware:

         Red Lion Hotels, Inc, which in turn is the sole owner of
         Red Lion Properties, Inc.

WestCoast  Hospitality  Corporation and its subsidiary  WestCoast  Bellevue Inn,
Inc., are the sole members of the following  limited liability company formed in
the State of Washington:
         Bellevue Inn, LLC

WestCoast Hospitality  Corporation is the sole general partner and approximately
97% owner of the following limited partnership formed in the State of Delaware:

         WestCoast Hospitality Limited Partnership

WestCoast  Hospitality Limited Partnership is the direct or indirect sole member
of the following limited liability companies formed in the State of Delaware:

         WHC803-M, LLC, which in turn is the sole member of WHC803, LLC;
         WHC804-M, LLC, which in turn is the sole member of WHC804, LLC
         WHC807-M, LLC, which in turn is the sole member of WHC807, LLC
         WHC809-M, LLC, which in turn is the sole member of WHC809, LLC
         WHC816-M, LLC, which in turn is the sole member of WHC816, LLC
         WHC817-M, LLC, which in turn is the sole member of WHC 817, LLC
         WHC818-M, LLC, which in turn is the sole member of WHC 818, LLC
         WHC820-M, LLC, which in turn is the sole member of WHC 820, LLC
         WHC821-M, LLC, which in turn is the sole member of WHC 821, LLC

Red Lion  Hotels,  Inc. is the direct or indirect  sole member of the  following
limited liability companies formed in the State of Delaware:

         WHC831-M, LLC, which in turn is the sole member of WHC831, LLC
         WHC837-M, LLC, which in turn is the sole member of WHC837, LLC
         WHC839-M, LLC which in turn is the sole member of WHC839, LLC
         WHC840-M, LLC, which in turn is the sole member of WHC 840, LLC

Red Lion Properties, Inc. is the direct or indirect sole member of the following
limited liability companies formed in the State of Delaware:

         WHC841-M, LLC, which in turn is the sole member of WHC841, LLC


Schedule 6.18
Insurance Matters

None

Schedule 7.14
Filing Jurisdictions*

Schedule 8.1
Permitted Liens

Account Number          Description                        Balance at 05/31/2003
(Long Term Debt)

050-2700-0000           Credit Facility - US Bank                     55,800,000

050-2740-0000           Bonds - Swanbeck                               1,851,400

050-2740-1000           Bonds - Olson                                  1,295,980

050-2740-2000           Bonds - Bashaw                                 1,295,980

050-2740-3000           Bonds - October                                  370,280

050-2740-4000           Bonds - Bellevue                                 370,280

070-2700-0000           Sterling Savings - Food Ct.                      463,334

070-2710-0000           Notes Payable - IDS                           10,981,584

160-2700-0000           Mort. Payable - Midland                        3,974,356

801-2700-0000           Mort. Payable - WA Mutual                      6,091,103

804-2700-0000           Notes Payable - Key Commercial                13,713,400

805-2710-0000           Industrial Rev. Bonds - WA Trust               5,321,591

808-2700-0000           Mort. Payable - Bank One                       1,290,024

809-2700-0000           Notes Payable - Midland                       35,222,384

812-2700-0000           Mort. Payable - WA Mutual                      2,299,086

813-2700-0000           Notes Payable - US Bank                        1,149,167

820-2700-0000           Notes Payable - Midland                        5,931,601

821-2700-0000           Notes Payable - Key Commercial                 6,660,794

822-2700-0000           Notes Payable - Bank of America                4,458,653

823-2700-0000           Notes Payable - Dupar (Seller)                 1,317,892

(Other)

070-2725-0000           LID Payable - Trolley                             18,413

075-2725-0000           LID Payable - Trolley                              6,122

805-2700-0000           Note Payable - Equity Land                       520,177

(Capital Leases)

809-2750-0000           Capital Lease - Met Life                         109,014

823-2750-0000           Capital Leases                                     3,508

857-2750-0000           Capital Lease - GE Capital                             0

Refinance debt referred to in Section 3.1                       To be determined


Schedule 8.5
Permitted Indebtedness

See Schedule 8.1


Schedule 8.8
Contingent Obligations

None


Schedule 11.2
Lending Offices, Addresses for Notices

The Borrower

WestCoast Hospitality, Limited Partnership
201 W. North River Drive
Spokane, Washington 99201
Attention: Chief Financial Officer
Telephone: (509) 459-6100
Facsimile: (509) 325-7324

The Agent

U.S. Bank National Association
1420 Fifth Avenue, Suite 1100
Seattle, Washington 98101
Attention: Cathryn S. Schalkle
Telephone: (206) 344-7845
Facsimile: (206) 344-2331

The Lenders (LIBOR and Domestic Lending Offices):

U.S. Bank National Association
1420 Fifth Avenue, Suite 1100
Seattle, Washington 98101
Attention: Cathryn S. Schalkle
Telephone: (206) 344-7845
Facsimile: (206) 344-2331

Exhibit A - Form of Compliance Certificate (SB031700281);
Exhibit B - Form of Interest Rate Notice (SB031700282);
Exhibit C - Form of Renewal Promissory Note (SB031700284);
Exhibit D - Form of Legal Opinion of Borrower's Counsel
Exhibit E - Form of Amendment to Deed of Trust (SB031700053);
Exhibit F - Form of Assignment and Acceptance Agreement


Exhibit A
to Second Amended and Restated Credit Agreement

FORM OF COMPLIANCE CERTIFICATE

This  Compliance  Certificate  is delivered  pursuant to the Second  Amended and
Restated  Credit  Agreement,  dated  as of  June 27,  2003  (together  with  all
amendments,  if any,  from time to time made thereto,  the "Credit  Agreement"),
WestCoast Hospitality,  Limited Partnership (the "Borrower"),  certain financial
institutions parties thereto (the "Lenders") and U.S. Bank National Association,
as administrative  agent for the Lenders (together with any successors  thereto,
the "Agent"). Unless otherwise defined herein or the context otherwise requires,
terms used herein or in any of the Attachments hereto have the meanings provided
in the Credit Agreement.

The Borrower hereby certifies,  represents and warrants that for the period (the
"Computation  Period")  commencing on  _________,  ____ and ending on _________,
____  (such  latter  date being the  "Computation  Date") no Default or Event of
Default has occurred and is continuing [except as disclosed below]. The Borrower
hereby further  certifies,  represents  and warrants that as of the  Computation
Date:

(a) Recourse Funded Debt Ratio.
As of the end of the Computation Period for the four fiscal quarters then ended,
the Recourse Funded Debt Ratio was ______.

(b) Fixed Charge Coverage Ratio.
As of the end of the Computation Period for the four fiscal quarters then ended,
the Fixed Charge Coverage Ratio was _____.

IN WITNESS WHEREOF, the undersigned has caused this Compliance Certificate to be
delivered by its Responsible Officer as of this ____ day of __________, ______.

WESTCOAST HOSPITALITY, LIMITED PARTNERSHIP

By: WestCoast Hospitality Corporation,
General Partner

By
Name:
Title:


FORM OF INTEREST RATE NOTICE

U.S. Bank National Association
1420 Fifth Avenue, Suite 1100
Seattle, Washington 98101
Attention: Cathryn S. Schalkle

Re: WestCoast Hospitality, Limited Partnership

Gentlemen and Ladies:

This Interest Rate Notice is delivered to you pursuant to  Section 5.2(a) of the
Second  Amended  and  Restated  Credit  Agreement,  dated  as of  June 27,  2003
(together  with all  amendments,  if any,  from time to time made  thereto,  the
"Credit  Agreement"),  among  WestCoast  Hospitality,   Limited  Partnership,  a
Delaware limited  partnership (the "Borrower"),  certain financial  institutions
parties  thereto  (the  "Lenders")  and  U.S. Bank  National   Association,   as
administrative  agent for the Lenders (together with any successors thereto, the
"Agent").  Unless otherwise  defined herein or the context  otherwise  requires,
terms used herein have the meanings provided in the Credit Agreement.

The  Borrower  hereby  requests  that on ________ __, ____ (the  "Interest  Rate
Election Date"),

A. There be advanced to the Borrower $_________ in new Prime Rate Loans.

B. There be advanced  to the  Borrower  $_________  in new LIBOR Rate Loans with
Loan Periods as follows:

Amount          Loan Period
$_________      ________ months
$_________      ________ months

C.  $_________  of Prime Rate Loans be  converted  to LIBOR Rate Loans with Loan
Periods as follows:

Amount          Loan Period
$_________      ________ months
$_________      ________ months

D.  $_________  of LIBOR Rate Loans with a Loan Period  ending on ________  ___,
____ be converted to Prime Rate Loans.

E.  $_________  of LIBOR Rate Loans with a Loan Period  ending on ________  ___,
____ be continued as LIBOR Rate Loan(s) with Loan Periods as follows:

Amount          Loan Period
$_________      ________ months
$_________      ________ months

The Borrower hereby:

(a) certifies and warrants that (i) no  Default or Event of Default has occurred
and is  continuing  or will  result  from the  Loans  contemplated  hereby;  and
(ii) the  representations  and warranties in Article VI of the Credit  Agreement
are and shall be true and  correct on and as of the date of this Notice with the
same  effect  as if made on and as of the  date of this  Notice  (except  to the
extent such  representations and warranties  expressly refer to an earlier date,
in which case they were true and correct as of such earlier date); and

(b) agrees that if prior to the Interest Rate Election Date any matter certified
to herein by it will not be true and  correct at such time as if then  made,  it
will immediately so notify the Agent.

Except to the extent,  if any, that prior to the Interest Rate Election Date the
Agent shall  receive  written  notice to the contrary  from the  Borrower,  each
matter  certified  to herein  shall be deemed to be certified as of the Interest
Rate Election Date as if then made.

The  Borrower  has caused  this  Notice to be executed  and  delivered,  and the
certification  and warranties  contained  herein to be made, by its  Responsible
Officer this ____ day of ___________, ____.

WESTCOAST HOSPITALITY, LIMITED PARTNERSHIP

By: WestCoast Hospitality Corporation,
General Partner

By:
Name:
Title:

Exhibit C
to Second Amended and Restated Credit Agreement

RENEWAL PROMISSORY NOTE

$4,000,000      June 27, 2003

FOR VALUE RECEIVED, the undersigned, WESTCOAST HOSPITALITY, LIMITED PARTNERSHIP,
a Delaware limited partnership (the "Borrower"), promises to pay to the order of
U.S. Bank National  Association,  as administrative  agent (the "Agent") for the
Lenders (as  hereinafter  defined),  the principal  sum of FOUR MILLION  DOLLARS
($4,000,000)  or so much  thereof as advanced  by the  Lenders  pursuant to that
certain  Second  Amended and Restated  Credit  Agreement  of even date  herewith
(together with all amendments and other modifications, if any, from time to time
thereafter made thereto, the "Credit Agreement"),  among the Borrower, U.S. Bank
National  Association,  as administrative  agent (the "Agent"),  and the various
financial  institutions as are, or may from time to time become, parties thereto
(the "Lenders"), on the Maturity Date.

The Borrower also promises to pay interest on the unpaid principal amount hereof
from time to time  outstanding  from the date hereof until maturity  (whether by
acceleration  or otherwise)  and, after  maturity,  until paid, at the rates per
annum and on the dates specified in the Credit Agreement.

Payments of both  principal  and  interest are to be made in lawful money of the
United  States of  America  in same day or  immediately  available  funds to the
account designated by the Agent pursuant to the Credit Agreement.

This Note is the Note referred to in, and evidences Indebtedness incurred under,
the  Credit  Agreement,  to which  reference  is made for a  description  of the
security for this Note and for a statement of the terms and  conditions on which
the Borrower is permitted  and required to make  prepayments  and  repayments of
principal  of  the  Indebtedness  evidenced  by  this  Note  and on  which  such
Indebtedness may be declared to be immediately due and payable. Unless otherwise
defined, terms used herein have the meanings provided in the Credit Agreement.

All parties hereto, whether as makers, endorsers, or otherwise,  severally waive
presentment for payment, demand, protest and notice of dishonor.

THIS NOTE  SHALL BE DEEMED  TO BE A  CONTRACT  MADE  UNDER AND  GOVERNED  BY THE
INTERNAL LAWS OF THE STATE OF WASHINGTON.

WESTCOAST HOSPITALITY, LIMITED PARTNERSHIP

By: WestCoast Hospitality Corporation,
General Partner

By

Title


Exhibit D
Form of Legal Opinion of Borrower's Counsel

US Bank National Association, as Agent for Lenders
1420 Fifth Avenue, 11th Floor
Seattle, WA 98101

Attention: Cathy Schalkle

Subject: Second Amended and Restated Credit Agreement


Exhibit E
Form of Amendment to Deed of Trust

Return Address:
U.S. Bank National Association
1420 Fifth Avenue, Suite 1100
Seattle, Washington 98101
Attention:  Cathryn S. Schalkle



AMENDMENT TO DEED OF TRUST

The deed of trust,  assignment  of leases and  rents,  security  agreement,  and
fixture  filing  described  below  ("Deed of Trust")  encumbering  certain  real
property in  ____________  County,  ___________,  is hereby amended as set forth
herein:

Grantor: ______________________________

Grantee/Trustee: U.S. Bank Trust Company, National Association

Grantee/Beneficiary:  U.S. Bank National  Association,  as agent for the lenders
under the amended and restated credit  agreement  dated as of December 29,  1999
(together with all amendments, modifications,  supplements and exhibits thereto,
the "Credit Agreement").

Recording No. of Document Amended: __________________.

1. The Deed of Trust is hereby amended to reflect that the Credit  Agreement has
been  amended and restated by that certain  second  amended and restated  credit
agreement of even date herewith.

2. Except as specifically  provided for herein,  all of the terms and conditions
of the Deed of Trust shall remain in full force and effect.


IN WITNESS WHEREOF, Grantor and Beneficiary have executed this amendment to deed
of trust as of June 27, 2003.

Grantor:

By
Name:
Title:


Beneficiary:

U.S. BANK NATIONAL ASSOCIATION, as Agent

By
Name:
Title:

STATE OF WASHINGTON                   )
                                      ) ss.
COUNTY OF KING                        )

On this ____ day of ____________,  2003,  before me, the  undersigned,  a Notary
Public  in and for  the  State  of  Washington,  duly  commissioned  and  sworn,
personally appeared Richard Barbieri, to me known to be the person who signed as
_______________________________    of    _______________________________,    the
_________________________ that executed the within and foregoing instrument, and
acknowledged  said  instrument to be the free and voluntary act and deed of said
corporation as general partner of said  ______________________  for the uses and
purposes  therein  mentioned,  and on  oath  stated  that he was  duly  elected,
qualified  and acting as said  officer of the  ___________________,  that he was
authorized to execute said  instrument,  that the seal  affixed,  if any, is the
corporate seal of said corporation,  and that said corporation was authorized to
execute said instrument on behalf of said ____________________.

IN WITNESS  WHEREOF I have  hereunto set my hand and  official  seal the day and
year first above written.

(Signature of Notary)

(Print or stamp name of Notary)

NOTARY PUBLIC in and for the State of Washington, residing
at .
My Commission Expires: .

STATE OF WASHINGTON                   )
                                      ) ss.
COUNTY OF KING                        )

On this  _______________,  2003, before me, the undersigned,  a Notary Public in
and for the  State  of  Washington,  duly  commissioned  and  sworn,  personally
appeared  _______________________,  to me known to be the  person  who signed as
____________________  of U.S. BANK  NATIONAL  ASSOCIATION,  the national banking
association that executed the within and foregoing instrument,  and acknowledged
said  instrument  to be the free  and  voluntary  act and deed of said  national
banking  association for the uses and purposes  therein  mentioned,  and on oath
stated  that he was  authorized  to  execute  said  instrument  on behalf of the
national banking association.

IN WITNESS  WHEREOF I have  hereunto set my hand and  official  seal the day and
year first above written.

(Signature of Notary)

(Print or stamp name of Notary)

NOTARY PUBLIC in and for the State
of Washington, residing at .
My Appointment Expires: .


EXHIBIT F
to Second Amended and Restated Credit Agreement

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

Reference is made to the Second Amended and Restated Credit Agreement,  dated as
of June 27,  2003 (as amended,  supplemented or otherwise  modified from time to
time, the "Credit Agreement"), among WestCoast Hospitality,  Limited Partnership
("Borrower"),   U.S. Bank   National   Association,   as  Administrative   Agent
("Administrative  Agent"),  and the other financial  institutions  party hereto.
Unless otherwise defined herein,  terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

The Assignor  named on Schedule I  (the  "Assignor")  and the Assignee  named on
Schedule I (the "Assignee") agree as follows:

The  Assignor  hereby  irrevocably  sells and  assigns to the  Assignee  without
recourse to the  Assignor,  and the Assignee  hereby  irrevocably  purchases and
assumes from the Assignor without recourse to the Assignor,  as of the Effective
Date (as  defined  below),  the Pro Rata  Share  specified  in  Schedule I  (the
"Assigned  Interest") in the rights and obligations  under the Credit  Agreement
with respect to the facility described in Schedule I.

The   Assignor   (a) makes  no   representation   or  warranty  and  assumes  no
responsibility  with respect to any  statements,  warranties or  representations
made in or in connection  with the Credit  Agreement or any other  instrument or
document furnished pursuant thereto or with respect to the execution,  legality,
validity,  enforceability,   genuiness,  sufficiency  or  value  of  the  Credit
Agreement or any other instrument or document furnished pursuant thereto,  other
than that the  Assignor  has not  created any  adverse  claim upon the  Assigned
Interest and that such  Assigned  Interest is free and clear of any such adverse
claim; and (b) makes no representation or warranty and assumes no responsibility
with respect to the financial  condition of Borrower or any of its  Subsidiaries
or the performance or observance by Borrower of any of its obligations under the
Credit Agreement or any other instrument or document furnished pursuant thereto.

The Assignee  (a) represents and warrants that it is legally authorized to enter
into this Assignment and Acceptance; (b) confirms that it has received a copy of
the  Credit  Agreement,  together  with  copies  of the  most  recent  financial
statements referred to in the Section 7.1 of the Credit Agreement and such other
documents and  information  as it has deemed  appropriate to make its own credit
analysis and decision to enter into this Assignment and  Acceptance;  (c) agrees
that it  will,  independently  and  without  reliance  upon  the  Assignor,  the
Administrative  Agent  or any  other  Lender  or the  Agent  and  based  on such
documents and information as it shall deem appropriate at the time,  continue to
make its own credit  decisions  in taking or not taking  action under the Credit
Agreement  or any other  instrument  or document  furnished  pursuant  hereto or
thereto;  (d) appoints  and  authorizes  the  Administrative  Agent to take such
action as agent on its behalf and to exercise such powers and  discretion  under
the Credit  Agreement and any other  instrument or document  furnished  pursuant
hereto or  thereto as are  delegated  to the  Administrative  Agent by the terms
thereof,  together with such powers as are  incidental  thereto;  and (e) agrees
that it will be bound by the provisions of the Credit Agreement and will perform
in  accordance  with its  terms  all the  obligations  which by the terms of the
Credit  Agreement  are required to be  performed  by it as a Lender,  including,
(i) if it is  organized  under the laws of a  jurisdiction  outside  the  United
States,  its  obligation  pursuant to Section 10.10 of the Credit  Agreement and
(ii) if  it is not  already  a  Lender,  its  obligation  to  deliver  a written
agreement  for the express  benefit of the Borrower  pursuant to Section 11.8 of
the Credit Agreement.

The effective date of this  Assignment  and Acceptance  shall be as specified on
Schedule I  (the "Effective  Date").  Following the execution of this Assignment
and  Acceptance,  by  Assignor  and  Assignee,  it  will  be  delivered  to  the
Administrative  Agent and the Borrower for  acceptance  by them and recording by
the Administrative  Agent pursuant to the Credit Agreement,  effective as of the
Effective   Date  (which  shall  not,   unless   otherwise   agreed  to  by  the
Administrative  Agent,  be earlier than five  Business  Days after the execution
hereof).

Upon such  acceptance  and  recording,  from and after the Effective  Date,  the
Administrative Agent shall make all payments in respect of the Assigned Interest
(including  payments  of  principal,  interest,  fees and other  amounts) to the
Assignee.  The Assignor and the Assignee shall make all appropriate  adjustments
in payments by the Administrative  Agent for periods prior to the Effective Date
or with respect to the making of this assignment directly between themselves.

From and after the  Effective  Date,  (a) the  Assignee  shall be a party to the
Credit  Agreement and, to the extent provided in this Assignment and Acceptance,
have the rights and obligations of a Lender thereunder and shall be bound by the
provisions  thereof and (b) the  Assignor  shall, to the extent provided in this
Assignment  and  Acceptance,  relinquish  its  rights and be  released  from its
obligations  under  the  Credit  Agreement  (other  than any such  rights  which
expressly survive the termination thereof).

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

IN  WITNESS  WHEREOF,  the  parties  hereto  have  caused  this  Assignment  and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers on Schedule I hereto.

SCHEDULE I

TO ASSIGNMENT AND ACCEPTANCE  RELATING TO THE SECOND AMENDED AND RESTATED CREDIT
AGREEMENT,  DATED AS OF  JUNE 27,  2003  AMONG  WESTCOAST  HOSPITALITY,  LIMITED
PARTNERSHIP,  U.S. BANK NATIONAL  ASSOCIATION,  AS ADMINISTRATIVE  AGENT IN SUCH
CAPACITY,  THE  "ADMINISTRATIVE  AGENT"),  AND THE OTHER FINANCIAL  INSTITUTIONS
PARTY HERETO.

Name of Assignor: _____________________________________________
Name of Assignee: _____________________________________________
Effective Date of Assignment:  ___________  __,  _______
Commitment  Percentage
Assigned: ____%

The terms set forth above and in the  Assignment  and  Acceptance  to which this
Schedule I is attached are hereby agreed to:

as Assignor


By:
Its:

,
as Assignee


By:
Its:

ASSIGNMENT ACKNOWLEDGED AND
CONSENTED TO:

WESTCOAST HOSPITALITY, LIMITED
PARTNERSHIP, as the Borrower

By:      WestCoast Hospitality Corporation,
         General Partner

         By:
         Its:

U.S. BANK NATIONAL ASSOCIATION,
as Administrative Agent

By:
Its:


Exhibit 10.3

PROMISSORY NOTE

Date of Note:         Effective as of June 27, 2003
Note Amount:          $5,100,000.00


THIS PROMISSORY NOTE (this "Note"),  is made by WHC807,  LLC, a Delaware limited
liability company  ("Borrower"),  having an address at c/o WestCoast Hospitality
Corporation,  201 W. North River Drive,  Suite 100,  Spokane,  Washington 99201,
Attention: Chief Financial Officer, to and in favor of COLUMN FINANCIAL, INC., a
Delaware  corporation  ("Lender"),  having an address at 11 Madison  Avenue, 5th
Floor, New York, New York 10010-3629, Attention: Edmund Taylor.

NOW, THEREFORE, FOR VALUE RECEIVED,  Borrower unconditionally promises to pay to
the order of Lender,  without any counterclaim,  setoff or deduction whatsoever,
on the Maturity Date (as hereinafter  defined),  at the office of Lender,  or at
such other place as Lender may  designate  to  Borrower in writing  from time to
time, the principal sum of FIVE MILLION ONE HUNDRED  THOUSAND AND NO/100 DOLLARS
($5,100,000.00),  together  with  interest on so much thereof as is from time to
time  outstanding  and  unpaid,  from the date of the  advance of the  principal
evidenced  hereby,  at the rate of 6.70% per annum (the "Note Rate"),  in lawful
money of the United  States of  America,  which  shall at the time of payment be
legal tender in payment of all debts and dues, public and private.

ARTICLE I - TERMS AND CONDITIONS

1.1      Payment of Principal and Interest.
(a) Said  interest  shall be computed  hereunder  based on a three hundred sixty
(360) day year and paid for the actual  number of days  elapsed for any whole or
partial month in which interest is being calculated.  In computing the number of
days  during  which  interest  accrues,  the day on which  funds  are  initially
advanced  shall be included  regardless of the time of day such advance is made,
and the day on which funds are repaid  shall be  included  unless  repayment  is
credited  prior to close of  business.  Payments  in federal  funds  immediately
available in the place  designated for payment  received by Lender prior to 2:00
p.m.  local time at said  place of payment on a day in which  Lender is open for
business shall be credited prior to close of business, while other payments may,
at the option of Lender,  not be credited until immediately  available to Lender
in federal funds in the place  designated  for payment prior to 2:00 p.m.  local
time at said  place of payment  on a day on which  Lender is open for  business.
Such  principal  and  interest  shall be  payable in equal  consecutive  monthly
installments of $35,075.63  each,  beginning on August 11,  2003 (the "First P&I
Date"),  and continuing on the eleventh (11th) day of each and every month (each
a "Payment Date") thereafter through and including July 11,  2013 (the "Maturity
Date"), at which time the entire outstanding principal balance hereof,  together
with all accrued but unpaid interest thereon,  shall be due and payable in full.
Each such monthly  installment  shall be applied first to the payment of accrued
interest and then to reduction of principal.

(b) If the advance of the principal  amount  evidenced by this Note is made on a
date other than the eleventh (11th) day of a calendar month, then Borrower shall
pay to Lender  contemporaneously  with the execution hereof interest at the Note
Rate as follows:  (a) if the advance of the principal  amount  evidenced by this
Note is made prior to the eleventh (11th) day of a calendar month, then Borrower
shall pay to Lender  contemporaneously with the execution hereof interest at the
Note Rate for a period from the date of such advance  through and  including the
tenth  (10th) day of the  calendar  month in which this Note is funded or (b) if
the advance of the  principal  amount  evidenced  by this Note is made after the
eleventh  (11th)  day of a calendar  month,  then  Borrower  shall pay to Lender
contemporaneously  with the  execution  hereof  interest  at the Note Rate for a
period from the date of such advance  through and including the tenth (10th) day
of the first  calendar  month  following the month in which this Note is funded.
Each  subsequent  interest  accrual period shall commence on the eleventh (11th)
day of each  calendar  month  during  the term of the Note and  shall end on and
include the tenth (10th) day of the next occurring  calendar month. For purposes
of making  payments  hereunder,  but not for  purposes of  calculating  interest
accrual  periods,  if the day on which such payment is due is not a Business Day
(as defined in the Mortgage),  then amounts due on such date shall be due on the
immediately preceding Business Day.

1.2      Prepayment.
(a)  Except as  specifically  provided  otherwise  herein,  this Note may not be
prepaid,  either in whole or part,  provided,  however,  Borrower shall have the
right and option to have the Property (as hereinafter defined) released from the
lien of the Yakima  Mortgage (as  hereinafter  defined) in  accordance  with the
terms and conditions of the Defeasance  provisions set forth in  Section 1.35 of
the  Yakima  Mortgage.  This Note may be prepaid in whole but not in part at any
time after the date three (3) months  prior to the Maturity  Date (the  "Lockout
Expiration Date"), provided (i) written notice of such prepayment is received by
Lender not more than sixty (60) days and not less than thirty (30) days prior to
the date of such prepayment, (ii) such prepayment is made on a Payment Date (or,
if such  prepayment is not received on a Payment Date,  interest is paid through
the tenth (10th) day of such calendar month if such prepayment is received on or
prior to the tenth  (10th) day of a calendar  month or interest is paid  through
the tenth  (10th) day of the  calendar  month  following  the month in which the
prepayment is received if prepayment is received  after the eleventh  (11th) day
of such calendar month) and is accompanied by all interest accrued hereunder and
all other sums due hereunder or under the other Loan  Documents (as  hereinafter
defined),  and  (iii) the  Other Loans (as defined in the Yakima  Mortgage)  are
simultaneously paid in full.

(b)
(1) If prior to the Lockout  Expiration Date and following the occurrence of
any default  beyond any  applicable  notice and/or grace period,  Borrower shall
tender  payment  of an amount  sufficient  to  satisfy  all of the  indebtedness
evidenced  by this Note and the other Loan  Documents,  Borrower  shall pay,  in
addition to the amounts payable hereunder and under the other Loan Documents,  a
prepayment fee in an amount equal to Required Yield Maintenance plus one-half of
one percent (.5%) of the principal  amount being prepaid.  For purposes  hereof,
"Prepayment Date" shall mean the date any such prepayment  hereunder is received
by Lender.  For purposes  hereof,  "Required  Yield  Maintenance"  shall mean an
amount equal to the greater of (A) the  present value as of the Prepayment  Date
of  the  remaining  scheduled  payments  of  principal  and  interest  from  the
Prepayment  Date through the  Maturity  Date  (including  an amount equal to the
outstanding   principal  balance  of  the  Note  on  such  date)  determined  by
discounting such payments at the Discount Rate (as hereinafter defined) less the
amount of principal  being  prepaid or (B) one  percent (1%) of the  outstanding
principal  balance of the Note as of the Prepayment Date. The "Discount Rate" is
the rate which, when compounded  monthly, is equivalent to the Treasury Rate (as
hereinafter defined), when compounded semi-annually.  The "Treasury Rate" is the
yield calculated by the linear  interpolation of the yields,  as reported in the
Federal Reserve Statistical Release H.15 Selected Interest Rates (the "Release")
under the heading "U.S.  government  securities",  and the subheading  "Treasury
constant  maturities" for the week ending prior to the Prepayment  Date, of U.S.
Treasury  constant  maturities  with maturity dates (one longer and one shorter)
most nearly  approximating  the  Maturity  Date.  In the event the Release is no
longer published,  Lender shall select a comparable publication to determine the
Treasury  Rate in its  reasonable  discretion.  Lender shall not be obligated to
accept  any  prepayment  of the  principal  balance  of this  Note  unless it is
accompanied  by the prepayment  consideration  due in connection  therewith.  If
prior to the Lockout  Expiration Date Lender exercises its option to declare the
entire unpaid  principal  balance due and payable and/or causes to be recorded a
notice of default in accordance with  Washington law (or any applicable  statute
or law) following the  occurrence of a default,  there shall be due and payable,
in addition to the unpaid principal balance, accrued interest and any other sums
due  hereunder  or under any of the  other  Loan  Documents,  a  prepayment  fee
computed as provided above in this Section 1.2.

(2) In the event that any prepayment fee is due hereunder,  Lender shall deliver
to  Borrower a  statement  setting  forth the amount  and  determination  of the
prepayment  fee.  Lender  shall not be  obligated  or required to have  actually
reinvested the prepaid  principal balance at the Treasury Rate or otherwise as a
condition to receiving the prepayment fee. No prepayment fee or premium shall be
due or payable in connection with any prepayment of the  indebtedness  evidenced
by this  Note  made  after  the  Lockout  Expiration  Date,  or upon  prepayment
resulting from application of insurance or condemnation  proceeds as provided in
the  Yakima  Mortgage  at any time  during  the loan  term.  With  regard to any
prepayment  made  hereunder   (except  for  a  prepayment   resulting  from  the
application  of  condemnation  or insurance  proceeds),  if prior written notice
required  in  Section 1.2(a)(i)  above  has not been  received  by  Lender,  the
prepayment  shall be increased  by an amount  equal to the lesser of  (x) thirty
(30) days' unearned  interest  computed on the outstanding  principal balance of
this Note so prepaid  and  (y) unearned  interest  computed  on the  outstanding
principal  balance of this Note so prepaid for the period from,  and  including,
the date of prepayment through the Maturity Date.

(c) Full or  partial  prepayments  of this Note shall be  permitted  in order to
apply  insurance or  condemnation  proceeds in accordance  with the terms of the
Yakima  Mortgage,  in which event no prepayment fee or premium shall be due. Any
such  prepayment of principal  shall be applied on the next  succeeding  Payment
Date following  Lender's receipt of such insurance or condemnation  proceeds and
determination  to apply such sums against the outstanding  principal  balance of
this Note in  accordance  with the terms of the  Yakima  Mortgage.  No notice of
prepayment  shall  be  required  under  the  circumstances   specified  in  this
Section 1.2(c).  In the  event  an  application  of  insurance  or  condemnation
proceeds in accordance  with the terms hereof result in a partial  prepayment of
this Note,  the monthly  installment  of  interest  and  principal  set forth in
Section 1.1  of  this  Note  shall  be  recomputed  at the  Note  Rate  and  the
outstanding principal balance of this Note remaining following such application,
based upon an  amortization  schedule of twenty-five  (25) years less the period
(A) from the eleventh  (11th) day of the calendar  month in which the advance of
the  principal  amount  evidenced  by  this  Note  is  made  to the  date of the
application of such proceeds if the advance hereunder is made on or prior to the
eleventh  (11th) day of a calendar month or (B) from the eleventh  (11th) day of
the calendar  month  following the date of the advance  hereunder to the date of
the  application  of such  proceeds if the advance  hereunder  is made after the
eleventh (11th) day of a calendar month.  Except as authorized  pursuant to this
Section 1.2(c),  partial  prepayments  of this Note shall not be  permitted.  No
principal amount repaid may be reborrowed.

(d) Except as otherwise  expressly provided in this Section 1.2,  the prepayment
fees provided  above shall be due, to the extent  permitted by  applicable  law,
under any and all  circumstances  where all or any  portion of this Note is paid
prior to the Maturity Date, whether such prepayment is voluntary or involuntary,
even if such  prepayment  results  from  Lender's  exercise  of its rights  upon
Borrower's  default hereunder and acceleration of the Maturity Date of this Note
(irrespective of whether foreclosure proceedings have been commenced), and shall
be in  addition to any other sums due  hereunder  or under any of the other Loan
Documents.  No tender of a  prepayment  of this  Note  with  respect  to which a
prepayment fee is due shall be effective  unless such  prepayment is accompanied
by the prepayment fee.  Borrower  acknowledges  that, in  establishing  the Note
Rate, Lender has assumed and taken into account the fact that the loan evidenced
hereby will not be prepaid  (other than at the times,  and on the terms,  herein
provided) and that there will be no  prohibited  transfer of the Property or any
other event which  would cause  Lender to  accelerate  the  Maturity  Date.  The
provisions hereof relating to Borrower's payment of a premium in the event of an
acceleration are intended to compensate Lender in the event that this assumption
proves to be incorrect.

(e) If at any time following the third (3rd)  anniversary of the First P&I Date,
Borrower is unable to exercise its right to  Defeasance  on a specified  Release
Date as set forth in Section 1.35(f) of the Yakima  Mortgage,  then Borrower may
prepay this Note on the specified  Release  Date;  provided,  however,  any such
permitted  prepayment  made on or prior to the Lockout  Expiration  Date must be
accompanied with the Required Yield Maintenance.  Any permitted  prepayment made
pursuant  to this  Section  1.2(e) is  subject  to the  requirements  of Section
1.2(a)(i)-(iii) and Section 1.2(b)(2) of this Note; provided,  however, Borrower
shall not be  required  to pay any  prepayment  penalty  or fee  other  than the
Required Yield Maintenance (as defined in Section 1.2(b) above).

1.3      Security.
The indebtedness  evidenced by this Note and the obligations  created hereby are
secured by,  among  other  things,  (i) those  ten (10)  certain  deeds of trust
(collectively,   the  "Mortgage")  more  particularly  described  on  Schedule A
attached hereto and  incorporated  herein by this reference;  and (ii) those ten
(10) certain assignments of leases and rents  (collectively,  the "Assignment"),
more  particularly  described on  Schedule B  attached  hereto and  incorporated
herein by this  reference.  The  Mortgage,  the  Assignment,  that  certain Cash
Management  Agreement  of even  date  herewith,  together  with this  Note,  any
indemnity and guaranty agreement,  any hazardous substances indemnity agreement,
and such other agreements, documents and instruments,  together with any and all
renewals,    modifications,     amendments,    restatements,     consolidations,
substitutions,  replacements,  and extensions  and  modifications  thereof,  are
herein referred to collectively  as the "Loan  Documents".  All of the terms and
provisions of the Loan Documents are incorporated  herein by reference.  Some of
the Loan Documents are to be filed for record on or about the date hereof in the
appropriate public records.  Notwithstanding  anything to the contrary contained
herein or elsewhere in any of the other Loan Documents, the liens created by the
Other Mortgages (as defined on Schedule A hereto) and the Other  Assignments (as
defined on Schedule B hereto) shall no longer secure the Borrower's  obligations
under this Note,  upon  Borrower's  satisfaction of the terms of Section 1.39 of
the Yakima Mortgage.

1.4      Default.
It is hereby  expressly  agreed that if any sum  payable  under this Note is not
paid on or before  the date such  payment is due,  or should  any other  default
occur under any of the Loan  Documents  which is not cured within any applicable
grace  or  cure  period,  including  without  limitation,  any  sale,  transfer,
conveyance  or other  violation  of the terms of  Section 1.13  of the  Mortgage
(unless Lender has previously expressly accepted a cure of such default), then a
default  shall exist  hereunder,  and in such event the  indebtedness  evidenced
hereby, including all sums advanced or accrued hereunder or under any other Loan
Document,  and all unpaid  interest  accrued  thereon,  shall,  at the option of
Lender and without notice to Borrower, at once become due and payable and may be
collected  forthwith,  whether or not there has been a prior  demand for payment
and regardless of the stipulated Maturity Date; provided,  however, if a default
hereunder  results from the  nonpayment of any sum payable  under the Note,  the
indebtedness  evidenced  hereby  shall not  become  subject to  acceleration  as
described  herein  unless such sum is not  received  within five (5) days of the
date such payment is due (provided,  however, there shall be no grace period for
the payment of principal  and interest due on the Maturity  Date).  In the event
that any  installment  payment  is not  received  by Lender on the date when due
(i.e., without application of any 5-day or other grace period), then in addition
to any default  interest  payments  due  hereunder,  Borrower  shall also pay to
Lender a late charge in an amount equal to five percent  (5.0%) of the amount of
such overdue installment payment. The foregoing late charge,  however, shall not
be assessed in  connection  with (i) any amounts which become due as a result of
Lender's exercise of its acceleration  rights hereunder,  or (ii) the balance of
the  principal  amount which  becomes due on the Maturity  Date.  So long as any
default  exists  hereunder,  regardless  of  whether  or not  there  has been an
acceleration  of the  indebtedness  evidenced  hereby,  and at all  times  after
maturity  of the  indebtedness  evidenced  hereby  (whether by  acceleration  or
otherwise),  interest shall accrue on the outstanding  principal balance of this
Note at a rate per annum equal to five  percent  (5.0%) plus the  interest  rate
which would be in effect hereunder  absent such default or maturity,  or if such
increased rate of interest may not be collected  under  applicable  law, then at
the maximum rate of interest, if any, which may be collected from Borrower under
applicable law (the "Default Interest Rate"), and such default interest shall be
immediately due and payable.  Borrower  acknowledges  that it would be extremely
difficult or impracticable to determine  Lender's actual damages  resulting from
any late  payment or default,  and such late  charges and default  interest  are
reasonable  estimates  of those  damages and do not  constitute  a penalty.  The
remedies of Lender in this Note or in the other Loan Documents,  or at law or in
equity,  shall  be  cumulative  and  concurrent,  and  may  be  pursued  singly,
successively or together, in Lender's discretion. Time is of the essence of this
Note.  In the event  either party seeks to enforce its rights under this Note in
any lawsuit or similar proceeding,  the substantially  prevailing party shall be
entitled to recover from the other party all costs and expenses incurred by such
prevailing party, including, but not limited to, reasonable attorneys' fees.

1.5      Exculpation.
Notwithstanding  anything in the Loan Documents to the contrary,  but subject to
the qualifications  hereinbelow set forth, Lender agrees that (i) Borrower shall
be liable upon the indebtedness  evidenced hereby and for the other  obligations
arising under the Loan  Documents to the full extent (but only to the extent) of
the  security  therefor  and any rents and leases  assigned to Lender,  the same
being all properties (whether real or personal),  rights,  estates and interests
now or at any time hereafter  securing the payment of this Note and/or the other
obligations of Borrower under the Loan Documents pursuant to the Yakima Mortgage
or Yakima Assignment (collectively,  the "Property"), and any interest of Lender
as assignee under any assignment of rents and/or leases,  (ii) if default occurs
in the  timely  and  proper  payment  of all or any  part of  such  indebtedness
evidenced  hereby  or  in  the  timely  and  proper  performance  of  the  other
obligations of Borrower under the Loan  Documents,  any  proceedings  brought by
Lender against  Borrower shall be limited to the  preservation,  enforcement and
foreclosure,   or  any  thereof,  of  the  liens,   security  titles,   estates,
assignments, rights and security interests now or at any time hereafter securing
the payment of this Note and/or the other obligations of Borrower under the Loan
Documents,  and exercise of power of sale and/or other rights  granted under the
Mortgage  and the  exercise of any rights set forth in the Mortgage or any other
instrument  given to secure this Note, or in any  assignment of rents and leases
contained in the Mortgage or in any separate  instrument  affecting the Property
or other  collateral and given in connection with this Note and  confirmation of
any sale under  power of sale,  and no  attachment,  execution  or other writ of
process shall be sought,  issued or levied upon any assets,  properties or funds
of Borrower or its general or limited  partners  other than the Property  except
with respect to the liability  described in items (a)  through (j) below in this
section,  and (iii) in the event of a foreclosure  or enforcement of such liens,
security titles, estates, assignments, rights or security interests securing the
payment of this Note and/or the other  obligations  of  Borrower  under the Loan
Documents,  whether by judicial  proceedings  or  exercise of power of sale,  no
judgment for any  deficiency  upon the  indebtedness  evidenced  hereby shall be
sought or  obtained  by Lender  against  Borrower,  except  with  respect to the
liability   described   in  items (a)   through  (j)  below  in  this   section.
Notwithstanding  the foregoing  provisions of this  section,  Borrower  shall be
fully and personally liable and subject to legal action for any damages incurred
by Lender as a result of the following:

(a) for proceeds paid to, and received by, Borrower under any insurance policies
(or paid as a result of any other claim or cause of action against any person or
entity) by reason of damage,  loss or  destruction  to all or any portion of the
Property,  to the full  extent of such  proceeds  not  previously  delivered  to
Lender,  but  which,  under the terms of the Loan  Documents,  should  have been
delivered to Lender;

(b) for proceeds or awards paid to, and received by, Borrower resulting from the
condemnation  or other taking in lieu of  condemnation  of all or any portion of
the  Property  to the full  extent of such  proceeds  or awards  not  previously
delivered to Lender,  but which,  under the terms of the Loan Documents,  should
have been delivered to Lender;

(c) for all tenant  security  deposits or other  refundable  deposits paid to or
held by Borrower in connection with leases of all or any portion of the Property
which are not applied in accordance  with the terms of the  applicable  lease or
other agreement or delivered to Lender;

(d) for rent and other  payments  received by Borrower from tenants under leases
of all or any  portion of the  Property  paid more than one (1) month in advance
which are not either  applied to the ordinary and  necessary  expenses of owning
and  operating  the  Property,  paid to  Lender  or  otherwise  applied  against
Borrower's obligations hereunder or under the Loan Documents;

(e) for  rents,  issues,  profits  and  revenues  of all or any  portion  of the
Property received by Borrower after Borrower's  receipt of any notice of default
from Lender hereunder or under the Loan Documents in the event of any default by
Borrower  hereunder or thereunder  provided that (i) Borrower does not cure same
in accordance with the terms of the applicable loan documents,  (ii) Lender does
not otherwise waive such default,  or (iii) such sums are not either (x) applied
to the ordinary and  necessary  expenses of owning and  operating  the Property,
(y) paid  to Lender or  (z) otherwise  applied  against  Borrower's  obligations
hereunder  or under the other  Loan  Documents  including  the  payment  of debt
service;

(f) for damage to the  Property  as a result of the  intentional  misconduct  or
gross  negligence  of Borrower  or any of its  principals,  officers,  managers,
members, or general partners,  or any guarantor or any indemnitor,  or any agent
or  employee  of any such  persons,  or any removal of all or any portion of the
Property by such persons in violation of the terms of the Loan Documents, to the
full extent of the losses or damages  actually  incurred by Lender on account of
such damage or removal;

(g) for  Borrower's  failure  to pay any valid  taxes,  assessments,  mechanic's
liens,  materialmen's  liens or other  claims  which could  create  liens on any
portion of the  Property,  accruing  prior to the date  Lender  acquires  actual
possession  and control of the Property,  which would be superior to the lien or
security title of the Yakima Mortgage or the other Loan  Documents,  to the full
extent of the  amount  claimed  by any such lien  claimant;  provided,  however,
Borrower  shall have no  liability  for taxes,  assessments  or liens  (i) which
accrue  during any period of time when  Borrower is not in effective  receipt or
control of the revenue from the Property due to a  receivership,  foreclosure or
other  remedial  action by Lender,  (ii) to the extent of the funds  provided by
Borrower  into the  Impound  Account (as  defined in  Section 1.6  of the Yakima
Mortgage)  to pay such taxes and  assessments,  or  (iii) for  which  there were
inadequate  revenue  from the Property to pay after taking into account all sums
due and paid Lender during such period and all ordinary and reasonable operating
expenses  paid  during  such  period  (but  without   taking  into  account  any
distributions to members or owners of Borrower),

(h) breach of any  obligation  or  indemnity  of  Borrower  under the  Hazardous
Substances  Indemnity  Agreement  of even date made by  Borrower  and  WestCoast
Hospitality  Corporation,  a  Washington  corporation,  or  Section  1.30 of the
Mortgage;

(i)  for  fraud  or  material  misrepresentation  by  Borrower  or  any  of  its
principals,  officers, managers, members or general partners, any guarantor, any
indemnitor or any agent,  employee or other person authorized to make statements
or  representations  on behalf of Borrower,  any  principal,  officer,  manager,
member or general partner of Borrower,  or any guarantor or any  indemnitor,  to
the full  extent of any  losses,  damages  and  expenses  of  Lender on  account
thereof; and

(j) for any amounts paid under commercial leases (e.g., restaurants, gift shops,
etc.)  containing  early  lease  termination  options or  otherwise  paid by any
commercial  tenant(s) in consideration of an early  termination of any lease and
not delivered to Lender to be held in accordance with the Yakima Mortgage.

References  herein to particular  sections of the Loan Documents shall be deemed
references  to such  sections  as  affected  by  other  provisions  of the  Loan
Documents  relating  thereto.  Nothing  contained in this  section  shall (1) be
deemed to be a release or impairment of the indebtedness  evidenced by this Note
or the other obligations of Borrower under the Loan Documents or the lien of the
Loan Documents upon the Property,  or (2) preclude Lender from foreclosing under
the Loan  Documents  in case of any default or from  enforcing  any of the other
rights of Lender except as stated in this section, or (3) limit or impair in any
way whatsoever the Indemnity and Guaranty Agreement or the Hazardous  Substances
Indemnity  Agreement,  each of even date  herewith  executed  and  delivered  in
connection  with the  indebtedness  evidenced by this Note or release,  relieve,
reduce,  waive or impair in any way  whatsoever,  any obligation of any party to
such  Indemnity  and  Guaranty  Agreement  or  Hazardous   Substances  Indemnity
Agreement.

Notwithstanding  anything to the  contrary in this Note or any of the other Loan
Documents,  Lender shall not be deemed to have waived any right which Lender may
have under Section 506(a),  506(b),  1111(b) or any other provisions of the U.S.
Bankruptcy  Code  to  file a  claim  for the  full  amount  of the  indebtedness
evidenced  by this Note and the other  obligations  of  Borrower  under the Loan
Documents or to require that all collateral shall continue to secure all of such
indebtedness and obligations.

ARTICLE II - GENERAL CONDITIONS

2.1      No Waiver;  Amendment.
No  failure  to  accelerate  the debt  evidenced  hereby by  reason  of  default
hereunder,  acceptance of a partial or past due payment,  or indulgences granted
from time to time  shall be  construed  (i) as a  novation  of this Note or as a
waiver of such right of  acceleration  or of the right of Lender  thereafter  to
insist  upon  strict  compliance  with the terms of this Note in the event of an
occurrence of a later default,  or (ii) to prevent the exercise of such right of
acceleration  or any other  right  granted  hereunder  or under  any other  Loan
Document  or by any  applicable  laws in the event of an  occurrence  of a later
default; and Borrower hereby expressly waives the benefit of any statute or rule
of law or equity now provided,  or which may hereafter be provided,  which would
produce a result contrary to or in conflict with the foregoing.  No extension of
the time for the  payment  of this Note or any  installment  due  hereunder,  or
release of any party,  made by agreement with any person now or hereafter liable
for the payment of this Note shall operate to release, discharge, modify, change
or affect the original liability of Borrower under this Note, either in whole or
in part unless Lender agrees otherwise in writing.  This Note may not be changed
orally,  but only by an  agreement in writing  signed by the party  against whom
enforcement of any waiver, change, modification or discharge is sought.

2.2      Waivers.
Presentment  for  payment,  demand,  protest  and notice of demand,  protest and
nonpayment,  notice of intent to accelerate maturity,  notice of acceleration of
maturity and all other  notices are hereby waived by Borrower.  Borrower  hereby
further waives and renounces, to the fullest extent permitted by law, all rights
to the benefits of any statute of limitations and any moratorium, reinstatement,
marshalling,  forbearance, valuation, stay, extension, redemption, appraisement,
exemption and homestead now or hereafter  provided by the  Constitution and laws
of the United States of America and of each state thereof, both as to itself and
in and to all of its property,  real and personal,  against the  enforcement and
collection  of  the  obligations  evidenced  by  this  Note  or the  other  Loan
Documents.

2.3      Limit of Validity.
The provisions of this Note and of all agreements  between  Borrower and Lender,
whether  now  existing  or  hereafter  arising  and  whether  written  or  oral,
including,  but not limited to, the Loan Documents, are hereby expressly limited
so that in no  contingency or event  whatsoever,  whether by reason of demand or
acceleration  of the maturity of this Note or otherwise,  shall the amount paid,
or agreed to be paid to Lender for the use, forbearance,  retention or detention
of the money loaned under this Note and related  indebtedness exceed the maximum
amount  permissible  under applicable law. If, from any circumstance  whatsoever
(including,  without  limitation,  the  receipt  of any late  charge or  similar
amount),  performance or fulfillment of any provision hereof or of any agreement
between  Borrower and Lender shall,  at the time  performance  or fulfillment of
such provision shall be due, exceed the limit for interest  prescribed by law or
otherwise  transcend the limit of validity  prescribed  by applicable  law, then
ipso facto the obligation to be performed or fulfilled  shall be reduced to such
limit and if,  from any  circumstance  whatsoever,  Lender  shall  ever  receive
anything of value  deemed  interest by  applicable  law in excess of the maximum
lawful amount, an amount equal to any excessive interest shall be applied to the
reduction of the principal balance owing under this Note in the inverse order of
its  maturity  (whether or not then due) or at the option of Lender be paid over
to Borrower,  and not to the payment of interest.  All interest  (including  any
amounts or payments  deemed to be  interest)  contracted  for,  charged,  taken,
reserved,  paid or agreed to be paid to Lender shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full
term of this Note, including any extensions or renewals hereof, until payment in
full of the principal balance of this Note so that the interest thereof for such
full  period  will not  exceed  at any  time the  maximum  amount  permitted  by
applicable law. This  Section 2.3  will control all agreements  between Borrower
and Lender.

2.4      Use of Funds.
Borrower  hereby  warrants,  represents  and covenants  that no funds  disbursed
hereunder  shall  be  used  for  personal,  family,  household  or  agricultural
purposes.

2.5      Unconditional  Payment.
Except as specifically  provided  herein,  Borrower is and shall be obligated to
pay  principal,  interest and any and all other  amounts  which  become  payable
hereunder or under the other Loan Documents  absolutely and  unconditionally and
without any  abatement,  postponement,  diminution  or deduction and without any
reduction for counterclaim or setoff.  In the event that at any time any payment
received  by  Lender   hereunder  shall  be  deemed  by  a  court  of  competent
jurisdiction to have been a voidable  preference or fraudulent  conveyance under
any  bankruptcy,  insolvency or other debtor relief law, then the  obligation to
make such payment shall survive any cancellation or satisfaction of this Note or
return  thereof to Borrower and shall not be  discharged  or satisfied  with any
prior payment thereof or cancellation of this Note, but shall remain a valid and
binding  obligation  enforceable  in  accordance  with the terms and  provisions
hereof, and such payment shall be immediately due and payable upon demand.

2.6      Further  Assurances.
Borrower   shall  execute  and   acknowledge   (or  cause  to  be  executed  and
acknowledged)  and  deliver to Lender  all  reasonable  documents,  and take all
reasonable  actions,  reasonably required by Lender from time to time to confirm
the rights created under this Note and the other Loan Documents,  to protect and
further the  validity,  priority and  enforceability  of this Note and the other
Loan  Documents,  to subject to the Loan  Documents  any  property  of  Borrower
intended by the terms of any one or more of the Loan  Documents to be encumbered
by the Loan Documents, or otherwise carry out the purposes of the Loan Documents
and the transactions  contemplated thereunder;  provided,  however, that no such
further actions,  assurances and confirmations shall increase,  modify or change
Borrower's obligations under this Note or under the other Loan Documents.

2.7      Submission to Jurisdiction; Waiver of Jury Trial.

(1)  BORROWER,   TO  THE  FULL  EXTENT  PERMITTED  BY  LAW,  HEREBY   KNOWINGLY,
INTENTIONALLY  AND VOLUNTARILY,  WITH AND UPON THE ADVICE OF COMPETENT  COUNSEL,
(A) SUBMITS TO PERSONAL  JURISDICTION IN THE STATE WHERE THE PROPERTY IS LOCATED
OVER ANY SUIT,  ACTION OR PROCEEDING  BY ANY PERSON  ARISING FROM OR RELATING TO
THIS NOTE, (B) AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN
ANY STATE OR FEDERAL COURT OF COMPETENT  JURISDICTION SITTING IN EITHER THE CITY
OR THE COUNTY WHERE THE PROPERTY IS LOCATED,  (C) SUBMITS TO THE JURISDICTION OF
SUCH  COURTS,  AND (D) TO THE  FULLEST  EXTENT  PERMITTED  BY LAW,  AGREES  THAT
BORROWER WILL NOT BRING ANY ACTION,  SUIT OR PROCEEDING IN ANY OTHER FORUM,  AND
BORROWER  FURTHER  CONSENTS AND AGREES TO SERVICE OF ANY  SUMMONS,  COMPLAINT OR
OTHER LEGAL  PROCESS IN ANY SUCH SUIT,  ACTION OR  PROCEEDING  BY  REGISTERED OR
CERTIFIED U.S.  MAIL,  POSTAGE  PREPAID,  TO BORROWER AT THE ADDRESS FOR NOTICES
DESCRIBED  ON THE FIRST PAGE  HEREOF,  AND CONSENTS AND AGREES THAT SUCH SERVICE
SHALL  CONSTITUTE  IN EVERY  RESPECT  VALID AND  EFFECTIVE  SERVICE (BUT NOTHING
HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER
MANNER PERMITTED BY LAW).

(2)  BORROWER,   TO  THE  FULL  EXTENT  PERMITTED  BY  LAW,  HEREBY   KNOWINGLY,
INTENTIONALLY  AND VOLUNTARILY,  WITH AND UPON THE ADVICE OF COMPETENT  COUNSEL,
WAIVES,  RELINQUISHES  AND  FOREVER  FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BASED UPON,  ARISING OUT OF, OR IN ANY WAY RELATING TO THIS
NOTE OR ANY  CONDUCT,  ACT OR  OMISSION OF LENDER OR  BORROWER,  OR ANY OF THEIR
DIRECTORS,  OFFICERS,  PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY
OTHER  PERSONS  AFFILIATED  WITH LENDER OR  BORROWER,  IN EACH OF THE  FOREGOING
CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

2.8      GOVERNING LAW.
THIS NOTE SHALL BE INTERPRETED,  CONSTRUED AND ENFORCED ACCORDING TO THE LAWS OF
THE STATE OF WASHINGTON.

2.9      Miscellaneous.
The terms and  provisions  hereof shall be binding upon and inure to the benefit
of  Borrower  and  Lender  and  their   respective   heirs,   executors,   legal
representatives,   successors,   successors-in-title  and  assigns,  whether  by
voluntary  action of the parties or by  operation  of law. As used  herein,  the
terms  "Borrower"  and  "Lender"  shall be deemed to  include  their  respective
successors,  successors-in-title and assigns, whether by voluntary action of the
parties  or by  operation  of law.  Subject  to the  limitations  set  forth  in
Section 1.5 above, if Borrower consists of more than one person or entity,  each
shall be jointly and  severally  liable to perform the  obligations  of Borrower
under  this  Note.  All  personal  pronouns  used  herein,  whether  used in the
masculine,  feminine or neuter  gender,  shall  include all other  genders;  the
singular  shall  include  the  plural and vice  versa.  Titles of  articles  and
sections  are for  convenience  only and in no way  define,  limit,  amplify  or
describe the scope or intent of any provisions hereof. Capitalized terms used in
this Note and not otherwise  defined  herein shall have the meaning  ascribed to
them in the Mortgage or in the other Loan Documents. Time is of the essence with
respect  to all  provisions  of this  Note,  the  Mortgage  and the  other  Loan
Documents.  This Note and the other Loan Documents contain the entire agreements
between the parties hereto relating to the subject matter hereof and thereof and
all prior agreements  relative hereto and thereto which are not contained herein
or  therein  are   terminated.   All   notices,   demands,   requests  or  other
communications to be sent by one party to the other hereunder or required by law
shall be given and become effective as provided in the Yakima  Mortgage.  If any
provision  under this Note or the application  thereof to any entity,  person or
circumstance  shall be invalid,  illegal or  unenforceable  to any  extent,  the
remainder of this Note and the  application  of the  provisions  hereof to other
entities,  persons or  circumstances  shall not be affected thereby and shall be
enforced to the fullest extent permitted by law.

ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY,  EXTEND CREDIT, OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.

PROMISSORY NOTE - SIGNATURE PAGE
3011-1075/Red Lion Hotel Yakima Center

IN WITNESS WHEREOF, the Borrower, intending to be legally bound hereby, has duly
executed this Note to be effective as of the day and year first written above.
BORROWER:

WHC807, LLC,
a Delaware limited liability company


By:
       Name:      Arthur M. Coffey
       Title:     President

Schedule List

Schedule A - Mortgage Description - All Ten
Schedule B - Assignment Description - All Ten

SCHEDULE A
Mortgage Description - All Ten

(1) Deed of Trust,  Assignment of Rents,  Security  Agreement and Fixture Filing
(the "Eureka Mortgage") from WHC831, LLC to a trustee for the benefit of Lender,
as beneficiary, dated as of the date hereof, concerning certain property located
in Eureka, Humboldt County, California.

(2) Deed of Trust,  Assignment of Rents,  Security  Agreement and Fixture Filing
(the  "Redding  Mortgage")  from  WHC840, LLC  to a trustee  for the  benefit of
Lender, as beneficiary, dated as of the date hereof, concerning certain property
located in Redding, Shasta County, California.

(3) Deed of Trust and Security Agreement (the "Boise Mortgage") from WHC817, LLC
to a trustee for the  benefit of Lender,  as  beneficiary,  dated as of the date
hereof, concerning certain property located in Boise, Ada County, Idaho.

(4) Deed of Trust and  Security  Agreement  (the  "Twin  Falls  Mortgage")  from
WHC818, LLC to a trustee for the benefit of Lender, as beneficiary,  dated as of
the date hereof,  concerning  certain property located in Twin Falls, Twin Falls
County, Idaho.

(5) Deed of Trust and Security  Agreement (the "Salt Lake City  Mortgage")  from
WHC816, LLC to a trustee for the benefit of Lender, as beneficiary,  dated as of
the date hereof,  concerning  certain  property  located in Salt Lake City, Salt
Lake County, Utah.

(6) Deed of Trust,  Assignment  of Leases  and  Rents,  Security  Agreement  and
Fixture Filing (the "Kennewick  Mortgage") from WHC803, LLC to a trustee for the
benefit of  Lender,  as  beneficiary,  dated as of the date  hereof,  concerning
certain property located in Kennewick, Benton County, Washington.

(7) Deed of Trust,  Assignment  of Leases  and  Rents,  Security  Agreement  and
Fixture  Filing (the "Pasco  Mortgage")  from  WHC837, LLC  to a trustee for the
benefit of  Lender,  as  beneficiary,  dated as of the date  hereof,  concerning
certain property located in Pasco, Franklin County, Washington.

(8) Deed of Trust,  Assignment  of Leases  and  Rents,  Security  Agreement  and
Fixture Filing (the "Port Angeles  Mortgage") from  WHC839, LLC to a trustee for
the benefit of Lender, as beneficiary,  dated as of the date hereof,  concerning
certain property located in Port Angeles, Clallam County, Washington.

(9) Deed of Trust,  Assignment  of Leases  and  Rents,  Security  Agreement  and
Fixture Filing (the "Richland  Mortgage") from  WHC841, LLC to a trustee for the
benefit of  Lender,  as  beneficiary,  dated as of the date  hereof,  concerning
certain property located in Richland, Benton County, Washington.

(10) Deed of Trust,  Assignment  of Leases and  Rents,  Security  Agreement  and
Fixture  Filing (the "Yakima  Mortgage")  from  WHC807, LLC to a trustee for the
benefit of  Lender,  as  beneficiary,  dated as of the date  hereof,  concerning
certain property located in Yakima, Yakima County, Washington.

All of the foregoing deeds of trust listed above, excluding the Yakima Mortgage,
shall be collectively referred to herein as the "Other Mortgages".

SCHEDULE B
Assignment Description - All Ten

(1)  Assignment  of Leases  and Rents  (the  "Eureka  Assignment")  of even date
herewith by WHC831,  LLC in favor of Lender concerning  certain property located
in Eureka, Humboldt County, California.

(2)  Assignment  of Leases and Rents  (the  "Redding  Assignment")  of even date
herewith by WHC840,  LLC in favor of Lender concerning  certain property located
in Redding, Shasta County, California.

(3)  Assignment  of  Leases  and Rents  (the  "Boise  Assignment")  of even date
herewith by WHC817,  LLC in favor of Lender concerning  certain property located
in Boise, Ada County, Idaho.

(4)  Assignment of Leases and Rents (the "Twin Falls  Assignment")  of even date
herewith by WHC818,  LLC in favor of Lender concerning  certain property located
in Twin Falls, Twin Falls County, Idaho.

(5)  Assignment  of Leases and Rents (the "Salt Lake City  Assignment")  of even
date  herewith by WHC816,  LLC in favor of Lender  concerning  certain  property
located in Salt Lake City, Salt Lake County, Utah.

(6)  Assignment of Leases and Rents (the  "Kennewick  Assignment")  of even date
herewith by WHC803,  LLC in favor of Lender concerning  certain property located
in Kennewick, Benton County, Washington.

(7)  Assignment  of  Leases  and Rents  (the  "Pasco  Assignment")  of even date
herewith by WHC837,  LLC in favor of Lender concerning  certain property located
in Pasco, Franklin County, Washington.

(8) Assignment of Leases and Rents (the "Port Angeles  Assignment") of even date
herewith by WHC839,  LLC in favor of Lender concerning  certain property located
in Port Angeles, Clallam County, Washington.

(9)  Assignment  of Leases and Rents (the  "Richland  Assignment")  of even date
herewith by WHC841,  LLC in favor of Lender concerning  certain property located
in Richland, Benton County, Washington.

(10)  Assignment  of Leases and Rents  (the  "Yakima  Assignment")  of even date
herewith by WHC807,  LLC in favor of Lender concerning  certain property located
in Yakima, Yakima County, Washington.

All of the foregoing assignments of leases and rents listed above, excluding the
Yakima  Assignment,  shall be  collectively  referred  to herein  as the  "Other
Assignments."

Exhibit 10.4
Deed of Trust,  Assignment of Leases and Rents,  Security  Agreement and Fixture
Filing

BORROWER: WHC807, LLC, a Delaware limited liability company
LENDER: COLUMN FINANCIAL, INC., a Delaware corporation
LENDER: FIRST AMERICAN TITLE INSURANCE COMPANY (Trustee)
LEGAL DESCRIPTION: The complete legal description is on Exhibit A. ASSESSOR'S
PROPERTY TAX PARCEL ACCOUNT NUMBERS: 191319-12561

THIS INSTRUMENT PREPARED BY
AND WHEN RECORDED, RETURN
TO:
Kevin A. Sullivan, Esq.
Winstead Sechrest & Minick P.C.
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas  75270

                        Coversheet Recording Information:

                                 Loan No. 399735

                              TO BE RECORDED IN THE
                            DEED OF TRUST RECORDS OF
                            YAKIMA COUNTY, WASHINGTON

THIS DEED OF TRUST,  ASSIGNMENT  OF LEASES AND  RENTS,  SECURITY  AGREEMENT  AND
FIXTURE  FILING  (this "Deed of Trust"),  executed on June 24,  2003,  but to be
effective  as of  June 27,  2003,  is entered  into by  WHC807,  LLC, a Delaware
limited liability company,  as grantor for all purposes hereunder  ("Borrower"),
whose  address is c/o  WestCoast  Hospitality  Corporation,  201 W. North  River
Drive, Suite 100, Spokane, Washington 99201, Attention: Chief Financial Officer,
to FIRST AMERICAN TITLE INSURANCE COMPANY, as Trustee ("Trustee"), whose address
is  National  Commercial  Services  Division,   2101 Fourth  Avenue,  Suite 800,
Seattle, Washington 98121, for the benefit of COLUMN FINANCIAL, INC., a Delaware
corporation, as beneficiary for all purposes hereunder ("Lender"), whose address
is 11 Madison  Avenue,  5th Floor,  New York,  New York  10010-3629,  Attention:
Edmund  Taylor.  For all state  law,  statutory  and other  purposes  hereunder,
(i) the term  "Borrower" as used herein shall be deemed to mean a grantor of the
Property as described herein the same as if the term "grantor" were used in lieu
of the term "Borrower" throughout this Deed of Trust, and (ii) the term "Lender"
as used herein shall be deemed to mean a beneficiary of the Property with all of
the rights conferred hereby the same as if the term  "beneficiary"  were used in
lieu of the term "Lender" throughout this Deed of Trust.

                              W I T N E S S E T H:

FOR GOOD AND VALUABLE  CONSIDERATION,  including the indebtedness herein recited
and the trust herein  created,  the receipt and  sufficiency of which are hereby
acknowledged, Borrower hereby irrevocably grants, transfers, conveys and assigns
to Trustee, IN TRUST WITH POWER OF SALE, for the benefit and security of Lender,
under and subject to the terms and conditions  hereinafter set forth, all of the
following   described   property,   whether  now  owned  or  hereafter  acquired
(collectively, the "Property"):

(A) All that certain real  property  situated in the County of Yakima,  State of
Washington,  more  particularly  described  on  Exhibit A  attached  hereto  and
incorporated  herein by this  reference  (the "Land"),  together with all of the
easements,  rights,  privileges,   franchises,   tenements,   hereditaments  and
appurtenances  now or hereafter  thereunto  belonging or in any way appertaining
thereto,  and all of the  estate,  right,  title,  interest,  claim  and  demand
whatsoever  of  Borrower  therein or  thereto,  either at law or in  equity,  in
possession or in expectancy, now owned or hereafter acquired;

(B) All structures, buildings and improvements of every kind and description now
or at any time hereafter located or placed on the Land (the "Improvements");

(C) All easements,  rights-of-way,  strips and gores of land,  vaults,  streets,
ways,  alleys,  passages,  sewer rights,  and other  emblements now or hereafter
located  on the Land or under or above the same or any part or  parcel  thereof,
and  all  estates,  rights,  titles,  interests,  tenements,  hereditaments  and
appurtenances,  reversions  and  remainders  whatsoever,  in any way  belonging,
relating or appertaining to the Property or any part thereof, or which hereafter
shall in any way belong, relate or be appurtenant thereto,  whether now owned or
hereafter acquired by Borrower;

(D)  All  furniture,  furnishings,  fixtures,  goods,  equipment,  inventory  or
personal property owned by Borrower and now or hereafter located on, attached to
or used in or about the Improvements,  including,  but not limited to, all items
of personal property located within or adjacent to the Improvements and included
within the definition of "Property and Equipment"  and  "Inventories"  under the
Uniform  System of  Accounts  for  Hotels as  published  by the  American  Hotel
Association of the United States and Canada (the "Uniform  System of Accounts"),
and  further  including,   without  limitation,  all  linen,  china,  glassware,
tableware,   uniforms,  all  machines,  engines,  boilers,  dynamos,  elevators,
stokers, tanks, cabinets,  awnings, screens, shades, blinds, carpets, draperies,
lawn mowers, and all appliances, plumbing, heating, air conditioning,  lighting,
ventilating, refrigerating, disposals and incinerating equipment, guest ledgers,
telephone systems,  televisions and television systems, computer systems and all
fixtures  and  appurtenances  thereto,  and such other  goods and  chattels  and
personal property owned by Borrower as are now or hereafter used or furnished in
operating  the  Improvements,  or the  activities  conducted  therein,  and  all
building  materials  and  equipment  hereafter  situated on or about the Land or
Improvements,  and all  warranties  and  guaranties  relating  thereto,  and all
additions thereto and substitutions and replacements  therefor (exclusive of any
of the foregoing owned or leased by tenants of space in the Improvements);

(E) All water,  water  courses,  ditches,  wells,  reservoirs and drains and all
water,  ditch,  well,  reservoir  and  drainage  rights  and  powers  which  are
appurtenant  to, located on, under or above or used in connection  with the Land
or the  Improvements,  or any part  thereof,  together  with (i) all  utilities,
utility lines, utility commitments,  utility capacity, capital recovery charges,
impact fees and other fees paid in connection with same,  (ii) reimbursements or
other  rights  pertaining  to utility or utility  services  provided to the Land
and/or Improvements and (iii) the present or future use or availability of waste
water  capacity,  or other  utility  facilities to the extent same pertain to or
benefit  the  Land  and/or  Improvements,  including,  without  limitation,  all
reservations  of or commitments or letters  covering any such use in the future,
whether now existing or hereafter created or acquired;

(F) All minerals, crops, timber, trees, shrubs, flowers and landscaping features
now or hereafter located on, under or above the Land;

(G) All cash funds,  deposit accounts and other rights and evidence of rights to
cash, now or hereafter created which are held by Lender pursuant to this Deed of
Trust or any other of the Loan Documents (as  hereinafter  defined),  including,
without  limitation,  all funds now or  hereafter on deposit in the Reserves (as
hereinafter defined);

(H) All leases, licenses, tenancies, concessions and occupancy agreements of the
Land or the  Improvements  now or  hereafter  entered  into by Borrower  and all
rents,  royalties,  issues,  profits,  bonus money, revenue,  income, rights and
other benefits,  room rentals, and revenues of any kind derived from all sources
(collectively,  the  "Rents"  or  "Rents  and  Profits")  of  the  Land  or  the
Improvements,  or the fixtures or equipment,  now or hereafter  arising from the
use or  enjoyment  of all or any  portion  thereof or from any present or future
lease (including,  without  limitation,  oil, gas and mineral leases),  license,
tenancy,  concession,  occupancy agreement or other agreement pertaining thereto
or arising  from any of the  Contracts  (as  hereinafter  defined) or any of the
General Intangibles (as hereinafter  defined) and all cash or securities held by
Borrower  (the  "Security  Deposits")  that secure  performance  by the tenants,
lessees, licensees or guests, as applicable, of their obligations under any such
leases,  licenses,  concessions  or occupancy  agreements,  whether said cash or
securities  are to be held  until the  expiration  of the terms of said  leases,
licenses,  concessions or occupancy  agreements or applied to one or more of the
installments of rent coming due prior to the expiration of said terms,  subject,
however, to the provisions contained in Section 1.11 hereinbelow;

(I) All  contracts  and  agreements  now or hereafter  entered by Borrower  into
covering  any  part  of  the  Land  or  the  Improvements   (collectively,   the
"Contracts")  and all revenue,  income and other  benefits  thereof,  including,
without  limitation,   management  agreements,   franchise  agreements,  service
contracts, maintenance contracts, equipment leases, personal property leases and
so called  "patronage"  agreements,  agreements  relating to the  collection  of
receivables or use of customer lists,  all bookings and  reservations  for space
within the  Improvements  or other  information,  and any contracts or documents
relating to construction on any part of the Land or the Improvements  (including
plans,  specifications,  studies, drawings,  surveys, tests, operating and other
reports, bonds and governmental  approvals) or to the management or operation of
any part of the Land or the Improvements;

(J) All  present  and future  monetary  deposits  given to any public or private
utility  with respect to utility  services  furnished to any part of the Land or
the Improvements;

(K) All present and future  funds,  accounts,  instruments  (including,  without
limitation,  promissory notes),  investment property,  letter-of-credit  rights,
letters  of  credit,  money,   supporting   obligations,   accounts  receivable,
documents,  causes of action,  claims, general intangibles  (including,  without
limitation,  payment intangibles and software,  trademarks, trade names, service
marks and  symbols now or  hereafter  used by  Borrower  in  connection  with or
related to any part of the Land or the Improvements, all names by which the Land
or the Improvements may be operated or known (specifically  excluding,  however,
the mark "Red Lion" or  "WestCoast"  or related  marks),  all rights to carry on
business under such names,  all telephone  numbers or listings,  and all rights,
interest and privileges which Borrower has or may have as developer or declarant
under any covenants,  restrictions or declarations now or hereafter  relating to
the Land or the  Improvements)  and all notes or chattel paper (whether tangible
or electronic)  now or hereafter owned by Borrower and arising from or by virtue
of Grantor's operations related to the Land or the Improvements and all customer
lists, other lists and business information relating in any way to the Land, the
Improvements or the use thereof (collectively, the "General Intangibles");

(L) All water taps,  sewer taps,  certificates  of occupancy,  permits,  special
permits, uses, licenses, franchises, certificates, consents, approvals and other
rights and privileges now or hereafter  obtained in connection  with the Land or
the Improvements and all present and future  warranties and guaranties  relating
to the  Improvements  or to any  equipment,  fixtures,  furniture,  furnishings,
personal property or components of any of the foregoing now or hereafter located
or installed on the Land or the Improvements;

(M) All building  materials,  supplies and equipment now or hereafter  placed on
the  Land or in the  Improvements  and  all  architectural  renderings,  models,
drawings, plans,  specifications,  studies and data now or hereafter relating to
the Land or the Improvements;

(N) All right,  title and  interest  of Borrower  in any  insurance  policies or
binders now or hereafter relating to the Property (whether or not such insurance
was requested or required by Lender), including any unearned premiums thereon;

(O) All proceeds,  products,  substitutions and accessions (including claims and
demands  therefor) of the conversion,  voluntary or  involuntary,  of any of the
foregoing  into  cash  or  liquidated  claims,  including,  without  limitation,
proceeds of insurance  (whether or not such  insurance was requested or required
by Lender) and condemnation awards; and

(P) All other or greater rights and interests of every nature in the Land or the
Improvements and in the possession or use thereof and income therefrom,  whether
now owned or hereafter acquired by Borrower.

FOR THE PURPOSE OF SECURING:

(1) The debt evidenced by and interest and all other sums owed pursuant to those
certain  Promissory  Notes (such  Promissory  Notes,  together  with any and all
renewals,    modifications,     amendments,    restatements,     consolidations,
substitutions, replacements and extensions thereof, are hereinafter collectively
referred  to as the  "Note")  all being of even date with this Deed of Trust and
having a maturity  date of July 11,  2013,  made by the entities as indicated on
Exhibit D  attached hereto and  incorporated  herein by reference and payable to
the order of Lender in the original  principal amounts as indicated on Exhibit D
(collectively,  the "Loan" or the "Loan Amount"), together with interest and any
yield maintenance premiums or other fees as therein provided;

(2) The  full and  prompt  payment  and  performance  of all of the  provisions,
agreements,  covenants  and  obligations  herein  contained and contained in any
other agreements, documents or instruments now or hereafter evidencing, securing
or otherwise relating to the indebtedness  evidenced by the Note (the Note, this
Deed of Trust,  the  Other  Deeds of  Trust,  as  described  on  Exhibit E,  the
Assignment,  as hereinafter  defined,  and such other agreements,  documents and
instruments related thereto, together with any and all renewals,  modifications,
amendments,  restatements,  consolidations,   substitutions,  replacements,  and
extensions and modifications  thereof, are hereinafter  collectively referred to
as the "Loan Documents") and the payment of all other sums therein covenanted to
be paid;

(3) Any and all future or additional  advances  (whether or not obligatory) made
by Lender to protect or preserve the  Property or the lien or security  interest
created hereby on the Property, or for taxes, assessments, operating expenses or
insurance  premiums  as  hereinafter  provided  or  for  performance  of  any of
Borrower's  obligations  hereunder or under the other Loan  Documents or for any
other purpose provided herein or in the other Loan Documents (whether or not the
original  Borrower  remains  the  owner  of the  Property  at the  time  of such
advances)  together  with  interest  thereon at the  Default  Interest  Rate (as
defined in the Note); and

(4) Any and all other  indebtedness now owing or which may hereafter be owing by
Borrower  to  Lender  and  which  is  evidenced  by a  promissory  note or other
agreement  which  specifically  states that it is intended to be secured by this
Deed  of  Trust,  and all  renewals,  modifications,  amendments,  restatements,
consolidations, substitutions, replacements and extensions thereof.

(All of the sums  referred  to in  Subsections (1)  through (4) above are herein
sometimes referred to as the "secured indebtedness" or the "indebtedness secured
hereby").

PROVIDED,  HOWEVER, that if the principal and interest and all other sums due or
to become due under the Note, including, without limitation, any prepayment fees
required pursuant to the terms of the Note, shall have been paid at the time and
in the manner  stipulated  therein and all other sums payable  hereunder and all
other  indebtedness  secured hereby shall have been paid and all other covenants
contained in the Loan Documents  shall have been  performed,  then, upon written
request of Lender stating that all  indebtedness  secured hereby have been paid,
and  upon  surrender  of  this  Deed  of  Trust  and the  Note  to  Trustee  for
cancellation  and  retention  and upon  payment by Borrower of  Trustee's  fees,
Trustee shall reconvey to Borrower,  or the person or persons  legally  entitled
thereto,  without warranty, any portion of the Property then held hereunder. The
recitals in such  reconveyance of any matters or facts shall be conclusive proof
of the truthfulness thereof. The grantee in any reconveyance may be described as
"the person or persons legally entitled thereto."

ARTICLE I
COVENANTS OF BORROWER

For the purpose of further securing the indebtedness  secured hereby and for the
protection  of  the  security  of  this  Deed  of  Trust,  for  so  long  as the
indebtedness  secured  hereby  or any  part  thereof  remains  unpaid,  Borrower
represents, covenants and agrees as follows:

1.1 Warranties of Borrower. Borrower, for itself and its successors and assigns,
does hereby represent,  warrant and covenant to and with Lender,  its successors
and assigns, that as of the date hereof:

(a)  Borrower  has good,  marketable  and  indefeasible  fee simple title to the
Property,  subject  only to those  matters  expressly  set  forth  on  Exhibit B
attached  hereto  and by this  reference  incorporated  herein  (the  "Permitted
Exceptions"),  and has full power and lawful authority to grant, bargain,  sell,
convey, assign, transfer and encumber its interest in the Property in the manner
and form hereby done or intended.  None of the Permitted  Exceptions  materially
interferes with the security  intended to be provided by this Deed of Trust, the
current  primary use of the  Property or the current  ability of the Property to
generate  income  sufficient  to service the Loan.  Borrower  will  preserve its
interest in and title to the Property  and will  forever  warrant and defend the
same to  Trustee  and Lender  against  any and all  claims  whatsoever  and will
forever  warrant and defend the  validity  and priority of the lien and security
interest   created  herein  against  the  claims  of  all  persons  and  parties
whomsoever,  subject  to the  Permitted  Exceptions  and such  matters as may be
approved  in writing by Lender  pursuant  to this Deed of Trust.  The  foregoing
warranty of title shall survive the  foreclosure,  exercise of any power of sale
or  other  enforcement  of this  Deed of  Trust  (whether  by  power  of sale or
otherwise),  and shall inure to the benefit of and be  enforceable  by Lender in
the event Lender  acquires  title to the Property  pursuant to any  foreclosure,
exercise of any power of sale or otherwise;

(b) No bankruptcy  or  insolvency  proceedings  are pending or  contemplated  by
Borrower  or, to the best  knowledge  of  Borrower,  against  Borrower  or by or
against any endorser, cosigner or guarantor of the Note;

(c)  To  Borrower's  best  knowledge,  all  reports,  certificates,  affidavits,
statements and other data furnished by Borrower to Lender in connection with the
Loan are true and correct in all material  respects and do not omit to state any
fact or  circumstance  necessary to make the  statements  contained  therein not
misleading;

(d) The execution,  delivery and performance of this Deed of Trust, the Note and
all of the other  Loan  Documents  have been duly  authorized  by all  necessary
action  to be  taken,  and are  binding  and  enforceable  against  Borrower  in
accordance with the respective terms thereof and do not contravene,  result in a
breach of or  constitute  (upon the  giving of notice or the  passage of time or
both) a default  under the  partnership  agreement,  certificate  or articles of
incorporation or other  organizational  documents of Borrower or any contract or
agreement of any nature to which Borrower is a party or by which Borrower or any
of its  property  may be bound and to the best of  Borrower's  knowledge  do not
violate or  contravene  any law,  order,  decree,  rule or  regulation  to which
Borrower is subject;

(e) To  Borrower's  best  knowledge,  Borrower  is not  required  to obtain  any
consent,  approval or authorization from or to file any declaration or statement
with,  any  governmental  authority  or the  agency in  connection  with or as a
condition to the execution,  delivery or performance of this Deed of Trust,  the
Note or the other Loan Documents which has not been so obtained or filed;

(f) To Borrower's  best  knowledge,  Borrower has obtained or made all necessary
(i) consents,  approvals and  authorizations and registrations and filings of or
with all  governmental  authorities  or agencies and  (ii) consents,  approvals,
waivers and notifications of partners, stockholders, members, creditors, lessors
and other  non-governmental  persons and/or  entities,  in each case,  which are
required to be obtained or made by Borrower in connection with the execution and
delivery of, and the performance by Borrower of its obligations  under, the Loan
Documents;

(g) Borrower is not an  "investment  company," or a company  "controlled"  by an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended;

(h) No part of the proceeds of the  indebtedness  secured hereby will be used by
Borrower for the purpose of purchasing  or acquiring  any "margin  stock" within
the meaning of  Regulations T,  U or X of the Board of  Governors of the Federal
Reserve  System or for any other purpose which would be  inconsistent  with such
Regulations T,  U or X or any other  Regulations of such Board of Governors,  or
for any purpose  prohibited by legal requirements or by the terms and conditions
of the Loan Documents;

(i) Borrower and, if Borrower is a partnership, any general partner of Borrower,
has filed all federal,  state and local tax returns required to be filed and has
paid or made adequate provision for the payment of all federal,  state and local
taxes,  charges and assessments,  including sales and payroll taxes,  payable by
Borrower and its general partners, if any. Borrower and its general partners, if
any,  believe that their  respective tax returns properly reflect the income and
taxes of Borrower and said  general  partners,  if any, for the periods  covered
thereby, subject only to reasonable adjustments required by the Internal Revenue
Service or other applicable tax authority upon audit;

(j) Borrower is not an "employee  benefit plan," as defined in  Section 3(3)  of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), which
is subject to Title I  of ERISA and the  assets of  Borrower  do not  constitute
"plan  assets"  of one or more  such  plans  within  the  meaning  of  29 C.F.R.
Section 2510.3-101;

(k) To Borrower's best knowledge, the Land and the Improvements and the intended
use thereof by Borrower comply with all applicable restrictive covenants, zoning
ordinances,  subdivision  and building  codes,  flood disaster laws,  applicable
health and environmental  laws and regulations and all other ordinances,  orders
or requirements issued by any state, federal or municipal  authorities having or
claiming jurisdiction over the Property. To Borrower's best knowledge,  the Land
and  Improvements  constitute  a separate  tax parcel for purposes of ad valorem
taxation. To Borrower's best knowledge, the Land and Improvements do not require
any rights over, or restrictions against, other property in order to comply with
any of the aforesaid governmental ordinances,  orders or requirements except for
such rights and  restrictions  which are described in the Title Insurance Policy
(as hereinafter defined);

(l) All utility services  necessary and sufficient for the full use,  occupancy,
operation and  disposition of the Land and the  Improvements  for their intended
purposes are available to the Property,  including water, storm sewer,  sanitary
sewer,  gas,   electric,   cable  and  telephone   facilities,   through  public
rights-of-way or perpetual  private  easements  reflected in the title insurance
policy  insuring  the lien of this Deed of Trust  and  approved  by Lender  (the
"Title Insurance Policy");

(m) All streets, roads, highways,  bridges and waterways necessary for access to
and  full  use,  occupancy,  operation  and  disposition  of the  Land  and  the
Improvements  have been  completed,  have been  dedicated to and accepted by the
appropriate  municipal  authority and are open and available to the Land and the
Improvements without further condition or cost to Borrower;

(n) All curb cuts,  driveways and traffic signals shown on the survey  delivered
to Lender prior to the execution and delivery of this Deed of Trust are existing
and to Borrower's  best knowledge  have been fully  approved by the  appropriate
governmental authority;

(o)  To  Borrower's  best  knowledge,  there  are no  judicial,  administrative,
mediation or arbitration  actions,  suits or  proceedings  pending or threatened
against or  affecting  Borrower  (and any member of  Borrower)  or the  Property
which, if adversely determined,  would have a material adverse effect on (a) the
Property,  (b) the  business,   prospects,   profits,  operations  or  condition
(financial  or  otherwise)  of  Borrower,   (c) the  enforceability,   validity,
perfection or priority of the lien of any Loan Document,  or (d) the  ability of
Borrower to perform any  obligations  under any Loan Document  (collectively,  a
"Material Adverse Effect");

(p) As of the  date of  this  Deed  of  Trust  (i) the  Property  is  free  from
delinquent water charges, sewer rents, taxes and assessments and from unrepaired
damage caused by fire,  flood,  accident or other casualty,  and (ii) no part of
the Land or the Improvements  has been taken in condemnation,  eminent domain or
like  proceeding nor is any such proceeding  pending or to Borrower's  knowledge
and belief, threatened or contemplated;

(q) Borrower possesses all franchises,  patents,  copyrights,  trademarks, trade
names, licenses (including,  without limitation,  liquor licenses),  and permits
(collectively,   the  "Permits")  adequate  for  the  conduct  of  its  business
substantially  as now  conducted  or, with respect to liquor  licenses,  has the
right to use the same in the operation of the Property pursuant to legal,  valid
and  enforceable  agreements,  all fees due and payable in  connection  with the
Permits have been paid and the Property and the conduct of  Borrower's  business
thereof materially complies with the Permits;

(r) Except as set forth in the Title Insurance  Policy insuring the lien of this
Deed of Trust and to Borrower's  best  knowledge,  no  improvements on adjoining
properties  encroach  upon the  Property.  To  Borrower's  best  knowledge,  the
Improvements  are  structurally  sound,  in good  repair  and free of defects in
materials and workmanship and have been constructed and installed in substantial
compliance  with the  plans  and  specifications  relating  thereto.  All  major
building systems located within the Improvements, including, without limitation,
the  heating  and air  conditioning  systems  and the  electrical  and  plumbing
systems, are in good working order and condition,  all of the guest rooms in the
Improvements  are in good condition and available for regular  occupancy and the
lobby,  restaurant and lounge  facilities,  meeting  rooms,  "back-of-the-house"
areas,  parking  facilities  and other  public areas are in good  condition  and
available for regular use. The  Improvements  and  Borrower's  operations of its
business  materially comply with the requirements of the Franchise Agreement (as
hereinafter defined);

(s) There are no security  agreements or financing  statements  affecting any of
the Property other than the security agreements and financing statements created
in favor of Lender;

(t) Except as previously disclosed in Borrower's Certification Regarding Project
Documents and Financial Information dated of even date herewith and delivered to
Lender or  otherwise  in  writing  by  Borrower  to  Lender,  and other  Manager
Compensation  Systems  (hereinafter   defined),   there  is  no:  (i) collective
bargaining  agreement  and  other  labor  agreement  to  which  Borrower  or the
Property,  or any portion  thereof,  is a party or by which  either is or may be
bound;  (ii) employment,  profit sharing,  deferred  compensation,  bonus, stock
option,  stock purchase,  pension,  retainer,  consulting,  retirement,  health,
welfare, or incentive plan or contract to which Borrower or the Property, or any
portion  thereof is a party, or by which either is or may be bound or (iii) plan
and agreement  under which  "fringe  benefits"  (including,  but not limited to,
vacation  plans or programs,  and related or similar  dental or medical plans or
programs, and related or similar benefits) are afforded to employees of Borrower
or the  Property,  or any portion  thereof.  As used herein,  the term  "Manager
Compensation  Systems" shall mean those certain incentive  compensation  systems
and  compensation/benefit  programs  for  employees  of the Manager  designed to
promote increased customer use of the Property. Borrower has not violated in any
material  respects any applicable  laws,  rules and regulations  relating to the
employment  of labor,  including  those  relating  to wages,  hours,  collective
bargaining  and the payment and  withholding of taxes and other sums as required
by appropriate governmental authorities;

(u) The Property is free and clear of any mechanics' or  materialmen's  liens or
liens in the nature thereof,  and no rights are outstanding that under law would
give rise to any such liens, any of which liens are or may be prior to, or equal
with, the lien of this Deed of Trust,  except those which are insured against by
the Title Insurance Policy;

(v) Except as  disclosed in the Title  Insurance  Policy,  no Existing  Lease or
Contract  or  easement,  right-of-way,   permit  or  declaration  (collectively,
"Property  Agreements")  provides  any party  with the right to obtain a lien or
encumbrance upon the Property superior to the lien of this Deed of Trust;

(w) Borrower has  delivered to Lender true,  correct and complete  copies of all
Property  Agreements and no default  exists or would exist,  with the passing of
time,  or the giving of notice,  or both,  under any  Property  Agreement  which
would, in the aggregate, have a Material Adverse Effect;

(x) To the best  knowledge of Borrower,  no offset or any right of offset exists
respecting  continued  contributions  to be made by any  party  to any  Property
Agreement except as expressly set forth herein.  Except as previously  disclosed
to Lender in writing, no material exclusions or restrictions on the utilization,
leasing or improvement of the Property (including non-compete  agreements) exist
in any Property Agreement;

(y) All work,  if any, to be  performed  by Borrower  under each of the Property
Agreements has been  substantially  performed,  all  contributions to be made by
Borrower to any party to such Property  Agreements have been made, and all other
conditions to such party's obligations thereunder have been satisfied;

(z) The Land is taxed  separately  without  regard to any other real  estate and
constitutes a legally  subdivided  lot under all applicable  legal  requirements
(or, if not  subdivided,  no subdivision or platting of the Property is required
under  applicable  legal  requirements),  and for all purposes may be mortgaged,
conveyed,  pledged,  hypothecated,  assigned  or  otherwise  dealt  with  as  an
independent parcel;

(aa) The Land forms no part of any property  owned,  used or claimed by Borrower
as a residence  or business  homestead  and is not exempt from forced sale under
the  laws of the  State  in which  the  Property  is  located.  Borrower  hereby
disclaims  and  renounces  each and  every  claim to all or any  portion  of the
Property as a homestead.  The Loan  evidenced by the Loan  Documents is made and
transacted  solely  for  business,  investment,   commercial  or  other  similar
purposes. No part of the Property is or will be used for agricultural or farming
purposes;

(bb) There are no  outstanding  options  or rights of first  offer or refusal to
purchase all or any portion of the Property or  Borrower's  interest  therein or
ownership  thereof made by Borrower and to Borrower's best knowledge made by any
other party;

(cc) There are no actions,  suits,  proceedings  or orders of record or of which
Borrower  has notice,  and, to the best of  Borrower's  knowledge,  there are no
inquiries or  investigations,  pending or threatened,  in any such case against,
involving or affecting  the Property,  at law or in equity,  or before or by any
federal, state, municipal or other governmental department,  commission,  board,
bureau, agency or instrumentality,  domestic or foreign,  alleging the violation
of any  federal,  state or local law,  statute,  ordinance,  rule or  regulation
relating to  Environmental  Laws.  Furthermore,  Borrower  has not  received any
written claim, notice or opinion that the ownership or operation of the Property
violates any federal, state or local law, statute,  ordinance, rule, regulation,
decree, order, and/or permit relating to Environmental Laws, and, to the best of
Borrower's knowledge, no valid basis for any proceeding, action or claim of such
nature exists;

(dd) The representations and warranties  contained in this Deed of Trust, or the
review and inquiry  made on behalf of Borrower  therefor,  have all been made by
persons   having  the   requisite   expertise  and  knowledge  to  provide  such
representations  and  warranties.  No  statement or fact made by or on behalf of
Borrower  in this  Deed of Trust or in any  certificate,  document  or  schedule
furnished to Lender pursuant hereto, contains any untrue statement of a material
fact or omits to state any material fact necessary to make statements  contained
therein or herein not  misleading  (which may be to  Borrower's  best  knowledge
where so provided  herein).  There is no fact presently  known to Borrower which
has not been disclosed to Lender which would have a Material Adverse Effect; and

(ee) Any  lease,  license  or  occupancy  agreement  now in effect  permits  the
application of insurance and condemnation proceeds as provided herein.

1.2      Defense of Title.
If,  while  this Deed of Trust is in force,  the  title to the  Property  or the
interest  of  Lender  or  Trustee  therein  shall be the  subject,  directly  or
indirectly,  of any  action at law or in  equity,  or be  attached  directly  or
indirectly,  or  endangered,  clouded  or  adversely  affected  in  any  manner,
Borrower,  at Borrower's expense,  shall take all necessary and proper steps for
the  defense of said title or  interest,  including  the  employment  of counsel
reasonably approved by Lender, the prosecution or defense of litigation, and the
compromise or discharge of claims made against said title or interest.

1.3      Performance  of  Obligations.
Borrower  shall  pay  when  due  the  principal  of  and  the  interest  on  the
indebtedness secured hereby including all charges,  fees and other sums required
to be paid by Borrower as provided  in the Loan  Documents,  and shall  observe,
perform  and  discharge  all  obligations  and  conditions,  and comply with all
prohibitions,  covenants and agreements to be observed,  performed or discharged
by Borrower set forth in the Loan Documents in accordance  with their terms.  In
the event that Borrower is in default under its  obligations  under this Deed of
Trust or under any of the other Loan Documents and the same is continuing  after
any applicable cure period,  Lender may,  without  limiting or waiving any other
rights or remedies of Lender hereunder, perform such obligations of Borrower and
any and all costs  and  expenses  reasonably  incurred  by Lender in  connection
therewith,  together  with  interest  thereon at the Default  Interest  Rate (as
defined in the Note) from the date  incurred by Lender  until  actually  paid by
Borrower,  shall be immediately  paid by Borrower on demand and shall be secured
by this Deed of Trust and by all of the other Loan Documents securing all or any
part of the indebtedness evidenced by the Note.

1.4      Insurance.
Borrower  shall,  at  Borrower's  expense,  maintain  in force and effect on the
Property at all times while this Deed of Trust continues in effect the following
insurance:

(a) "All-risk"  coverage  insurance  against loss or damage to the Property from
all-risk  perils,  with any and all  exclusions  subject to Lender  approval and
otherwise satisfactory to Lender. The amount of such insurance shall be not less
than  one  hundred  percent  (100%)  of  the  full   replacement   cost  of  the
Improvements,  furniture,  furnishings,  fixtures,  equipment  and  other  items
(whether  personalty or fixtures) included in the Property and owned by Borrower
from time to time, without reduction for depreciation.  The determination of the
replacement  cost  amount  shall  be  adjusted   annually  to  comply  with  the
requirements of the insurer issuing such coverage or, at Lender's  election,  by
reference to such indexes, appraisals or information as Lender determines in its
reasonable  discretion.  Full  replacement  cost,  as used herein,  means,  with
respect to the  Improvements,  the cost of replacing  the  Improvements  without
regard to deduction  for  depreciation,  exclusive  of the cost of  excavations,
foundations  and  footings  below the lowest  basement  floor,  and means,  with
respect to such furniture, furnishings, fixtures, equipment and other items, the
cost of replacing the same.  Each policy or policies shall contain a replacement
cost endorsement and either an agreed amount endorsement (to avoid the operation
of any co-insurance provisions) or a waiver of any co-insurance provisions,  all
subject to Lender's approval.

(b) Commercial general liability  insurance for personal injury,  bodily injury,
death and property damage liability in amounts not less than  $5,000,000.00  per
occurrence,  $6,000,000.00  aggregate  (inclusive of umbrella  coverage) or such
lesser  amount as Lender in Lender's  sole  discretion  may  accept,  for bodily
injury,  personal injury and property damage. Lender hereby retains the right to
periodically  review the amount of said liability  insurance being maintained by
Borrower  and to require an increase in the amount of said  liability  insurance
should  Lender deem an increase to be  reasonably  prudent  under then  existing
circumstances.

(c)  Insurance  covering  the  major  components  of the  central  heating,  air
conditioning and ventilating  systems,  boilers,  other pressure  vessels,  high
pressure  piping and  machinery,  elevators  and  escalators,  if any, and other
similar  equipment  installed  in the  Improvements,  in an amount  equal to one
hundred percent (100%) of the full replacement  cost of the  Improvements  which
policies shall insure against  physical  damage to and loss of occupancy and use
of the Improvements arising out of an accident or breakdown covered thereunder.

(d) If the Land or any part thereof is  identified  by the  Secretary of Housing
and  Urban  Development  as  being  situated  in an  area  now  or  subsequently
designated as having special flood hazards (including, without limitation, those
areas designated as Zone A or Zone V), flood insurance in an amount equal to one
hundred  percent  (100%)  of the  replacement  cost of the  Improvements  or the
maximum amount of flood  insurance  available under the National Flood Insurance
Program, whichever is the lesser.

(e)  During  the  period  of any  construction  on the  Land  or  renovation  or
alteration of the Improvements, a so-called "Builder's All-Risk Completed Value"
or "Course  of  Construction"  insurance  policy in  non-reporting  form for any
Improvements under construction,  renovation or alteration in an amount approved
by Lender and Worker's  Compensation  Insurance  covering all persons engaged in
such construction, renovation or alteration.

(f) Business interruption insurance in amounts sufficient to compensate Borrower
for all Rents and Profits  during a period of not less than eighteen (18) months
in which the  Property  may be  damaged or  destroyed;  provided,  however,  the
required  period of coverage  shall be twelve  (12) months  during any period of
time in which the  outstanding  balance of the Loan is less than Twenty  Million
Dollars ($20,000,000.00).

(g) Law and  ordinance  coverage  in an  amount  satisfactory  to  Lender if the
Property, or any part thereof, shall constitute a nonconforming use or structure
under  applicable  zoning  ordinances,  sub-division and building codes or other
laws, ordinances, orders and requirements.

(h) Such other insurance on the Property or on any replacements or substitutions
thereof  or  additions  thereto as may from time to time be  required  by Lender
against other insurable hazards or casualties,  including,  without  limitation,
innkeeper's  liability  and  liquor  liability,  which at the time are  commonly
insured  against in the case of property  similarly  situated,  due regard being
given to the height and type of buildings, their construction, location, use and
occupancy.

The "all-risk"  commercial  property and rental income insurance  required under
Section 1.4(a)  and 1.4(f)  above shall cover  perils of  terrorism  and acts of
terrorism  and Borrower  shall  maintain  commercial  property and rental income
insurance  for  loss  resulting  from  perils  and  acts of  terrorism  on terms
(including  amounts)  consistent  with those required under  Section 1.4(a)  and
1.4(f)  above at all  times  during  the term of the  Loan,  provided,  however,
Borrower's  insurance  coverage  may  exclude  perils and acts of  terrorism  if
Borrower also obtains,  at Borrower's sole cost and expense,  a Terrorism Policy
(hereinafter defined). The term "Terrorism Policy", as used herein, shall mean a
separate  stand-alone  terrorism  insurance  policy  obtained by Borrower  which
corresponds to Borrower's primary insurance exclusion relating to acts or perils
of  terrorism  such that  there  are no gaps in  coverage  and  being  otherwise
acceptable  to  Lender  and  consistent  as to  coverage  amounts,  ratings  and
conditions  with the  requirements  of this  Section 1.4  as it relates to other
sorts of insurance  coverage.  Borrower shall not decline or otherwise terminate
any terrorism coverage offered under Borrower's  all-risk  commercial policy (as
opposed to ancillary insurance,  such as earthquake,  flood,  automobile and the
like) unless a Terrorism Policy is already in place.

All such  insurance  shall  (i) be  issued by  companies  approved by Lender and
licensed  to do business  in the state  where the  Property  is located,  with a
claims  paying  ability  rating of "AA-" or better by  Standard &  Poor's Rating
Services,  a division  of The McGraw  Hill  Companies,  Inc.,  (ii) contain  the
complete address of the Land (or a complete legal  description),  (iii) be for a
term  of at  least  one (1)  year,  (iv) contain  deductibles  no  greater  than
$25,000.00  or as  otherwise  required  by  Lender,  and  (v) be  subject to the
approval  of  Lender  as to  insurance  companies,  amounts,  content,  forms of
policies,  any  exclusions,  method by which  premiums  are paid and  expiration
dates.  Notwithstanding the rating requirements described in subitem (i) of this
paragraph, the insurance company providing general liability coverage may have a
claims  paying  ability  rating  of as low as "A" by  Standard  & Poor's  Rating
Service and be on a  "non-admitted"  basis and the insurance  company  providing
property  coverage   pursuant  to   Section 1.4(a)   hereinabove  in  excess  of
$10,000,000.00  of loss may have a claims  paying  ability  rating  of as low as
"BBB" by Standard & Poor's Rating Service so long as such  insurance  company is
admitted.

Borrower  shall as of the date  hereof  deliver  to  Lender  evidence  that said
insurance  policies  have been paid  current as of the date hereof and  original
certificates  of  insurance  signed  by  an  authorized  agent  evidencing  such
insurance  satisfactory  to Lender.  Borrower shall renew all such insurance and
deliver to Lender  certificates  evidencing  such  renewals at least thirty (30)
days before any such  insurance  shall  expire.  Without  limiting  the required
endorsements  to  insurance  policies,  Borrower  further  agrees  that all such
policies and any other  policies  covering the Property or any portion  thereof,
whether or not  required or  requested by Lender,  shall  provide that  proceeds
thereunder shall be payable to Lender, its successors and assigns,  pursuant and
subject to a mortgagee  clause (without  contribution) of standard form attached
to, or otherwise  made a part of, the  applicable  policy and that  Lender,  its
successors  and  assigns,  shall be named as an  additional  insured  under  all
liability  insurance  policies.  Borrower further agrees that all such insurance
policies and any other  policies  covering the Property or any portion  thereof,
whether or not required or requested by Lender:  (i) shall  provide for at least
thirty (30) days' prior written  notice to Lender prior to any  cancellation  or
termination  thereof and prior to any  modification  thereof  which  affects the
interest  of Lender;  (ii) shall  contain an  endorsement  or  agreement  by the
insurer that any loss shall be payable to Lender in accordance with the terms of
such  policy  notwithstanding  any act or  negligence  of  Borrower  which might
otherwise  result in forfeiture of such insurance;  and (iii) shall  either name
Lender as an  additional  insured  or waive all  rights of  subrogation  against
Lender.  The delivery to Lender of the insurance policies or the certificates of
insurance  as provided  above shall  constitute  an  assignment  of all proceeds
payable under such insurance  policies by Borrower to Lender as further security
for the indebtedness secured hereby. In the event of foreclosure of this Deed of
Trust, or other transfer of title to the Property in  extinguishment in whole or
in part of the secured  indebtedness,  all right, title and interest of Borrower
in and to all proceeds  payable under such policies then in force concerning the
Property shall thereupon vest in the purchaser at such foreclosure, or in Lender
or other  transferee in the event of such other  transfer of title.  Approval of
any  insurance  by Lender shall not be a  representation  of the solvency of any
insurer or the  sufficiency  of any amount of insurance.  In the event  Borrower
fails to provide,  maintain,  keep in force or deliver and furnish to Lender the
policies  of  insurance  required  by this  Deed of Trust or  evidence  of their
renewal as required  herein,  Lender may, but shall not be obligated to, procure
such insurance and Borrower shall pay all amounts  advanced by Lender,  together
with interest thereon at the Default Interest Rate (as defined in the Note) from
and after  the date  advanced  by  Lender  until  actually  repaid by  Borrower,
promptly upon demand by Lender. Any amounts so advanced by Lender, together with
interest thereon, shall be secured by this Deed of Trust and by all of the other
Loan  Documents  securing all or any part of the  indebtedness  evidenced by the
Note.  Lender  shall not be  responsible  for nor incur  any  liability  for the
insolvency  of the  insurer or other  failure of the  insurer to  perform,  even
though  Lender has caused the  insurance  to be placed  with the  insurer  after
failure of Borrower to furnish such insurance.

1.5      Payment of Taxes.
Borrower  shall  pay or cause to be paid,  except  to the  extent  provision  is
actually made therefor  pursuant to Section 1.6 of this Deed of Trust, all taxes
and  assessments  which are or may  become a lien on the  Property  or which are
assessed  against or imposed upon the Property.  Borrower  shall furnish  Lender
with  receipts (or if receipts  are not  immediately  available,  with copies of
canceled checks  evidencing  payment with receipts to follow promptly after they
become available) showing payment of such taxes and assessments at least fifteen
(15) days prior to the applicable delinquency date therefor. Notwithstanding the
foregoing,  Borrower  may in good faith,  by  appropriate  proceedings  and upon
notice to Lender, contest the validity,  applicability or amount of any asserted
tax or assessment so long as (a) such  contest is diligently  pursued,  (b) such
contest suspends the obligation to pay the tax or assessment and that nonpayment
of such tax or  assessment  will not  result in the sale,  loss,  forfeiture  or
diminution  of the  Property  or any part  thereof  or any  interest  of  Lender
therein, and (c) prior to the earlier of the commencement of such contest or the
delinquency  date of the asserted tax or  assessment,  Borrower  deposits in the
Impound  Account (as hereinafter  defined) an amount  determined by Lender to be
adequate  to cover  the  payment  of such  tax or  assessment  and a  reasonable
additional  sum to cover  possible  interest,  costs  and  penalties;  provided,
however,  that Borrower shall promptly cause to be paid any amount adjudged by a
court  of  competent  jurisdiction  to be due,  with  all  interest,  costs  and
penalties  thereon,  promptly after such judgment  becomes  final;  and provided
further  that in any event each such contest  shall be concluded  and the taxes,
assessments,  interest,  costs and penalties shall be paid prior to the date any
writ or order is issued under which the Property may be sold, lost or forfeited.

1.6      Tax and Insurance  Impound  Account.
Borrower  shall  establish  and  maintain  at all times while this Deed of Trust
continues in effect an impound  account (the "Impound  Account") with Lender for
payment  of real  estate  taxes,  ad valorem  taxes,  personal  property  taxes,
assessments  and  insurance on the Property and as  additional  security for the
indebtedness  secured  hereby.  Borrower shall deposit in the Impound Account an
amount determined by Lender to be sufficient (when added to the monthly deposits
described  herein) to pay the next due annual  installment of real estate taxes,
ad valorem  taxes,  personal  property taxes and  assessments on the Property at
least  one (1)  month  prior to the  delinquency  date  thereof  (if paid in one
installment)  and the next due annual  insurance  premiums  with  respect to the
Property  at least one (1) month  prior to the due date  thereof (if paid in one
installment).  Commencing on the first  monthly  payment date under the Note and
continuing  thereafter  on each monthly  payment  date under the Note,  Borrower
shall  pay to Lender  (by  distribution  from the Rent  Account  to the  Impound
Account in accordance with the Cash Management Agreement), concurrently with the
monthly payment due under the Note, an amount equal to one-twelfth (1/12) of the
amount of the annual real estate  taxes,  ad valorem  taxes,  personal  property
taxes and  assessments  that will next become due and  payable on the  Property,
plus  one-twelfth  (1/12) of the  amount of the annual  premiums  that will next
become due and  payable on  insurance  policies  which  Borrower  is required to
maintain  hereunder,  each as reasonably  estimated and determined by Lender. So
long as no default  hereunder or under the other Loan Documents has occurred and
is  continuing,  all sums in the Impound  Account shall be held by Lender in the
Impound  Account to pay said taxes,  assessments  and insurance  premiums in one
installment before the same become delinquent. Borrower shall be responsible for
ensuring  the  receipt  by  Lender,  at  least  thirty  (30)  days  prior to the
respective due date for payment thereof,  of all bills,  invoices and statements
for all taxes,  assessments  and insurance  premiums to be paid from the Impound
Account,  and so long as no default  hereunder or under the other Loan Documents
has occurred and is continuing,  Lender shall pay the governmental  authority or
other party entitled thereto directly to the extent funds are available for such
purpose in the Impound Account.  In making any payment from the Impound Account,
Lender  shall be entitled to rely on any bill,  statement  or estimate  procured
from the  appropriate  public  office or insurance  company or agent without any
inquiry  into the  accuracy of such bill,  statement or estimate and without any
inquiry into the accuracy,  validity,  enforceability  or  contestability of any
tax,  assessment,  valuation,  sale,  forfeiture,  tax  lien or  title  or claim
thereof.  No interest on funds contained in the Impound Account shall be paid by
Lender to Borrower and any interest or other earnings on funds  deposited in the
Impound Account shall be solely for the account of Lender. If the total funds in
the Impound  Account  shall  exceed the amount of payments  actually  applied by
Lender for the purposes of the Impound  Account,  such excess may be credited by
Lender on subsequent  payments to be made hereunder or, at the option of Lender,
refunded to Borrower  within ten (10) business days after payment  thereof.  If,
however,  the Impound Account shall not contain sufficient funds to pay the sums
required when the same shall become due and payable,  Borrower shall, within ten
(10) days after receipt of written notice thereof,  deposit with Lender the full
amount of any such deficiency.

1.7      FF&E Reserve.
As additional  security for the  indebtedness  secured  hereby,  Borrower  shall
establish and maintain at all times while this Deed of Trust continues in effect
a reserve (the "FF&E Reserve") with Lender for the payment of costs and expenses
incurred  by Borrower  in  connection  with  capital  improvements,  repairs and
replacements  performed  at the  Property,  including  but not  limited  to, the
performance of work to the roofs, chimneys, gutters, downspouts,  paving, curbs,
ramps, driveways, balconies, porches, patios, exterior walls, exterior doors and
doorways, windows, carpets, appliances,  fixtures, elevators, and mechanical and
HVAC equipment and the replacement of furnishings, fixtures and equipment in the
guest rooms, hallways, lobbies, restaurants, lounges, meeting and banquet rooms,
parking  facilities and other public areas  accessible by the public for regular
use and  such  other  items  as  Lender  may  approve  from  time to time in its
reasonable  discretion  (collectively,  the "Repairs").  Commencing on the first
monthly  payment date under the Note, and continuing  thereafter on each monthly
payment date under the Note,  Borrower shall pay to Lender (by distribution from
the Rent Account in accordance with the Cash Management Agreement), concurrently
with and in addition to the  monthly  payment due under the Note,  and until the
Note and all other  indebtedness  secured hereby is fully paid and performed,  a
deposit  to the FF&E  Reserve  in an  amount  equal to the  Required  Percentage
(hereinafter  defined) of the annual "gross revenues",  as hereinafter  defined,
from the Property for the prior calendar  year,  divided by twelve (12). As used
herein,  "gross  revenues"  shall mean all Rents and Profits derived by Borrower
from room sales, telephone sales, net fax sales, net vending sales, net catering
sales, net guest laundry sales, and any other  miscellaneous sales not including
interest  income,  dividend income,  gains on the sale of stock,  bonds or other
securities, or from the sale of used furniture,  fixtures and equipment, or from
any other passive income source.  As used herein,  "Required  Percentage"  shall
mean five  percent (5%)  through and  including  the deposit to be made into the
TILC Reserve contemporaneously with the thirty-sixth (36th)  monthly payment due
under the Note and four percent (4%) thereafter. So long as no default hereunder
or under the other Loan Documents has occurred and is  continuing,  (i) all sums
in the FF&E  Reserve  shall be held by Lender in the FF&E  Reserve to pay and/or
reimburse Borrower for the costs and expenses of Repairs, and (ii) Lender shall,
so long as no default  hereunder or under the other Loan  Documents has occurred
and is continuing, and to the extent funds are available for such purpose in the
FF&E  Reserve,  disburse to Borrower  the amount paid or incurred by Borrower in
performing  such  Repairs  within ten (10) days  following:  (a) the  receipt by
Lender of a written request from Borrower for disbursement from the FF&E Reserve
and a certification by Borrower to Lender that the applicable item of Repair has
been  completed;  (b) the  delivery  to Lender of  invoices,  receipts  or other
evidence verifying the cost of performing the Repairs;  and (c) for disbursement
requests  (i) in  excess of  $20,000.00  with respect to any single  Repair,  or
(ii) for any single Repair that is  structural in nature,  delivery to Lender of
the following documents,  if applicable,  (1) affidavits,  lien waivers or other
evidence  reasonably  satisfactory  to  Lender  showing  that  all  materialmen,
laborers,  subcontractors  and any  other  parties  who  might  or  could  claim
statutory or common law liens and are furnishing or have furnished  materials or
labor to the  Property  have been paid all amounts  due for labor and  materials
furnished to the Property;  (2) a certification from an inspecting  architect or
other third party  acceptable to Lender  describing  the  completed  Repairs and
verifying the completion of the Repairs and the value of the completed  Repairs;
and (3) a new (or  amended)  certificate  of  occupancy  for the  portion of the
Improvements  covered by such Repairs,  if said new  certificate of occupancy is
required  by law, or a  certification  by Borrower  that no new  certificate  of
occupancy is required by law. Lender shall not be required to make advances from
the FF&E Reserve  more  frequently  than once in any thirty (30) day period.  In
making any payment  from the FF&E  Reserve,  Lender shall be entitled to rely on
such request from  Borrower,  and on any bill,  statement,  or estimate from any
third party,  without any inquiry into the accuracy,  validity or contestability
of any such amount.  Lender may, at Borrower's  expense (not to exceed $2,500.00
annually),  make or cause to be made  during  the term of this  Deed of Trust an
annual inspection of the Property to determine the need, as determined by Lender
in its reasonable  judgment,  for further Repairs of the Property.  In the event
that such inspection  reveals that further Repairs of the Property are required,
Lender shall provide Borrower with a written description of the required Repairs
and Borrower  shall  complete  such Repairs to the  reasonable  satisfaction  of
Lender  within  ninety  (90) days  after the  receipt of such  description  from
Lender,  or such later date as may be approved by Lender in its sole discretion.
Interest or other  earnings on the funds  contained in the FF&E Reserve shall be
credited to Borrower as provided in Section 5.28  hereof.  In the event that the
amounts on deposit or available in the FF&E  Reserve are  inadequate  to pay the
cost of the Repairs, Borrower shall pay the amount of such deficiency.

1.8      Security Interest in Reserves.
(a) As additional  security for the payment and  performance  by Borrower of all
duties,  responsibilities  and  obligations  under the Note and the  other  Loan
Documents,  Borrower hereby  unconditionally and irrevocably  assigns,  conveys,
pledges, mortgages,  transfers,  delivers, deposits, sets over and confirms unto
Lender,  and hereby grants to Lender a security  interest in all sums on deposit
or due under this Deed of Trust and the other Loan Documents including,  without
limitation,  (i) the Impound Account,  the FF&E Reserve, the Repair Reserve, the
Curtailment  Reserve  and any other  reserve,  if any,  set  forth on  Exhibit C
attached hereto and made a part hereof (collectively, the "Reserves"),  (ii) the
accounts into which the Reserves  have been  deposited,  (iii) all  insurance on
said accounts,  (iv) all  accounts,  contract rights and general  intangibles or
other rights and  interests  pertaining  thereto,  (v) all sums now or hereafter
therein or represented thereby, (vi) all replacements, substitutions or proceeds
thereof,  (vii) all  instruments  and documents now or hereafter  evidencing the
Reserves or such accounts,  (viii) all powers, options,  rights,  privileges and
immunities  pertaining to the Reserves  (including the right to make withdrawals
therefrom),  and (ix) all proceeds of the foregoing.  Borrower hereby authorizes
and consents to the account into which the Reserves  have been  deposited  being
held in Lender's  name or the name of any entity  servicing  the Note for Lender
and hereby  acknowledges and agrees that Lender, or at Lender's  election,  such
servicing agent,  shall have exclusive control over said account.  Notice of the
assignment  and security  interest  granted to Lender herein may be delivered by
Lender at any time to the financial  institution  wherein the Reserves have been
established,  and Lender, or such servicing entity, shall have possession of all
passbooks or other  evidences  of such  accounts.  Borrower  hereby holds Lender
harmless  with respect to all risk of loss  regarding  amounts on deposit in the
Reserves,  except  to the  extent  that any such  loss is  caused  by the  gross
negligence or  intentional  misconduct  of Lender.  Borrower  hereby  knowingly,
voluntarily  and  intentionally  stipulates,  acknowledges  and agrees  that the
advancement  of the funds from the Reserves as set forth herein is at Borrower's
direction  and is not the  exercise  by Lender of any right of  set-off or other
remedy upon a default.  If a default shall occur hereunder or under any other of
the Loan  Documents  which is not  cured  within  any  applicable  grace or cure
period,  then Lender may,  without notice or demand on Borrower,  at its option:
(A) withdraw any or all of the funds (including,  without limitation,  interest)
then remaining in the Reserves and apply the same, after deducting all costs and
expenses of safekeeping, collection and delivery (including, but not limited to,
attorneys' fees,  costs and expenses) to the indebtedness  evidenced by the Note
or any other  obligations  of Borrower  under the other Loan  Documents  in such
manner as Lender shall deem appropriate in its sole discretion,  and the excess,
if any, shall be paid to Borrower,  (B) exercise any and all rights and remedies
of a secured party under any applicable Uniform Commercial Code, or (C) exercise
any other remedies  available at law or in equity. No such use or application of
the  funds  contained  in the  Reserves  shall be  deemed  to cure  any  default
hereunder or under the other Loan Documents.

(b) The  Reserves  are  solely  for the  protection  of  Lender  and  entail  no
responsibility  on Lender's part beyond the payment of the respective  costs and
expenses in  accordance  with the terms  thereof and beyond the  allowing of due
credit for the sums actually received.  Upon assignment of this Deed of Trust by
Lender,  any funds in the Reserves  shall be turned over to the assignee and any
responsibility of Lender, as assignor, with respect thereto shall terminate. The
Reserves shall not, unless otherwise  explicitly  required by applicable law, be
or be deemed to be  escrow  or trust  funds,  but,  at  Lender's  option  and in
Lender's  discretion,  may either be held in a separate account or be commingled
by  Lender  with  the  general  funds  of  Lender.  Upon  full  payment  of  the
indebtedness  secured  hereby in accordance  with its terms (or if earlier,  the
completion of the  applicable  conditions to release of each Reserve to Lender's
satisfaction)  or at such earlier  time as Lender may elect,  the balance in the
Reserves then in Lender's possession shall be paid over to Borrower and no other
party shall have any right or claim thereto.
(c) Any amounts  received by Lender from  Borrower may be invested by Lender (or
its  servicer)  for its  benefit,  and Lender  shall not be obligated to pay, or
credit,  any  interest  earned  thereon to Borrower  except as may be  otherwise
specifically provided in this Deed of Trust.

1.9      Casualty and  Condemnation.
Borrower  shall give  Lender  prompt  written  notice of the  occurrence  of any
casualty affecting greater than $25,000.00 of the value of the Property,  or the
institution of any  proceedings for eminent domain or for the  condemnation  of,
the Property or any portion  thereof  (collectively,  an "Insured  Event").  All
insurance  proceeds on the Property (whether or not such insurance was requested
or required by Lender), and all causes of action, claims,  compensation,  awards
and recoveries for any damage,  condemnation or taking of all or any part of the
Property or for any damage or injury to it for any loss or  diminution  in value
of the Property,  are hereby assigned to and shall be paid to Lender. Lender may
participate in any suits or proceedings relating to any such proceeds, causes of
action,  claims,  compensation,  awards  or  recoveries,  and  Lender  is hereby
authorized, in its own name or in Borrower's name, to adjust any loss covered by
any  insurance  (whether  or not such  insurance  was  requested  or required by
Lender)  or any  condemnation  claim  or  cause  of  action,  and to  settle  or
compromise  any claim or cause of action in connection  therewith,  and Borrower
shall from time to time  deliver to Lender any  instruments  required  to permit
such participation;  provided,  however, that Lender shall not have the right to
participate  in the  adjustment of any loss which is not in excess of the lesser
of (i) ten percent (10%) of the then outstanding  principal balance of the Note,
and (ii) $350,000.00.  Provided no default is then continuing hereunder or under
any of the other Loan Documents and no event has occurred which, with the giving
of notice or the passage of time or both, would  constitute a default  hereunder
or under any of the other Loan  Documents,  Lender shall apply any sums received
by it under this  Section  first to the payment of all of its costs and expenses
(including,  but not  limited  to,  reasonable  legal  fees  and  disbursements)
incurred in obtaining those sums, and then, as follows:

(a) In the event that Lender receives insurance proceeds or condemnation  awards
upon the occurrence of an Insured Event in an amount not in excess of the lesser
of (i) ten percent (10%) of the then outstanding  principal balance of the Note,
and  (ii) $350,000.00,  (collectively,  the "Threshold Amount"),  Borrower shall
repair or restore the Property,  and Lender shall,  to the extent such insurance
proceeds or  condemnation  awards are available  for such  purpose,  disburse to
Borrower the amount paid or incurred by Borrower as a result of any such Insured
Event for costs and  expenses  incurred  by  Borrower  to repair or restore  the
Property  (collectively,   the  "Casualty  Repairs")  in  accordance  with,  and
satisfaction  of, the same terms and  conditions for  disbursement  set forth in
Section 1.7 of this Deed of Trust but as applied to  disbursements  for Casualty
Repairs.

(b) In the event any  proceeds  or  awards  from an  Insured  Event  exceed  the
Threshold Amount but less than fifty percent (50%) of the  Improvements  located
on the Land have been taken or destroyed, then if:

(1) the Property can, in Lender's reasonable judgment, with diligent restoration
or repair,  be returned to a condition at least equal to the  condition  thereof
that existed prior to the casualty or partial  taking causing the loss or damage
by the earlier to occur of the following dates: (i) twelve (12) months after the
receipt of  insurance  proceeds  or  condemnation  awards by either  Borrower or
Lender,  and (ii) six  (6) months prior to the Maturity  Date (as defined in the
Note), and

(2) all necessary governmental approvals can be obtained to allow the rebuilding
and reoccupancy of the Property as described in Section 1.9(b)(1) above, and

(3)  there  are  sufficient  sums  available   (through  insurance  proceeds  or
condemnation  awards and  contributions  by  Borrower,  the full amount of which
additional  contributions  shall at  Lender's  option have been  deposited  with
Lender) for such restoration or repair (including,  without limitation,  for any
reasonable  costs and  expenses of Lender to be incurred in  administering  said
restoration  or repair) and for payment of principal  and interest to become due
and payable under the Note during such restoration or repair, and

(4) the economic  feasibility  of the  Improvements  after such  restoration  or
repair will be such that income from their  operation is reasonably  anticipated
to be sufficient  to pay operating  expenses of the Property and debt service on
the  indebtedness  secured  hereby in full with a 1.55:1 debt  service  coverage
ratio, and

(5)  Borrower  shall have  delivered  to  Lender,  at  Borrower's  sole cost and
expense,  an  appraisal  report  from  an  appraiser,   in  form  and  substance
satisfactory  to Lender  appraising  the value of the Property as proposed to be
restored  or  repaired  to be not less than the  appraised  value  necessary  to
support the loan to value ratio  which was  initially  required by Lender in its
determination to make the Loan (i.e., 1.55:1.0), and

(6) Such damage or destruction  shall not allow the termination of any franchise
agreement covering the Property, or if such termination is allowed, Borrower has
obtained and delivered to Lender evidence satisfactory to Lender that such right
to terminate has been waived by the franchisor,

then,  Lender  shall,  solely for the  purposes of such  restoration  or repair,
advance so much of the  remainder of such sums as may be required to  facilitate
such  restoration or repair,  and any funds deposited by Borrower  therefor,  to
Borrower in the manner and upon such terms and  conditions  as would be required
by a prudent interim  construction  lender,  including,  but not limited to, the
prior approval by Lender of plans and  specifications,  contractors and the form
of construction  contracts and the furnishing to Lender of permits,  bonds, lien
waivers, invoices,  receipts and affidavits from contractors and subcontractors,
in form and substance reasonably  satisfactory to Lender. Any remaining proceeds
shall be  (a) (i) applied  for payment of the Yakima Loan, and then (ii) applied
for  payment  of the other  indebtedness  secured  hereby,  or  (b) released  to
Borrower,  in  Lender's  absolute  discretion.  Borrower  shall,  in good faith,
undertake   reasonable  efforts  to  cause  the  conditions  described  in  this
Section 1.9(b)  to  be  fully  satisfied  (e.g.,   Borrower  shall  timely  make
applications  for necessary  governmental  permits,  shall order an  appropriate
appraisal  report,  etc.). If such  conditions are satisfied,  Borrower shall be
obligated  to  undertake  restoration  and  repair of the  damaged  improvements
subject to the terms of this Section 1.9.

Any  disbursement  pursuant  to this  Section 1.9(b)  of sums by  Lender  shall,
subject to Borrower's  satisfaction of the provisions  hereof, be in a manner to
promptly  facilitate  the  restoration  or repair of the Property.  In the event
Borrower fails to meet the requirements of this Section 1.9(b),  then Lender may
elect, in its absolute discretion and without regard to the adequacy of Lender's
security,  to apply any remaining insurance or condemnation  proceeds (a)(i) for
payment of the Yakima Loan, then (ii) payment of the other indebtedness  secured
hereby, or (b) released to Borrower, in Lender's absolute discretion.

(c) In all other cases, namely, in the event that fifty percent (50%) or more of
the  Improvements  located on the Land have been taken or destroyed,  Lender may
elect,  in Lender's  absolute  discretion  and without regard to the adequacy of
Lender's security, to (i) require Borrower to obtain the release of the Property
in accordance with Section 1.39 hereof, including, without limitation, requiring
the payment in full of the accrued interest and outstanding principal balance of
the Yakima Loan, and (ii) make  insurance or condemnation  proceeds available to
Borrower for repair or restoration if Borrower  establishes to the  satisfaction
of  Lender,  in its sole  discretion,  that  Borrower  otherwise  satisfies  the
requirements of Section 1.9(b)  above. Should Lender make the election described
immediately  above  in  item (ii)  of this  Section 1.9(c),  Borrower  shall  be
obligated  to  undertake  restoration  and  repair of the  damaged  Improvements
consistent with the provisions of this Section 1.9.

(d) Any reduction in the  indebtedness  secured  hereby  resulting from Lender's
application  of any sums  received by it  hereunder  shall take effect only when
Lender  actually  receives  such  sums  and  elects  to apply  such  sums to the
indebtedness  secured  hereby  and,  in any  event,  the  unpaid  portion of the
indebtedness  secured  hereby shall remain in full force and effect and Borrower
shall not be  excused in the  payment  thereof.  Partial  payments  received  by
Lender,  as described in the preceding  sentence,  shall be applied  against the
Note consistent with the prepayment provisions described therein for casualty or
condemnation  proceeds. If Borrower undertakes to restore or repair the Property
after the occurrence of a casualty or partial taking of the Property as provided
above,  Borrower  shall  promptly and  diligently,  at Borrower's  sole cost and
expense and regardless of whether the insurance proceeds or condemnation  award,
as appropriate,  shall be sufficient for the purpose,  restore,  repair, replace
and rebuild the  Property  as nearly as  possible  to its value,  condition  and
character  immediately  prior to such  casualty or partial  taking in accordance
with the  foregoing  provisions  and Borrower  shall pay to Lender all costs and
expenses of Lender incurred in  administering  said  rebuilding,  restoration or
repair,  provided  that Lender makes such  proceeds or award  available for such
purpose.  Borrower  agrees to execute and deliver from time to time such further
instruments as may be requested by Lender to confirm the foregoing assignment to
Lender of any award, damage, insurance proceeds,  payment or other compensation.
Borrower   hereby   irrevocably   constitutes   and   appoints   Lender  as  the
attorney-in-fact  of Borrower  (which power of attorney  shall be irrevocable so
long as any indebtedness secured hereby is outstanding,  shall be deemed coupled
with an interest,  shall survive the  voluntary or  involuntary  dissolution  of
Borrower and shall not be affected by any  disability or incapacity  suffered by
Borrower  subsequent  to the date  hereof),  with  full  power of  substitution,
subject to the terms of this  Section,  to settle  for,  collect and receive any
such awards,  damages,  insurance proceeds,  payments or other compensation from
the  parties or  authorities  making the same,  to appear in and  prosecute  any
proceedings therefor and to give receipts and acquittance therefor.

1.10     Mechanics'  Liens.
Borrower  shall pay when due all claims and demands of  mechanics,  materialmen,
laborers and others for any work  performed or materials  delivered for the Land
or the  Improvements  which are  performed  by  delivered  at the  direction  of
Borrower;  provided,  however, that, Borrower shall have the right to contest in
good  faith  any such  claim or  demand,  so long as it does so  diligently,  by
appropriate  proceedings  and  without  prejudice  to Lender and  provided  that
neither the Property nor any  interest  therein  would be in any danger of sale,
loss or forfeiture  during the pendency of such  proceeding  or contest.  In the
event Borrower  shall contest any such claim or demand,  Borrower shall promptly
notify  Lender of such contest and  thereafter  shall,  upon  Lender's  request,
promptly  provide a bond, cash deposit or other security  satisfactory to Lender
to protect Lender's interest and security should the contest be unsuccessful. If
Borrower shall fail to  immediately  discharge or provide  security  against any
such claim or demand as  aforesaid,  Lender  may do so and any and all  expenses
incurred by Lender,  together with interest thereon at the Default Interest Rate
(as defined in the Note) from the date incurred by Lender until actually paid by
Borrower,  shall be immediately  paid by Borrower on demand and shall be secured
by this Deed of Trust and by all of the other Loan Documents securing all or any
part of the indebtedness evidenced by the Note.

1.11     Assignment  of Leases and Rents.
Borrower  acknowledges and confirms that, as additional  collateral security for
the payment of the  indebtedness  secured hereby,  and cumulative of any and all
rights and remedies herein provided,  it has executed and delivered to Lender an
Assignment  of  Leases  and  Rents of even  date  herewith  (the  "Assignment"),
intending such Assignment to create a present,  absolute assignment to Lender of
all current or future  leases of all or any portion of the  Property  and Rents.
Upon the  occurrence  of a default  under this Deed of Trust  which has not been
cured within any  applicable  grace or cure period,  Lender shall be entitled to
exercise  any or all of the  remedies  provided in this Deed of Trust and in the
Assignment,  including,  without limitation,  the appointment of a receiver. The
Assignment  shall  continue  in full  force  and  effect  during  any  period of
foreclosure or redemption with respect to the Property.

1.12     Leases and Licenses.
(a) All  leases  entered  into by  Borrower  after the date  hereof  (excluding,
however, any standard,  commercially  reasonable registration card for overnight
guests  and any  standard,  commercially  reasonable  agreements  for the use of
banquet  facilities  or meeting  rooms  entered into in the  ordinary  course of
business),  shall be written on the  standard  form lease  (without any material
changes) which Lender has approved or shall approve prior to the use thereof (or
other  custom  form lease as may be  approved  by Lender)  and shall be on arm's
length terms  consistent with the terms for similar leases in the market area of
the  Land,  shall  provide  for free rent  only if the same is  consistent  with
prevailing  market conditions and shall provide for market rents then prevailing
in the market area of the Land or otherwise approved in writing by Lender.  Such
leases shall also provide for Security Deposits in reasonable amounts.  Borrower
shall also submit to Lender for Lender's  approval,  which approval shall not be
unreasonably  withheld,  prior to the  execution  thereof,  any proposed  lease,
license or occupancy  agreement of the  Improvements or any portion thereof that
differs  materially and adversely from the aforementioned  form lease.  Borrower
shall not  execute  any  lease,  license  or  occupancy  agreement  for all or a
substantial  portion  of the  Property,  except for an actual  occupancy  by the
tenant,  lessee or  licensee  thereunder,  and shall at all times  promptly  and
faithfully perform, or cause to be performed,  all of the covenants,  conditions
and agreements  contained in all leases,  licenses and occupancy agreements with
respect to the Property, now or hereafter existing, on the part of the landlord,
lessor or  licensor  thereunder  to be kept and  performed.  Upon the request of
Lender,  Borrower shall deliver to Lender a copy of each such lease, license and
occupancy  agreement.  Borrower  shall  not do or suffer to be done any act that
might  result in a default by the  landlord,  lessor or licensor  under any such
lease,  license or occupancy  agreement or allow the tenant,  lessee or licensee
thereunder  to  withhold  payment  or rent and,  except as  otherwise  expressly
permitted by the terms of Section 1.13 hereof, shall not further assign any such
lease, license or occupancy agreement or any such rents. Borrower, at no cost or
expense to Lender,  shall enforce,  short of  termination,  the  performance and
observance of each and every condition and covenant of each of the parties under
such leases.  Borrower shall not,  without the prior written  consent of Lender,
modify any of the leases, terminate or accept the surrender of any leases, waive
or release any other party from the  performance or observance of any obligation
or  condition  under such  leases  except in the normal  course of business in a
manner  which is  consistent  with sound and  customary  leasing and  management
practices  for similar  properties  in the  community  in which the  Property is
located.  Borrower shall not permit the prepayment of any rents under any of the
leases for more than one (1) month prior to the due date thereof.

(b)  Borrower  shall be entitled to enter into such  discount  programs or other
patronage  agreements  without  Lender's prior approval so long as such programs
and  agreements  are in  accordance  with  industry  customs and  standards  and
otherwise reflect sound business practices.

1.13     Alienation and Further Encumbrances.
(a) Borrower acknowledges that Lender has relied upon the principals of Borrower
and their experience in owning and operating  properties similar to the Property
in connection with the closing of the Loan. Accordingly,  except as specifically
allowed hereinbelow in this Section and notwithstanding anything to the contrary
contained  in  Section 5.5  hereof,  in the event that the  Property or any part
thereof or interest  therein  shall be sold  (including  any  installment  sales
agreement),  conveyed, disposed of, alienated,  hypothecated,  leased (except to
tenants of space or overnight guests and users of banquet or meeting  facilities
in the  Improvements in accordance with the provisions of Section 1.12  hereof),
assigned,  pledged,  mortgaged,  further encumbered or otherwise  transferred or
Borrower shall be divested of its title to the Property or any interest therein,
in any manner or way, whether  voluntarily or  involuntarily,  without the prior
written consent of Lender being first obtained, which consent may be withheld in
Lender's sole discretion, then the same shall constitute a default hereunder and
Lender  shall  have the  right,  at its  option,  to  declare  any or all of the
indebtedness secured hereby,  irrespective of the Maturity Date, immediately due
and payable  and to  otherwise  exercise  any of its other  rights and  remedies
contained in Article III  hereof. If such acceleration is during any period when
a prepayment  fee is payable  pursuant to the  provisions set forth in the Note,
then, in addition to all of the foregoing,  such  prepayment fee shall also then
be immediately due and payable to the same end as though Borrower were prepaying
the entire indebtedness secured hereby on the date of such acceleration. For the
purposes  of  this  Section,  the  sale,  conveyance,   transfer,   disposition,
alienation,   hypothecation,  pledge  or  encumbering  (whether  voluntarily  or
involuntarily) of all or any portion of the ownership  interest in (or, directly
or  indirectly  through  constituent  parties,  any of the  ultimate  beneficial
ownership  interest in) Borrower shall be deemed to be a transfer of an interest
in  the  Property.   Notwithstanding  the  foregoing,   however,   transfers  or
assignments of ownership interests in Borrower (or its constituent  parties) may
be undertaken without the consent of Lender in the following circumstances:

(1) In the case of a Borrower which is a limited  partnership,  up to 49% of the
limited  partnership  interests in Borrower shall be freely transferable so long
as those persons  responsible for the management and control of Borrower and the
Property remain unchanged following such transfer.

(2) In the case of a Borrower which constitutes a limited liability company,  up
to 49% of the  non-managing  membership  interests  in Borrower  shall be freely
transferable so long as those persons responsible for the management and control
of Borrower and the Property remain unchanged following such transfer.

(3) In the case of a Borrower which constitutes a corporation,  up to 49% of the
aggregate of the issued and outstanding capital stock of Borrower may be sold or
assigned,  taking into account (i) any prior sales or assignments,  and (ii) the
effective  change in  ownership  resulting  from any  issuance  of new shares of
capital  stock in Borrower  or its  constituent  party so long as those  persons
responsible  for the management and control of Borrower and the Property  remain
unchanged following such transfer.

(4) Gifts for estate planning purposes of any individual's interests in Borrower
or in any of  Borrower's  general  partners,  members or joint  venturers to the
spouse  or any  lineal  descendant  of such  individual,  or to a trust  for the
benefit  of any one or more of such  individual,  spouse or  lineal  descendant,
shall  not be a  default  under  this  Deed of  Trust  so long  as  Borrower  is
reconstituted,  if required,  following  such gift and so long as those  persons
responsible  for the  management of the Property and Borrower  remain  unchanged
following such gift or any replacement management is approved by Lender.

(5) Involuntary  assignments or transfers  caused by the death,  incompetence or
dissolution of Borrower,  one of its constituent  parties or the owner of one of
its  constituent  parties are permitted if:  (i) Borrower is  reconstituted,  if
required,  following such death,  incompetence  or  dissolution,  and (ii) those
persons  responsible for the management and control of Borrower and the Property
remain  unchanged as a result of such death,  incompetence or dissolution or any
replacement management is approved by Lender.

In all cases where  assignment  of ownership  interests  is allowed  without the
consent of Lender pursuant to this Section 1.13(a),  the proportionate ownership
which is  proposed  to be  transferred  shall be  calculated  so as to take into
account  prior  transfers or  assignments.  Furthermore,  the sale,  conveyance,
transfer, disposition, alienation, hypothecation, pledge or encumbering (whether
voluntarily or involuntarily) of all or any portion of the ownership interest in
(or, directly or indirectly  through  constituent  parties,  any of the ultimate
beneficial  ownership  interest  in)  any  guarantor  of  Borrower's  obligation
hereunder or under any of the other Loan  Documents  shall  constitute a default
hereunder  and Lender  shall have the right to  exercise  its  various  remedies
described  hereinabove;  provided,  however,  ownership  interests  in any  such
guarantor may be transferred in a manner consistent with the allowable transfers
of ownership interests in Borrower described hereinabove.

Notwithstanding the foregoing,  for so long as WestCoast Hospitality Corporation
("WCH"), a Washington  corporation and general partner of WestCoast  Hospitality
Limited Partnership ("WestCoast  Hospitality") remains a publicly-traded company
the stock of such corporation shall be freely  transferable  without the consent
of  Lender,   notwithstanding  that  WCH  may  be  a  beneficial  owner  through
constituent  parties of  Borrower  and a  guarantor  of  Borrower's  obligations
hereunder.  At any time that WCH ceases to be a public traded company, WCH shall
be  subject  to the  limitations  set forth in this  Section 1.13.  Furthermore,
notwithstanding  that WestCoast  Hospitality  may be a beneficial  owner through
constituent  parties of  Borrower,  limited  partnership  interests in WestCoast
Hospitality shall be freely  transferable  without the consent of Lender so long
as WCH remains the sole general partner, majority owner in WestCoast Hospitality
and remains responsible for the management and control of WestCoast Hospitality.
The merger of WCH and  WestCoast  Hospitality  or the  transfer  of assets  from
WestCoast  Hospitality  to WCH shall not require the consent of Lender and shall
not constitute a default under this Section 1.13 so long as prior written notice
thereof is provided to Lender.

(b) Notwithstanding the foregoing provisions of this Section 1.13,  Lender shall
consent to a sale,  conveyance  or  transfer of the  Property  in its  entirety,
including  sale,  conveyance  or  transfer of all of the  ownership  interest in
Borrower  (hereinafter,  a "Sale") to any person or entity provided that each of
the following terms and conditions are satisfied:

(1) No  default  is then  continuing  hereunder  or under any of the other  Loan
Documents;

(2) Borrower gives Lender written notice of the terms of such  prospective  Sale
not less than thirty  (30) days before the date on which such Sale is  scheduled
to close and, concurrently  therewith,  gives Lender all reasonable  information
concerning the proposed transferee of the Property  (hereinafter,  a "Buyer") or
any  replacement  guarantor as Lender  would  require in  evaluating  an initial
extension  of  credit  to  a  borrower  and  pays  to  Lender  a  non-refundable
application fee in the amount of $5,000.00 (the "Application Fee"). Lender shall
have the right,  in its  reasonable  discretion,  to approve or  disapprove  the
proposed Buyer and the substitution of the replacement guarantor. In determining
whether to give or withhold its approval of the proposed  Buyer and  replacement
guarantor, Lender shall consider, among other things, the Buyer's experience and
track record in owning and operating  facilities  similar to the Property or the
same of the  professional  management  company  proposed  by Buyer,  the Buyer's
entity structure,  the Buyer's financial strength,  the Buyer's general business
standing, the Buyer or the proposed manager's  relationships and experience with
contractors,  vendors,  tenants,  lenders and other business  entities,  and the
proposed  guarantor's  financial  ability  to  perform  the  obligations  of the
indemnity and guaranty;

(3)  Borrower  pays  Lender,  concurrently  with the  closing  of such  Sale,  a
non-refundable  assumption  fee (the  "Assumption  Fee") in an  amount  equal to
one-half of one percent (.5%) of the then outstanding  principal  balance of the
Yakima  Note for the first  Sale and one  percent  (1%) of the then  outstanding
principal balance of the Yakima Note for any sales thereafter;

(4) The Buyer assumes and agrees to pay the indebtedness  secured hereby subject
to the  provisions  of  Section 5.23  hereof and to  perform  the  covenants  of
Borrower  under  the Loan  Documents,  and,  prior to or  concurrently  with the
closing of such Sale, the Buyer executes, without any cost or expense to Lender,
such documents and agreements as Lender shall reasonably require to evidence and
effectuate  said  assumption  and  delivers  such legal  opinions  as Lender may
require;

(5) Borrower and the Buyer hereby authorize Lender to prepare, file of record or
otherwise  effectuate new financing statements or financing statement amendments
which  describe  all or any portion of the assets of  Borrower  and the Buyer as
collateral thereunder and further, Borrower and the Buyer will execute any other
additional documents reasonably requested by Lender in order to perfect Lender's
security interest in the Property, all without cost to Lender.  Borrower and the
Buyer  specifically  authorize  Lender to cause such financing  statements to be
filed  without  any  signature  of a  representative  of the  Borrower  or Buyer
appearing thereon, where such filings are permitted by applicable law;

(6)  Borrower  delivers to Lender,  without any cost or expense to Lender,  such
endorsements to Lender's Title Insurance Policy,  hazard insurance  endorsements
or certificates and other similar  materials as Lender may deem necessary at the
time of the Sale, all in form and substance  satisfactory to Lender,  including,
without  limitation,  an endorsement or endorsements to Lender's Title Insurance
Policy insuring the lien of this Deed of Trust,  extending the effective date of
such policy to the date of execution and delivery  (or, if later,  of recording)
of  the  assumption   agreement  referenced  above  in  Subsection (4)  of  this
Section 1.13(b),  with no additional exceptions added to such policy except such
encumbrances  previously  approved in writing by Lender,  and insuring  that fee
simple title to the Property is vested in the Buyer;

(7) Borrower  executes  and  delivers to Lender,  without any cost or expense to
Lender, a release of Lender, its officers, directors, employees and agents, from
all claims and  liability  relating to the  transactions  evidenced  by the Loan
Documents,  through and  including  the date of the  closing of the Sale,  which
agreement  shall be in form and  substance  satisfactory  to Lender and shall be
binding upon the Buyer;

(8) Subject to the provisions of Section 5.23 hereof, such Sale is not construed
so as to relieve Borrower of any personal liability under the Note or any of the
other Loan  Documents for any acts or events  occurring or  obligations  arising
prior to or simultaneously with the closing of such Sale, and Borrower executes,
without any cost or expense to Lender,  such  documents and agreements as Lender
shall  reasonably  require to evidence and effectuate the  ratification  of said
personal liability;

(9) Such  Sale is not  construed  so as to  relieve  any  current  guarantor  or
indemnitor of its obligations under any guaranty or indemnity agreement executed
in  connection  with the Loan and each such  current  guarantor  and  indemnitor
executes,  without any cost or expense to Lender,  such documents and agreements
as Lender shall  reasonably  require to evidence and effectuate the ratification
of  each  such  guaranty  and  indemnity  agreement,  provided  that  if a party
associated  with the  Buyer  approved  by Lender  in its  reasonable  discretion
assumes  the  obligations  of the  current  guarantor  or  indemnitor  under its
guaranty  or  indemnity  agreement  and such  party  associated  with the  Buyer
executes,  without any cost or expense to Lender,  a new  guaranty or  indemnity
agreement which is in the same form and substance as the then existing  guaranty
and  indemnity  agreement  or otherwise in form and  substance  satisfactory  to
Lender,  then Lender shall release the current  guarantor or indemnitor from all
obligations  arising under its guaranty or indemnity agreement after the closing
of such Sale;

(10) The Buyer shall  furnish,  if the Buyer is a corporation,  partnership,  or
other entity,  all documents  evidencing the Buyer's capacity and good standing,
and  the  qualification  of  the  signers  to  execute  the  assumption  of  the
indebtedness  secured hereby,  which documents shall include, but not in any way
be limited to,  certified  copies of all documents  relating to the organization
and  formation of the Buyer and of the entities,  if any,  which are partners or
members  of the  Buyer.  The Buyer and such  constituent  partners,  members  or
shareholders  of Buyer (as the case may be),  as Lender  may  require,  shall be
single-purpose,  single-asset  "bankruptcy  remote"  entities,  whose  formation
documents shall be approved by counsel to Lender;  provided,  however, the Buyer
shall not be required to be "bankruptcy  remote" from any  affiliated  entity of
Buyer which purchases any of the Other  Properties as required by  subsection 17
herein.  An  individual  recommended  by the Buyer and  approved by Lender shall
serve as an Independent  Director (as defined in Section 1.32(t) of this Deed of
Trust)  of the  Buyer (if the  Buyer is a  corporation  or a  limited  liability
company) or the Buyer's  corporate or limited  liability company general partner
(if the  Buyer is a  partnership)  or an  independent  member  or,  in  Lender's
discretion,  manager,  of Buyer (if the Buyer is a limited  liability  company).
Unanimous consent of the board of directors (including the Independent Director)
shall  be  required  for,  among  other  things,   any  merger,   consolidation,
dissolution, bankruptcy or insolvency of any such constituent partner, member or
shareholder of the Buyer (as the case may be) or of the Buyer;

(11) The  Buyer,  if  required  by Lender,  shall  furnish an opinion of counsel
satisfactory to Lender and its counsel (i) that the Buyer's formation  documents
provide for the matters described in Section 1.13(b)(10)  hereof,  (ii) that the
assumption  of the  indebtedness  evidenced  hereby  has been  duly  authorized,
executed  and  delivered,  and that the Loan  Documents  are valid,  binding and
enforceable  against the Buyer in accordance  with their terms,  (iii) that  the
Buyer and any  entity  which is a  controlling  stockholder,  member or  general
partner of Buyer,  have been duly  organized,  and are in existence  and in good
standing,  (iv) that the assets of the Buyer will not be  consolidated  with the
assets of any other entity  (including the Buyer's  general  partner or managing
member,  if any) having an interest in, or affiliation  with, the Buyer,  in the
event of bankruptcy or insolvency of any such entity or such general  partner or
managing  member,  and  (v) with  respect to such other  matters,  as Lender may
reasonably request;

(12) If the Buyer is a single-member  limited liability  company,  Buyer must be
formed  in the state of  Delaware,  and the  Buyer's  operating  agreement  must
provide for the continued existence of the Buyer in the event of the bankruptcy,
death, or dissolution,  liquidation, termination or adjudication of incompetency
of the sole  member.  The Buyer,  if required by Lender,  shall also  furnish an
opinion of counsel satisfactory to Lender and its counsel that if the Buyer is a
single-member  limited  liability  company,  (i) the  Buyer is a separate  legal
entity formed in the state of Delaware; (ii) the separate existence of the Buyer
shall  continue  until the  cancellation  of the  certificate  of  organization;
(iii) the Buyer's operating  agreement  provides for the continued  existence of
the Buyer in the event of the bankruptcy,  death,  or dissolution,  liquidation,
termination or adjudication  of  incompetency of the sole member,  and that such
provisions  would  be  enforceable   notwithstanding   the  bankruptcy,   death,
dissolution,  liquidation,  termination or  adjudication  of incompetency of the
sole member;  (iv) any  judgment creditor of the sole member may not satisfy its
claims  against the sole member by asserting a claim against the Property or any
other assets of the Buyer;  and (v) a federal  bankruptcy  court would hold that
the laws of the state of organization of the Buyer,  and not federal law, govern
the determination of what persons or entities have authority to file a voluntary
bankruptcy  petition  on behalf of the  Buyer;  (vi) in  order for any person or
entity to file a voluntary bankruptcy petition on behalf of the Buyer, the prior
unanimous  approval or written consent of the member and the board of directors,
including  the  Independent  Director,  of the  Borrower  (each  as  defined  in
Section 1.32(t))  is  required;  and  (vii) such   requirements  and  all  other
provisions  of the  Buyer's  operating  agreement  are the  valid,  binding  and
enforceable agreements of the sole member;

(13) If  required  under the  operative  documents  with  respect to a Secondary
Market Transaction (as hereinafter defined), Lender shall have received evidence
in writing from the Rating  Agency (as  hereinafter  defined) to the effect that
the  Sale  will  not  result  in a  re-qualification,  reduction,  downgrade  or
withdrawal  of any rating  initially  assigned  or to be assigned in a Secondary
Market Transaction or, if no such rating has been issued, in Lender's good faith
judgment,  such  Sale  shall not have an  adverse  effect on the level of rating
obtainable in connection with the Loan;

(14)  Borrower   shall   reimburse   Lender  for  all  of  Lender's   reasonable
out-of-pocket  costs and expenses  (including,  without  limitation,  reasonable
attorneys' fees and disbursements and Rating Agency fees and expenses)  incurred
or  anticipated  to be incurred by Lender in connection  with a Sale  including,
without limitation, Lender's determination of whether Borrower has satisfied all
of the conditions and requirements set forth in this Section 1.13(b);

(15)  Borrower's  obligations  under the contract of sale pursuant to which such
Sale,  conveyance or transfer is proposed to occur shall expressly be subject to
the satisfaction of the terms and conditions of this Section 1.13(b);

(16) The Buyer shall obtain the written  consent of the Franchisor  (hereinafter
defined) to the transfer of the Property and the Franchise Agreement in favor of
Franchisor to Buyer as well as a comfort letter from Franchisor substantially in
the form of the comfort letter  obtained in connection  with the initial funding
of the Note and otherwise in form and substance satisfactory to Lender; and

(17) The Other Properties (hereinafter defined) shall be subject to simultaneous
Sales to the identical  Buyer in accordance with the terms of the Other Deeds of
Trust.

1.14     Payment of Utilities,  Assessments,  Charges,  Etc.
Borrower  shall pay when due all utility  charges which are incurred by Borrower
or which may become a charge or lien  against  any portion of the  Property  for
gas,  electricity,  water and sewer  services  furnished  to the Land and/or the
Improvements  and all other  assessments  or  charges  of a similar  nature,  or
assessments  payable  pursuant to any restrictive  covenants,  whether public or
private,  affecting  the Land and/or the  Improvements  or any portion  thereof,
whether or not such assessments or charges are or may become liens thereon.

1.15     Access  Privileges  and  Inspections.
Lender and the agents, representatives and employees of Lender shall, subject to
the  rights  of  tenants,  have  full  and  free  access  to the  Land  and  the
Improvements  and any other  location  where  books and records  concerning  the
Property are kept at all  reasonable  times for the purposes of  inspecting  the
Property  and of  examining,  copying  and  making  extracts  from the books and
records of Borrower relating to the Property.  Borrower shall lend assistance to
all such agents, representatives and employees of Lender.

1.16     Waste;  Alteration  of the  Property.
Borrower  shall not commit,  suffer or permit any waste on the Property nor take
any  actions  that might  invalidate  any  insurance  carried  on the  Property.
Borrower  shall  maintain the Property in good  condition  and repair but in any
event,  not less than the standard  prevailing  for hotels of similar age, size,
construction  and  franchise  affiliation  in the  metropolitan  area  where the
Property is located.  No part of the Improvements may be removed,  demolished or
materially  altered,  without the prior written  consent of Lender,  except that
Borrower  may remove  worn-out or obsolete  items of  furnishings,  equipment or
personal property without Lender's consent provided such items are replaced with
items of  comparable  value and utility.  Without the prior  written  consent of
Lender, Borrower shall not commence construction of any improvements on the Land
other than improvements required for the maintenance or repair of the Property.

1.17     Zoning/Use.
Without the prior  written  consent of Lender,  Borrower  shall not seek,  make,
suffer, consent to or acquiesce in any change in the zoning or conditions of use
of the  Land or the  Improvements.  Borrower  shall  comply  with  and  make all
payments  required  under  the  provisions  of  any  covenants,   conditions  or
restrictions affecting the Land or the Improvements.  Borrower shall comply with
all existing and future  requirements  of all  governmental  authorities  having
jurisdiction  over the  Property.  Borrower  shall keep all  licenses,  permits,
franchises,  certificates of occupancy,  consents, and other approvals necessary
for the  operation  of the  Property  in full force and effect.  Borrower  shall
operate the Property as a hotel complex for so long as the indebtedness  secured
hereby is outstanding. If, under applicable zoning provisions, the use of all or
any part of the Land or the  Improvements  is or  becomes a  nonconforming  use,
Borrower  shall not cause or permit  such use to be  discontinued  or  abandoned
without the prior written  consent of Lender.  Further,  without  Lender's prior
written consent,  Borrower shall not file or subject any part of the Land or the
Improvements  to any  declaration  of  condominium or cooperative or convert any
part of the Land or the Improvements to a condominium, cooperative or other form
of multiple ownership and governance.

1.18     Financial  Statements  and Books and Records.
Borrower  shall keep  accurate  books and records of account of the Property and
its own financial  affairs in accordance  with the Uniform System of Accounts as
revised from time to time and sufficient to permit the  preparation of financial
statements   therefrom  in  accordance   with  generally   accepted   accounting
principles.  In addition to statements  prepared in accordance  with the Uniform
System of Accounts,  Borrower must submit statements prepared in accordance with
generally accepted accounting principles  consistently  applied.  Lender and its
duly authorized  representatives shall have the right to examine, copy and audit
Borrower's records and books of account at all reasonable times. So long as this
Deed of Trust continues in effect, Borrower shall provide to Lender, in addition
to any other financial  statements  required hereunder or under any of the other
Loan Documents, the following financial statements and information, all of which
must be  certified to Lender as being true and correct by Borrower or the entity
to which they pertain,  as applicable,  be prepared in accordance with generally
accepted accounting principles consistently applied and be in form and substance
acceptable to Lender:

(a) copies of all tax returns  filed by Borrower,  within thirty (30) days after
the date of filing;

(b) quarterly operating statements for the Property, within forty-five (45) days
after the end of each March,  June,  September and December,  provided operating
statements  shall be delivered  monthly for the first twelve (12) full  calendar
months of the Note within thirty (30) days after the end of each month;

(c) annual balance  sheets,  statements of income and expenses and statements of
changes in financial  position for the Property and annual financial  statements
for Borrower,  each principal,  member or general partner in Borrower,  and each
indemnitor and guarantor under any indemnity or guaranty  executed in connection
with the Loan, within ninety (90) days after the end of each fiscal year audited
by (i) BDO Seidman, LLP or one of the "big 4" national accounting firms, so long
as the then  outstanding  balance  of the Loan  equals  or  exceeds  Thirty-Five
Million  Dollars  ($35,000,000.00),  or (ii) to the extent that the  outstanding
balance   of  the  Loan  is  then  less   than   Thirty-Five   Million   Dollars
($35,000,000.00), an accounting firm reasonably acceptable to Lender; and

(d)  such  other  information  with  respect  to  the  Property,  Borrower,  the
principals,  members or general  partners in Borrower,  and each  indemnitor and
guarantor under any indemnity or guaranty  executed in connection with the Loan,
which may be requested  from time to time by Lender,  within a  reasonable  time
after the applicable request.

If any of the  aforementioned  materials  are not furnished to Lender within the
applicable  time  periods,  Borrower  shall pay to Lender a late fee of $250.00.
Further,  if any of the  aforementioned  materials  are not  furnished to Lender
within the applicable time periods,  or there is evidence of an event of default
hereunder  or under any of the other Loan  Documents  and  Lender is  reasonably
dissatisfied with the contents of any of the foregoing, in addition to any other
rights and remedies of Lender contained herein, Lender shall have the right, but
not the  obligation,  to obtain the same by means of an audit by an  independent
certified public  accountant  selected by Lender, in which event Borrower agrees
to pay, or to reimburse Lender for, any expense of such audit and further agrees
to  provide  all  necessary  information  to said  accountant  and to  otherwise
cooperate  in the  making  of  such  audit.  Borrower  agrees  that  any and all
materials furnished hereunder are the property of Lender (and Lender's servicer)
and may be released and made available to such parties as Lender or its servicer
deems appropriate in connection with the servicing of the Yakima Loan, including
any Rating  Agency  responsible  for rating  securities  issued in any Secondary
Market Transaction (as such terms are defined in Section 5.32 hereof).

1.19     Further  Documentation.
Borrower shall, on the request of Lender in Lender's  reasonable  discretion and
at the expense of Borrower, promptly correct any defect, error or omission which
may be  discovered  in the contents of this Deed of Trust or in any of the other
Loan  Documents and promptly  execute,  acknowledge,  deliver and record or file
such further instruments and do such further acts as may be necessary, desirable
or proper to carry out more  effectively  the purposes of this Deed of Trust and
the other Loan  Documents  or as may be deemed  advisable  by Lender to protect,
continue or preserve  the liens and  security  interests  hereunder,  including,
without limitation, security instruments,  financing statements and continuation
statements.

1.20     Payment of Costs; Advances to Protect Property.
(a) Payment of Costs.  Borrower shall pay all  reasonable  costs and expenses of
every character incurred in connection with the closing of the Loan or otherwise
attributable or chargeable to Borrower as the owner of the Property,  including,
without limitation, appraisal fees, recording fees, documentary, stamp, mortgage
or intangible taxes,  brokerage fees and commissions,  title policy premiums and
title search fees,  uniform  commercial  code/tax  lien/litigation  search fees,
escrow fees and reasonable attorneys' fees.

(b) Advances to Protect  Property.  Without limiting or waiving any other rights
and remedies of Lender hereunder,  if Lender determines that Borrower has failed
to perform any of its  obligations,  covenants or  agreements  contained in this
Deed of Trust or in any of the other  Loan  Documents  and such  failure  is not
cured within any applicable grace or cure period, or if any action or proceeding
of any  kind  (including,  but  not  limited  to,  any  bankruptcy,  insolvency,
arrangement,  reorganization  or other debtor  relief  proceeding)  is commenced
which  would  affect  Lender's  interest in the  Property  or Lender's  right to
enforce its security  therein,  then Lender may, at its option,  with or without
notice to Borrower, make any appearances,  disburse or advance any sums and take
any actions as may be  necessary or desirable to protect or enforce the security
of this Deed of Trust or to remedy  the  failure  of  Borrower  to  perform  its
covenants and agreements  (without,  however,  waiving any default of Borrower);
provided,  however,  Lender  may not for a period of  thirty  (30) days take the
foregoing action if Borrower is contesting such action or proceeding (unless, in
Lender's  judgment,  any delay would potentially  further damage the Property or
Lender's  interest  therein).  Borrower  agrees to pay on demand all expenses of
Lender  reasonably  incurred with respect to the foregoing  (including,  but not
limited to, fees and  disbursements of counsel),  together with interest thereon
at the Default Interest Rate (as defined in the Note) from and after the date on
which Lender incurs such expenses until reimbursement  thereof by Borrower.  Any
such expenses so incurred by Lender,  together with interest thereon as provided
above,  shall be  additional  indebtedness  of Borrower  secured by this Deed of
Trust and by all of the other  Loan  Documents  securing  all or any part of the
indebtedness  evidenced by the Note.  The  necessity for any such actions and of
the amounts to be paid shall be  determined  by Lender in its sole and  absolute
discretion. Lender is hereby empowered to enter and to authorize others to enter
upon the Property or any part thereof for the purpose of performing or observing
any such defaulted term,  covenant or condition  without thereby becoming liable
to Borrower or any person in possession holding under Borrower.  Borrower hereby
acknowledges  and agrees  that the  remedies  set forth in this  Section 1.20(b)
shall  be  exercisable  by  Lender,  and any and all  payments  made or costs or
expenses incurred by Lender in connection  therewith shall be secured hereby and
shall be, without demand,  immediately  repaid by Borrower with interest thereon
at the Default Interest Rate (as defined in the Note),  notwithstanding the fact
that such remedies were  exercised and such payments made and costs  incurred by
Lender  after the filing by Borrower of a voluntary  case or the filing  against
Borrower  of an  involuntary  case  pursuant  to or within  the  meaning  of the
Bankruptcy Reform Act of 1978, as amended (the "Act"), Title 11 U.S.C., or after
any similar action  pursuant to any other debtor relief law (whether  statutory,
common  law,  case law or  otherwise)  of any  jurisdiction  whatsoever,  now or
hereafter in effect, which may be or become applicable to Borrower,  Lender, any
guarantor or indemnitor,  the secured indebtedness or any of the Loan Documents.
This indemnity shall survive payment in full of the indebtedness secured hereby.
This  Section 1.20(b)  shall not be  construed  to  require  Lender to incur any
expenses, make any appearances or take any actions.

1.21     Security  Interest.
This Deed of Trust is also  intended to encumber and create a security  interest
in, and Borrower hereby grants to Lender a security interest in all Reserves (as
hereinabove  defined),  fixtures,  chattels,  accounts,  equipment,   inventory,
contract rights, general intangibles and other personal property included within
the Property, all renewals,  replacements of any of the aforementioned items, or
articles in substitution therefor or in addition thereto or the proceeds thereof
(said property is hereinafter  referred to  collectively  as the  "Collateral"),
whether or not the same shall be attached to the Land or the Improvements in any
manner.  It is hereby  agreed that to the extent  permitted  by law,  all of the
foregoing  property  is to be deemed and held to be a part of and affixed to the
Land and the  Improvements.  The foregoing  security  interest  shall also cover
Borrower's  leasehold  interest in any of the foregoing property which is leased
by Borrower.  Notwithstanding the foregoing, all of the foregoing property shall
be owned by Borrower and no leasing or installment  sales or other  financing or
title retention agreement in connection therewith shall be permitted without the
prior written  approval of Lender.  Borrower shall  promptly  replace all of the
Collateral  subject to the lien or security  interest of this Deed of Trust when
worn out or  obsolete  with  Collateral  comparable  to the worn out or obsolete
Collateral  when new and will not,  without the prior written consent of Lender,
remove from the Land or the  Improvements  any of the Collateral  subject to the
lien or security interest of this Deed of Trust except such as is replaced by an
article of equal suitability and value as above provided, owned by Borrower free
and clear of any lien or security  interest  except that created by this Deed of
Trust and the other Loan Documents and except as otherwise  expressly  permitted
by the terms of Section 1.13 of this Deed of Trust.  All of the Collateral shall
be kept at the location of the Land except as otherwise required by the terms of
the Loan Documents. Borrower shall not use any of the Collateral in violation of
any applicable statute, ordinance or insurance policy.

1.22     Security  Agreement.
This  Deed  of  Trust  constitutes  both a real  property  deed of  trust  and a
"security  agreement" between Borrower and Lender with respect to the Collateral
in which Lender is granted a security interest hereunder, and, cumulative of all
other  rights and  remedies of Lender  hereunder,  Lender  shall have all of the
rights and remedies of a secured party under any applicable  Uniform  Commercial
Code. Borrower hereby authorizes Lender to prepare,  file of record or otherwise
effectuate  new financing  statements or financing  statement  amendments  which
describe all or any portion of the assets of Borrower as collateral  thereunder.
Borrower specifically agrees that Lender may cause such financing statements and
financing  statement   amendments  to  be  filed  without  any  signature  of  a
representative  of the  Borrower  appearing  thereon,  where  such  filings  are
permitted by  applicable  law.  Borrower  hereby  further  agrees to execute and
deliver on demand such security agreements,  financing statements,  continuation
statements  or other  instruments  as Lender may  request or require in order to
impose,  perfect or continue  the  perfection  of the lien or security  interest
created hereby.

Borrower  will not change the  principal  place of business  or chief  executive
office set forth below, or change the state of its organization or registration,
or change  its name,  without  in each  instance  the prior  written  consent of
Lender,   which  consent  shall  not  be  unreasonably   withheld,   delayed  or
conditioned.  Lender's consent will,  however,  be conditioned upon, among other
things, the execution and delivery of additional financing statements,  security
agreements and other instruments which may be necessary to effectively  evidence
or perfect  Lender's  security  interest in the  Collateral  as a result of such
changes.  The name,  principal place of business and chief  executive  office of
Borrower (as Debtor under any applicable  Uniform  Commercial  Code),  as of the
date hereof, are:

WHC807, LLC
c/o WestCoast Hospitality Corporation
201 W. North River Drive, Suite 100
Spokane, Washington 99201
Attention: Chief Financial Officer

The name and address of Lender (as Secured  Party under any  applicable  Uniform
Commercial Code), as of the date hereof, are:

Column Financial, Inc.
11 Madison Avenue
5th Floor
New York, New York 10010-3629
Attention: Edmund Taylor

1.23     Easements and  Rights-of-Way.
Borrower shall not grant any easement or right-of-way with respect to all or any
portion of the Land or the  Improvements  without the prior  written  consent of
Lender.  The purchaser at any foreclosure sale hereunder may, at its discretion,
disaffirm  any  easement  or  right-of-way  granted in  violation  of any of the
provisions  of this  Deed of Trust  and may  take  immediate  possession  of the
Property  free  from,  and  despite  the terms of,  such  grant of  easement  or
right-of-way.  If Lender  consents to the grant of an easement or  right-of-way,
Lender  agrees to grant  such  consent  without  charge to  Borrower  other than
reasonable expenses, including, without limitation,  reasonable attorneys' fees,
incurred by Lender in the review of Borrower's  request and, if  applicable,  in
the preparation of documents relating to the subordination of this Deed of Trust
to such easement or right-of-way.

1.24     Compliance with Laws.
(a)  Borrower  shall  at  all  times  comply  with  all  statutes,   ordinances,
regulations  and  other  governmental  or  quasi-governmental  requirements  and
private covenants now or hereafter relating to the ownership,  construction, use
or operation of the Property,  including,  but not limited to, those  concerning
employment and  compensation  of persons engaged in operation and maintenance of
the Property and any  environmental  or  ecological  requirements,  even if such
compliance shall require structural changes to the Property;  provided, however,
that, Borrower may, upon providing Lender with security  satisfactory to Lender,
proceed diligently and in good faith to contest the validity or applicability of
any such statute,  ordinance,  regulation or  requirement so long as during such
contest the  Property  shall not be subject to any lien,  charge,  fine or other
liability and shall not be in danger of being  forfeited,  lost or closed during
the pendency of such contest. Borrower shall not use or occupy, or allow the use
or occupancy  of, the Property in any manner which  violates any lease of or any
other  agreement  applicable  to the  Property  or  any  applicable  law,  rule,
regulation or order or which  constitutes a public or private  nuisance or which
makes void, voidable or cancelable,  or materially increases the premium of, any
insurance then in force with respect thereto.

(b) Borrower  agrees that the  Property  shall at all times comply to the extent
applicable with the requirements of the Americans with Disabilities Act of 1990,
the Fair Housing  Amendments  Act of 1988 and all other state and local laws and
ordinances related to handicapped access and all rules, regulations,  and orders
issued  pursuant  thereto  including,  without  limitation,  the Americans  with
Disabilities Act Accessibility  Guidelines for Buildings and Facilities ("Access
Laws").  Borrower  agrees to give  prompt  notice to  Lender of the  receipt  by
Borrower of any complaints related to any material violations of any Access Laws
and of the  commencement  of any proceedings or  investigations  which relate to
compliance with applicable Access Laws.

1.25     Additional  Taxes.
In the event of the enactment  after this date of any law of the state where the
Property is located or of any other governmental entity deducting from the value
of the  Property  for the  purpose of  taxation  any lien or  security  interest
thereon,  or  imposing  upon  Lender the payment of the whole or any part of the
taxes or assessments or charges or liens herein required to be paid by Borrower,
or  changing  in any way the laws  relating  to the  taxation of deeds of trust,
mortgages or security  agreements or debts secured by deeds of trust,  mortgages
or security agreements or the interest of the beneficiary,  mortgagee or secured
party in the  property  covered  thereby,  or the manner of  collection  of such
taxes, so as to adversely affect this Deed of Trust or the indebtedness  secured
hereby or Lender, then, and in any such event, Borrower,  upon demand by Lender,
shall pay such  taxes,  assessments,  charges  or  liens,  or  reimburse  Lender
therefor; provided, however, that if in the opinion of counsel for Lender (a) it
might be unlawful to require Borrower to make such payment, or (b) the making of
such  payment  might  result in the  imposition  of interest  beyond the maximum
amount  permitted by law,  then and in either such event,  Lender may elect,  by
notice in writing given to Borrower,  to declare all of the indebtedness secured
hereby to be and become due and payable in full, sixty (60) days from the giving
of such notice.

1.26     Borrower's  Waivers.
To the full extent permitted by law,  Borrower agrees that Borrower shall not at
any time insist upon,  plead,  claim or take the benefit or advantage of any law
now or hereafter  in force  providing  for any  appraisement,  valuation,  stay,
moratorium or extension,  or any law now or hereafter in force providing for the
reinstatement  of the  indebtedness  secured  hereby  prior  to any  sale of the
Property to be made pursuant to any provisions  contained herein or prior to the
entering  of  any  decree,   judgment  or  order  of  any  court  of   competent
jurisdiction,  or any right  under any  statute to redeem all or any part of the
Property so sold. To the full extent  permitted by law,  Borrower shall not have
or assert any right under any statute or rule of law pertaining to the exemption
of homestead  or other  exemption  under any federal,  state or local law now or
hereafter  in effect,  the  administration  of estates of decedents or any other
matters  whatsoever  to defeat,  reduce or affect the right of Lender  under the
terms of this Deed of Trust to a sale of the Property, for the collection of the
secured  indebtedness  without any prior or different resort for collection,  or
the right of Lender  under the terms of this Deed of Trust to the payment of the
indebtedness  secured  hereby out of the  proceeds  of sale of the  Property  in
preference  to  every  other  claimant  whatever.  Borrower,  for  Borrower  and
Borrower's successors and assigns, and for any and all persons ever claiming any
interest in the Property, to the full extent permitted by law, hereby knowingly,
intentionally  and  voluntarily  with and upon the advice of  competent  counsel
waives, releases, relinquishes and forever forgoes: (a) all rights of valuation,
appraisement,  stay of  execution,  reinstatement  and  notice  of  election  or
intention to mature or declare due the secured indebtedness (except such notices
as are specifically  provided for herein);  (b) all right to a marshaling of the
assets of Borrower,  including the  Property,  to a sale in the inverse order of
alienation, or to direct the order in which any of the Property shall be sold in
the event of foreclosure of the liens and security  interests hereby created and
agrees that any court having  jurisdiction  to foreclose such liens and security
interests may order the Property sold as an entirety; (c) all rights and periods
of redemption  provided  under  applicable  law; and (d) all  present and future
statutes of  limitations as a defense to any action to enforce the provisions of
this Deed of Trust or to collect any of the  indebtedness  secured hereby to the
fullest extent  permitted by law and agrees that it shall not solicit or aid the
solicitation of the filing of any Petition (as hereinafter  defined) against the
Borrower,  whether  acting on its own  behalf  or on behalf of any other  party.
Without limiting the generality of the foregoing, Borrower shall not (i) provide
information  regarding  the identity of  creditors  or the nature of  creditors'
claims  to any  third  party  unless  compelled  to do so by order of a court of
competent jurisdiction or by regulation promulgated by a governmental agency; or
(ii) pay  the legal fees or  expenses of any  creditor of or interest  holder in
Borrower with respect to any matter whatsoever.

1.27     SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
(a)  BORROWER,   TO  THE  FULL  EXTENT  PERMITTED  BY  LAW,  HEREBY   KNOWINGLY,
INTENTIONALLY  AND VOLUNTARILY,  WITH AND UPON THE ADVICE OF COMPETENT  COUNSEL,
(i) SUBMITS TO PERSONAL  JURISDICTION  IN THE STATE OF WASHINGTON OVER ANY SUIT,
ACTION OR  PROCEEDING BY ANY PERSON  ARISING FROM OR RELATING TO THE NOTE,  THIS
DEED OF TRUST OR ANY  OTHER OF THE  LOAN  DOCUMENTS,  (ii) AGREES  THAT ANY SUCH
ACTION,  SUIT OR  PROCEEDING  MAY BE BROUGHT  IN ANY STATE OR  FEDERAL  COURT OF
COMPETENT JURISDICTION PRESIDING OVER YAKIMA COUNTY,  WASHINGTON,  (iii) SUBMITS
TO THE  JURISDICTION OF SUCH COURTS,  AND (iv) AGREES THAT IT WILL NOT BRING ANY
ACTION,  SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING  HEREIN SHALL AFFECT
THE RIGHT OF LENDER OR TRUSTEE TO BRING ANY ACTION,  SUIT OR  PROCEEDING  IN ANY
OTHER FORUM). TO THE FULL EXTENT PERMITTED BY LAW, BORROWER FURTHER CONSENTS AND
AGREES TO SERVICE OF ANY SUMMONS,  COMPLAINT OR OTHER LEGAL  PROCESS IN ANY SUCH
SUIT,  ACTION OR  PROCEEDING  BY  REGISTERED  OR CERTIFIED  U.S.  MAIL,  POSTAGE
PREPAID,  TO THE BORROWER AT THE ADDRESS FOR NOTICES  DESCRIBED  IN  SECTION 5.4
HEREOF,  AND  CONSENTS AND AGREES THAT SUCH SERVICE  SHALL  CONSTITUTE  IN EVERY
RESPECT  VALID AND  EFFECTIVE  SERVICE  (BUT  NOTHING  HEREIN  SHALL  AFFECT THE
VALIDITY OR  EFFECTIVENESS  OF PROCESS  SERVED IN ANY OTHER MANNER  PERMITTED BY
LAW).

(b)  BORROWER,   TO  THE  FULL  EXTENT  PERMITTED  BY  LAW,  HEREBY   KNOWINGLY,
INTENTIONALLY  AND VOLUNTARILY,  WITH AND UPON THE ADVICE OF COMPETENT  COUNSEL,
WAIVES,  RELINQUISHES  AND  FOREVER  FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING  BASED UPON,  ARISING OUT OF, OR IN ANY WAY RELATING TO THE
INDEBTEDNESS  SECURED  HEREBY  OR ANY  CONDUCT,  ACT OR  OMISSION  OF  LENDER OR
BORROWER,  OR ANY OF THEIR DIRECTORS,  OFFICERS,  PARTNERS,  MANAGERS,  MEMBERS,
EMPLOYEES,  AGENTS OR ATTORNEYS,  OR ANY OTHER PERSONS AFFILIATED WITH LENDER OR
BORROWER, IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT,  TORT OR
OTHERWISE.

1.28     Contractual  Statute  of  Limitations.
Borrower  hereby  agrees that any claim or cause of action by  Borrower  against
Lender, or any of Lender's directors,  officers,  employees, agents, accountants
or attorneys,  based upon, arising from or relating to the indebtedness  secured
hereby, or any other matter, cause or thing whatsoever,  whether or not relating
thereto, occurred, done, omitted or suffered to be done by Lender or by Lender's
directors,  officers,  employees,  agents,  accountants  or  attorneys,  whether
sounding in contract or in tort or otherwise, shall be barred unless asserted by
Borrower by the  commencement of an action or proceeding in a court of competent
jurisdiction by the filing of a complaint  within three (3) years after Borrower
first  acquires or reasonably  should have acquired  knowledge of the first act,
occurrence  or  omission  upon which such claim or cause of action,  or any part
thereof, is based and service of a summons and complaint on an officer of Lender
or any other person authorized to accept service of process on behalf of Lender,
within  thirty (30) days  thereafter.  Borrower  agrees that such three (3) year
period of time is reasonable and  sufficient  time for a borrower to investigate
and act upon any such  claim or cause  of  action.  The  three  (3) year  period
provided  herein shall not be waived,  tolled or extended except by the specific
written  agreement of Lender.  This provision  shall survive any  termination of
this Deed of Trust or any of the other Loan Documents.

1.29     Management.
The  management of the Property  shall be by either:  (a) Borrower  or an entity
affiliated  with  Borrower  approved  by Lender for so long as  Borrower or said
affiliated  entity is managing  the Property in a first class  manner,  or (b) a
professional  property management company approved by Lender (any such person or
entity which manages the Property,  other than Borrower, is hereinafter referred
to as  the  "Manager").  Any  such  management  by  an  affiliated  entity  or a
professional  property  management  company  shall  be  pursuant  to  a  written
agreement  approved  by  Lender.  In no event  shall any  Manager  be removed or
replaced or the terms of any management  agreement  modified or amended  without
the prior written  consent of Lender.  In the event (x) of default  hereunder or
under any management contract then in effect,  which default is not cured within
any  applicable  grace or cure  period,  or  (y) of a change in  control  (fifty
percent or more) of the  ownership of Manager or if Manager  provides  cause for
termination, including, without limitation, gross negligence, willful misconduct
or fraud, or (z) of the Manager becoming insolvent or a debtor in any bankruptcy
or insolvency  proceeding,  Lender shall have the right to terminate,  or direct
Borrower to  terminate,  such  management  contract at any time and, in any such
event of  termination  of the  management  contract,  to  retain,  or to  direct
Borrower  to  retain,  a new  management  agent  approved  by  Lender.  Any such
successor  manager  shall  be a  reputable  management  company  having a senior
executive  with at least  seven  (7)  years'  experience  in the  management  of
hotel/hospitality  properties in the state where the Property is located,  shall
be the manager of at least five (5)  projects  comparable  to the  Property  and
shall be reasonably acceptable to Lender.  Borrower further covenants and agrees
that Borrower shall require the Manager (or any successor  managers) to maintain
at all  times  during  the  term of this  Deed of  Trust  worker's  compensation
insurance  as  required  by  applicable   governmental   authorities   or  legal
requirements.

1.30     Hazardous Materials and Environmental Concerns.
(a) Borrower  hereby  represents  and warrants to Lender,  that,  as of the date
hereof:  (i) to the best of Borrower's  knowledge,  information and belief,  the
Property has not been in direct or indirect  violation of any Environmental Laws
(as defined below);  (ii) to the best of Borrower's  knowledge,  information and
belief,  no Hazardous  Substances (as defined below) are located on or have been
handled, manufactured,  generated, stored, processed, transported to or from, or
disposed  of  on  or  Released  or  discharged  from  the  Property   (including
underground  contamination)  except for those substances used by Borrower in the
ordinary course of its business and in compliance with all  Environmental  Laws;
(iii) the  Property  is not  subject  to any  private  or  governmental  lien or
judicial,  administrative  or other  notice  or  action  relating  to  Hazardous
Substances or noncompliance  with  Environmental  Laws, nor is Borrower aware of
any basis for such lien, notice or action;  (iv) except as previously  disclosed
to Lender, to the best of Borrower's  knowledge,  information and belief,  there
are no underground  storage tanks or other underground  storage receptacles used
to store  Hazardous  Substances  on the Property;  (v) Borrower  has received no
notice of, and to the best of Borrower's  knowledge  and belief,  there does not
exist any investigation, action, proceeding or claim by any agency, authority or
unit of  government  or by any third party which could result in any  liability,
penalty,  sanction or judgment under any Environmental  Laws with respect to any
condition, use or operation of the Property, nor does Borrower know of any basis
for such investigation,  action, proceeding or claim; (vi) Borrower has received
no notice that,  and, to the best of  Borrower's  knowledge and belief there has
been no claim by any party that, any use, operation or condition of the Property
has caused any nuisance, trespass or any other liability or adverse condition on
any other  property,  nor does  Borrower  know of any  basis for such  notice or
claim; and (vii) to Borrower's best knowledge, information and belief, there are
no present environmental  conditions or events or past environmental  conditions
or  events on or near the  Property  that  could be  reasonably  anticipated  to
materially adversely affect the value of the Property.

(b)  Borrower  shall keep or cause the  Property to be kept free from  Hazardous
Substances  (except those  substances used by Borrower in the ordinary course of
its business and in compliance  with all  Environmental  Laws) and in compliance
with all  Environmental  Laws, shall not install or use any underground  storage
tanks,  shall  expressly  prohibit  the  use,  generation,   handling,  storage,
production,  processing  and  disposal of  Hazardous  Substances  by all tenants
(except  those  substances  used by  tenants  in the  ordinary  course  of their
activities  and  in  compliance  with  all  Environmental  Laws),  invitees  and
trespassers,  and, without limiting the generality of the foregoing,  during the
term of this Deed of Trust,  shall not install in the  Improvements or permit to
be installed in the Improvements  asbestos or any substance containing asbestos.
If required by Lender,  in its reasonable  discretion or under any Environmental
Law,  Borrower  shall  maintain an  Operations  and  Maintenance  Program  ("O&M
Program") for the management of asbestos,  lead-based paint,  radon or any other
Hazardous Substances at the Property.

(c) Borrower  shall  promptly  notify  Lender if Borrower  shall become aware of
(i) any  Release or threatened  Release of Hazardous  Substances  at, on, under,
from or affecting or threatening to affect the Property (except those substances
used by  Borrower  or  tenants  in the  ordinary  course  of their  business  or
activities,  respectively,  and in  compliance  with  all  Environmental  Laws),
(ii) any lien or filing of lien,  action or notice  affecting or  threatening to
affect  the  Property  or  Borrower  resulting  from any  violation  or  alleged
violation of Environmental Law, (iii) any  investigation,  inquiry or proceeding
concerning  Borrower  or  the  Property  pursuant  to any  Environmental  Law or
otherwise relating to Hazardous Substances, or (iv) any occurrence, condition or
state of facts which would render any representation or warranty in this Section
incorrect  in any  respect  if made at the  time  of  such  discovery.  Further,
Borrower shall timely  deliver to Lender copies of any and all orders,  notices,
permits,  applications,   reports,  and  other  communications,   documents  and
instruments pertaining to the actual,  alleged or potential  non-compliance with
any Environmental  Laws in connection with the Property or presence or existence
of any Hazardous  Substances at, on, about, under, within, near or in connection
with the Property  (except those  substances  used in the ordinary course of its
business  and in  compliance  with  all  Environmental  Laws).  Borrower  shall,
promptly and when and as required, at Borrower's sole cost and expense, take all
actions as shall be necessary or advisable for compliance with the terms of this
Section 1.30  or for the  remediation of any and all portions of the Property or
other affected  property,  including,  without  limitation,  all  investigative,
monitoring,  removal,  containment,  remedial and response actions in accordance
with all  applicable  Environmental  Laws and shall  further  pay or cause to be
paid, at no expense to Lender,  all remediation,  response,  administrative  and
enforcement  costs of  applicable  governmental  agencies  which may be asserted
against the Property.  In the event Borrower  fails to do so within  thirty (30)
days after  Borrower's  receipt of written  notice thereof  (1) Lender  may, but
shall not be  obligated  to,  undertake  remediation  at the  Property  or other
affected  property  necessary to bring the Property  into  conformance  with the
terms of Environmental  Laws, and  (2) Borrower  hereby grants to Lender and its
agents  and  employees  access to the  Property  and a license  to do all things
Lender  shall  deem  necessary  to bring  the  Property  into  conformance  with
Environmental Laws. Any and all costs and expenses reasonably incurred by Lender
in connection therewith,  together with interest thereon at the Default Interest
Rate (as defined in the Note) from the date  incurred by Lender  until  actually
paid by Borrower,  shall be immediately  paid by Borrower on demand and shall be
secured  by this Deed of Trust and by all of the other Loan  Documents  securing
all or any part of the indebtedness  evidenced by the Note.  BORROWER  COVENANTS
AND AGREES, AT BORROWER'S SOLE COST AND EXPENSE, TO INDEMNIFY,  DEFEND (AT TRIAL
AND APPELLATE LEVELS, AND WITH ATTORNEYS,  CONSULTANTS AND EXPERTS ACCEPTABLE TO
LENDER),  AND HOLD LENDER HARMLESS FROM AND AGAINST ANY AND ALL LIENS,  DAMAGES,
LOSSES, LIABILITIES,  OBLIGATIONS,  SETTLEMENT PAYMENTS, PENALTIES, ASSESSMENTS,
CITATIONS,  DIRECTIVES, CLAIMS, LITIGATION, DEMANDS, DEFENSES, JUDGMENTS, SUITS,
PROCEEDINGS,  COSTS,  DISBURSEMENTS  AND  EXPENSES  OF ANY KIND OR OF ANY NATURE
WHATSOEVER (INCLUDING, WITHOUT LIMITATION,  REASONABLE ATTORNEYS',  CONSULTANTS'
AND  EXPERTS'  FEES  AND  DISBURSEMENTS   ACTUALLY  INCURRED  IN  INVESTIGATING,
DEFENDING,  SETTLING OR PROSECUTING ANY CLAIM,  LITIGATION OR PROCEEDING)  WHICH
MAY AT ANY TIME BE IMPOSED  UPON,  INCURRED BY OR  ASSERTED  OR AWARDED  AGAINST
LENDER OR THE  PROPERTY,  AND  ARISING  DIRECTLY OR  INDIRECTLY  FROM OR OUT OF:
(A) THE PRESENCE,  RELEASE OR THREAT OF RELEASE OF ANY HAZARDOUS  SUBSTANCES ON,
IN, UNDER, AFFECTING OR THREATENING TO AFFECT ALL OR ANY PORTION OF THE PROPERTY
OR ANY SURROUNDING  AREAS,  REGARDLESS OF WHETHER OR NOT CAUSED BY OR WITHIN THE
CONTROL OF BORROWER;  (B) THE VIOLATION OF ANY ENVIRONMENTAL LAWS RELATING TO OR
AFFECTING OR  THREATENING  TO AFFECT THE  PROPERTY,  WHETHER OR NOT CAUSED BY OR
WITHIN THE CONTROL OF BORROWER; (C) THE FAILURE BY BORROWER TO COMPLY FULLY WITH
THE  TERMS  AND  CONDITIONS  OF  THIS   SECTION 1.30;   (D) THE  BREACH  OF  ANY
REPRESENTATION  OR  WARRANTY   CONTAINED  IN  THIS   SECTION 1.30;   OR  (E) THE
ENFORCEMENT OF THIS SECTION 1.30,  INCLUDING,  WITHOUT  LIMITATION,  THE COST OF
ASSESSMENT,  CONTAINMENT  AND/OR REMOVAL OF ANY AND ALL HAZARDOUS  SUBSTANCES ON
AND/OR FROM ALL OR ANY PORTION OF THE  PROPERTY OR ANY  SURROUNDING  AREAS,  THE
COST OF ANY  ACTIONS  TAKEN IN RESPONSE  TO THE  PRESENCE,  RELEASE OR THREAT OF
RELEASE OF ANY  HAZARDOUS  SUBSTANCES  ON, IN, UNDER OR AFFECTING ANY PORTION OF
THE  PROPERTY OR ANY  SURROUNDING  AREAS TO PREVENT OR MINIMIZE  SUCH RELEASE OR
THREAT OF RELEASE SO THAT IT DOES NOT  MIGRATE OR  OTHERWISE  CAUSE OR  THREATEN
DANGER TO PRESENT OR FUTURE PUBLIC HEALTH,  SAFETY,  WELFARE OR THE ENVIRONMENT,
AND COSTS INCURRED TO COMPLY WITH THE ENVIRONMENTAL  LAWS IN CONNECTION WITH ALL
OR ANY PORTION OF THE PROPERTY.  THE INDEMNITY SET FORTH IN THIS SECTION 1.30(c)
SHALL ALSO INCLUDE ANY  DIMINUTION IN THE VALUE OF THE SECURITY  AFFORDED BY THE
PROPERTY OR ANY FUTURE REDUCTION IN THE SALES PRICE OF THE PROPERTY BY REASON OF
ANY MATTER SET FORTH IN THIS  SECTION 1.30(c),  AND ANY AND ALL LIENS,  DAMAGES,
LOSSES, LIABILITIES,  OBLIGATIONS,  SETTLEMENT PAYMENTS, PENALTIES, ASSESSMENTS,
CITATIONS,  DIRECTIVES, CLAIMS, LITIGATION, DEMANDS, DEFENSES, JUDGMENTS, SUITS,
PROCEEDINGS,  COSTS,  DISBURSEMENTS  OR  EXPENSES  OF ANY KIND OR OF ANY  NATURE
WHATSOEVER  ARISING OUT OF OR  RELATING TO INJURY OR DEATH DUE TO EXPOSURE  FROM
HAZARDOUS  SUBSTANCES  THAT MAY BE PRESENT OR RELEASED AT, ON, UNDER OR FROM THE
PROPERTY.  LENDER'S  RIGHTS UNDER THIS SECTION SHALL SURVIVE  PAYMENT IN FULL OF
THE INDEBTEDNESS  SECURED HEREBY AND SHALL BE IN ADDITION TO ALL OTHER RIGHTS OF
LENDER UNDER THIS DEED OF TRUST, THE NOTE AND THE OTHER LOAN DOCUMENTS.

(d) Upon Lender's  request,  at any time after the occurrence of a default under
this  Section 1.30  or at such other time as Lender  has  reasonable  grounds to
believe that Hazardous Substances are or have been handled,  generated,  stored,
processed, transported to or from, or released or discharged from or disposed of
on or around the Property  (other than in the normal course of Borrower's or the
tenants'  business  or  activities,  respectively,  and in  compliance  with all
Environmental  Laws) or that  Borrower,  any  tenant or the  Property  may be in
violation of Environmental Laws, Borrower shall provide, at Borrower's sole cost
and expense, an environmental site assessment or environmental  compliance audit
of the Property prepared by a hydrogeologist or environmental  engineer or other
appropriate  consultant  approved by Lender to determine  (i) whether  there has
been a Release or threatened  Release of Hazardous  Substances at, on, under, or
from the Property onto adjoining properties, and (ii) if the Property is in full
compliance with Environmental Laws (including as to asbestos containing material
and lead-based  paint).  If Borrower  fails to provide such  assessment or audit
within  sixty (60)  days after  such  request,  Lender  may order the same,  and
Borrower  hereby  grants to Lender and its  employees  and agents  access to the
Property and a license to undertake such  assessment or audit.  The cost of such
assessment or audit, together with interest thereon at the Default Interest Rate
(as defined in the Note) from the date incurred by Lender until actually paid by
Borrower,  shall be immediately  paid by Borrower on demand and shall be secured
by this Deed of Trust and by all of the other Loan Documents securing all or any
part of the indebtedness evidenced by the Note.

(e) Without  limiting the foregoing,  Lender and its authorized  representatives
may, during normal  business hours and at its own expense,  inspect the Property
and Borrower's records related thereto for the purpose of determining compliance
with Environmental Laws and the terms and conditions of this Section 1.30.

(f) As used herein,  the term  "Release" or "Released"  shall  include,  without
limitation,  any  intentional  or  unintentional  placing,  spilling,   leaking,
pumping,  pouring,  emitting,  emptying,   discharging,   injecting,   escaping,
leaching,  dumping,  disposing,   discarding  or  abandoning  of  any  Hazardous
Substance  other than in the normal course of business or activities of Borrower
or its tenants, and in compliance with all Environmental Laws.

(g) For purposes of this Section 1.30, the term "best knowledge, information and
belief"  of  Borrower  shall  mean the  conscious  awareness  of the  directors,
officers and employees of Borrower who are involved in the  consummation  of the
Loan or the management of the Property.

(h) As used herein,  the term  "Environmental  Laws" shall mean local,  state or
federal  law,  rule  or  regulation  pertaining  to  environmental   regulation,
contamination,   remediation,  human  health  or  clean-up,  including,  without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (42 U.S.C.   9601 et seq.  and 40 CFR  302.1 et seq.),  the Resource
Conservation  and  Recovery Act of 1976 (42 U.S.C.   6901 et seq.),  the Federal
Water Pollution Control Act (33 U.S.C.  1251 et seq. and 40 CFR  116.1 et seq.),
the Hazardous  Materials  Transportation  Act (49 U.S.C.  1801 et seq.), and the
regulations promulgated pursuant to said laws, all as amended.

(i) As used herein, the term "Hazardous Substances" shall mean hazardous,  toxic
or harmful substances, wastes, materials, pollutants or contaminants, including,
without limitation,  asbestos,  polychlorinated  biphenyls,  petroleum products,
radon,   lead-based  paints,   flammable  explosives,   radioactive   materials,
infectious  substances or raw materials which include hazardous  constituents or
any other  substances  or  materials  which are  included  under or regulated by
Environmental Laws.

Notwithstanding   anything  contained  herein  to  the  contrary,   specifically
including,  but not limited to this Section 1.30 and Section 1.24,  this Deed of
Trust does not secure any guaranty or  indemnification  of Borrower or any third
party to the  extent  the  instrument  evidencing  the  same  states  that  such
obligations are not so secured. Any obligations that are secured by this Deed of
Trust that are the  substantial  equivalent  of  Borrower's  indemnities  in the
Hazardous  Substances  Indemnity  Agreement  shall be  limited to the actual and
consequential  damages  incurred by Lender,  including  all advances or payments
paid  or  agreed  to be  paid  by  Lender  pursuant  to its  rights  to  require
environmental  assessments,   join  or  participate  in  any  proceedings,  cure
Borrower's  default or enforce its remedies  (a) prior to and after any judicial
foreclosure  of this Deed of Trust or the date a deed is delivered  and accepted
in lieu thereof,  or (b) prior to any  non-judicial  foreclosure of this Deed of
Trust  or the  date a deed  is  delivered  and  accepted  in lieu  thereof.  The
obligations  of Borrower  under this Section shall be mutually  exclusive of any
liabilities  arising after a  non-judicial  foreclosure of this Deed of Trust or
the delivery and acceptance of a deed in lieu of such  non-judicial  foreclosure
which are evidenced by the Hazardous Substances Indemnity Agreement.

1.31     Indemnification; Subrogation.
(a) BORROWER SHALL INDEMNIFY,  DEFEND AND HOLD LENDER HARMLESS AGAINST:  (i) ANY
AND ALL CLAIMS FOR  BROKERAGE,  LEASING,  FINDER'S OR SIMILAR  FEES WHICH MAY BE
MADE  RELATING TO THE  PROPERTY OR THE SECURED  INDEBTEDNESS,  (ii) ANY  AND ALL
LIABILITY,  OBLIGATIONS,  LOSSES,  DAMAGES,  PENALTIES,  CLAIMS, ACTIONS, SUITS,
LIENS, CHARGES, ENCUMBRANCES,  COSTS AND EXPENSES (INCLUDING LENDER'S ATTORNEYS'
FEES, TOGETHER WITH REASONABLE  APPELLATE COUNSEL FEES, IF ANY) OF WHATEVER KIND
OR NATURE WHICH MAY BE ASSERTED AGAINST,  IMPOSED ON OR INCURRED BY LENDER UNDER
ANY  LEASE OR  OCCUPANCY  AGREEMENT,  FOR ANY LOSS  ARISING  FROM A  FAILURE  OR
INABILITY  TO  COLLECT  RENTS AND  PROFITS  OR IN  CONNECTION  WITH THE  SECURED
INDEBTEDNESS,  THIS DEED OF TRUST,  THE PROPERTY,  OR ANY PART  THEREOF,  OR THE
EXERCISE  BY LENDER OF ANY RIGHTS OR  REMEDIES  GRANTED TO IT UNDER THIS DEED OF
TRUST,  AND ANY  DEFAULT  UNDER  THIS DEED OF TRUST,  (iii) ANY  LIENS  (WHETHER
JUDGMENTS,  MECHANICS',  MATERIALMEN'S  OR OTHERWISE),  CHARGES AND ENCUMBRANCES
FILED  AGAINST  THE  PROPERTY,  AND  (iv) ANY  CLAIMS AND DEMANDS FOR DAMAGES OR
INJURY, INCLUDING CLAIMS FOR PROPERTY DAMAGE, PERSONAL INJURY OR WRONGFUL DEATH,
ARISING OUT OF OR IN CONNECTION  WITH ANY ACCIDENT OR FIRE OR OTHER  CASUALTY ON
THE LAND OR THE  IMPROVEMENTS  OR ANY  NUISANCE  OR  TRESPASS  MADE OR  SUFFERED
THEREON,  INCLUDING,  IN ANY  CASE,  ATTORNEYS'  FEES,  COSTS  AND  EXPENSES  AS
AFORESAID, WHETHER AT PRETRIAL, TRIAL OR APPELLATE LEVEL FOR ANY CIVIL, CRIMINAL
OR ADMINISTRATIVE PROCEEDINGS. SHOULD LENDER INCUR ANY LIABILITY UNDER THIS DEED
OF TRUST OR ANY OF THE OTHER  LOAN  DOCUMENTS,  THE AMOUNT  THEREOF,  INCLUDING,
WITHOUT  LIMITATION,  COSTS,  EXPENSES AND REASONABLE  ATTORNEYS' FEES, TOGETHER
WITH INTEREST THEREON AT THE DEFAULT INTEREST RATE (AS DEFINED IN THE NOTE) FROM
THE  DATE  INCURRED  BY  LENDER  UNTIL  ACTUALLY  PAID  BY  BORROWER,  SHALL  BE
IMMEDIATELY DUE AND PAYABLE TO LENDER BY BORROWER ON DEMAND AND SHALL BE SECURED
HEREBY AND BY ALL OF THE OTHER LOAN  DOCUMENTS  SECURING  ALL OR ANY PART OF THE
INDEBTEDNESS  EVIDENCED BY THE NOTE. HOWEVER,  NOTHING HEREIN SHALL BE CONSTRUED
TO OBLIGATE  BORROWER TO  INDEMNIFY,  DEFEND AND HOLD  HARMLESS  LENDER FROM AND
AGAINST  ANY AND  ALL  LIABILITIES,  OBLIGATIONS,  LOSSES,  DAMAGES,  PENALTIES,
CLAIMS,  ACTIONS,  SUITS,  COSTS OR  EXPENSES  ASSERTED  AGAINST,  IMPOSED ON OR
INCURRED BY LENDER BY REASON OF LENDER'S WILLFUL MISCONDUCT OR GROSS NEGLIGENCE.
THIS INDEMNITY SHALL SURVIVE PAYMENT IN FULL OF THE INDEBTEDNESS SECURED HEREBY.

(b) Lender may engage the  services  of  attorneys  to enforce the terms of this
Deed of Trust or to protect its rights  hereunder,  and in the event of any such
engagement,   Borrower  shall  pay  Lender's   attorneys'  fees  (together  with
reasonable appellate counsel fees, if any), consultants' fees, experts' fees and
expenses  reasonably  incurred  by Lender,  whether or not an action is actually
commenced against Borrower. All references to "attorneys" in this Subsection and
elsewhere in this Deed of Trust shall include without limitation any attorney or
law firm engaged by Lender and Lender's in-house counsel,  and all references to
"fees and expenses" in this Subsection and elsewhere in this Deed of Trust shall
include  without  limitation  any  fees of such  attorney  or law  firm  and any
allocation charges and allocation costs of Lender's in-house counsel.

(c) A waiver of  subrogation  shall be obtained by Borrower  from its  insurance
carrier and, consequently, Borrower waives any and all right to claim or recover
against Lender, its officers, employees, agents and representatives, for loss of
or damage to  Borrower,  the  Property,  Borrower's  property or the property of
others under Borrower's control from any cause insured against or required to be
insured against by the provisions of this Deed of Trust.

1.32 Covenants with Respect to Indebtedness,  Operations and Fundamental Changes
of Borrower.
Borrower represents, warrants and covenants as of the date hereof and until such
time as the loan evidenced by the Note is paid in full, that Borrower:

(a) does  not own and  will not own any  encumbered  asset  other  than  (i) the
Property,  and (ii) incidental  personal property necessary for the operation of
the Property;

(b) is not engaged and will not engage in any business other than the ownership,
management and operation of the Property;

(c) will not enter into any  contract or  agreement  with any  member,  manager,
general  partner,  principal or affiliate of Borrower or any affiliate  thereof,
except in the ordinary course of business and upon terms and conditions that are
intrinsically  fair and are no less  favorable  to it than  those  that would be
obtained in a comparable arms-length transaction with an unrelated third party;

(d) has not incurred and will not incur any debt,  secured or unsecured,  direct
or  contingent  (including  guaranteeing  any  obligation),  other than  (i) the
secured  indebtedness,  and (ii) Permitted Trade Debt (hereinafter  defined). As
used herein,  the term  "Permitted  Trade Debt" shall mean trade and operational
debt  incurred by  Borrower  (including,  but not  limited  to, debt  related to
furniture,  fixture and equipment or the leases therefor) in the ordinary course
of business which satisfies each of the following requirements:

(i) with the exception of equipment leases, such trade or operational debt shall
not exceed sixty (60) days in duration so long as the  aggregate  balance of the
Loan exceeds Twenty Million and No/100 Dollars ($20,000,000.00);
(ii)  such  trade or  operational  debt and  leases  shall  not  exceed  (in the
aggregate  with any trade  debt,  operational  debt or leases  incurred by Other
Borrowers  with  respect to the Other  Property)  four  percent (4%) of the then
outstanding principal balance of the Loan;
(iii) all debt related to furniture,  fixtures or equipment (including equipment
leases)  incurred by Borrower  (without taking into account any similar trade or
operational  debt or equipment  leases  incurred by Other  Borrowers)  shall not
exceed Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00);
(iv) without limitation to the preceding constraints,  such operational or trade
debt shall be with trade creditors and be in amounts normal and reasonable under
the circumstances; and
(v) except for  equipment  leases,  such debt shall not be secured  (whether  by
senior  lien or  security  interests,  subordinate  or pari passu) by all or any
portion of the Property.

(e) has not made and will not make any  loans or  advances  to any  third  party
(including  any member,  manager,  general  partner,  principal  or affiliate of
Borrower, or any guarantor);

(f) is and will be  solvent  and pay its debts from its assets as the same shall
become due;  provided,  however,  solely for purposes of determining  compliance
with the provisions of this  Section1.32(f) any lack of solvency or inability to
pay debts by Borrower shall be evaluated on an aggregate basis with those of the
Other  Borrowers  (or,  in the event of an Uncross  Amendment,  with those other
borrowers in a Crossed Group);

(g) has done or caused to be done and will do all things  necessary  to preserve
its  existence  and  corporate,   limited   liability  company  and  partnership
formalities  (as  applicable),  and will not, nor will any  partner,  limited or
general,  shareholder or member thereof,  amend,  modify or otherwise change its
partnership  certificate,   partnership  agreement,   certificate,  articles  of
incorporation, by-laws, certificate of organization or formation, or articles of
organization,  operating  agreement or regulations  in a manner which  adversely
affects Borrower's,  or any such partner's,  member's or shareholder's existence
as a single-purpose, single-asset "bankruptcy remote" entity;

(h) will conduct and operate its business as presently conducted and operated;

(i) has  maintained,  and will  maintain  books and  records  and bank  accounts
separate  from  those  of  its  affiliates,   including  its  general  partners,
principals and members;

(j) will be,  and at all times  will hold  itself  out to the public as, a legal
entity  separate and distinct from any other entity  (including any affiliate of
Borrower,  any constituent party of Borrower,  any guarantor or any affiliate of
any constituent party or guarantor);  has corrected, and shall correct any known
misunderstanding  regarding its status as a separate entity; has conducted,  and
shall  conduct,  its business in its own name;  has paid,  and will pay, its own
liabilities  out of its own funds and assets;  has not,  and shall not  identify
itself or any of its  affiliates  as a division  or part of the  other;  and has
maintained  and utilized,  and shall  maintain and utilize a separate  telephone
number and separate stationery, invoices and checks from any other entity;

(k) will file its own tax returns  except to the extent  applicable  law permits
Borrower to file a  consolidated  return with its owners in which event Borrower
shall be shown as a separate member of such group and such consolidated  returns
shall be  maintained  in a manner so as to  account  separately  for  Borrower's
taxes, such that Borrower's separate information may be readily accessible;

(l)  will  maintain  adequate  capital  for the  normal  obligations  reasonably
foreseeable  in a  business  of its  size  and  character  and in  light  of its
contemplated  business  operations;  provided,  however,  solely for purposes of
determining  compliance  with the  provisions  of this  Section 1.32(l)  capital
adequacy of Borrower shall be evaluated on an aggregate  basis with those of the
Other  Borrowers  (or,  in the event of an Uncross  Amendment,  with those other
borrowers in a Crossed Group);

(m) will not, nor will any member, manager,  shareholder,  partner, principal or
affiliate, seek the dissolution or winding up, in whole or in part, of Borrower;

(n) will not enter into any transaction of merger or  consolidation,  or acquire
by purchase or otherwise all or substantially  all of the business or assets of,
or any stock or beneficial ownership of, any entity;

(o) has not, and will not  commingle the funds and other assets of Borrower with
those of any member,  manager,  general  partner,  principal or affiliate or any
other person;

(p) has maintained, and will maintain its assets in such a manner that it is not
costly or difficult to segregate,  ascertain or identify its  individual  assets
from those of any affiliate or any other person;

(q) has,  and any  general  partner or managing  member of Borrower  has, at all
times  since  their  respective  formation,  observed  all legal  and  customary
formalities  regarding their  respective  formation and will continue to observe
all legal and customary formalities;

(r) does not and will not hold  itself  out to be  responsible  for the debts or
obligations of any other person except those  obligations of the Other Borrowers
to Lender prior to an Uncross  Amendment (and after the occurrence of an Uncross
Amendment except for the other borrowers within a Crossed Group);

(s) upon the commencement of a voluntary or involuntary bankruptcy proceeding by
or against  Borrower,  Borrower shall not seek a supplemental  stay or otherwise
pursuant to 11 U.S.C. 105 or any other provision of the Act, or any other debtor
relief law  (whether  statutory,  common  law,  case law, or  otherwise)  of any
jurisdiction  whatsoever,  now or  hereafter  in effect,  which may be or become
applicable,  to stay,  interdict,  condition,  reduce or inhibit  the ability of
Lender to enforce any rights of Lender  against any  guarantor or  indemnitor of
the secured obligations or any other party liable with respect thereto by virtue
of any indemnity, guaranty or otherwise;

(t) if Borrower is a limited  partnership or a limited  liability  company,  the
general  partner or  managing  (or sole)  member (the "SPC  Entity")  shall be a
corporation (or limited  liability  company) whose sole asset is its interest in
Borrower and the SPC Entity will at all times comply, and will cause Borrower to
comply, with each of the representations, warranties, and covenants contained in
this  Section 1.32  as if such  representation,  warranty or  covenant  was made
directly by the SPC Entity. If Borrower is a corporation,  Borrower itself shall
comply with each of the  representations,  warranties and covenants contained in
this  Section 1.32 as an SPC Entity.  Borrower shall at all times cause there to
be at least one duly appointed member of the board of directors (an "Independent
Director") of the Borrower reasonably  satisfactory to Lender who shall not have
been at the time of such individual's appointment,  and may not have been at any
time during the preceding  five (5) years (i) a  shareholder  of, or an officer,
director,  attorney,  counsel,  partner or employee  of,  Borrower or any of its
shareholders,  subsidiaries  or affiliates,  (ii) a customer of, or supplier to,
Borrower or any of its shareholders,  subsidiaries or affiliates, (iii) a person
or other entity  controlling or under common control with any such  shareholder,
partner,  supplier or customer,  or (iv) a member of the immediate family of any
such shareholder,  officer, director,  partner, employee,  supplier, customer or
any other director of the Borrower. As used herein, the term "control" means the
possession,  directly  or  indirectly,  of the  power to  direct  or  cause  the
direction of the management and policies of a person or entity,  whether through
ownership of voting securities, by contract or otherwise;

(u) has not caused and shall not cause, as applicable, the board of directors of
Borrower,  the  members or  managers  of  Borrower,  or the board of  directors,
members or managers of any general partner of Borrower to take any action which,
under the terms of the  organizational  documents  for  Borrower and its general
partner or manager,  as applicable,  requires the unanimous  affirmative vote of
one hundred percent (100%) of the members of the board of directors,  members or
manager, unless at the time of such action there shall be at least one director,
member or manager, as applicable, who is an Independent Director;

(v) shall conduct its business so that the assumptions of fact made with respect
to Borrower in that certain  opinion  letter dated the date hereof  delivered by
Paine, Hamblen,  Coffin, Brooke & Miller LLP (the  "Non-Consolidation  Opinion")
with  respect to  non-consolidation  issues,  delivered in  connection  with the
execution and delivery of the Loan Documents  shall be true and correct,  in all
material respects at all times;

(w) upon the commencement of a voluntary or involuntary bankruptcy proceeding by
or against  Borrower,  Borrower shall not seek a supplemental  stay or otherwise
pursuant to 11 U.S.C. 105 or any other provision of the Act, or any other debtor
relief law  (whether  statutory,  common  law,  case law, or  otherwise)  of any
jurisdiction  whatsoever,  now or  hereafter  in effect,  which may be or become
applicable,  to stay,  interdict,  condition,  reduce or inhibit  the ability of
Lender to enforce any rights of Lender  against any  guarantor or  indemnitor of
the secured obligations or any other party liable with respect thereto by virtue
of any indemnity, guaranty or otherwise; and

(x) is and  shall  remain  organized  in the  State of  Delaware,  has and shall
maintain in effect an  operating  agreement  which  provides  for the  continued
existence of Borrower in the event of the  bankruptcy or dissolution of the sole
member, and shall conduct its business so that the assumptions of fact made with
respect to Borrower in that certain  single  member  limited  liability  company
opinion letter dated the date hereof delivered by Richards, Layton & Finger (the
"Single  Member LLC  Opinion")  delivered in  connection  with the execution and
delivery  of the  Loan  Documents  shall be true and  correct,  in all  material
respects at all times.

1.33     Litigation.
Borrower  will  give  prompt  written  notice to  Lender  of any  litigation  or
governmental  proceedings  pending or threatened (in writing)  against  Borrower
which might have a Material Adverse Effect.

1.34     ERISA.
(a)  Borrower  shall  not  engage  in any  transaction  which  would  cause  any
obligation, or action taken or to be taken, hereunder (or the exercise by Lender
of any of its rights under the Note, this Deed of Trust or any of the other Loan
Documents)  to be a  non-exempt  (under  a  statutory  or  administrative  class
exemption) prohibited transaction under ERISA.

(b)  Borrower   further   covenants   and  agrees  to  deliver  to  Lender  such
certifications  or other evidence from time to time  throughout the term of this
Deed of Trust, as requested by Lender in its sole discretion,  that (i) Borrower
is not an "employee benefit plan" as defined in Section 3(3) of ERISA,  which is
subject to Title I of ERISA,  or a  "governmental  plan"  within the  meaning of
Section 3(3) of ERISA; (ii) Borrower is not subject to state statutes regulating
investments and fiduciary  obligations  with respect to governmental  plans; and
(iii) one or more of the following  circumstances  is true:
(1) Equity  interests  in Borrower are publicly  offered  securities  within the
meaning of  29 C.F.R.  Section 2510.3-101(b)(2)  as amended from time to time or
any successor provision;
(2) Less than  twenty-five  percent  (25%) of each  outstanding  class of equity
interests in Borrower are held by "benefit plan investors" within the meaning of
29 C.F.R. Section 2510.3-101(f)(2) as amended from time to time or any successor
provision; or
(3) Borrower  qualifies as an  "operating  company" or a "real estate  operating
company"  within the  meaning of  29 C.F.R.  Section 2510.3-101(c)  or (e) or an
investment company registered under the Investment Company Act of 1940.

(c) BORROWER SHALL INDEMNIFY LENDER AND DEFEND AND HOLD LENDER HARMLESS FROM AND
AGAINST ALL CIVIL  PENALTIES,  EXCISE  TAXES,  OR OTHER LOSS,  COST,  DAMAGE AND
EXPENSE  (INCLUDING,   WITHOUT  LIMITATION,   REASONABLE   ATTORNEYS'  FEES  AND
DISBURSEMENTS AND COSTS INCURRED IN THE INVESTIGATION, DEFENSE AND SETTLEMENT OF
CLAIMS AND LOSSES  INCURRED IN CORRECTING ANY  PROHIBITED  TRANSACTION OR IN THE
SALE  OF  A  PROHIBITED  LOAN,  AND  IN  OBTAINING  ANY  INDIVIDUAL   PROHIBITED
TRANSACTION  EXEMPTION  UNDER  ERISA  THAT MAY BE  REQUIRED,  IN  LENDER'S  SOLE
DISCRETION)  THAT  LENDER MAY INCUR,  DIRECTLY OR  INDIRECTLY,  AS A RESULT OF A
DEFAULT UNDER THIS  SECTION 1.34.  THIS INDEMNITY SHALL SURVIVE ANY TERMINATION,
SATISFACTION OR FORECLOSURE OF THIS DEED OF TRUST.

1.35     Defeasance.
(a) Notwithstanding anything to the contrary contained in the Note, this Deed of
Trust  or the  other  Loan  Documents,  at  any  time  after  the  second  (2nd)
anniversary  of the date  that is the  "startup  day,"  within  the  meaning  of
Section 860G(a)(9) of the Internal Revenue Code of 1986, as amended from time to
time  or  any  successor  statute  (the  "Code"),  of a  "real  estate  mortgage
investment  conduit"  ("REMIC")  within the meaning of Section 860D of the Code,
that holds the Note and this Deed of Trust and  provided  (unless  Lender  shall
otherwise  consent,  in its sole  discretion)  no default  has  occurred  and is
continuing  hereunder or under any of the other Loan  Documents,  Borrower shall
have the right to obtain the release of the Property  from the lien of this Deed
of Trust and the  other  Loan  Documents  upon the  satisfaction  of each of the
following  conditions  precedent (such transaction being referred to herein as a
"Defeasance"):
(1) not less than thirty (30) days' prior written notice to Lender  specifying a
regular Payment Date under the Note (the "Release Date") on which the Defeasance
Collateral (hereinafter defined) is to be delivered;
(2) the remittance to Lender on the related Release Date of interest accrued and
unpaid on the  outstanding  principal  amount of the Note to and  including  the
Release Date and the  scheduled  amortization  payment due on such Release Date,
together with all other  amounts then due and payable under the Note,  this Deed
of Trust and the other Loan Documents;
(3) the delivery on or prior to the Release Date to Lender of:

(A) an amount  equal to that which is  sufficient  to purchase  U.S.  Government
Securities  (hereinafter  defined) that provide for payments prior, but as close
as possible,  to all successive  monthly  Payment Dates (as defined in the Note)
occurring  after the Release  Date  including  the payment  made on the Maturity
Date,  with each such  payment  being equal to or greater than the amount of the
corresponding installment of principal,  interest and, if applicable, the fee of
the  Servicer  required  to  be  paid  hereunder  and/or  under  the  Note  (the
"Defeasance  Collateral"),  each of which  shall be duly  endorsed by the holder
thereof as directed by Lender or accompanied by a written instrument of transfer
in  form  and  substance  wholly  satisfactory  to  Lender  (including,  without
limitation,  such  instruments as may be required by the depository  institution
holding such securities to effectuate  book-entry  transfers and pledges through
the  book-entry  facilities  of such  institution)  in order  to  create a first
priority  security  interest  therein in favor of Lender in conformity  with all
applicable state and federal laws governing granting of such security interests;

(B) a pledge and  security  agreement,  in form and  substance  satisfactory  to
Lender,  creating a first priority  security  interest in favor of Lender in the
Defeasance  Collateral (the "Defeasance Security  Agreement"),  which Defeasance
Security  Agreement  shall  (i) provide,  among  other  things,  that any excess
received by Lender from the Defeasance  Collateral  over the amounts  payable by
Borrower  hereunder  shall be refunded to Borrower  promptly  after each Payment
Date, and (ii) be included within the definition of "Deed of Trust" for purposes
of each Loan Document from and after the date of its execution;

(C) a certificate of an authorized  representative  of Borrower  certifying that
the requirements set forth in this Section 1.35(a)  have been satisfied;

(D) an opinion of counsel for  Borrower in form and  substance  satisfactory  to
Lender to the  effect  that  Lender  has a  perfected  first  priority  security
interest in the Defeasance  Collateral and the Defeasance  Security Agreement is
enforceable against Borrower in accordance with its terms;

(E) an opinion of counsel for Lender,  prepared and delivered by counsel for the
Servicer at Borrower's  reasonable  expense,  stating that any trust formed as a
REMIC in  connection  with any  Secondary  Market  Transaction  (as  defined  in
Section 5.32 hereof) will not fail to maintain its status as a REMIC as a result
of such Defeasance;

(F) a certificate from a firm of independent  public  accountants  acceptable to
Lender  certifying  that the Defeasance  Collateral is sufficient to satisfy the
requirements of Section 1.35(a)(3)(A) hereinabove;

(G) a proposed  release of the Property from this Deed of Trust,  the Assignment
and any UCC Financing  Statements relating thereto and a termination of the Cash
Management  Agreement  (for  execution  by  Lender)  in a form  appropriate  for
cancellation  of such  documents  in the  jurisdiction  in which the Property is
located;

(H) evidence in writing from the applicable Rating Agency to the effect that the
collateral  substitution  will  not  result  in  a  downgrading,  withdrawal  or
qualification  of the  respective  ratings in effect  immediately  prior to such
Defeasance for any  securities  issued in connection  with the Secondary  Market
Transaction (as defined in Section 5.32 hereof) which are then outstanding;

(I) such other  certificates,  documents or instruments as Lender may reasonably
request;

(4) the payment by Borrower to Lender of all reasonable  out-of-pocket costs and
expenses  (including,  without limitation,  attorneys' and accountant's fees and
disbursements,  and  Rating  Agency  fees  and  expenses,  if any)  incurred  or
anticipated to be incurred by Lender in connection with the  satisfaction of the
conditions and requirements described in this Section 1.35; and

(5) contemporaneous  Defeasance election being undertaken and completed relative
to the Other Properties and pursuant to the terms of the Other Deeds of Trust.

(b) Upon compliance with the  requirements  of this  Section 1.35,  the Property
shall be released from the lien of this Deed of Trust,  the  Assignment  and any
UCC Financing  Statements related thereto,  the obligations  hereunder and under
the  other  Loan  Documents  with  respect  to the  Property  shall no longer be
applicable and the Defeasance  Collateral shall be the sole source of collateral
securing the Note and all other  obligations  under the Loan  Documents.  Lender
shall apply the Defeasance Collateral and the payments received therefrom to the
payment  of all  scheduled  principal  and  interest  payments  (the  "Scheduled
Defeasance  Payments") due on all successive  Payment Dates under the Note after
the Release  Date  including  the payment due on the  Maturity  Date.  Borrower,
pursuant to the Defeasance  Security  Agreement or other  appropriate  document,
shall direct that the payments received from the Defeasance  Collateral shall be
made directly to Lender and applied to satisfy the obligations of Borrower under
the Note and the Defeasance Security Agreement.

(c) In  connection  with the  release of the  Property in  accordance  with this
Section 1.35,  if  Borrower  shall  continue  to own any  assets  other than the
Defeasance  Collateral,  Borrower shall establish or designate a single-purpose,
bankruptcy-remote   successor  entity   acceptable  to  Lender  (the  "Successor
Trustor"),  with respect to which a  non-consolidation  opinion  satisfactory in
form  and   substance   to  Lender  has  been   delivered  to  Lender  (if  such
non-consolidation  opinion  was  required of  Borrower  in  connection  with the
origination  of the  indebtedness  secured  hereby) in which case Borrower shall
transfer and assign to the Successor Trustor all obligations,  rights and duties
under the Note and the Defeasance Security Agreement,  together with the pledged
Defeasance  Collateral.  The Successor  Trustor shall assume the  obligations of
Borrower under the Note and the  Defeasance  Security  Agreement  pursuant to an
assumption  agreement  satisfactory  to  Lender  in its  sole  discretion.  As a
condition to such  assignment  and  assumption,  Borrower  shall  (i) deliver to
Lender an  opinion of counsel in form and  substance  and  delivered  by counsel
satisfactory to Lender in its sole discretion stating,  among other things, that
such  assumption  agreement is enforceable  against  Borrower and such successor
entity in accordance  with their  respective  terms,  and (ii) pay all costs and
expenses incurred by Lender or its agents in connection with such assignment and
assumption (including, without limitation, the review of the proposed transferee
and the preparation of the assumption agreement and related documentation). Upon
such assumption,  Borrower shall be relieved of its obligations hereunder, under
the other Loan Documents and under the Defeasance  Security Agreement other than
those  obligations  which are specifically  intended to survive the termination,
satisfaction  or  assignment  of this Deed of Trust or the  exercise of Lender's
rights and remedies hereunder.

(d) Upon the release of the Property in accordance with this paragraph, Borrower
shall have no further right to prepay the Note pursuant to the other  provisions
of this paragraph or otherwise.  In connection  with the conditions set forth in
Section 1.35(a)(3)(A)  above,  Borrower  hereby appoints Lender as its agent and
attorney-in-fact  for the purpose of purchasing the Defeasance  Collateral  with
funds provided by Borrower.  Borrower shall pay any and all expenses incurred in
the purchase of the Defeasance Collateral and any revenue,  documentary stamp or
intangible  taxes or any other tax or charge due in connection with the transfer
of the  Note  or  otherwise  required  to  accomplish  the  agreements  of  this
paragraph.

(e)  As  used  herein,  the  term  "U.S.   Government   Securities"  shall  mean
non-redeemable  securities  evidencing  an  obligation  to timely pay  principal
and/or  interest in a full and timely manner that are direct  obligations of the
United States of America for the full and timely payment of which its full faith
and credit is pledged.

(f)  Notwithstanding  the provisions of clauses  (a)-(e)  above,  if at any time
following the third (3rd)  anniversary  of the First P&I Date (as defined in the
Note)   Borrower   delivers   to   Lender   a   written   notice   pursuant   to
Section 1.35(a)(i) above specifying a Release Date and, if as a result of delays
by Lender in including  the Loan in a Secondary  Market  Transaction,  Lender is
unable due to REMIC  restrictions  to exercise  its right to  Defeasance  on the
specified  Release  Date,  then  Borrower  may prepay the Note on the  specified
Release Date, in accordance with  Section 1.2(e) of the Note. Any such permitted
prepayment  made on or prior to the Lockout  Expiration  Date (as defined in the
Note) shall be accompanied with payment of Required Yield Maintenance.

1.36     Franchise  Agreement.
Borrower  shall comply with all terms and  provisions of that certain  Franchise
License  Agreement  ("Franchise  Agreement"),  dated on or about the date hereof
between  Borrower and  WestCoast  Hotels,  Inc., a Washington  corporation  (the
"Franchisor")  relating to the Property,  a copy of which has been  delivered to
Lender, and shall keep the Franchise  Agreement in full force and effect so long
as any portion of the secured indebtedness  remains outstanding.  Borrower shall
promptly  provide Lender with full and complete copies of all notices of default
and  other  correspondence  received  by  Borrower  pursuant  to such  Franchise
Agreement  which relates to the  performance  of Borrower  under such  Franchise
Agreement,  including,  without limitation,  all franchise  inspections (quality
assurance  reports).  Notwithstanding  anything in this Section to the contrary,
Borrower  shall have the right to replace  the  Franchisor  by  executing  a new
franchise agreement with another franchisor, which agreement and franchisor must
be reasonably acceptable to Lender.

1.37     Personal  Property  Leases.
Borrower has leased certain personal  property pursuant to leases (the "Personal
Property  Leases"),  copies of which Borrower has delivered to Lender.  Borrower
shall comply with all terms and provisions of the Personal  Property  Leases and
shall keep the  Personal  Property  Leases in full force and effect  (except for
worn out or obsolete  items  replaced by Borrower) so long as any portion of the
secured indebtedness remains outstanding.

1.38     Partial  Release.
If fifty  percent (50%) or more of the  Improvements  located on the Property is
taken or  destroyed  as  described  in  Section 1.9(c)  hereinabove,  Lender may
require a prepayment of the Yakima Note pursuant to such Section 1.9(c)  whether
or not the proceeds  from such taking or  destruction  are adequate to fund such
prepayment.  The  amount  of such  partial  prepayment  (the  "Casualty  Release
Payment") shall equal the greater of (i) the casualty or condemnation  proceeds,
or (ii) the Minimum Release Payment (hereinafter  defined).  Upon payment of the
Casualty  Release  Payment,  Lender shall give written  consent to Borrower to a
release (a "Casualty  Release") of the Property  upon the  satisfaction  (in the
determination of Lender) of the following conditions  precedent  (singularly and
collectively referred to as a "Casualty Release Condition"):

(a) Any and all sums then due and  payable  to Lender  under the Loan  Documents
pertaining  to  the  Yakima  Loan  shall  be  fully  paid  (including,   without
limitation,  principal  and  interest  under  the  Yakima  Note) and no event of
default (as described in Article II  herein) shall exist and be continuing,  nor
shall Lender have given Borrower  notice of any event or condition  which,  with
the passage of time or the giving of notice (or both),  could result in an event
of default if not cured by Borrower.

(b) Borrower  shall have  established  a good record in the payment of sums when
due under the Loan Documents.

(c) Borrower shall submit a prepared release  instrument (the "Casualty  Release
Instrument")  in form and substance  satisfactory  to Lender and any information
necessary for Lender to process the Casualty Release Instrument, including a lot
and block or metes and bounds description of the Property,  the name and address
of  the  title  insurance  company  to  whose  attention  the  Casualty  Release
Instrument  should be directed,  numbers  that  reference  the Casualty  Release
Instrument  (i.e.,  tax parcel  numbers,  title company order  numbers,  release
numbers,  etc.), the date when the Casualty Release is to become effective,  the
name and address of the prospective purchaser of the Property,  the intended use
thereof,  and such other  documents  and  information  as Lender may  reasonably
request.  The Casualty  Release  Instrument  shall be delivered,  in escrow,  by
Lender to the title company so designated,  to be held, released,  delivered and
recorded in accordance  with Lender's escrow  instructions,  which shall require
delivery  of the  Casualty  Release  Payment  to Lender  prior to  delivery  and
recordation  of the Casualty  Release  Instrument  and the  satisfaction  of all
Casualty Release  Conditions.  In no event shall the execution and delivery of a
Casualty  Release  Instrument  affect  any of  Lender's  obligations  under this
Mortgage or the other Loan Documents.

(d) All  reasonable  costs and expenses  incurred by Lender (and any servicer of
the Yakima Loan) in  connection  with the review,  approval and execution of any
Casualty  Release  shall be paid by Borrower  prior to and as a condition of the
execution of any Casualty Release Instrument, including (but not limited to) the
Administration Fee (hereafter described),  reasonable attorneys' fees, all costs
and  expenses  of Lender  (and any  servicer  of the Yakima  Loan)  incurred  in
connection with obtaining any engineering  reports,  opinions and consents,  and
the endorsement to the Title Insurance Policy.  All recording fees and taxes are
to be paid by Borrower.

(e) Payment to Lender of an administrative fee (the "Administration Fee") in the
amount of $500.00.

(f) The satisfaction of such other conditions precedent as Lender may reasonably
require.

As used herein,  the term "Minimum  Release  Payment"  shall mean the sum of the
indebtedness  outstanding  as evidenced  by the Yakima Note.  Lender shall (upon
written notice to Borrower) apply the required prepayment in the following order
and priority:  first, to the accrued interest and outstanding  principal balance
of the Yakima Loan,  next to the accrued  interest and principal  balance of the
Other Loans in an allocated amount and in a manner deemed  appropriate by Lender
in its sole discretion.

In any instance  herein where the approval,  consent or the exercise of judgment
of Lender is required,  the  granting or denial of such  approval or consent and
the exercise of such judgment shall be (a) within the sole discretion of Lender;
(b) deemed  to have been  given  only by a  specific  writing  intended  for the
purpose and executed by Lender;  and (c) free from any limitation or requirement
of  reasonableness,  unless  otherwise  expressly  provided.  Each provision for
consent,  approval,  inspection,  review or  verification  by Lender is only for
Lender's own purposes and benefit.

1.39  Uncrossing  the Yakima Loan and One or More of the Other Loans.
In the circumstances described in this Section 1.39, the provisions of this Deed
of Trust and other Loan  Documents  shall be amended such that  (i) this Deed of
Trust shall only  thereafter  secure certain of the  promissory  notes and loans
currently  described on Exhibit D  hereto and the terms "Other Notes" and "Note"
and "Loan" and "Other Loans" shall be  thereafter  modified to only include such
specified  promissory notes and loans which shall remain so secured by this Deed
of Trust, (ii) the cross-default  provisions later described with respect to the
deeds of trust and properties  described on Exhibit E  attached  hereto shall be
modified  such that only  certain of such  properties  and deeds of trust  shall
thereafter  be  subject  to such  cross-default  with this Deed of Trust and the
terms "Other Deeds of Trust" and "Other Properties" shall be thereafter modified
to  only   include  such   specified   deeds  of  trust  and   properties,   and
(iii) conforming changes shall be made to all of the other Loan Documents.  Such
amendment to be undertaken to the Loan Documents to accomplish the modifications
described in the immediately  preceding  sentence shall be referred to herein as
an "Uncross Amendment".

(a) Uncross Amendment Undertaken at Lender's Election. At any time, or from time
to time, Lender may elect and require Borrower and all of the Other Borrowers to
effectuate  an Uncross  Amendment as Lender may elect and  specify.  Any Uncross
Amendment required by Lender pursuant to this Section 1.39(a)  shall not require
Borrower's compliance with the conditions specified in Section 1.39(b) but shall
be  undertaken at  Borrower's  expense.  In such  circumstance,  Borrower  shall
execute all such  documents as may be reasonably  required by Lender in order to
undertake  the  Uncross  Amendment  and, to the extent  Borrower  should fail to
timely  execute any such  documents as may be required to undertake  the Uncross
Amendment,  Lender shall be entitled,  as Borrower's agent and attorney-in-fact,
to execute any such documents by and on behalf of Borrower,  it being agreed and
understood  that such  appointment  is deemed coupled with an interest and hence
irrevocable.

(b) Uncross  Amendment  Undertaken at  Borrower's  Election.  Borrower  shall be
entitled  to elect  that an  Uncross  Amendment  be  undertaken,  but only  upon
Borrower's  written notice to Lender that Borrower so elects to cause an Uncross
Amendment to be undertaken and upon  Borrower's  provision of evidence to Lender
that the  following  conditions  precedent to such Uncross  Amendment  have been
fully satisfied:
(1) No default or  circumstance  or event shall have  occurred  which,  with the
giving of notice,  the  passage of time or both,  would  constitute  an event of
default  hereunder or under any of the other Loan Documents  shall have occurred
and then be continuing; and
(2) Lender shall have  received  approved  MAI  appraisals  and other  financial
information with respect to the Property and all of the Other Properties,  which
such appraisals and financial  information shall satisfy the following financial
requirements  with respect to each group of properties or loans which,  pursuant
to  the  proposed  Uncross  Amendment,  are  proposed  to  be  then  subject  to
cross-collateralization  and cross-default arrangements amongst each other (each
such group of properties and loans being  hereinafter  referred to as a "Crossed
Group"):

(i) the aggregate  loan-to-value  ratio of each Crossed Group,  as determined by
Lender, which would result if the proposed Uncross Amendment were to occur shall
be  equal to or less  than  fifty-five  percent (55%)  based  upon  such new MAI
appraisals, all provided by appraisers and using reasonably assumptions approved
by Lender and taking into  account the  outstanding  balance of the loan in such
Crossed Group should the Uncross Amendment occur;
(ii) the debt service  coverage  ratio of the aggregate  properties and loans in
each Crossed Group  resulting from the proposed  Uncross  Amendment shall be not
less than 1.80:1 based on (1) actual  but ordinary  revenue from the  respective
properties  calculated on a trailing 12-month basis, (2) a limitation that total
expenses (including reserves) as a percentage of total revenue is not to be less
than  seventy-five  percent (75%),  and (3) a  requirement  that debt service is
calculated based on the greater of the debt service payments  required under the
loans  within each Crossed  Group or a  hypothetical  debt  service  which would
result from such same loans bearing an eight  percent (8%)  interest rate and an
otherwise identical amortization schedule; and
(iii) after  taking into account the effect of the Uncross  Amendment,  Lender's
estimation  of cash flow  available  for debt  service  with  respect to one (1)
Crossed Group shall be no less than sixty  percent  (60%) of the aggregate  cash
flow  available  for  debt  service  as to the  Property  and  all of the  Other
Properties in the aggregate prior to the Uncross Amendment.

(3) Borrower shall execute such amendments as Lender may reasonably require with
respect  to this  Deed of Trust and all of the other  Loan  Documents  and shall
provide such amendments to any title policy (or supplemental title information),
opinion letter(s) of borrower's  counsel or other similar  information as Lender
may reasonably require;

(4) If required under the operative documents with respect to a Secondary Market
Transaction (as  hereinafter  defined),  Lender shall have received  evidence in
writing from the Rating Agency (as  hereinafter  defined) to the effect that the
Uncross Amendment will not result in a re-qualification, reduction, downgrade or
withdrawal  of any rating  initially  assigned  or to be assigned in a Secondary
Market Transaction or, if no such rating has been issued, in Lender's good faith
judgment,  such  Sale  shall not have an  adverse  effect on the level of rating
obtainable in connection with the Loan or the Crossed Group; and.

(5) Borrower  shall  reimburse  Lender for all of Lender's  reasonable  costs or
expenses  incurred  with  respect to the Uncross  Amendment  including,  without
limitation, reasonable attorneys' fees.

ARTICLE II
EVENTS OF DEFAULT

2.1      Events of Default.
The occurrence of any of the following events shall be a default hereunder:

(a)  Borrower  fails to  (i) make  any  payment  under  the Note  when  due,  or
(ii) timely  make any regularly  scheduled  monthly deposit into a Reserve under
this Deed of Trust or any of the other Loan Documents when due.
(b)  Borrower  fails  to  punctually  perform  any  other  covenant,  agreement,
obligation,  term or  condition  hereof which  requires  payment of any money to
Lender  and such  failure  continues  for ten (10) days after  Lender's  written
notice to Borrower of such amount due (it being expressly  agreed and understood
that no notice or grace period  whatsoever  shall be applicable  with respect to
those items described in Section 2.1(a) hereinabove).
(c) Borrower  fails to provide  insurance as required by  Section 1.4  hereof or
fails to perform any  covenant,  agreement,  obligation,  term or condition  set
forth  in  Section 1.16  or  Section 1.30   hereof;   provided,   however,   the
cancellation  of any such  insurance due to Lender's  failure to pay the premium
thereof in accordance with  Section 1.6  hereof shall not be an event of default
hereunder.
(d) Borrower fails to perform any other covenant, agreement, obligation, term or
condition  set forth  herein,  other  than  those  otherwise  described  in this
Section 2.1,  and, to the extent such failure or default is susceptible of being
cured,  the  continuance  of such  failure or default for thirty (30) days after
written notice thereof from Lender to Borrower;  provided, however, that if such
default  is  susceptible  of cure but such  cure  cannot  be  accomplished  with
reasonable  diligence  within said period of time, and if Borrower  commences to
cure such default  promptly  after  receipt of notice  thereof from Lender,  and
thereafter prosecutes the curing of such default with reasonable diligence, such
period of time shall be extended  for such period of time as may be necessary to
cure such default with  reasonable  diligence,  but not to exceed an  additional
ninety (90) days.
(e) Any  representation  or warranty made herein,  in or in connection  with any
application  or  commitment  relating  to the Loan,  or in any of the other Loan
Documents to Lender by Borrower,  by any principal,  managing  member or general
partner in Borrower or by any  indemnitor  or guarantor  under any  indemnity or
guaranty  executed in  connection  with the Loan is determined by Lender to have
been false or  misleading  in any material  respect at the time made and, to the
extent such default is  susceptible  of being  cured,  the  continuance  of such
default  for thirty  (30) days after  written  notice  therefrom  from Lender to
Borrower.
(f) There shall be a sale, conveyance, disposition,  alienation,  hypothecation,
leasing,  assignment,  pledge,  mortgage,  granting of a security interest in or
other transfer or further encumbrancing of the Property, Borrower or its owners,
or any portion  thereof or any interest  therein,  in violation of  Section 1.13
hereof.
(g) A default  occurs under any of the other Loan  Documents  which has not been
cured within any applicable grace or cure period therein provided.
(h) Borrower, any principal,  general partner or managing member (as applicable)
in  Borrower,  WestCoast  Hospitality,  Red Lion  Hotels,  Inc.,  Red Lion Hotel
Properties,  Inc.,  WCH, or any  indemnitor or guarantor  under any indemnity or
guaranty executed in connection with the Loan becomes insolvent, or shall make a
transfer in fraud of Lender or other creditors,  or shall make an assignment for
the benefit of creditors other than Lender, shall file a petition in bankruptcy,
shall voluntarily be adjudicated insolvent or bankrupt or shall admit in writing
the  inability  to pay  debts as they  mature,  shall  petition  or apply to any
tribunal  for or shall  consent to or shall not  contest  the  appointment  of a
receiver,  trustee,  custodian  or similar  officer for  Borrower,  for any such
principal,   general   partner  or  managing   member  of  Borrower,   WestCoast
Hospitality, Red Lion Hotels, Inc., Red Lion Hotel Properties, Inc., WCH, or for
any such  indemnitor  or  guarantor or for a  substantial  part of the assets of
Borrower, of any such principal,  general partner or managing member of Borrower
or of WestCoast  Hospitality,  Red Lion Hotels, Inc., Red Lion Hotel Properties,
Inc., WCH, or of any such  indemnitor or guarantor,  or shall commence any case,
proceeding or other action under any  bankruptcy,  reorganization,  arrangement,
readjustment  or  debt,  dissolution  or  liquidation  law  or  statute  of  any
jurisdiction, whether now or hereafter in effect.
(i) A petition  ("Petition") is filed or any case, proceeding or other action is
commenced against Borrower,  against any principal,  general partner or managing
member of Borrower or against any indemnitor or guarantor under any indemnity or
guaranty  executed  in  connection  with the Loan  seeking  to have an order for
relief  entered  against  it as debtor or seeking  reorganization,  arrangement,
adjustment, liquidation,  dissolution or composition of it or its debts or other
relief  under  any  law  relating  to   bankruptcy,   insolvency,   arrangement,
reorganization,  receivership or other debtor relief under any law or statute of
any  jurisdiction,  whether now or hereafter in effect,  or a court of competent
jurisdiction enters an order for relief against Borrower, against any principal,
general  partner or managing  member of Borrower  or against any  indemnitor  or
guarantor under any indemnity or guaranty  executed in connection with the Loan,
as  debtor,  or an order,  judgment  or decree is  entered  appointing,  with or
without the  consent of  Borrower,  of any such  principal,  general  partner or
managing member of Borrower or of any such indemnitor or guarantor,  a receiver,
trustee,  custodian or similar  officer for  Borrower,  for any such  principal,
general  partner or managing  member of Borrower or for any such  indemnitor  or
guarantor,  or for any substantial part of any of the properties of Borrower, of
any such  principal,  general  partner or managing  member of Borrower or of any
such indemnitor or guarantor,  and if any such event shall occur, such Petition,
case,  proceeding,  action,  order,  judgment or decree  shall not be  dismissed
within sixty (60) days after being commenced.
(j)  Borrower  solicits or aids the  solicitation  of the filing of any Petition
against  Borrower  including,  without  limitation:   (i) providing  information
regarding  the identity of creditors or the nature of  creditors'  claims to any
third party in connection with the filing of a Petition  unless  compelled to do
so by order of a court of competent jurisdiction or by regulation promulgated by
a governmental agency, or (ii) paying the legal fees or expenses of any creditor
of or interest holder in Borrower in connection with the filing of the Petition.
(k) The  Property or any material  part  thereof  shall be taken on execution or
other  process of law in any action  against  Borrower  and,  to the extent such
default is  susceptible  of being  cured,  the  continuance  of such default for
thirty (30) days after written notice thereof from Lender to Borrower.
(l)      Borrower abandons all or a material portion of the Property.
(m) The  holder  of any  lien or  security  interest  on the  Property  (without
implying the consent of Lender to the  existence or creation of any such lien or
security interest), whether superior or subordinate to this Deed of Trust or any
of the other Loan  Documents,  declares a default and such  default is not cured
within any applicable grace or cure period set forth in the applicable  document
or such holder  institutes  foreclosure or other proceedings for the enforcement
of its remedies  thereunder  and, to the extent such default is  susceptible  of
being cured,  the continuance of such default for thirty (30) days after written
notice thereof from Lender to Borrower.
(n) The  Property,  or any part  thereof,  is subjected to actual or  threatened
waste or to removal,  demolition or material alteration so that the value of the
Property is materially  diminished thereby and Lender reasonably determines that
it is not  adequately  protected  from  any  loss,  damage  or  risk  associated
therewith  and, to the extent such default is  susceptible  of being cured,  the
continuance  of such default for thirty (30) days after written  notice  thereof
from Lender to Borrower.
(o) Any dissolution,  termination,  partial or complete  liquidation,  merger or
consolidation  of  Borrower,   its  managing   member(s)  or  WCH  or  WestCoast
Hospitality or Red Lion Hotels,  Inc. or Red Lion Hotel Properties,  Inc. (other
than a  consolidation,  merger or similar event amongst  affiliated  parties and
undertaken consistent with the requirements of Section 1.13 hereof).
(p) Any franchise  agreement or management  agreement  affecting the Property is
terminated  and is  not  replaced  with  a  franchise  agreement  or  management
agreement, as applicable, reasonably acceptable to Lender within sixty (60) days
of such termination.
(q) Any liquor license  relating to the Property,  if any,  ceases to be in full
force and effect,  and such liquor  license is not  restored  within  sixty (60)
days, except with Lender's prior written consent.
(r) If any of the facts  forming the basis of the  assumptions  set forth in the
Non-Consolidation  Opinion,  shall no longer be true and correct in all material
respects.  and, to the extent such default is  susceptible  of being cured,  the
continuance  of such default for thirty (30) days after written  notice  thereof
from Lender to Borrower.
(s) If any of the facts  forming the basis of the  assumptions  set forth in the
Single  Member LLC Opinion,  shall no longer be true and correct in all material
respects.
(t) The  occurrence of any default (and  expiration  of any  expressly  provided
grace or cure period relative thereto) pursuant to any of those nine (9) certain
Deed of Trusts and Security Agreements  (collectively,  "Other Deeds of Trust"),
all dated of even date herewith executed by the entities as indicated on Exhibit
E attached  hereto and  incorporated  herein by reference,  to a trustee for the
benefit of Lender  relative to properties  located in the counties and states as
indicated on Exhibit E (collectively,  "Other Properties") and more particularly
described in the other Deeds of Trust.

ARTICLE III
REMEDIES

3.1      Remedies  Available.
If there shall occur a default  under this Deed of Trust,  and such  default has
not been cured within any  applicable  grace or cure  period,  then this Deed of
Trust is subject to foreclosure as provided by law and Lender may, at its option
and by or through a trustee,  nominee,  assignee  or  otherwise,  to the fullest
extent permitted by law, exercise any or all of the following  rights,  remedies
and recourses, either successively or concurrently:

(a)  Acceleration.  Accelerate  the Maturity  Date and declare any or all of the
indebtedness  secured  hereby to be  immediately  due and  payable  without  any
presentment,  demand,  protest,  notice or action of any kind whatever  (each of
which is hereby expressly  waived by Borrower),  whereupon the same shall become
immediately  due and  payable.  Upon  any  such  acceleration,  payment  of such
accelerated amount shall constitute a prepayment of the principal balance of the
Note and any  applicable  prepayment  fee provided for in the Note shall then be
immediately due and payable.
(b) Entry on the  Property.  Without in any way curing or waiving any default of
Borrower,  either in person or by agent or by court-appointed  receiver, with or
without bringing any action or proceeding, or by a receiver appointed by a court
and  without  regard  to the  adequacy  of its  security,  enter  upon  and take
possession of the Property,  or any part thereof, in its own name or in the name
of the  Trustee,  without  force or with such force as is  permitted  by law and
without  notice or process or with such notice or process as is required by law,
unless  such  notice and process are  waivable,  in which case  Borrower  hereby
waives such notice and process,  and do any and all acts and perform any and all
work which may be desirable  or  necessary in Lender's  judgment to complete any
unfinished  construction  on the Land,  to  preserve  and/or  enhance the value,
marketability or rentability of the Property,  to increase the income therefrom,
to manage and operate the  Property or to protect the security  hereof,  and all
sums expended by Lender therefor,  together with interest thereon at the Default
Interest Rate (as defined in the Note),  shall be immediately due and payable to
Lender by Borrower on demand and shall be secured hereby and by all of the other
Loan  Documents  securing all or any part of the  indebtedness  evidenced by the
Note.
(c)  Collect  Rents  and  Profits.  With or  without  taking  possession  of the
Property,  sue for or otherwise  collect the Rents and Profits,  including those
past due and unpaid,  and apply the same,  less costs and  expenses of operation
and collection,  including  reasonable  attorneys'  fees, upon any  indebtedness
secured hereby, all in such order as Lender in its discretion may determine.
(d) Appointment of Receiver. Upon, or at any time prior or after, initiating the
exercise  of  any  power  of  sale,  instituting  any  judicial  foreclosure  or
instituting any other foreclosure of the liens and security  interests  provided
for herein or any other legal proceedings hereunder, make application, ex parte,
to a court of competent  jurisdiction  for  appointment of a receiver for all or
any part of the  Property,  as a matter of strict  right and  without  notice to
Borrower and without regard to the adequacy of the Property for the repayment of
the  indebtedness  secured  hereby or the  solvency of Borrower or any person or
persons liable for the payment of the indebtedness  secured hereby, and Borrower
does hereby irrevocably consent to such appointment,  waives any and all notices
of and  defenses to such  appointment  and agrees not to oppose any  application
therefor by Lender,  but nothing  herein is to be construed to deprive Lender of
any other right, remedy or privilege Lender may now have under the law to have a
receiver appointed,  provided,  however,  that the appointment of such receiver,
trustee or other  appointee by virtue of any court order,  statute or regulation
shall not  impair or in any  manner  prejudice  the  rights of Lender to receive
payment of the Rents and Profits  pursuant to other terms and provisions of this
Deed of Trust or the  Assignment.  Any such receiver shall have all of the usual
powers and duties of receivers in similar cases, including,  without limitation,
the full power to hold,  develop,  rent, lease,  manage,  maintain,  operate and
otherwise use or permit the use of the Property  upon such terms and  conditions
as said receiver may deem to be prudent and reasonable  under the  circumstances
as more fully set forth in Section 3.3  below. Such  receivership  shall, at the
option of Lender, continue until full payment of all of the indebtedness secured
hereby or until  title to the  Property  shall have passed by  foreclosure  sale
under this Deed of Trust or deed in lieu of foreclosure.
(e) Foreclosure.  Immediately commence an action to foreclose this Deed of Trust
or to  specifically  enforce its provisions or any of the  indebtedness  secured
hereby,  pursuant to the applicable  Washington state law, and sell the Property
or  cause  the  Property  to be sold in  accordance  with the  requirements  and
procedures provided by the applicable Washington state law in a single parcel or
in several parcels at the option of Lender.

(1) In the event  foreclosure  proceedings  are filed by  Lender,  all  expenses
incident to such proceedings, including, but not limited to, attorneys' fees and
costs, shall be paid by Borrower and secured by this Deed of Trust and by all of
the other Loan Documents securing all or any part of the indebtedness  evidenced
by the Note. The secured  indebtedness and all other obligations secured by this
Deed of Trust, including,  without limitation,  interest at the Default Interest
Rate (as defined in the Note), any prepayment charge, fee or premium required to
be paid under the Note in order to prepay  principal (to the extent permitted by
applicable law), reasonable attorneys' fees and any other amounts due and unpaid
to  Lender  under  the Loan  Documents,  may be bid by  Lender in the event of a
foreclosure  sale  hereunder.  In the event of a  judicial  sale  pursuant  to a
foreclosure  decree,  it is understood and agreed that Lender or its assigns may
become the purchaser of the Property or any part thereof.
(2) Lender may, by following the  procedures  and  satisfying  the  requirements
prescribed by applicable law, foreclose on all or only a portion of the Property
and, in such event,  said foreclosure  shall not affect the lien of this Deed of
Trust on the remaining portion of the Property.

(f) Trustee's  Sale.  Cause the Trustee to sell the Property at a trustee's sale
in  accordance  with  the  non-judicial   foreclosure   procedures  required  by
Washington law.
(g) Judicial Remedies. Proceed by suit or suits, at law or in equity, instituted
by Lender, or Trustee, upon written request of Lender, to enforce the payment of
the indebtedness  secured hereby or the other obligations of Borrower  hereunder
or pursuant to the Loan Documents, to foreclose the liens and security interests
of this Deed of Trust as against  all or any part of the  Property,  and to have
all or any part of the Property  sold under the judgment or decree of a court of
competent  jurisdiction.  In  the  event  of  a  judicial  sale  pursuant  to  a
foreclosure  decree,  it is understood and agreed that Lender or its assigns may
become the  purchaser of the  Property.  This remedy shall be  cumulative of any
other  non-judicial  remedies  available  to the Lender with respect to the Loan
Documents.  Proceeding with the request or receiving a judgment for legal relief
shall not be or be deemed to be an election  of  remedies  or bar any  available
non-judicial remedy of the Lender.
(h) Security Agreement Remedies.  Expenses of retaking,  holding,  preparing for
sale, selling or the like (including,  without  limitation,  Lender's reasonable
attorneys'  fees and legal  expenses),  together  with  interest  thereon at the
Default  Interest Rate from the date  incurred by Lender until  actually paid by
Borrower,  shall be paid by Borrower on demand and shall be secured by this Deed
of Trust and by all of the other Loan Documents  securing all or any part of the
indebtedness  evidenced by the Note. If notice is required by law,  Lender shall
give Borrower at least ten (10) days' prior written notice of the time and place
of any public sale of such property or of the time of or after which any private
sale or any other intended disposition thereof is to be made, and if such notice
is sent to Borrower,  as the same is provided for the mailing of notices herein,
it is  hereby  deemed  that such  notice  shall be and is  reasonable  notice to
Borrower. No such notice is necessary for any such property which is perishable,
threatens  to decline  speedily in value or is of a type  customarily  sold on a
recognized   market.   Any  sale  made  pursuant  to  the   provisions  of  this
Section 3.1(h)  shall be  deemed  to have  been a  public  sale  conducted  in a
commercially  reasonable manner if held  contemporaneously  with the foreclosure
sale as  provided  in  Section 3.1(e)  hereof  upon  giving the same notice with
respect  to the  sale  of the  Property  hereunder  as is  required  under  said
Section 3.1(e).  Furthermore,  to the extent  permitted  by law, in  conjunction
with, in addition to or in substitution for the rights and remedies available to
Lender pursuant to any applicable Uniform Commercial Code:

(i) In the event of a  foreclosure  sale,  the  Property  may,  at the option of
Lender, be sold as a whole; and
(ii) It shall not be necessary that Lender take possession of the aforementioned
Collateral  (as defined in Section 1.21 herein),  or any part thereof,  prior to
the time that any sale  pursuant to the  provisions of this Section is conducted
and it shall not be necessary  that said  Collateral,  or any part  thereof,  be
present at the location of such sale; and
(iii) Lender may appoint or delegate any one or more persons as agent to perform
any act or acts necessary or incident to any sale held by Lender,  including the
sending of notices and the conduct of the sale, but in the name and on behalf of
Lender.

(i) Other. Exercise any other right or remedy available hereunder,  under any of
the other Loan Documents or at law or in equity.

3.2      Application  of  Proceeds.
To the fullest extent permitted by law, the proceeds of any sale under this Deed
of Trust  shall  be  applied,  to the  extent  funds  are so  available,  to the
following items in such order as Lender in its discretion may determine:

(a) To payment  of the  costs,  expenses  and fees of taking  possession  of the
Property, and of holding,  operating,  maintaining,  using, leasing,  repairing,
improving,  marketing and selling the same and of otherwise  enforcing  Lender's
right and remedies hereunder and under the other Loan Documents,  including, but
not limited to, a reasonable fee to the Trustee,  receivers'  fees, court costs,
attorneys',  accountants',   appraisers',   auctioneers',  managers'  and  other
professionals'  fees,  title  charges  and  transfer  taxes and  payment  of all
expenses, liabilities and advances of Trustee.
(b) To payment of all sums expended by Lender under the terms of any of the Loan
Documents and not yet repaid, together with interest on such sums at the Default
Interest Rate (as defined in the Note).
(c) To payment of the secured  indebtedness and all other obligations secured by
this Deed of Trust,  including,  without  limitation,  interest  at the  Default
Interest  Rate (as  defined in the Note) for any  applicable  period and, to the
extent  permitted by  applicable  law,  any  prepayment  fee,  charge or premium
required  to be paid under the Note in order to prepay  principal,  in any order
that Lender chooses in its sole discretion.
(d) The  remainder,  if any, of such funds shall be  disbursed to Borrower or to
the person or persons legally entitled thereto.

3.3 Right and Authority of Receiver or Lender in the Event of Default;  Power of
Attorney.
Upon the  occurrence of a default  hereunder,  which default is not cured within
any  applicable  grace or cure period,  and entry upon the Property  pursuant to
Section 3.1(b)  hereof or appointment of a receiver  pursuant to  Section 3.1(d)
hereof,  and under such terms and  conditions  as may be prudent and  reasonable
under the  circumstances in Lender's or the receiver's sole  discretion,  all at
Borrower's expense,  Lender or said receiver,  or such other persons or entities
as they shall hire,  direct or engage,  as the case may be, may do or permit one
or more of the following, successively or concurrently:  (a) enter upon and take
possession  and control of any and all of the  Property;  (b) take  and maintain
possession of all documents, books, records, papers and accounts relating to the
Property;  (c) manage  and operate the Property;  (d) preserve  and maintain the
Property;  (e) make  repairs and alterations to the Property;  (f) complete  any
construction  or repair of the  Improvements,  with such  changes,  additions or
modifications of the plans and specifications or intended disposition and use of
the  Improvements  as Lender  may in its sole  discretion  deem  appropriate  or
desirable to place the  Property in such  condition  as will,  in Lender's  sole
discretion,  make  it or  any  part  thereof  readily  marketable  or  rentable;
(g) conduct  a marketing or leasing  program with  respect to the  Property,  or
employ a marketing or leasing agent or agents to do so,  directed to the leasing
or sale of the  Property  under such terms and  conditions  as Lender may in its
sole discretion  deem  appropriate or desirable;  (h) employ  such  contractors,
subcontractors,   materialmen,  architects,  engineers,  consultants,  managers,
brokers,  marketing agents, or other employees,  agents, independent contractors
or  professionals,  as Lender may in its sole  discretion  deem  appropriate  or
desirable to implement  and  effectuate  the rights and powers  herein  granted;
(i) execute and deliver, in the name of Lender as attorney-in-fact  and agent of
Borrower or in its own name as Lender,  such  documents and  instruments  as are
necessary or appropriate to consummate authorized  transactions;  (j) enter into
such leases, whether of real or personal property, or tenancy agreements,  under
such terms and conditions as Lender may in its sole discretion deem  appropriate
or desirable;  (k) collect  and receive the Rents and Profits from the Property;
(l) eject  tenants or  repossess  personal  property,  as provided  by law,  for
breaches of the  conditions  of their  leases or other  agreements;  (m) sue for
unpaid Rents and Profits,  payments,  income or proceeds in the name of Borrower
or Lender;  (n) maintain  actions in forcible entry and detainer,  ejectment for
possession and actions in distress for rent;  (o) compromise or give acquittance
for  Rents and  Profits,  payments,  income or  proceeds  that may  become  due;
(p) delegate  or assign any and all  rights  and powers  given to Lender by this
Deed of Trust;  and (q) do any acts which are  necessary to protect the security
hereof  and use such  measures,  legal or  equitable,  reasonably  necessary  to
implement and  effectuate  the  provisions  of this Deed of Trust.  This Deed of
Trust shall constitute a direction to and full authority to any lessee, or other
third party who has  heretofore  dealt or contracted  or may  hereafter  deal or
contract with Borrower or Lender,  at the request of Lender,  to pay all amounts
owing  under any lease,  contract,  concession,  license or other  agreement  to
Lender  without proof of the default relied upon. Any such lessee or third party
is hereby  irrevocably  authorized  to rely upon and  comply  with (and shall be
fully protected by Borrower in so doing) any request, notice or demand by Lender
for the payment to Lender of any Rents and Profits or other sums which may be or
thereafter become due under its lease,  contract,  concession,  license or other
agreement,  or for the  performance  of any  undertakings  under any such lease,
contract,  concession,  license or other  agreement,  and shall have no right or
duty to inquire whether any default under this Deed of Trust or under any of the
other Loan Documents has actually occurred or is then existing.  Borrower hereby
constitutes  and appoints  Lender,  its assignees,  successors,  transferees and
nominees,  as Borrower's true and lawful  attorney-in-fact  and agent, with full
power of substitution in the Property,  in Borrower's  name, place and stead, to
do or permit any one or more of the foregoing described rights, remedies, powers
and authorities,  successively or concurrently, and said power of attorney shall
be  deemed a power  coupled  with an  interest  and  irrevocable  so long as any
indebtedness  secured  hereby is  outstanding.  Any money  advanced by Lender in
connection with any action taken under this Section 3.3,  together with interest
thereon at the Default  Interest  Rate (as defined in the Note) from the date of
making such  advancement by Lender until  actually paid by Borrower,  shall be a
demand  obligation owing by Borrower to Lender and shall be secured by this Deed
of Trust and by every other instrument securing the secured indebtedness.

3.4      Occupancy  After  Foreclosure.
In the event there is a foreclosure or comparable sale or sales hereunder and at
the  time of  such  sale  or  sales,  Borrower  or  Borrower's  representatives,
successors  or  assigns,  or any other  persons  claiming  any  interest  in the
Property  by,  through  or  under  Borrower  (except  tenants  of  space  in the
Improvements  subject  to leases  entered  into prior to the date  hereof),  are
occupying or using the Property,  or any part  thereof,  then, to the extent not
prohibited by applicable law, each and all shall, at the option of Lender or the
purchaser at such sale, as the case may be, immediately become the tenant of the
purchaser  at such  sale,  which  tenancy  shall be a tenancy  from  day-to-day,
terminable at the will of either landlord or tenant,  at a reasonable rental per
day based upon the value of the Property occupied or used, such rental to be due
daily to the purchaser.  Further,  to the extent permitted by applicable law, in
the event the tenant fails to  surrender  possession  of the  Property  upon the
termination  of such tenancy,  the purchaser  shall be entitled to institute and
maintain  an action for  unlawful  detainer of the  Property in the  appropriate
court of the county in which the Land is located.

3.5 Notice to Account Debtors.
Lender may, at any time after a default  hereunder,  which  default is not cured
within any  applicable  grace or cure  period,  notify the  account  debtors and
obligors  of any  accounts,  chattel  paper,  negotiable  instruments  or  other
evidences  of  indebtedness  to Borrower  included in the Property to pay Lender
directly.  Borrower  shall at any time or from time to time upon the  request of
Lender provide to Lender a current list of all such account debtors and obligors
and their addresses.

3.6      Cumulative  Remedies.
All  remedies  contained in this Deed of Trust are  cumulative  and Lender shall
also have all other remedies  provided at law and in equity or in any other Loan
Documents. Such remedies may be pursued separately, successively or concurrently
at the sole subjective direction of Lender and may be exercised in any order and
as often as occasion  therefor shall arise.  No act of Lender shall be construed
as an election to proceed under any particular  provisions of this Deed of Trust
to the exclusion of any other  provision of this Deed of Trust or as an election
of remedies to the exclusion of any other remedy which may then or thereafter be
available  to Lender.  No delay or failure  by Lender to  exercise  any right or
remedy  under this Deed of Trust shall be construed to be a waiver of that right
or remedy or of any default  hereunder.  Lender may  exercise any one or more of
its rights and  remedies  at its option  without  regard to the  adequacy of its
security.

3.7      Payment of Expenses.
Borrower shall pay on demand all of Lender's expenses reasonably incurred in any
efforts to enforce  any terms of this Deed of Trust,  whether or not any lawsuit
is  filed  and  whether  or not  foreclosure  is  commenced  but not  completed,
including,  but  not  limited  to,  reasonable  legal  fees  and  disbursements,
including  those  incurred at trial,  on appeal and on petition  for review,  in
arbitration  and  mediation  proceedings  and in  connection  with  negotiation,
compromise  or  settlement  of the  secured  or  unsecured  obligations  and any
proceedings  for  relief  in  bankruptcy,  foreclosure  costs  and the  costs of
searching records, obtaining title reports, surveyors' reports,  engineering and
environmental   reports,   attorneys'   opinions,   title  insurance   policies,
appraisals,  expert  witness  fees and fees for the  trustee  under  the deed of
trust, together with interest thereon from and after the date incurred by Lender
until actually paid by Borrower at the Default  Interest Rate (as defined in the
Note),  and the same  shall be  secured  by this Deed of Trust and by all of the
other Loan Documents  securing all or any part of the indebtedness  evidenced by
the Note.

ARTICLE IV
CONCERNING THE TRUSTEE

4.1      No  Required  Action.
Trustee  shall not be  required  to take any  action  toward the  execution  and
enforcement  of the trust hereby  created or to institute,  appear in, or defend
any action,  suit, or other  proceeding in connection  therewith  where,  in his
opinion,  such action  would be likely to involve  him in expense or  liability,
unless  requested  so to do by a written  instrument  signed by Lender  and,  if
Trustee  so  requests,   unless  Trustee  is  tendered  security  and  indemnity
satisfactory to Trustee against any and all cost, expense, and liability arising
therefrom.  Trustee shall not be responsible for the execution,  acknowledgment,
or validity of the Loan Documents,  or for the proper authorization  thereof, or
for the  sufficiency of the lien and security  interest  purported to be created
hereby,  and Trustee makes no representation in respect thereof or in respect of
the rights, remedies, and recourses of Lender.

4.2      Certain  Rights.
With the approval of Lender, Trustee shall have the right to take any and all of
the following actions:  (i) to select, employ, and consult with counsel (who may
be, but need not be,  counsel for Lender)  upon any matters  arising  hereunder,
including the preparation,  execution, and interpretation of the Loan Documents,
and shall be fully  protected  in relying  as to legal  matters on the advice of
counsel,  (ii) to execute any of the trusts and powers hereof and to perform any
duty  hereunder  either  directly or through his agents or  attorneys,  (iii) to
select and employ, in and about the execution of his duties hereunder,  suitable
accountants,  engineers and other experts, agents and attorneys-in-fact,  either
corporate  or  individual,  not  regularly in the employ of Trustee (and Trustee
shall not be answerable for any act, default,  negligence,  or misconduct of any
such  accountant,  engineer  or  other  expert,  agent or  attorney-in-fact,  if
selected  with  reasonable  care,  or for any error of  judgment  or act done by
Trustee in good faith,  or be otherwise  responsible  or  accountable  under any
circumstances  whatsoever,  except for Trustee's gross negligence or bad faith),
and  (iv) any and all other  lawful  action that Lender may instruct  Trustee to
take to protect or  enforce  Lender's  rights  hereunder.  Trustee  shall not be
personally  liable in case of entry by Trustee,  or anyone entering by virtue of
the powers herein granted to Trustee, upon the Property for debts contracted for
or liability or damages incurred in the management or operation of the Property.
Trustee shall have the right to rely on any instrument,  document,  or signature
authorizing  or  supporting  any action taken or proposed to be taken by Trustee
hereunder,  believed  by Trustee in good faith to be genuine.  Trustee  shall be
entitled to reimbursement for expenses incurred by Trustee in the performance of
Trustee's duties hereunder and to reasonable  compensation for such of Trustee's
services  hereunder as shall be rendered.  Borrower will, from time to time, pay
the  compensation due to Trustee  hereunder and reimburse  Trustee for, and save
Trustee  harmless  against,  any and all  liability  and  expenses  which may be
incurred  by  Trustee  in  the  performance  of  Trustee's   duties  except  for
liabilities arising from Trustee's gross negligence or willful misconduct.

4.3      Retention of Money.
All moneys received by Trustee shall,  until used or applied as herein provided,
be held in trust for the purposes for which they were received,  but need not be
segregated in any manner from any other moneys (except to the extent required by
applicable  law),  and Trustee  shall be under no liability  for interest on any
moneys received by Trustee hereunder.

4.4      Successor  Trustees.
Trustee  may  resign by the giving of notice of such  resignation  in writing or
verbally to Lender.  If Trustee shall die, resign,  or become  disqualified from
acting in the  execution  of this  trust,  or if, for any reason,  Lender  shall
prefer to appoint a  substitute  trustee or  multiple  substitute  trustees,  or
successive  substitute trustees or successive multiple substitute  trustees,  to
act instead of the aforenamed Trustee, Lender shall have full power to appoint a
substitute  trustee  (or,  if  preferred,   multiple  substitute   trustees)  in
succession who shall succeed (and if multiple substitute trustees are appointed,
each of such multiple  substitute  trustees  shall  succeed) to all the estates,
rights,  powers, and duties of the aforenamed  Trustee.  Such appointment may be
executed by any authorized agent of Lender,  and if such Lender be a corporation
and  such  appointment  be  executed  in its  behalf  by  any  officer  of  such
corporation, such appointment shall be conclusively presumed to be executed with
authority and shall be valid and  sufficient  without proof of any action by the
board of directors or any superior officer of the  corporation.  Borrower hereby
ratifies  and  confirms any and all acts which the  aforenamed  Trustee,  or his
successor or successors in this trust,  shall do lawfully by virtue  hereof.  If
multiple  substitute  Trustees are appointed,  each of such multiple  substitute
Trustees shall be empowered and authorized to act alone without the necessity of
the joinder of the other multiple  substitute  trustees,  whenever any action or
undertaking  of such  substitute  trustees is  requested  or  required  under or
pursuant to this Deed of Trust or applicable law.

4.5      Perfection  of  Appointment.
Should  any deed,  conveyance,  or  instrument  of any nature be  required  from
Borrower by any Trustee or substitute  Trustee to more fully and certainly  vest
in and  confirm to the  Trustee or  substitute  Trustee  such  estates,  rights,
powers, and duties, then, upon request by the Trustee or substitute Trustee, any
and all such  deeds,  conveyances  and  instruments  shall  be  made,  executed,
acknowledged,  and delivered and shall be caused to be recorded  and/or filed by
Borrower.

4.6      Succession  Instruments.
Any substitute Trustee appointed pursuant to any of the provisions hereof shall,
without  any  further  act,  deed,  or  conveyance,  become  vested with all the
estates, properties, rights, powers, and trusts of its or his predecessor in the
rights hereunder with like effect as if originally named as Trustee herein;  but
nevertheless,  upon the written request of Lender or of the substitute  Trustee,
the Trustee ceasing to act shall execute and deliver any instrument transferring
to such substitute Trustee,  upon the trusts herein expressed,  all the estates,
properties,  rights,  powers,  and trusts of the Trustee so ceasing to act,  and
shall duly  assign,  transfer and deliver any of the property and moneys held by
such Trustee to the substitute Trustee so appointed in the Trustee's place.

4.7      No Representation by Trustee.
By accepting  or  approving  anything  required to be  observed,  performed,  or
fulfilled  or to be given to Trustee  (on its own behalf or on behalf of Lender)
pursuant to the Loan Documents,  including,  without  limitation,  any officer's
certificate,  balance  sheet,  statement  of profit and loss or other  financial
statement,  survey,  appraisal,  or insurance policy, neither Trustee nor Lender
shall be deemed to have  warranted,  consented to, or affirmed the  sufficiency,
legality, effectiveness, or legal effect of the same, or of any term, provision,
or condition  thereof,  and such acceptance or approval  thereof shall not be or
constitute any warranty or affirmation  with respect thereto by Trustee,  either
on its own behalf or on behalf of Lender.

ARTICLE V
MISCELLANEOUS TERMS AND CONDITIONS

5.1      Time of Essence.
Time is of the essence with respect to all provisions of this Deed of Trust.

5.2      Reconveyance  by Trustee.
Upon written  request of Lender  stating that all sums and  obligations  secured
hereby have been paid and  satisfied,  and upon  surrender of this Deed of Trust
and the Note to Trustee  for  cancellation  and  retention  and upon  payment by
Borrower of Trustee's fees, Trustee shall reconvey to Borrower, or the person or
persons legally entitled thereto,  without warranty, any portion of the Property
then held hereunder.  The recitals in such  reconveyance of any matters or facts
shall be  conclusive  proof of the  truthfulness  thereof.  The  grantee  in any
reconveyance  may be  described  as "the  person  or  persons  legally  entitled
thereto."

5.3      Certain  Rights  of  Lender.
Without  affecting   Borrower's   liability  for  the  payment  of  any  of  the
indebtedness secured hereby,  Lender may from time to time and without notice to
Borrower:  (a) release  any person  liable for the  payment of the  indebtedness
secured  hereby;  (b) extend or modify the terms of payment of the  indebtedness
secured hereby;  (c) accept  additional real or personal property of any kind as
security or alter,  substitute or release any property securing the indebtedness
secured hereby; (d) recover any part of the Property;  (e) consent in writing to
the making of any  subdivision  map or plat  thereof;  (f) join in granting  any
easement therein;  or (g) join in any extension  agreement of this Deed of Trust
or any agreement subordinating the lien hereof.

5.4      Notices.
Any notice,  report,  demand, request or other instrument authorized or required
to be given or furnished hereunder,  under any of the other Loan Documents or as
required by law  ("Notices")  shall be in writing and shall be given as follows:
(a) by hand  delivery;  (b) by  deposit in the United States mail as first class
certified  mail,  return  receipt  requested,  postage paid;  (c) by  expedited,
prepaid,  nationwide courier service,  either commercial or United States Postal
Service,  with  proof of  actual  or  attempted  delivery;  or  (d) by  telecopy
transmission  (other than for notices of default) with a confirmation copy to be
delivered by duplicate notice in accordance with any of  clauses (a)-(c)  above,
in each  case,  addressed  to the  party  intended  to  receive  the same at the
following address(es):

Lender:
Column Financial, Inc.
11 Madison Avenue
5th Floor
New York, New York 10010-3629
Attention: Edmund Taylor
Telecopier: (212) 325-8106
Re: Red Lion Hotel Yakima Center
Yakima, Washington

with copies to:
Credit Suisse First Boston Mortgage Capital LLC
Legal & Compliance Department
One Madison Avenue
New York, New York 10010
Attention: Pamela L. McCormack, Esq.
Telecopier: (917) 326-7805
Re: Red Lion Hotel Yakima Center
Yakima, Washington

and Servicer:
KeyCorp Real Estate Capital Markets, Inc.
911 Main Street
Suite 1500
Kansas City, Missouri 64105
Attention: Diane Haislip
Telecopier: (216) 357-6543
or any successor servicer of the Loan.
Re: Red Lion Hotel Yakima Center
Yakima, Washington

Borrower:
WHC807, LLC
c/o WestCoast Hospitality Corporation
201 W. North River Drive, Suite 100
Spokane, Washington 99201
Attention: Chief Financial Officer
Telecopier: (509) 325-7324

with a copy to:
Paine, Hamblen, Coffin, Brooke & Miller LLP
717 W. Sprague, Suite 1200
Spokane, Washington 99202
Attention: Thomas L. McKeirnan, Esq.
Telecopier: (509) 838-0007

Any party may change the address to which any such Notice is to be  delivered to
any other address  within the United States of America,  by furnishing  ten (10)
days written  notice of such change to the other parties in accordance  with the
provisions  of this  Section 5.4.  All notices,  demands and  requests  shall be
effective upon personal delivery,  or one (1) business day after being deposited
with the private courier service, or two (2) business days after being deposited
in the United States mail as required  above.  The inability to deliver  Notices
because  of a changed  address of which no Notice was  given,  or  rejection  or
refusal to accept any Notice  offered for delivery shall be deemed to be receipt
of the  Notice as of the date of such  inability  to  deliver  or  rejection  or
refusal  to  accept  delivery.  Notice  for  either  party  may be  given by its
respective  counsel.  Additionally,  Notice from Lender may also be given by the
Servicer.

5.5      Successors and Assigns.
The terms,  provisions,  indemnities,  covenants and conditions  hereof shall be
binding upon Borrower and the successors and assigns of Borrower,  including all
successors  in  interest  in and to all or any part of the  Property,  and shall
inure to the  benefit  of  Lender  and its  successors  and  assigns  and  shall
constitute  covenants  running with the land. If Borrower  consists of more than
one person or entity,  each will be jointly and severally  liable to perform the
obligations of Borrower.

5.6      Severability.
A  determination  that any provision of this Deed of Trust is  unenforceable  or
invalid shall not affect the enforceability or validity of any other provision.

5.7      Gender.
Within this Deed of Trust,  words of any gender  shall be held and  construed to
include any other gender,  and words in the singular shall be held and construed
to include the plural, and vice versa, unless the context otherwise requires.

5.8      Waiver;  Discontinuance  of  Proceedings.
Lender may waive any single default by Borrower  hereunder  without  waiving any
other  prior or  subsequent  default,  and may  remedy any  default by  Borrower
hereunder without waiving the default remedied.  Neither the failure or delay by
Lender in  exercising,  any right,  power or remedy upon any default by Borrower
hereunder  shall be  construed as a waiver of such default or as a waiver of the
right to exercise any such right,  power or remedy at a later date. No single or
partial exercise by Lender of any right, power or remedy hereunder shall exhaust
the same or shall preclude any other or further exercise thereof, and every such
right,  power or remedy  hereunder may be exercised at any time and from time to
time.  No  modification  or waiver of any  provision  hereof nor  consent to any
departure by Borrower  therefrom shall in any event be effective unless the same
shall be in writing and signed by Lender,  and then such waiver or consent shall
be effective only in the specific  instance and for the specific  purpose given.
No notice to nor demand on Borrower in any case shall of itself entitle Borrower
to any other or  further  notice or demand in  similar  or other  circumstances.
Acceptance  by Lender of any  payment in an amount less than the amount then due
on any of the secured indebtedness shall be deemed an acceptance on account only
and shall not in any way affect the existence of a default hereunder.

5.9      Section  Headings.
The  headings  of the  sections  and  paragraphs  of this  Deed of Trust are for
convenience of reference  only, are not to be considered a part hereof and shall
not limit or otherwise affect any of the terms hereof.

5.10     GOVERNING  LAW.
THIS DEED OF TRUST WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF  WASHINGTON,  PROVIDED  THAT TO THE EXTENT THAT ANY OF SUCH LAWS
MAY NOW OR HEREAFTER  BE  PREEMPTED  BY FEDERAL  LAW,  SUCH FEDERAL LAW SHALL SO
GOVERN AND BE CONTROLLING.

5.11     Counting  of Days.
The term "days" when used herein shall mean  calendar  days.  If any time period
ends on a Saturday,  Sunday or holiday officially recognized by the state within
which  the  Land is  located,  the  period  shall be  deemed  to end on the next
succeeding business day; provided,  however, that in the case of payments due by
Borrower to Lender on a Saturday, Sunday or holiday (e.g., monthly deposits into
Reserves,  payments on the Note,  etc.) such payments shall be deemed due on the
immediately  preceding  business day. The term  "business day" or "Business Day"
when used herein shall mean a weekday,  Monday  through  Friday,  except a legal
holiday  or a day on  which  banking  institutions  in New  York,  New  York are
authorized by law to be closed.

5.12     Intentionally omitted.

5.13     Unsecured  Portion of  Indebtedness.
If any part of the secured  indebtedness cannot be lawfully secured by this Deed
of Trust or if any part of the Property  cannot be lawfully  subject to the lien
and security interest hereof to the full extent of such  indebtedness,  then all
payments made shall be applied on said  indebtedness  first in discharge of that
portion thereof which is unsecured by this Deed of Trust.

5.14     Cross Default.
A default hereunder which has not been cured within any applicable grace or cure
period shall be a default under each of the other Loan Documents.

5.15     Interest  After Sale.
In the event the Property or any part thereof shall be sold upon  foreclosure as
provided  hereunder,  to the extent permitted by law, the sum for which the same
shall have been sold shall,  for purposes of redemption (if applicable  pursuant
to the laws of the state in which the Property is located), bear interest at the
Default Interest Rate (as defined in the Note).

5.16     Construction  of this  Document.
This  document  may be construed as a mortgage,  security  deed,  deed of trust,
chattel mortgage, conveyance,  assignment, security agreement, pledge, financing
statement,  hypothecation or contract,  or any one or more of the foregoing,  in
order to fully  effectuate the liens and security  interests  created hereby and
the purposes and agreements herein set forth.

5.17     No Merger.
It is the desire and intention of the parties hereto that this Deed of Trust and
the lien hereof shall not merge in fee simple title to the Property.

5.18     Rights With Respect to Junior  Encumbrances.
Any  person or entity  purporting  to have or to take a junior  deed of trust or
mortgage  or other  lien upon the  Property  or any  interest  therein  shall be
subject  to the  rights of Lender to amend,  modify,  increase,  vary,  alter or
supplement this Deed of Trust,  the Note or any of the other Loan Documents,  to
extend the Maturity  Date,  to increase the amount of the  indebtedness  secured
hereby,  to waive or forebear  the  exercise  of any of its rights and  remedies
hereunder or under any of the other Loan Documents and to release any collateral
or security for the indebtedness  secured hereby, in each and every case without
obtaining  the consent of the holder of such junior lien and without the lien or
security  interest of this Deed of Trust losing its priority  over the rights of
any such junior lien.

5.19     Lender  May  File  Proofs  of  Claim.
In  the  case  of  any  receivership,  insolvency,  bankruptcy,  reorganization,
arrangement,  adjustment, composition or other proceedings affecting Borrower or
the principals,  members or general  partners in Borrower,  or their  respective
creditors or property, Lender, to the extent permitted by law, shall be entitled
to file  such  proofs  of claim  and  other  documents  as may be  necessary  or
advisable in order to have the claims of Lender allowed in such  proceedings for
the  entire  secured  indebtedness  at the  date  of  the  institution  of  such
proceedings  and for any  additional  amount which may become due and payable by
Borrower hereunder after such date.

5.20     After-Acquired  Property.
All property  acquired by Borrower after the date of this Deed of Trust which by
the terms of this Deed of Trust  shall be subject  to the lien and the  security
interest  created hereby,  shall  immediately  upon the  acquisition  thereof by
Borrower and without further deed, grant, encumbrance,  conveyance or assignment
become subject to the lien and security interest created by this Deed of Trust.

5.21     No Representation.
By  accepting  delivery  of any  item  required  to be  observed,  performed  or
fulfilled or to be given to Lender  pursuant to the Loan  Documents,  including,
but not limited to, any  officer's  certificate,  balance  sheet,  statement  of
profit and loss or other  financial  statement,  survey,  appraisal or insurance
policy, Lender shall not be deemed to have warranted,  consented to, or affirmed
the sufficiency,  legality, effectiveness or legal effect of the same, or of any
term,  provision or condition  thereof,  and such acceptance of delivery thereof
shall not be or constitute  any warranty,  consent or  affirmation  with respect
thereto by Lender.

5.22     Counterparts.
This Deed of Trust may be executed in any number of counterparts,  each of which
shall be  effective  only  upon  delivery  and  thereafter  shall be  deemed  an
original, and all of which shall be taken to be one and the same instrument, for
the same effect as if all parties hereto had signed the same signature page.

5.23     Personal  Liability.
Notwithstanding  anything to the contrary  contained in this Deed of Trust,  the
liability of Borrower  and its general  partners  for the  indebtedness  secured
hereby  and  for  the  performance  of  the  other  agreements,   covenants  and
obligations  contained  herein and in the Loan Documents shall be limited as set
forth in Section 1.5 of the Note; provided,  however,  that nothing herein shall
be deemed to be a waiver of any right  which  Lender or  Trustee  may have under
Sections 506(a),  506(b), 1111(b) or any other provisions of the U.S. Bankruptcy
Code to file a claim for the full amount of the  indebtedness  secured hereby or
to require that all collateral shall continue to secure all  indebtedness  owing
to Lender in  accordance  with the Note,  this Deed of Trust and the other  Loan
Documents.

5.24     Recording and Filing.
Borrower  will  cause the Loan  Documents  and all  amendments  and  supplements
thereto  and  substitutions  therefor to be  recorded,  filed,  re-recorded  and
re-filed in such manner and in such places as Lender shall  reasonably  request,
and will pay on demand all such recording,  filing,  re-recording  and re-filing
taxes, fees and other charges. Borrower shall reimburse Lender, or its servicing
agent,  for the costs incurred in obtaining a tax service  company to verify the
status of payment of taxes and assessments on the Property.

5.25     Entire  Agreement and  Modifications.
This Deed of Trust and the other Loan  Documents  contain the entire  agreements
between the parties and supersede any prior  agreements  (oral or written),  and
may not be amended, revised, waived,  discharged,  released or terminated orally
but only by a written  instrument or  instruments  executed by the party against
which  enforcement of the amendment,  revision,  waiver,  discharge,  release or
termination is asserted.

5.26     Maximum  Interest.
The provisions of this Deed of Trust and of all agreements  between Borrower and
Lender,  whether now existing or hereafter  arising and whether written or oral,
are hereby  expressly  limited so that in no  contingency  or event  whatsoever,
whether  by  reason of demand or  acceleration  of the  maturity  of the Note or
otherwise,  shall the amount paid, or agreed to be paid  ("Interest")  to Lender
for the use,  forbearance,  retention or detention of the money loaned under the
Note exceed the maximum amount  permissible  under  applicable law. If, from any
circumstance  whatsoever,  performance or fulfillment of any provision hereof or
of any agreement  between  Borrower and Lender shall, at the time performance or
fulfillment  of such  provision  shall be due,  exceed  the limit  for  Interest
prescribed  by law or otherwise  transcend  the limit of validity  prescribed by
applicable  law,  then ipso facto the  obligation  to be  performed or fulfilled
shall be reduced to such limit, and if, from any circumstance whatsoever, Lender
shall ever receive anything of value deemed Interest by applicable law in excess
of the maximum lawful amount, an amount equal to any excessive Interest shall be
applied to the  reduction of the  principal  balance owing under the Note in the
inverse  order of its  maturity  (whether  or not then due) or at the  option of
Lender  be paid  over to  Borrower,  and not to the  payment  of  Interest.  All
Interest  (including any amounts or payments  judicially or otherwise  under law
deemed to be Interest) contracted for, charged,  taken, reserved, paid or agreed
to be paid to Lender  shall,  to the extent  permitted  by  applicable  law,  be
amortized,  prorated, allocated and spread throughout the full term of the Note,
including  any  extensions  and renewals  thereof  until  payment in full of the
principal  balance of the Note so that the  Interest  thereon for such full term
will not at any time exceed the maximum amount permitted by applicable law. This
Section will control all agreements between Borrower and Lender.

5.27     Application of Default  Interest Rate Not a Waiver.
Application  of the Default  Interest Rate (as defined in the Note) shall not be
deemed to constitute a waiver of any default or any rights or remedies of Lender
under  this  Deed  of  Trust,  any  other  Loan  Document  or  applicable  legal
requirements,  or a  consent  to any  extension  of  time  for  the  payment  or
performance  of any obligation  with respect to which the Default  Interest Rate
(as defined in the Note) may be invoked.

5.28     Interest  Payable by Lender.
Lender  shall cause funds in the  Curtailment  Reserve and the FF&E Reserve (the
"Funds") to be deposited into interest  bearing accounts of the type customarily
maintained  by  Lender or its  servicing  agent for the  investment  of  similar
reserves, which accounts may not yield the highest interest rate then available.
The Funds  shall be held in an account in Lender's  name (or such other  account
name as  Lender  may  elect)  at a  financial  institution  or other  depository
selected by Lender (or its servicer) in its sole discretion  (collectively,  the
"Depository  Institution").  Borrower  shall  earn no more  than  an  amount  of
interest on the Funds equal to an amount  determined  by applying to the average
monthly  balance  of such  Funds the  quoted  interest  rate for the  Depository
Institution's money market savings account, as such rate is determined from time
to time (such  allocated  amount being  referred to as  "Borrower's  Interest").
Lender,  the servicer or the Depository  Institution shall be entitled to report
under Borrower's Federal tax identification  number, the Borrower's  Interest on
the Funds.  If the Depository  Institution  does not have an  established  money
market savings account (or if an interest rate for such account cannot otherwise
be  determined  in  connection  with the deposit of such  Funds),  a  comparable
interest rate quoted by the Depository  Institution and acceptable to Lender (or
its  servicer)  in its  reasonable  discretion  shall be  used.  The  amount  of
Borrower's  Interest  allocated  to Funds  shall be added to the  balance in the
Curtailment  Reserve and the FF&E Reserve and shall be disbursed  for payment of
the items for which other Funds in the Curtailment  Reserve and the FF&E Reserve
are to be  disbursed.  Furthermore,  reference  is also made to  Section C-1  on
Exhibit C  of this  Deed of Trust  with  respect  to the  inclusion  of  certain
additional  monies  from the Cash  Management  Account  (as  defined in the Cash
Management Agreement) within the term "Funds" for purposes of this Section 5.28.

5.29     Further  Stipulations.
The  additional  covenants,  agreements  and  provisions  set forth in Exhibit C
attached hereto, if any, shall be a part of this Deed of Trust and shall, in the
event of any conflict  between such  further  stipulations  and any of the other
provisions of this Deed of Trust, be deemed to control.

5.30     Relationship  of the Parties.
The relationship  between Borrower and Lender is that of a borrower and a lender
only and  neither of those  parties  is, nor shall it hold itself out to be, the
agent, employee, joint venturer or partner of the other party.

5.31     Fixture  Filing.
This  Deed of Trust  shall be  effective  from  the date of its  recording  as a
financing  statement  filed  as a  fixture  filing  with  respect  to all  goods
constituting  part of the  Property  which  are or are to become  fixtures.  The
mailing  address of Borrower  and the  address of Lender from which  information
concerning the security  interests may be obtained are set forth in Section 1.22
above.

5.32     Sale of Note and  Securitization.
At the  request of the Lender  and,  to the extent not  already  required  to be
provided by Borrower  under this Deed of Trust,  Borrower  shall use  reasonable
efforts to satisfy the market standards to which the Lender customarily  adheres
or which may be reasonably required in the marketplace or by the Rating Agencies
in  connection  with  any  Secondary  Market  Transaction  of  rated  single  or
multi-class  securities (the  "Securities")  secured by or evidencing  ownership
interests in the Note and this Deed of Trust, including, without limitation, to:

(a)  (i) provide  such  financial  and other  information  with  respect  to the
Property,  the Borrower and the Manager,  (ii) provide  budgets  relating to the
Property;  (iii) perform  or permit or cause to be performed  or permitted  such
site inspection,  appraisals, market studies,  environmental reviews and reports
(Phase I's and, if appropriate,  Phase II's),  engineering reports and other due
diligence  investigations of the Property, as may be reasonably requested by the
Lender  or the  Rating  Agencies  or as  may  be  necessary  or  appropriate  in
connection   with  the  Secondary   Market   Transaction;   and  (iv) make  such
representations  and  warranties as of the closing date of the Secondary  Market
Transaction with respect to the Property, Borrower and the Loan Documents as are
customarily  provided in  securitization  transactions  and as may be reasonably
requested  by the Lender or the Rating  Agencies and  consistent  with the facts
covered  by such  representations  and  warranties  as they  exist  on the  date
thereof, including the representations and warranties made in the Loan Documents
(collectively,  the  "Provided  Information"),   together,  if  customary,  with
appropriate  verification  and/or consents of the Provided  Information  through
letters of auditors or opinions of counsel of independent  attorneys  acceptable
to the Lender and the Rating Agencies;

(b) at Borrower's  expense,  cause its counsel to render opinions,  which may be
relied upon by the Lender,  the Rating  Agencies and their  respective  counsel,
agents and representatives, as to non-consolidation,  fraudulent conveyance, and
true sale or any other opinion  customary in  securitization  transactions  with
respect to the  Property  and Borrower  and its  affiliates,  which  counsel and
opinions shall be reasonably satisfactory to the Lender and the Rating Agencies;

(c) execute such amendments to the Loan Documents and organizational  documents,
enter  into a lockbox  or  similar  arrangement  with  respect  to the Rents and
establish and fund such reserve funds (including,  without  limitation,  reserve
funds for deferred maintenance and capital  improvements) as may be requested by
the Lender or the Rating  Agencies or otherwise to effect the  Secondary  Market
Transaction;  provided,  however,  that the  Borrower  shall not be  required to
modify or amend any Loan Document if such modification or amendment would (on an
aggregate  basis)  (i) change  the  interest  rate,  the stated  maturity or the
amortization  of principal  set forth in the Note, or  (ii) modify  or amend any
other material economic term of the Loan; and

(d) execute such  amendment to the Loan  Documents  in order to  reallocate  the
aggregate  Loan Amount amongst the Yakima Loan and the Other Loans all as Lender
may  require;  provided,  however,  that the  Borrower  shall not be required to
modify or amend any Loan Document if such modification or amendment would (on an
aggregate  basis)  (i) change  the  interest  rate,  the stated  maturity or the
amortization  of principal  set forth in the Note, or  (ii) modify  or amend any
other material economic term of the Loan.

For purposes hereof, a "Secondary Market  Transaction"  shall be (a) any sale or
assignment of this Deed of Trust,  the Note and the other Loan  Documents to one
or more  investors as a whole loan;  (b) a  participation  of the Loan to one or
more investors;  (c) any  deposit of this Deed of Trust,  the Note and the other
Loan Documents with a trust or other entity which may sell certificates or other
instruments to investors  evidencing an ownership interest in the assets of such
trust or other entity; or (d) any other sale, assignment or transfer of the Loan
or any interest  therein to one or more investors.  At any time during which the
Loan is an asset  of a  securitization  or is  otherwise  an asset of any  rated
transaction,  "Rating  Agency" shall mean the rating  agency or rating  agencies
that from time to time rate the Securities,  certificates  or other  instruments
issued in connection with such securitization or other transaction.

All reasonable  third party costs and expenses  incurred by Lender in connection
with Borrower's complying with requests made under this Section shall be paid by
Borrower.

In the event that the  provisions of this Deed of Trust or any of the other Loan
Documents  require the receipt of written  confirmation  from each Rating Agency
with respect to the ratings on the Securities,  or, in accordance with the terms
of the transaction documents relating to a Secondary Market Transaction,  such a
rating  confirmation  is  required  in order for the consent of the Lender to be
given,  the  Borrower  shall pay all of the costs and  expenses  of the  Lender,
Servicer and each Rating Agency in  connection  therewith,  and, if  applicable,
shall pay any fees  imposed by any Rating  Agency as a condition to the delivery
of such confirmation.

ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY,  EXTEND CREDIT, OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.

Signature Page

IN WITNESS  WHEREOF,  Borrower,  intending to be legally bound hereby,  has duly
executed  this  Deed of Trust to be  effective  as of the date set  forth in the
first paragraph hereof.

BORROWER:

WHC807, LLC,
a Delaware limited liability company

By:
       Name:      Arthur M. Coffey
       Title:     President

STATE OF WASHINGTON                          )
                                             : ss.
COUNTY OF SPOKANE                            )

I certify that I know or have satisfactory evidence that Arthur M. Coffey is the
person who appeared before me, and said person  acknowledged that he signed this
instrument,  on oath stated that he was authorized to execute the instrument and
acknowledged it as the President of WHC807,  LLC, a Delaware  limited  liability
company,  to be the  free  and  voluntary  act of such  party  for the  uses and
purposes mentioned in this instrument.

         Dated:  June ____, 2003.

Print Name:
Notary Public in and for the State of Washington,
residing at
My commission expires:

EXHIBIT LIST

Exhibit A     -   Legal Description
Exhibit B     -   Permitted Exceptions
Exhibit C     -   Additional Stipulations
Exhibit D     -   Note Description - All Ten
Exhibit E     -   Other Deeds of Trust

EXHIBIT A

Legal Description

EXHIBIT B

Permitted Exceptions

EXHIBIT C

Additional Stipulations
C-1 Cash Management Stipulations. Borrower, Lender and any Manager have, of even
date herewith,  entered into that certain Cash  Management  Agreement (the "Cash
Management Agreement") of even date herewith which, among other things, provides
for the  disposition of Rents and Profits from the Property.  It is specifically
agreed that (i) the Cash  Management  Agreement is one of the Loan Documents (as
defined  in this  Deed of  Trust),  and  (ii) the  Lock  Box  Account,  the Cash
Management  Account and all other Accounts and  Sub-Accounts  (as such terms are
described or defined in the Cash Management  Agreement) shall be included within
the  Reserves  (as  defined  in  this  Deed  of  Trust).  The  Reserves  and any
disbursement  therefrom  shall be subject  to both this Deed of Trust,  the Cash
Management  Agreement and the other Loan Documents.  All references in this Deed
of Trust to the  Impound  Account and to the other  Reserves  shall be deemed to
refer to the Sub-Account of the Cash Management  Account (as defined in the Cash
Management  Agreement)  into which the  proceeds of each such  Reserve have been
deposited pursuant to the Cash Management Agreement.  All payments from Borrower
to Lender with respect to Reserves shall be made by  disbursement  from the Lock
Box Account or as otherwise provided in the Cash Management Agreement.  All sums
held  in  the  Cash  Management  Account  prior  to  being  allocated  into  the
Sub-Accounts  shall also be  considered  "Funds" for  purposes  of  Section 5.28
hereof and shall bear  interest  to be added to the Cash  Management  Account in
accordance with that provision;  provided, however, once such monies in the Cash
Management Account have been allocated to Sub-Accounts  pursuant to the terms of
the Cash Management  Agreement,  such  Sub-Accounts  shall bear interest for the
ultimate benefit of Borrower only to the extent required by Section 5.28  hereof
or by the Cash Management Agreement.

C-2 Repair  Reserve.  Prior to the  execution of this Deed of Trust,  Lender has
caused the Property to be inspected  and such  inspection  has revealed that the
Property  is  in  need  of  certain  maintenance,  repairs  and/or  remedial  or
corrective  work.  Contemporaneously  with the  execution  hereof,  Borrower has
established  with the Lender a reserve in the amount of $50,075.00  (the "Repair
Reserve") by depositing  such amount with Lender.  Borrower  shall cause each of
the  items  described  in that  certain  engineering  report  (the  "Engineering
Report")  dated May 15, 2003 and  prepared by National  Assessment  Corporation,
relative to the Property,  copies of which have been provided to, and receipt of
which is hereby  acknowledged  by, Borrower (the "Deferred  Maintenance")  to be
completed,  performed  and  corrected  to  the  satisfaction  of  Lender  and as
necessary  to bring the  Property  into  compliance  with all  applicable  laws,
ordinances,  rules and regulations on or before one year from the effective date
hereof, as such time period may be extended by Lender in its sole discretion. So
long as no default  hereunder or under the other Loan Documents has occurred and
is continuing  (i) all sums in the Repair Reserve shall be held by Lender in the
Repair  Reserve  to pay the  costs  and  expenses  of  completing  the  Deferred
Maintenance,  and (ii) Lender  shall, to the extent funds are available for such
purpose in the Repair Reserve,  disburse to Borrower the amount paid or incurred
by Borrower in  completing,  performing or correcting  the Deferred  Maintenance
upon  (a) the  receipt  by  Lender  of  a  written  request  from  Borrower  for
disbursement  from the Repair  Reserve  which shall include a  certification  by
Borrower that the applicable item of Deferred  Maintenance has been completed in
accordance  with the  terms of this  Deed of  Trust,  (b) delivery  to Lender of
invoices,  receipts or other evidence satisfactory to Lender verifying the costs
of the Deferred Maintenance to be reimbursed,  and (c) for disbursement requests
(i) for any single item of Deferred  Maintenance  that is  structural in nature,
delivery to Lender of (1) affidavits,  lien waivers or other evidence reasonably
satisfactory to Lender showing that all  materialmen,  laborers,  subcontractors
and any other parties who might or could claim statutory or common law liens and
are  furnishing or have  furnished  materials or labor to the Property have been
paid all amounts due for labor and materials  furnished to the  Property;  (2) a
certification  from an  inspecting  architect  or other third  party  consultant
reasonably  acceptable to Lender describing the completed  Deferred  Maintenance
and verifying the completion of such Deferred  Maintenance  and the value of the
completed Deferred Maintenance so performed, and, if applicable, certifying that
the Property is, as a result of such Deferred  Maintenance,  in compliance  with
all applicable laws, ordinances,  rules and regulations relating to the Deferred
Maintenance  so performed;  and (3) a new (or amended)  certificate of occupancy
for the portion of the  Improvements  covered by such Deferred  Maintenance,  if
said new  certificate  of  occupancy is required by law, or a  certification  by
Borrower that no new  certificate of occupancy is required by law.  Lender shall
not be required to make advances from the Repair  Reserve more  frequently  than
one time in any calendar  month.  In making any payment from the Repair Reserve,
Lender  shall be  entitled to rely on such  request  from  Borrower  without any
inquiry into the accuracy,  validity or  contestability  of any such amount.  No
interest or other earnings on the funds contained in the Repair Reserve shall be
paid to Borrower and any interest or other earnings on funds  deposited into the
Repair Reserve shall be solely for the account of Lender.  In the event that the
amounts on deposit or available in the Repair  Reserve are inadequate to pay the
costs  of the  Deferred  Maintenance,  Borrower  shall  pay the  amount  of such
deficiency.

C-3 Additional Washington Provisions.
(a) This Deed of Trust shall constitute a Financing Statement filed as a fixture
filing pursuant to Article 9 of the Uniform Commercial Code (RCW  62A.9-502(c)).
Parts of the Property  are or are to become  fixtures or  Improvements  (defined
above).
(b) Borrower hereby represents, warrants and covenants that none of the Property
is used principally or at all for agricultural or farming purposes. The Property
does not constitute the homestead of Borrower.
(c) At Lender's  option,  any written  notice or default given to Borrower under
this Deed of Trust  may be given in the form of a  statutory  notice of  default
under the Washington Deed of Trust Act or any other form as Lender may elect.
(d) ORAL  AGREEMENTS  OR ORAL  COMMITMENTS  TO LEND MONEY,  EXTEND  CREDIT OR TO
FORBEAR ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.

C-4 Environmental  Reserve. Prior to the execution of this Deed of Trust, Lender
has caused the Property to be inspected  and such  inspection  has revealed that
the  Property  is in need of certain  maintenance,  repairs  and/or  remedial or
corrective work relative to environmental  concerns.  Contemporaneously with the
execution  hereof,  Borrower  has  established  with the Lender a reserve in the
amount of $232,500.00  (the  "Environmental  Reserve") by depositing such amount
with  Lender.  Borrower  shall  cause  each  of  the  items  (collectively,  the
"Environmental Work") described in that certain Phase I Environmental Assessment
dated  May 16,  2003  and  prepared  by  Environmental  Assessment  Corporation,
relative  to the  Property  together  with  that  certain  Addendum  to  Phase I
Environmental  Site Assessment  Report dated  June 23, 2003  (collectively,  the
"Environmental  Report"),  copies of which have been provided to, and receipt of
which is hereby acknowledged by, Borrower to be completed, performed, remediated
and  corrected  to the  satisfaction  of Lender  and as  necessary  to bring the
Property  into  compliance  with all  applicable  laws,  ordinances,  rules  and
regulations on or before one year from the effective  date hereof,  as such time
period may be extended by Lender in its sole discretion.  The Environmental Work
includes,  without  limitation,  the  following  items:  Borrower  is to  have a
subsurface   investigation   conducted  by  an  environmental   consulting  firm
acceptable to Lender to determine the environmental integrity of the Property in
the area of former  gasoline  service station in accordance with a scope of work
acceptable  to Lender and  consistent  with the  recommendations  and  protocols
contained  in  the  Environmental  Report.  Should  petroleum   constituents  be
identified in soil and/or groundwater  samples collected in connection with such
subsurface  investigation  above  regulatory  action levels,  Borrower shall (a)
promptly notify the appropriate Washington environmental regulatory agencies (b)
conduct such further  investigation  and activities as specified and recommended
in the Environmental  Report and (c) take such other action to obtain regulatory
closure of the  Property  all in a manner  acceptable  to Lender.  So long as no
default  hereunder  or under  the  other  Loan  Documents  has  occurred  and is
continuing (i) all sums in the Environmental  Reserve shall be held by Lender in
the  Environmental  Reserve  to pay the costs and  expenses  of  completing  the
Environmental Work, and (ii) Lender shall, to the extent funds are available for
such purpose in the Environmental Reserve,  disburse to Borrower the amount paid
or incurred by Borrower in completing, performing, remediating or correcting the
Environmental  Work upon  (a) the  receipt by Lender of a written  request  from
Borrower for disbursement from the  Environmental  Reserve which shall include a
certification  by Borrower that the applicable  item of  Environmental  Work has
been completed in accordance with the terms of this Deed of Trust,  (b) delivery
to  Lender  of  invoices,  receipts  or other  evidence  satisfactory  to Lender
verifying  the costs of the  Environmental  Work to be  reimbursed,  and (c) for
disbursement  requests  (i) in excess of  $20,000.00  with respect to any single
item of  Environmental  Work or (ii) for any single item of  Environmental  Work
that is structural in nature, delivery to Lender of (1) affidavits, lien waivers
or  other  evidence   reasonably   satisfactory   to  Lender  showing  that  all
materialmen,  laborers,  subcontractors and any other parties who might or could
claim  statutory  or  common  law  liens and are  furnishing  or have  furnished
materials or labor to the Property  have been paid all amounts due for labor and
materials  furnished to the  Property;  (2) a  certification  from an inspecting
architect,  environmental  consultant or other third party  acceptable to Lender
describing the completed Environmental Work and verifying the completion of such
Environmental Work and the value of such completed Environmental Work; and (3) a
new (or amended)  certificate  of occupancy for the portion of the  Improvements
covered by such  Environmental  Work,  if said new  certificate  of occupancy is
required  by law, or a  certification  by Borrower  that no new  certificate  of
occupancy is required by law. Lender shall not be required to make advances from
the  Environmental  Reserve more frequently than one time in any calendar month.
In making any payment from the Environmental  Reserve,  Lender shall be entitled
to rely on such request  from  Borrower  without any inquiry into the  accuracy,
validity or  contestability of any such amount. No interest or other earnings on
the funds contained in the  Environmental  Reserve shall be paid to Borrower and
any interest or other earnings on funds deposited into the Environmental Reserve
shall be solely for the  account of Lender.  To the extent  Lender  should  ever
determine that the remaining costs for the Environmental  Work should exceed the
remaining  balance in the  Environmental  Reserve,  Lender  shall be entitled to
require  an  additional  deposit  into the  Environmental  Reserve  equal to one
hundred and fifty  percent (150%) of Lender's estimate of such additional costs.
In the event  that the  amounts on deposit  or  available  in the  Environmental
Reserve are ultimately  inadequate to pay the costs of the  Environmental  Work,
Borrower shall pay the amount of such deficiency.

C-5 Definitions.  For the purposes of this Exhibit C,  the following terms shall
have the following meanings:

(a)  "Operative  Period" means (a) if  Borrower  fails to provide  Lender with a
Commitment on or prior to the Refinance Notification Date, the period commencing
on the  Refinance  Notification  Date  and  ending  on the  date  on  which  the
indebtedness  secured hereby has been paid in full, and (b) if Borrower provides
Lender with a Commitment on or prior to the Refinance  Notification Date and the
Void Commitment Date occurs,  the period  commencing on the Void Commitment Date
and ending on the date on which the indebtedness secured hereby has been paid in
full.
(b) "Commitment" shall have the meaning specified in Section C-6 hereof.
(c)  "Refinance   Notification   Date"  shall  have  the  meaning  specified  in
Section C-6 hereof.
(d) "Void  Commitment  Date" shall have the  meaning  specified  in  Section C-6
hereof.
(e)  "Qualified  Institutional  Lender" means a financial  institution  or other
lender with a long term credit rating which is not less than investment grade.
(f) "Net  Operating  Income" means the  difference  (determined on a cash basis)
between  (A) Revenues  received during the preceding calendar month, and (B) the
sum of  (1) Operating  Expenses paid during such month and (2) monthly  payments
under the Note, deposits to the Reserves, and any other payments required by the
Loan  Documents  which  Borrower  has  made to  Lender  during  the  immediately
preceding calendar month.
(g)  "Operating  Expenses"  means  with  respect  to any  period  all normal and
customary expenses payable in the ordinary course of operating the Property as a
hotel  project (but such expenses  being  determined on an accrual basis for the
relevant  calculation period,  unless otherwise expressly provided herein),  but
excluding all Excluded Items.
(h) "Excluded Items" means (A) any capital expenditure, (B) any expenses for the
payment of any debts or obligations  of Borrower which are not directly  related
to the operation of the Property,  (C) any  payments for services which have not
yet been rendered,  goods which have not yet been received, or any other item of
expense for which payment is not  currently  due,  (D) any debt service  payment
upon,  or any other  payments with respect to, any  indebtedness,  including the
indebtedness   secured  hereby,   (E) any   allowance  for   depreciation,   and
(F) distributions to stockholders or partners in Borrower, and income taxes.
(i)  "Revenues"  shall be  determined  on an  accrual  basis  (unless  otherwise
indicated) and in accordance with generally accepted  accounting  principles for
the  applicable  period,  and means all Rents and  Profits  during the period in
question,  after deducting all allowances for rebates and  adjustments,  whether
cash or credit,  derived  directly or  indirectly  from any  source,  including,
without limitation: rental of rooms; food and beverage; sales from gift or other
shops  managed  directly by Borrower or any agent of  Borrower;  telephone;  net
vending income (gross vending revenue reduced by the amount payable to equipment
vendors for the use  thereof);  commissions;  net rentals of cars,  bicycles and
other items; meeting room rentals; all net revenue received from any third party
concessionaires  operating any  concession  under any agreement with Borrower or
its agents,  and other persons  occupying space at the Property and/or rendering
services to guests staying at the Property;  and any form of incentive  payments
or awards received by Borrower from any source whatsoever which are attributable
to the operation of the Property.

C-6 Repayment; Refinancing. Borrower shall repay the indebtedness secured hereby
in accordance with the provisions of the Note.  Borrower shall deliver to Lender
a written commitment or engagement letter ("Commitment"), which Commitment shall
set forth  specific  terms and  conditions  for the  refinancing  of the  entire
outstanding  amount  of  the  indebtedness   secured  hereby  from  a  Qualified
Institutional  Lender or a national  recognized  investment  banking  firm on or
before the date which is ninety (90) days prior to the stated  maturity  date of
the Note (the "Refinance  Notification Date"). If Borrower fails to deliver such
Commitment  prior to the Refinance  Notification  Date or if such  Commitment is
delivered on or before the Refinance  Notification Date, but lapses,  terminates
or is otherwise withdrawn prior to the funding of such Commitment and the use of
the proceeds  thereof to pay the entire  outstanding  amount of the indebtedness
secured  hereby (the date upon which such  Commitment  lapses,  terminates or is
otherwise  withdrawn is hereinafter  referred to as the "Void Commitment Date"),
unless the indebtedness secured hereby shall have been paid in full prior to the
Refinance  Notification Date or the Void Commitment Date, as the case may be, an
Operative  Period shall be in effect and all Net Operating  Income shall be paid
to Lender for deposit to the Curtailment Reserve pursuant to Section C-7 hereof.

C-7      Curtailment Reserve.

(a) Immediately  upon the  commencement of an Operative  Period,  Borrower shall
establish and maintain at all times  thereafter while this Deed of Trust remains
in effect a reserve (the "Curtailment  Reserve") with Lender,  which Curtailment
Reserve shall be additional security for the indebtedness secured hereby. In the
event that  Borrower is required  to  establish  and  maintain  the  Curtailment
Reserve,  then  beginning on the day on which  Borrower is required to establish
the  Curtailment   Reserve,  and  on  the  eleventh (11th)  day  of  each  month
thereafter, Borrower shall pay to Lender a deposit in the Curtailment Reserve in
an  amount  equal  to all  Net  Operating  Income  for  the  prior  month.  Upon
termination of the Operative  Period,  Borrower shall not thereafter be required
to make such monthly deposits.  Borrower shall provide to Lender, not later than
the day on which any  deposit  into the  Curtailment  Reserve is  required to be
made, an operating  statement and other  information  reasonably  necessary with
respect to the Property for the preceding calendar month,  indicating the amount
of the Net  Operating  Income for purposes of this  Section,  all in  reasonable
detail and certified by Borrower to be true, correct and complete,  and prepared
otherwise in accordance with the requirements set forth in Section 1.18  hereof.
Such statements  shall also contain such information and detail as is reasonably
necessary for the determination of Net Operating Income,  Revenues and Operating
Expenses for the purposes of this Section.  Such determination  shall be subject
to final confirmation by Lender.
(b) The Curtailment  Reserve shall not, unless otherwise  explicitly required by
applicable  law, be or be deemed to be escrow or trust  funds,  but, at Lender's
option and Lender's  discretion  may either be held in a separate  account or be
commingled by Lender with the general funds of Lender.  The Curtailment  Reserve
is solely for the protection of Lender and entails no responsibility on Lender's
part  beyond  the  allowing  of due  credit  for sums  actually  received.  Upon
assignment of this Deed of Trust by Lender, any funds in the Curtailment Reserve
shall be turned  over to the  assignee  and any  responsibility  of  Lender,  as
assignor,  with  respect  thereto  shall  terminate.  Upon full  payment  of the
indebtedness secured hereby in accordance with its terms or at such earlier time
as Lender may elect,  the balance of the  Curtailment  Reserve  then in Lender's
possession  shall be paid over to  Borrower  and no other  party  shall have any
right or claim thereto.
(c) As additional  security for the payment and  performance  by Borrower of all
duties,  responsibilities  and  obligations  under the Note and the  other  Loan
Documents,  Borrower hereby  unconditionally and irrevocably  assigns,  conveys,
pledges, mortgages,  transfers,  delivers, deposits, sets over and confirms unto
Lender,  and hereby grants to Lender a security interest in (i) the  Curtailment
Reserve, (ii) the account into which the Curtailment Reserve has been deposited,
if any, (iii) all insurance of said account, (iv) all accounts,  contract rights
and  general  intangibles  or other  rights and  interests  pertaining  thereto,
(v) all  sums  now  or  hereafter  therein  or  represented  thereby,   (vi) all
replacements,  substitutions  or proceeds  thereof,  (vii) all  instruments  and
documents now or hereafter  evidencing the Curtailment Reserve or such accounts,
(viii) all powers, options, rights,  privileges and immunities pertaining to the
Curtailment  Reserve  (including the right to make withdrawals  therefrom),  and
(ix) all  proceeds of the foregoing.  Borrower hereby authorizes and consents to
any account into which the  Curtailment  Reserve will be deposited being held in
Lender's name or the name of any entity servicing the Note for Lender and hereby
acknowledges  and agrees that Lender,  or at Lender's  election,  such servicing
agent, shall have exclusive control over said account.  Notice of the assignment
and security interest granted to Lender herein may be delivered by Lender at any
time to the  financial  institution  wherein  the  Curtailment  Reserve has been
established,  and Lender, or such servicing entity, shall have possession of all
passbooks or other evidences of such accounts.  Borrower hereby assumes all risk
of loss with respect to amounts on deposit in the Curtailment Reserve, except to
the extent such loss is caused by the gross negligence or intentional misconduct
of  Lender.  Borrower  hereby  waives  all  right  to  withdraw  funds  from the
Curtailment  Reserve.  If, after the establishment of the Curtailment Reserve, a
default shall occur  hereunder or under any other of the Loan Documents which is
not cured within any applicable  grace or cure period,  then Lender may, without
notice or demand on  Borrower,  at its  option:  (A) withdraw  any or all of the
funds  (including,  without  limitation,  any  interest)  then  remaining in the
Curtailment  Reserve and apply the same,  after deducting all costs and expenses
of  safekeeping,  collection  and  delivery  (including,  but  not  limited  to,
attorneys' fees,  costs and expenses) to the indebtedness  evidenced by the Note
or any other  obligations  of Borrower  under the other Loan  Documents  in such
manner or as Lender  shall  deem  appropriate  in its sole  discretion,  and the
excess,  if any, shall be paid to Borrower,  (B) exercise any and all rights and
remedies of a secured party under any  applicable  Uniform  Commercial  Code, or
(C) exercise  any other remedies  available at law or in equity.  No such use or
application of the funds contained in the Curtailment Reserve shall be deemed to
cure any default hereunder or under the other Loan Documents. If the Curtailment
Reserve is established  pursuant to this Section,  Borrower  agrees and it shall
execute  any and all  agreements  Lender  deems  necessary  in order to  further
perfect  the  security  interest  granted to Lender in this Deed of Trust and to
further confirm the agreements set forth in this Section.

C-8 Termite Reserve.  Prior to the execution of this Deed of Trust, Borrower has
caused the  Property to be  inspected  with  respect to termites and other pests
which  inspections has revealed that the Property is in need of treatment and/or
remedial  or  corrective  work.  Contemporaneously  with the  execution  hereof,
Borrower has established  with Lender a reserve in the amount of $18,725.00 (the
"Termite  Reserve") by depositing such amount with Lender.  Borrower shall cause
each of the items described in that certain Wood Destroying  Pests and Organisms
Inspection  Report dated April 24, 2003 and prepared by All Seasons Pest Control
as  supplemented  by  estimate  for  corrective  work  prepared  by Bill  Radtke
Construction,  Inc., relative to the Property,  copies of which were provided by
Borrower to Lender (the "Termite  Work") to be treated,  performed and corrected
to the  satisfaction  of Lender and as  necessary to enable such  licensed  pest
inspector to provide a "clean"  report with respect to the Property on or before
sixty (60)  days from the  effective  date  hereof,  as such time  period may be
extended by Lender in its sole  discretion.  So long as no default  hereunder or
under the other Loan  Documents has occurred and is  continuing  (i) all sums in
the Termite  Reserve  shall be held by Lender in the Termite  Reserve to pay the
costs and expenses of completing the Termite Work, and (ii) Lender shall, to the
extent funds are available for such purpose in the Termite Reserve,  disburse to
Borrower  the  entire  balance  of the  Termite  Reserve  in a  single  lump sum
disbursement upon Borrower's  provision of evidence  reasonably  satisfactory to
Lender that  Borrower has caused the Termite Work to be fully  completed,  which
such evidence may include, without limitation, a "clean" termite and pest report
on the  standard  form  used in the  state of  Washington.  Lender  may  further
require, at Lender's discretion,  copies of invoices, receipts or other evidence
satisfactory  to Lender  verifying  that the costs of the Termite Work have been
satisfied in full. No interest or other  earnings in the funds  contained in the
Termite  Reserve shall be paid to Borrower and any interest or other earnings on
funds  deposited  into the  Termite  Reserve  shall be solely for the account of
Lender.  In the event that the amounts on deposit are  available  in the Termite
Reserve are inadequate to pay the costs of the Termite Work,  Borrower shall pay
the amount of such deficiency.

EXHIBIT D

Note Description - All Ten

(1)  Promissory  Note  ("Eureka  Note")  made  by  WHC831,  LLC in the  original
principal amount of THREE MILLION AND NO 100/DOLLARS  ($3,000,000.00).  The loan
evidenced by the Eureka Note shall be referred to herein as the "Eureka Loan" or
the "Eureka Loan Amount."

(2)  Promissory  Note  ("Redding  Note")  made by  WHC840,  LLC in the  original
principal  amount of FIVE MILLION AND NO/100 DOLLARS  ($5,000,000.00).  The loan
evidenced by the Redding Note shall be referred to herein as the "Redding  Loan"
or the "Redding Loan Amount."

(3) Promissory Note ("Boise Note") made by WHC817, LLC in the original principal
amount of SEVEN MILLION ONE HUNDRED THOUSAND AND NO/100 DOLLARS ($7,100,000.00).
The loan  evidenced  by the Boise Note shall be referred to herein as the "Boise
Loan" or the "Boise Loan Amount."

(4)  Promissory  Note ("Twin  Falls  Note") made by WHC818,  LLC in the original
principal amount of THREE MILLION AND NO/100 DOLLARS  ($3,000,000.00).  The loan
evidenced  by the Twin Falls Note shall be referred to herein as the "Twin Falls
Loan" or the "Twin Falls Loan Amount."

(5) Promissory Note ("Salt Lake City Note") made by WHC816,  LLC in the original
principal  amount of SIX MILLION AND NO/100  DOLLARS  ($6,000,000.00).  The loan
evidenced  by the Salt Lake City Note shall be  referred  to herein as the "Salt
Lake City Loan" or the "Salt Lake City Loan Amount."

(6)  Promissory  Note  ("Kennewick  Note") made by WHC803,  LLC in the  original
principal  amount of TWO  MILLION  FIVE  HUNDRED  THOUSAND  AND  NO/100  DOLLARS
($2,500,000.00).  The loan  evidenced by the Kennewick Note shall be referred to
herein as the "Kennewick Loan" or the "Kennewick Loan Amount."

(7) Promissory Note ("Pasco Note") made by WHC837, LLC in the original principal
amount   of  TEN   MILLION   THREE   HUNDRED   THOUSAND   AND   NO/100   DOLLARS
($10,300,000.00).  The loan  evidenced  by the Pasco Note shall be  referred  to
herein as the "Pasco Loan" or the "Pasco Loan Amount."

(8) Promissory  Note ("Port  Angeles Note") made by WHC839,  LLC in the original
principal  amount of NINE  MILLION  ONE  HUNDRED  THOUSAND  AND  NO/100  DOLLARS
($9,100,000.00).  The loan  evidenced by the Port Angeles Note shall be referred
to herein as the "Port Angeles Loan" or the "Port Angeles Loan Amount."

(9)  Promissory  Note  ("Richland  Note")  made by WHC841,  LLC in the  original
principal  amount of FOUR  MILLION  ONE  HUNDRED  THOUSAND  AND  NO/100  DOLLARS
($4,100,000.00).  The loan  evidenced  by the Redding  Note shall be referred to
herein as the "Richland Loan" or the "Richland Loan Amount."

(10)  Promissory  Note  ("Yakima  Note")  made by  WHC807,  LLC in the  original
principal  amount of FIVE  MILLION  ONE  HUNDRED  THOUSAND  AND  NO/100  DOLLARS
($5,100,000.00).  The loan  evidenced  by the Yakima  Note shall be  referred to
herein as the "Yakima Loan" or the "Yakima Loan Amount."

All of the foregoing  promissory notes listed above,  excluding the Yakima Note,
shall be  collectively  referred  to  herein  as the  "Other  Notes."  The loans
evidenced,  in part, by the promissory notes listed above,  excluding the Yakima
Loan,  shall be  collectively  referred  to herein  as the  "Other  Loans."  The
borrower's with respect to each of the Other Loans are collectively  referred to
as the "Other Borrowers".

EXHIBIT E

Other Deeds of Trust

(1) Deed of Trust,  Assignment of Rents,  Security  Agreement and Fixture Filing
(the  ''Eureka  Mortgage'')  from  WHC831,  LLC to a trustee  for the benefit of
Lender, as beneficiary, dated as of the date hereof, concerning certain property
located in Humboldt County, California.

(2) Deed of Trust,  Assignment of Rents,  Security  Agreement and Fixture Filing
(the  ''Redding  Mortgage'')  from  WHC840,  LLC to a trustee for the benefit of
Lender, as beneficiary, dated as of the date hereof, concerning certain property
located in Shasta County, California.

(3) Deed of Trust and Security  Agreement (the ''Boise  Mortgage'') from WHC817,
LLC to a trustee for the benefit of Lender, as beneficiary, dated as of the date
hereof, concerning certain property located in Ada County, Idaho.

(4) Deed of Trust and  Security  Agreement  (the ''Twin Falls  Mortgage'')  from
WHC818, LLC to a trustee for the benefit of Lender, as beneficiary,  dated as of
the date  hereof,  concerning  certain  property  located in Twin Falls  County,
Idaho.

(5) Deed of Trust and Security  Agreement (the ''Salt Lake City Mortgage'') from
WHC816, LLC to a trustee for the benefit of Lender, as beneficiary,  dated as of
the date hereof, concerning certain property located in Salt Lake County, Utah.

(6) Deed of Trust,  Assignment  of Leases  and  Rents,  Security  Agreement  and
Fixture Filing (the ''Kennewick  Mortgage'')  from WHC803,  LLC to a trustee for
the benefit of Lender, as beneficiary,  dated as of the date hereof,  concerning
certain property located in Benton County, Washington.

(7) Deed of Trust,  Assignment  of Leases  and  Rents,  Security  Agreement  and
Fixture Filing (the ''Pasco  Mortgage'')  from WHC837,  LLC to a trustee for the
benefit of  Lender,  as  beneficiary,  dated as of the date  hereof,  concerning
certain property located in Franklin County, Washington.

(8) Deed of Trust,  Assignment  of Leases  and  Rents,  Security  Agreement  and
Fixture Filing (the ''Port Angeles Mortgage'') from WHC839, LLC to a trustee for
the benefit of Lender, as beneficiary,  dated as of the date hereof,  concerning
certain property located in Clallam County, Washington.

(9) Deed of Trust,  Assignment  of Leases  and  Rents,  Security  Agreement  and
Fixture Filing (the ''Richland Mortgage'') from WHC841, LLC to a trustee for the
benefit of  Lender,  as  beneficiary,  dated as of the date  hereof,  concerning
certain property located in Benton County, Washington.

Exhibit 10.5
INDEMNITY AND GUARANTY AGREEMENT

THIS  INDEMNITY  AND  GUARANTY  AGREEMENT  (this  "Agreement"),  executed  to be
effective as of June 27, 2003, is made by WESTCOAST HOSPITALITY  CORPORATION,  a
Washington  corporation  ("Indemnitor"),  whose  address is 201 W.  North  River
Drive, Suite 100, Spokane,  Washington 99201, Attention: Chief Financial Officer
in favor of COLUMN FINANCIAL,  INC., a Delaware  corporation  ("Lender"),  whose
address  is  11 Madison  Avenue,  5th Floor,   New York,   New York  10010-3629,
Attention: Edmund Taylor.

                              W I T N E S S E T H:

WHEREAS, WHC807, LLC, a Delaware limited liability company (the "Borrower"), has
obtained a loan (the "Loan") in the principal amount of FIVE MILLION ONE HUNDRED
THOUSAND AND NO/100 DOLLARS ($5,100,000.00) from Lender; and

WHEREAS,  the Loan is evidenced by a Promissory  Note (the "Note") dated of even
date herewith,  executed by Borrower and payable to the order of Lender,  in the
stated  principal amount of FIVE MILLION ONE HUNDRED THOUSAND AND NO/100 DOLLARS
($5,100,000.00),  and is  secured  by,  among  other  things,  a Deed of  Trust,
Assignment  of Leases and Rents,  Security  Agreement  and  Fixture  Filing (the
"Mortgage") dated of even date herewith from Borrower for the benefit of Lender,
encumbering that certain real property  situated in the County of Yakima,  State
of Washington,  as more particularly  described on Exhibit A attached hereto and
incorporated herein by this reference,  together with the buildings,  structures
and other  improvements  now or hereafter  located  thereon (said real property,
buildings,  structures and other  improvements  being  hereinafter  collectively
referred to as the  "Property"),  and by other  documents and  instruments  (the
Note, the Mortgage and such other documents, agreements, and instruments, as the
same may from time to time be amended, consolidated,  renewed or replaced, being
collectively referred to herein as the "Loan Documents"); and

WHEREAS, as a condition to making the Loan to Borrower, Lender has required that
Indemnitor  indemnify Lender from and against and guarantee payment to Lender of
those items for which  Borrower is  personally  liable and for which  Lender has
recourse against Borrower under the terms of the Note and the Mortgage; and

WHEREAS,  Indemnitor  is an affiliate of Borrower,  the extension of the Loan to
Borrower is of  substantial  benefit to Indemnitor  and,  therefore,  Indemnitor
desires to indemnify Lender from and against and guarantee  payment to Lender of
those items for which  Borrower is  personally  liable and for which  Lender has
recourse against Borrower under the terms of the Note and the Mortgage.

NOW,  THEREFORE,  to  induce  Lender  to  extend  the  Loan to  Borrower  and in
consideration  of the  foregoing  premises  and  for  other  good  and  valuable
consideration,  the receipt and  sufficiency  of which are hereby  acknowledged,
Indemnitor hereby covenants and agrees for the benefit of Lender, as follows:

1.       INDEMNITY AND GUARANTY.
INDEMNITOR HEREBY ASSUMES LIABILITY FOR, HEREBY GUARANTEES PAYMENT TO LENDER OF,
HEREBY AGREES TO PAY, PROTECT, DEFEND AND SAVE LENDER HARMLESS FROM AND AGAINST,
AND  HEREBY  INDEMNIFIES  LENDER  FROM  AND  AGAINST  ANY AND  ALL  LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION,
ATTORNEYS' FEES), CAUSES OF ACTION, SUITS, CLAIMS,  DEMANDS AND JUDGMENTS OF ANY
NATURE OR DESCRIPTION WHATSOEVER  (COLLECTIVELY,  "COSTS") WHICH MAY AT ANY TIME
BE IMPOSED UPON, INCURRED BY OR AWARDED AGAINST LENDER AS A RESULT OF:

(a) PROCEEDS PAID TO, AND RECEIVED BY, BORROWER UNDER ANY INSURANCE POLICIES (OR
PAID AS A RESULT OF ANY OTHER  CLAIM OR CAUSE OF ACTION  AGAINST  ANY  PERSON OR
ENTITY) BY REASON OF DAMAGE,  LOSS OR  DESTRUCTION  TO ALL OR ANY PORTION OF THE
PROPERTY,  TO THE FULL  EXTENT OF SUCH  PROCEEDS  NOT  PREVIOUSLY  DELIVERED  TO
LENDER,  BUT  WHICH,  UNDER THE TERMS OF THE LOAN  DOCUMENTS,  SHOULD  HAVE BEEN
DELIVERED TO LENDER;

(b)  PROCEEDS OR AWARDS PAID TO, AND RECEIVED BY,  BORROWER  RESULTING  FROM THE
CONDEMNATION  OR OTHER TAKING IN LIEU OF  CONDEMNATION  OF ALL OR ANY PORTION OF
THE  PROPERTY,  TO THE FULL  EXTENT OF SUCH  PROCEEDS  OR AWARDS NOT  PREVIOUSLY
DELIVERED TO LENDER,  BUT WHICH,  UNDER THE TERMS OF THE LOAN DOCUMENTS,  SHOULD
HAVE BEEN DELIVERED TO LENDER;

(c) ALL TENANT SECURITY DEPOSITS OR OTHER REFUNDABLE DEPOSITS PAID TO OR HELD BY
BORROWER IN CONNECTION WITH LEASES OF ALL OR ANY PORTION OF THE PROPERTY,  WHICH
ARE NOT APPLIED IN ACCORDANCE  WITH THE TERMS OF THE  APPLICABLE  LEASE OR OTHER
AGREEMENT;

(d) RENT AND OTHER  PAYMENTS  RECEIVED  FROM TENANTS  UNDER LEASES OF ALL OR ANY
PORTION OF THE  PROPERTY  PAID MORE THAN ONE (1) MONTH IN ADVANCE  WHICH ARE NOT
EITHER  APPLIED TO THE ORDINARY AND  NECESSARY  EXPENSES OF OWNING AND OPERATING
THE PROPERTY, PAID TO LENDER OR OTHERWISE APPLIED AGAINST BORROWER'S OBLIGATIONS
UNDER THE LOAN DOCUMENTS INCLUDING THE PAYMENT OF DEBT SERVICE;

(e) RENTS,  ISSUES,  PROFITS AND  REVENUES OF ALL OR ANY PORTION OF THE PROPERTY
RECEIVED  BY BORROWER  AFTER  BORROWER'S  RECEIPT OF ANY NOTICE OF DEFAULT  FROM
LENDER  UNDER  THE LOAN  DOCUMENTS,  IN THE  EVENT OF ANY  DEFAULT  BY  BORROWER
THEREUNDER, PROVIDED THAT (I) BORROWER DOES NOT CURE SAME IN ACCORDANCE WITH THE
TERMS OF THE APPLICABLE  LOAN  DOCUMENTS,  (II) LENDER DOES NOT OTHERWISE  WAIVE
SUCH  DEFAULT,  OR  (III) SUCH  SUMS ARE NOT EITHER  APPLIED TO THE ORDINARY AND
NECESSARY  EXPENSES  OF OWNING AND  OPERATING  THE  PROPERTY,  PAID TO LENDER OR
OTHERWISE  APPLIED  AGAINST  BORROWER'S  OBLIGATIONS  UNDER  THE LOAN  DOCUMENTS
INCLUDING THE PAYMENT OF DEBT SERVICE;

(f) DAMAGE TO THE PROPERTY AS A RESULT OF THE  INTENTIONAL  MISCONDUCT  OR GROSS
NEGLIGENCE OF BORROWER OR ANY OF ITS PRINCIPALS,  OFFICERS, MANAGERS, MEMBERS OR
GENERAL PARTNERS,  INDEMNITOR,  OR ANY AGENT OR EMPLOYEE OF SUCH PERSONS, OR ANY
REMOVAL OF ALL OR ANY PORTION OF THE  PROPERTY IN  VIOLATION OF THE TERMS OF THE
LOAN DOCUMENTS,  TO THE FULL EXTENT OF THE LOSSES OR DAMAGES  INCURRED BY LENDER
ON ACCOUNT OF SUCH DAMAGE OR REMOVAL;

(g) FAILURE BY BORROWER TO PAY ANY VALID TAXES,  ASSESSMENTS,  MECHANIC'S LIENS,
MATERIALMEN'S  LIENS OR OTHER  CLAIMS WHICH COULD CREATE LIENS ON ANY PORTION OF
THE  PROPERTY  WHICH  WOULD BE  SUPERIOR  TO THE LIEN OR  SECURITY  TITLE OF THE
MORTGAGE OR THE OTHER LOAN DOCUMENTS;  PROVIDED,  HOWEVER, INDEMNITOR SHALL HAVE
NO  LIABILITY  FOR TAXES OR  ASSESSMENTS  OR LIENS (i) WHICH  ACCRUE  DURING ANY
PERIOD OF TIME WHEN  BORROWER  IS NOT IN  EFFECTIVE  RECEIPT  OR  CONTROL OF THE
REVENUE FROM THE PROPERTY DUE TO A  RECEIVERSHIP,  FORECLOSURE OR OTHER REMEDIAL
ACTION BY LENDER,  (ii) TO THE EXTENT OF THE FUNDS PROVIDED BY BORROWER INTO THE
IMPOUND  ACCOUNT (AS DEFINED IN SECTION 1.6 OF THE  MORTGAGE)  TO PAY SUCH TAXES
AND  ASSESSMENTS,  OR (iii) FOR WHICH  THERE WERE  INADEQUATE  REVENUE  FROM THE
SECURITY  PROPERTY TO PAY AFTER TAKING INTO ACCOUNT ALL SUMS DUE AND PAID LENDER
DURING SUCH PERIOD AND ALL  ORDINARY  AND  REASONABLE  OPERATING  EXPENSES  PAID
DURING SUCH PERIOD (BUT WITHOUT TAKING INTO ACCOUNT ANY DISTRIBUTIONS TO MEMBERS
OR OWNERS OF BORROWER);

(h) BREACH OF ANY  OBLIGATION  OR  INDEMNITY  OF  BORROWER  UNDER THE  HAZARDOUS
SUBSTANCES  INDEMNITY  AGREEMENT  OF EVEN DATE  HEREWITH  MADE BY  BORROWER  AND
INDEMNITOR OR UNDER SECTION 1.30 OF THE MORTGAGE;

(i) FRAUD OR MATERIAL  MISREPRESENTATION  BY BORROWER  OR  INDEMNITOR  OR ANY OF
THEIR  PRINCIPALS,  OFFICERS,  AGENTS  OR  EMPLOYEES  TO THE FULL  EXTENT OF ANY
LOSSES, DAMAGES AND EXPENSES OF LENDER ON ACCOUNT THEREOF; AND

(j) ANY AMOUNTS PAID UNDER LEASES CONTAINING EARLY LEASE TERMINATION  OPTIONS OR
OTHERWISE PAID BY ANY TENANT(S) IN CONSIDERATION OF AN EARLY  TERMINATION OF ANY
LEASE AND NOT DELIVERED TO LENDER TO BE HELD IN ACCORDANCE WITH THE MORTGAGE.

This is a  guaranty  of  payment  and  performance  and not of  collection.  The
liability of  Indemnitor  under this  Agreement  shall be  absolute,  direct and
immediate and not  conditional  or  contingent  upon the pursuit of any remedies
against  Borrower or any other  person  (including,  without  limitation,  other
guarantors,  if any), nor against the collateral for the Loan. Indemnitor waives
any right to require  that an action be brought  against  Borrower  or any other
person or to require  that resort be made to any  collateral  for the Loan or to
any balance of any deposit  account or credit on the books of Lender in favor of
Borrower or any other person.  In the event, on account of the Bankruptcy Reform
Act of 1978,  as amended,  or any other debtor  relief law  (whether  statutory,
common  law,  case law or  otherwise)  of any  jurisdiction  whatsoever,  now or
hereafter  in  effect,  which may be or  become  applicable,  Borrower  shall be
relieved  of or fail to incur  any  Costs  as  provided  in the Loan  Documents,
Indemnitor shall  nevertheless be fully liable for such Costs. In the event of a
default under the Loan Documents which is not cured within any applicable  grace
or cure period,  Lender  shall have the right to enforce its rights,  powers and
remedies  (including,  without limitation,  foreclosure of all or any portion of
the  collateral  for the Loan)  thereunder or hereunder,  in any order,  and all
rights,  powers  and  remedies  available  to  Lender  in such  event  shall  be
non-exclusive  and cumulative of all other rights,  powers and remedies provided
thereunder  or  hereunder  or by  law or in  equity.  If  the  indebtedness  and
obligations  guaranteed hereby are partially paid or discharged by reason of the
exercise  of any of the  remedies  available  to Lender,  this  Agreement  shall
nevertheless remain in full force and effect, and Indemnitor shall remain liable
for all remaining  indebtedness and obligations  guaranteed hereby,  even though
any rights  which  Indemnitor  may have  against  Borrower  may be  destroyed or
diminished by the exercise of any such remedy.

2.       Indemnification Procedures.
(a) If any action shall be brought  against Lender based upon any of the matters
for which Lender is  indemnified  hereunder,  Lender shall notify  Indemnitor in
writing  thereof and  Indemnitor  shall  promptly  assume the  defense  thereof,
including,  without  limitation,  the employment of counsel acceptable to Lender
and the negotiation of any settlement;  provided,  however,  that any failure of
Lender to notify  Indemnitor  of such  matter  shall  not  impair or reduce  the
obligations of Indemnitor hereunder. Lender shall have the right, at the expense
of Indemnitor  (which  expense shall be included in Costs),  to employ  separate
counsel in any such action and to  participate  in the defense  thereof.  In the
event  Indemnitor  shall fail to discharge or undertake to defend Lender against
any  claim,  loss  or  liability  for  which  Lender  is  indemnified  hereunder
thirty (30)  days after  Indemnitor  receives  written  notice demand  therefor,
Lender may, at its sole option and election,  defend or settle such claim,  loss
or  liability.  The  liability  of  Indemnitor  to  Lender  hereunder  shall  be
conclusively established by such settlement, provided such settlement is made in
good  faith,  the  amount  of such  liability  to  include  both the  settlement
consideration  and  the  costs  and  expenses,  including,  without  limitation,
attorneys'  fees  and  disbursements,  incurred  by  Lender  in  effecting  such
settlement.  In such event,  such settlement  consideration,  costs and expenses
shall be  included  in Costs and  Indemnitor  shall pay the same as  hereinafter
provided.

(b)  Indemnitor  shall  not,  without  the  prior  written  consent  of  Lender:
(i) settle or compromise any action, suit, proceeding or claim or consent to the
entry of any judgment that does not include as an unconditional term thereof the
delivery by the claimant or  plaintiff to Lender of a full and complete  written
release of Lender  (in form,  scope and  substance  reasonably  satisfactory  to
Lender) from all liability in respect of such action, suit,  proceeding or claim
and a dismissal with  prejudice of such action,  suit,  proceeding or claim;  or
(ii) settle  or compromise any action,  suit,  proceeding or claim in any manner
that may adversely  affect  Lender or obligate  Lender to pay any sum or perform
any obligation as reasonably determined by Lender.

(c) All Costs shall be immediately  reimbursable  to Lender when and as incurred
and,  in the event of any  litigation,  claim or other  proceeding,  without any
requirement  of waiting for the ultimate  outcome of such  litigation,  claim or
other  proceeding,  and Indemnitor  shall pay to Lender any and all Costs within
ten (10) days after written  notice from Lender  itemizing  the amounts  thereof
incurred to the date of such notice.  In addition to any other remedy  available
for the failure of Indemnitor to periodically pay such Costs, such Costs, if not
paid within said ten-day  period,  shall bear  interest at the Default  Interest
Rate (as defined in the Note).

3.       Reinstatement  of  Obligations.
If at any time all or any part of any payment made by  Indemnitor or received by
Lender from  Indemnitor  under or with  respect to this  Agreement is or must be
rescinded or returned for any reason whatsoever (including,  but not limited to,
the insolvency,  bankruptcy or reorganization  of Indemnitor or Borrower),  then
the  obligations  of Indemnitor  hereunder  shall,  to the extent of the payment
rescinded or returned, be deemed to have continued in existence, notwithstanding
such previous payment made by Indemnitor,  or receipt of payment by Lender,  and
the  obligations  of Indemnitor  hereunder  shall continue to be effective or be
reinstated,  as the case may be, as to such payment, all as though such previous
payment by Indemnitor had never been made.

4.       Waivers by  Indemnitor.
(1) To the extent  permitted by law and by executing this Agreement,  Indemnitor
freely,  irrevocably and unconditionally waives all rights and defenses that the
Indemnitor  may have because the  Borrower's  debt is secured by real  property;
this  means,  among other  things,  Indemnitor  hereby  waives and agrees not to
assert or take advantage of:

(a) Any  right to  require  Lender  to  proceed  against  Borrower  or any other
indemnitor,  guarantor or any other person or to proceed  against or exhaust any
security  held by Lender at any time or to pursue any other  remedy in  Lender's
power  or  under  any  other  agreement  before  proceeding  against  Indemnitor
hereunder;

(b)      Intentionally omitted;

(c) Any defense that may arise by reason of the  incapacity,  lack of authority,
death or  disability  of any other person or persons or the failure of Lender to
file or enforce a claim against the estate (in administration, bankruptcy or any
other proceeding) of any other person or persons;

(d) Demand,  presentment for payment,  notice of nonpayment,  protest, notice of
protest  and  all  other  notices  of any  kind,  or the  lack  of any  thereof,
including,  without  limiting the  generality  of the  foregoing,  notice of the
existence,  creation  or  incurring  of any new or  additional  indebtedness  or
obligation or of any action or non-action on the part of Borrower,  Lender,  any
endorser or creditor  of Borrower or of  Indemnitor  or on the part of any other
person  whomsoever  under this or any other  instrument in  connection  with any
obligation or evidence of indebtedness held by Lender;

(e)      Any defense based upon an election of remedies by Lender;

(f) Any  right  or  claim of right  to  cause a  marshalling  of the  assets  of
Indemnitor;

(g)      Intentionally omitted;

(h) Any duty on the part of Lender to disclose to  Indemnitor  any facts  Lender
may now or hereafter know about Borrower or the Property,  regardless of whether
Lender has reason to believe  that any such facts  materially  increase the risk
beyond  that which  Indemnitor  intends to assume or has reason to believe  that
such  facts  are  unknown  to  Indemnitor  or has a  reasonable  opportunity  to
communicate  such facts to  Indemnitor,  it being  understood  and  agreed  that
Indemnitor is fully  responsible for being and keeping informed of the financial
condition  of  Borrower,  of the  condition  of the  Property and of any and all
circumstances  bearing on the risk that  liability may be incurred by Indemnitor
hereunder;

(i) Any lack of  notice  of  disposition  or of  manner  of  disposition  of any
collateral for the Loan;

(j) Any invalidity,  irregularity or  unenforceability,  in whole or in part, of
any one or more of the Loan Documents;

(k) Any lack of commercial reasonableness in dealing with the collateral for the
Loan;

(l) Any  deficiencies  in the  collateral  for the Loan or any deficiency in the
ability  of Lender to  collect  or to obtain  performance  from any  persons  or
entities  now or  hereafter  liable  for  the  payment  and  performance  of any
obligation hereby guaranteed or indemnified against;

(m) An assertion or claim that the  automatic  stay  provided by 11 U.S.C.   362
(arising upon the voluntary or involuntary bankruptcy proceeding of Borrower) or
any other stay provided  under any other debtor  relief law (whether  statutory,
common  law,  case law or  otherwise)  of any  jurisdiction  whatsoever,  now or
hereafter  in effect,  which may be or become  applicable,  shall  operate or be
interpreted  to stay,  interdict,  condition,  reduce or inhibit  the ability of
Lender to enforce any of its rights,  whether now or hereafter  required,  which
Lender may have against Indemnitor or the collateral for the Loan;

(n) Any  modifications  of the Loan  Documents  or any  obligation  of  Borrower
relating  to the Loan by  operation  of law or by action of any  court,  whether
pursuant to the Bankruptcy  Reform Act of 1978, as amended,  or any other debtor
relief  law  (whether  statutory,  common  law,  case law or  otherwise)  of any
jurisdiction whatsoever, now or hereafter in effect, or otherwise; and

(o) Any action,  occurrence,  event or matter  consented to by Indemnitor  under
Section 5(h) hereof, under any other provision hereof, or otherwise.

(2) Without  limitation  but in addition to the  foregoing,  by  executing  this
Agreement,  Indemnitor freely, irrevocably and unconditionally waives all rights
and defenses that the Indemnitor may have because the Borrower's debt is secured
by real property; this means, among other things:

(a) Lender may collect from the Indemnitor without first foreclosing on any real
or personal property collateral pledged by the Borrower.

(b) If  Lender  forecloses  on  any  real  property  collateral  pledged  by the
Borrower:
(i) The  amount of the debt may be  reduced  only by the  price  for which  that
collateral is sold at the foreclosure sale, even if the collateral is worth more
than the sale price.
(ii)  The  Lender  may  collect  from  the  Indemnitor  even if the  Lender,  by
foreclosing  on the real  property  collateral,  has  destroyed  any  right  the
Indemnitor may have to collect from the Borrower.  This is an unconditional  and
irrevocable  waiver of any rights and defenses the  Indemnitor  may have because
the Borrower's debt is secured by real property.

(c)  Indemnitor  waives all rights and  defenses  arising  out of an election of
remedies by Lender, even though that election of remedies, such as a nonjudicial
foreclosure with respect to security for a guaranteed obligation,  has destroyed
the Indemnitor's rights of subrogation and reimbursement against the principal.

(d) Intentionally omitted.

(e)  Indemnitor  acknowledges  and  agrees  that  Lender is relying on the above
waivers in making the Loan,  and that these  waivers are a material  part of the
consideration which Lender is receiving for making the Loan.

(f)  Indemnitor  waives the right,  if any,  to the benefit of, or to direct the
application of, any security held by Lender, including,  without limitation, the
Property  described in the Deed of Trust;  and, until all the  indebtedness  and
obligations,  payment and performance of which are hereby guaranteed,  have been
paid and performed in full, any right to enforce any remedy which Lender now has
or hereafter  may have against  Borrower,  and any right to  participate  in any
security now or hereafter held by Lender.

5.       General Provisions.
(a) Fully  Recourse.  All of the  terms and  provisions  of this  Agreement  are
recourse  obligations  of Indemnitor  and not  restricted  by any  limitation on
personal liability.

(b)  Unsecured   Obligations.   Indemnitor  hereby  acknowledges  that  Lender's
appraisal  of the  Property  is such that  Lender is not  willing  to accept the
consequences of the inclusion of  Indemnitor's  indemnity set forth herein among
the  obligations  secured by the Mortgage and the other Loan  Documents and that
Lender  would  not  make  the  Loan  but for the  unsecured  personal  liability
undertaken by Indemnitor herein.

(c)  Survival.  This  Agreement  shall be deemed to be  continuing in nature and
shall  remain in full force and effect and shall  survive  the  exercise  of any
remedy  by  Lender  under  the  Mortgage  or any of the  other  Loan  Documents,
including, without limitation, any foreclosure or deed in lieu thereof, even if,
as a part of such remedy, the Loan is paid or satisfied in full.

(d) No Subrogation; No Recourse Against Lender. Notwithstanding the satisfaction
by Indemnitor of any liability hereunder until a year and a day have elapsed for
the  payment in full of the Loan (the  "Waiver  Period"),  Indemnitor  shall not
enforce  any right of  subrogation,  contribution,  reimbursement  or  indemnity
whatsoever or any right of recourse to or with respect to Borrower or the assets
or property of Borrower or to any  collateral  for the Loan. In connection  with
the foregoing,  Indemnitor expressly waives any and all rights of subrogation to
Lender against Borrower,  and Indemnitor hereby waives any rights to enforce any
remedy which Lender may have against  Borrower and any right to  participate  in
any collateral for the Loan during the Waiver Period. In addition to and without
in any way limiting the foregoing,  Indemnitor  hereby  subordinates any and all
indebtedness of Borrower now or hereafter owed to Indemnitor to all indebtedness
of Borrower to Lender,  and agrees with Lender that Indemnitor  shall not demand
or accept any payment of principal or interest  from  Borrower,  shall not claim
any offset or other reduction of Indemnitor's  obligations  hereunder because of
any such  indebtedness  and  shall  not take any  action  to  obtain  any of the
collateral from the Loan during the Waiver Period. Further, Indemnitor shall not
have any right of  recourse  against  Lender by reason of any action  Lender may
take or omit to take  under  the  provisions  of this  Agreement  or  under  the
provisions of any of the Loan Documents.

(e) Reservation of Rights.  Nothing contained in this Agreement shall prevent or
in any way diminish or interfere with any rights or remedies, including, without
limitation,  the right to contribution,  which Lender may have against Borrower,
Indemnitor or any other party under the  Comprehensive  Environmental  Response,
Compensation  and  Liability Act of 1980  (codified at Title 42 U.S.C.   9601 et
seq.), as it may be amended from time to time, or any other applicable  federal,
state or local laws, all such rights being hereby expressly reserved.

(f) Financial Statements.  Indemnitor hereby agrees, as a material inducement to
Lender to make the Loan to  Borrower,  to  maintain  a net worth of no less than
$15,000,000.00  (based  upon the fair  market  value of  Guarantor's  assets  as
evidenced by an annual audited  financial  statement  prepared by an independent
certified public accountant  reasonably acceptable to Lender) for so long as any
portion of the Loan  shall  remain  outstanding  and to furnish to Lender in the
manner and within the time periods set forth in the  Mortgage  current and dated
financial statements. Indemnitor hereby warrants and represents unto Lender that
any and all balance sheets,  net worth statements and other financial data which
have  heretofore  been given or may hereafter be given to Lender with respect to
Indemnitor  did or will  at the  time of such  delivery  fairly  and  accurately
present the financial condition of Indemnitor.

(g) Rights Cumulative;  Payments.  Lender's rights under this Agreement shall be
in addition to all rights of Lender  under the Note,  the Mortgage and the other
Loan Documents.  Further,  payments made by Indemnitor  under this Agreement (or
any other indemnitor  under separate  agreement) shall not reduce in any respect
Borrower's  obligations  and  liabilities  under the Note,  the Mortgage and the
other Loan Documents.

(h) No  Limitation  on  Liability.  Indemnitor  hereby  consents and agrees that
Lender  may at any time and  from  time to time  without  further  consent  from
Indemnitor do any of the following events, and the liability of Indemnitor under
this  Agreement  shall be  unconditional  and  absolute  and  shall in no way be
impaired or limited by any of the following  events,  whether  occurring with or
without  notice  to  Indemnitor  or  with  or  without  consideration:   (i) any
extensions  of time for  performance  required by any of the Loan  Documents  or
extension or renewal of the Note;  (ii) any  sale,  assignment or foreclosure of
the  Note,  the  Mortgage  or any of the  other  Loan  Documents  or any sale or
transfer of the  Property;  (iii) any  change in the  composition  of  Borrower,
including,  without limitation, the withdrawal or removal of Indemnitor from any
current or future  position of  ownership,  management  or control of  Borrower;
(iv) the  accuracy or inaccuracy of the  representations  and warranties made by
Indemnitor  herein or by Borrower in any of the Loan Documents;  (v) the release
of Borrower or of any other person or entity from  performance  or observance of
any of the agreements,  covenants,  terms or conditions  contained in any of the
Loan  Documents  by  operation  of law,  Lender's  voluntary  act or  otherwise;
(vi) the  release or  substitution  in whole or in part of any  security for the
Loan;  (vii) Lender's  failure to record the  Mortgage or to file any  financing
statement  (or Lender's  improper  recording or filing  thereof) or to otherwise
perfect,  protect,  secure  or insure  any lien or  security  interest  given as
security for the Loan;  (viii) the  modification of the terms of any one or more
of the Loan  Documents;  or (ix) the taking or failure to take any action of any
type whatsoever  with respect to Lender's  rights under the Loan  Documents.  No
such action which Lender shall take or fail to take in connection  with the Loan
Documents  or any  collateral  for the  Loan,  nor any  course of  dealing  with
Borrower  or any other  person,  shall  limit,  impair or  release  Indemnitor's
obligations hereunder, affect this Agreement in any way or afford Indemnitor any
recourse against Lender. Nothing contained in this Section shall be construed to
require Lender to take or refrain from taking any action referred to herein.

(i) Entire  Agreement;  Amendment;  Severability.  This  Agreement  contains the
entire agreement between the parties respecting the matters herein set forth and
supersedes all prior  agreements,  whether written or oral,  between the parties
respecting such matters. Any amendments or modifications  hereto, in order to be
effective,   shall  be  in  writing  and  executed  by  the  parties  hereto.  A
determination  that any provision of this Agreement is  unenforceable or invalid
shall not affect the enforceability or validity of any other provision,  and any
determination  that the  application  of any provision of this  Agreement to any
person  or  circumstance  is  illegal  or  unenforceable  shall not  affect  the
enforceability  or  validity  of such  provision  as it may  apply to any  other
persons or circumstances.

(j) Governing Law; Binding Effect; Waiver of Acceptance. THIS AGREEMENT SHALL BE
GOVERNED  BY  AND  CONSTRUED  IN  ACCORDANCE  WITH  THE  LAWS  OF THE  STATE  OF
WASHINGTON,  EXCEPT TO THE EXTENT THAT THE APPLICABILITY OF ANY OF SUCH LAWS MAY
NOW OR  HEREAFTER  BE  PREEMPTED  BY FEDERAL LAW, IN WHICH CASE SUCH FEDERAL LAW
SHALL SO GOVERN AND BE CONTROLLING. This Agreement shall bind Indemnitor and its
heirs, personal  representatives,  successors and assigns and shall inure to the
benefit  of  Lender  and  the  officers,  directors,  shareholders,  agents  and
employees  of  Lender  and  their  respective  heirs,  successors  and  assigns.
Notwithstanding the foregoing,  Indemnitor shall not assign any of its rights or
obligations  under this Agreement  without the prior written  consent of Lender,
which  consent  may be  withheld  by Lender in its sole  discretion.  Indemnitor
hereby waives any  acceptance of this  Agreement by Lender,  and this  Agreement
shall immediately be binding upon Indemnitor.

(k) Notices. All notices,  demands,  requests or other communications to be sent
by one party to another  hereunder  or required by law shall be given and become
effective as provided in the  Mortgage,  provided that the address of Indemnitor
shall be as follows:

WestCoast Hospitality Corporation
201 W. North River Drive, Suite 100
Spokane, Washington 99201
Attention: Chief Financial Officer
FACSIMILE: (509) 325-7324

(l) No Waiver; Time of Essence; Business Day. The failure of any party hereto to
enforce any right or remedy hereunder,  or to promptly enforce any such right or
remedy,  shall not  constitute  a waiver  thereof nor give rise to any  estoppel
against  such party nor excuse any of the parties  hereto from their  respective
obligations hereunder. Any waiver of such right or remedy must be in writing and
signed by the party to be bound. This Agreement is subject to enforcement at law
or in equity, including actions for damages or specific performance.  Time is of
the essence hereof. The term "business day" as used herein shall mean a weekday,
Monday  through  Friday,  except  a  legal  holiday  or a day on  which  banking
institutions in New York, New York are authorized by law to be closed.

(m)  Captions  for  Convenience.  The  captions and headings of the sections and
paragraphs of this Agreement are for convenience of reference only and shall not
be construed in interpreting the provisions hereof.

(n)  Attorneys'  Fees.  In the event it is  necessary  for  Lender to retain the
services  of an  attorney  or any other  consultants  in order to  enforce  this
Agreement,  or any portion thereof,  Indemnitor  agrees to pay to Lender any and
all costs and expenses, including, without limitation, attorneys' fees, incurred
by  Lender  as a result  thereof  and such  costs,  fees and  expenses  shall be
included in Costs.

(o) Successive  Actions.  A separate right of action  hereunder shall arise each
time Lender  acquires  knowledge  of any matter  indemnified  or  guaranteed  by
Indemnitor under this Agreement.  Separate and successive actions may be brought
hereunder to enforce any of the  provisions  hereof at any time and from time to
time. No action hereunder shall preclude any subsequent  action,  and Indemnitor
hereby waives and covenants not to assert any defense in the nature of splitting
of causes of action or merger of judgments.

(p) Reliance. Lender would not make the Loan to Borrower without this Agreement.
Accordingly,  Indemnitor  intentionally  and  unconditionally  enters  into  the
covenants and  agreements as set forth above and  understands  that, in reliance
upon and in  consideration  of such covenants and agreements,  the Loan shall be
made and, as part and parcel thereof,  specific  monetary and other  obligations
have  been,  are being  and shall be  entered  into  which  would not be made or
entered into but for such reliance.

(q) SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
(1)  INDEMNITOR,  TO  THE  FULL  EXTENT  PERMITTED  BY  LAW,  HEREBY  KNOWINGLY,
INTENTIONALLY  AND VOLUNTARILY,  WITH AND UPON THE ADVICE OF COMPETENT  COUNSEL,
(A) SUBMITS TO PERSONAL  JURISDICTION  IN THE STATE OF WASHINGTON OVER ANY SUIT,
ACTION OR PROCEEDING BY ANY PERSON  ARISING FROM OR RELATING TO THIS  AGREEMENT,
(B) AGREES THAT ANY SUCH ACTION,  SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE
OR  FEDERAL  COURT OF  COMPETENT  JURISDICTION  PRESIDING  OVER  YAKIMA  COUNTY,
WASHINGTON,  (C) SUBMITS  TO THE  JURISDICTION  OF SUCH  COURTS,  AND (D) TO THE
FULLEST EXTENT PERMITTED BY LAW, AGREES THAT IT WILL NOT BRING ANY ACTION,  SUIT
OR PROCEEDING  IN ANY OTHER FORUM (BUT NOTHING  HEREIN SHALL AFFECT THE RIGHT OF
LENDER TO BRING ANY ACTION,  SUIT OR PROCEEDING IN ANY OTHER FORUM).  INDEMNITOR
FURTHER  CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS,  CITATION,  COMPLAINT OR
OTHER LEGAL  PROCESS IN ANY SUCH SUIT,  ACTION OR  PROCEEDING  BY  REGISTERED OR
CERTIFIED  U.S.  MAIL,  RETURN  RECEIPT  REQUESTED,   POSTAGE  PREPAID,  TO  THE
INDEMNITOR  AT THE ADDRESS FOR NOTICES  DESCRIBED IN  SECTION 5(k)  HEREOF,  AND
CONSENTS AND AGREES THAT SUCH SERVICE  SHALL  CONSTITUTE  IN EVERY RESPECT VALID
AND  EFFECTIVE  SERVICE  (BUT  NOTHING  HEREIN  SHALL  AFFECT  THE  VALIDITY  OR
EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW).
(2)  INDEMNITOR,  TO  THE  FULL  EXTENT  PERMITTED  BY  LAW,  HEREBY  KNOWINGLY,
INTENTIONALLY  AND VOLUNTARILY,  WITH AND UPON THE ADVICE OF COMPETENT  COUNSEL,
WAIVES,  RELINQUISHES  AND  FOREVER  FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BASED UPON,  ARISING OUT OF, OR IN ANY WAY RELATING TO THIS
AGREEMENT OR ANY  CONDUCT,  ACT OR OMISSION OF LENDER OR  INDEMNITOR,  OR ANY OF
THEIR DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR
ANY OTHER PERSONS AFFILIATED WITH LENDER OR INDEMNITOR, IN EACH OR THE FOREGOING
CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

(r) Additional Waivers by Indemnitor.
(1) Indemnitor  covenants and agrees that, upon the  commencement of a voluntary
or  involuntary  bankruptcy  proceeding  by or  against  Borrower  (or any other
indemnitor  relative  to the Loan or the  Costs),  Indemnitor  shall not seek or
cause  Borrower  or any other  person or entity to seek a  supplemental  stay or
other relief, whether injunctive or otherwise, pursuant to 11 U.S.C.  105 or any
other provision of the Bankruptcy  Reform Act of 1978, as amended,  or any other
debtor relief law, (whether statutory, common law, case law or otherwise) of any
jurisdiction  whatsoever,  now or  hereafter  in effect,  which may be or become
applicable,  to stay,  interdict,  condition,  reduce or inhibit  the ability of
Lender to enforce any rights of Lender against  Indemnitor or the collateral for
the Loan by virtue of this Agreement or otherwise.
(2)  Indemnitor  covenants  and  agrees  that it shall  not  solicit  or aid the
solicitation of the filing of any Petition (as defined in the Mortgage)  against
the Borrower,  whether acting on its own behalf or on behalf of any other party,
including, without limitation:  (i) providing information regarding the identity
of creditors or the nature of creditors' claims to any third party in connection
with the filing of a Petition  unless  compelled to do so by order of a court of
competent jurisdiction or by regulation promulgated by a governmental agency; or
(ii) paying  the legal fees or expenses of any creditor of or interest holder in
the Borrower in connection with the filing of a Petition.  (s) Joint and Several
Liability. Notwithstanding anything to the contrary herein, the representations,
warranties,  covenants,  agreements  and  obligations  made  and  undertaken  by
Indemnitor herein, and all representations,  warranties,  covenants, agreements,
liability and  obligations  made or undertaken by other  indemnitors or obligors
(including Borrower) relative to the Loan, shall be joint and several.

Signature Page

IN  WITNESS  WHEREOF,  Indemnitor  has  executed  this  Indemnity  and  Guaranty
Agreement to be effective as of the date first written above.

INDEMNITOR:

WESTCOAST HOSPITALITY CORPORATION,
a Washington corporation


By:
       Name:      Arthur M. Coffey
       Title:     President


Exhibit 31.1

                       WESTCOAST HOSPITALITY CORPORATION

    CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I,  Arthur  M.  Coffey,  President  and Chief  Executive  Officer  of  WestCoast
Hospitality Corporation certify that:

1. I have reviewed this quarterly  report on Form 10-Q of WestCoast  Hospitality
Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact  necessary to make the statements
made, in light of the  circumstances  under which such statements were made, not
misleading with respect to the period covered by this report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information included in this report, fairly present in all material respects the
financial  condition,  results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-25(e)) for the registrant and have:

     a)  designed  such  disclosure  controls  and  procedures,  or caused  such
     disclosure controls and procedures to be designed under our supervision, to
     ensure that material information relating to the registrant,  including its
     consolidated  subsidiaries,  is made  known to us by  others  within  those
     entities,  particularly  during the  period in which  this  report is being
     prepared;

     b) Evaluated the effectiveness of the registrant's  disclosure controls and
     procedures  and  presented  in  this  report  our  conclusions   about  the
     effectiveness of the disclosure  controls and procedures,  as of the end of
     the period covered by this report based on such evaluation; and

     c) Disclosed in this report any change in the registrant's internal control
     over financial  reporting that occurred during the registrant's most recent
     fiscal quarter that has  materially  affected,  or is reasonably  likely to
     materially  affect,  the  registrant's   internal  control  over  financial
     reporting; and;

5. The registrant's other certifying  officer(s) and I have disclosed,  based on
our most recent evaluation of internal control over financial reporting,  to the
registrant's  auditors  and the audit  committee  of the  registrant's  board of
directors:

     a) all significant  deficiencies  and material  weaknesses in the design or
     operation of internal control over financial reporting which are reasonably
     likely to adversely  affect the  registrant's  ability to record,  process,
     summarize and report financial information; and

     b) any fraud,  whether or not material,  that involves  management or other
     employees who have a significant role in the registrant's  internal control
     over financial reporting.

Date: August 14, 2003

/s/ Arthur M. Coffey
_________________________________________
Arthur M. Coffey
President and Chief Executive Officer


Exhibit 31.2

                       WESTCOAST HOSPITALITY CORPORATION

    CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Peter P.  Hausback,  Vice  President,  Chief  Financial  Officer of WestCoast
Hospitality Corporation certify that:

1. I have reviewed this quarterly  report on Form 10-Q of WestCoast  Hospitality
Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact  necessary to make the statements
made, in light of the  circumstances  under which such statements were made, not
misleading with respect to the period covered by this report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information included in this report, fairly present in all material respects the
financial  condition,  results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-25(e)) for the registrant and have:

     a)  designed  such  disclosure  controls  and  procedures,  or caused  such
     disclosure controls and procedures to be designed under our supervision, to
     ensure that material information relating to the registrant,  including its
     consolidated  subsidiaries,  is made  known to us by  others  within  those
     entities,  particularly  during the  period in which  this  report is being
     prepared;

     b) Evaluated the effectiveness of the registrant's  disclosure controls and
     procedures  and  presented  in  this  report  our  conclusions   about  the
     effectiveness of the disclosure  controls and procedures,  as of the end of
     the period covered by this report based on such evaluation; and

     c) Disclosed in this report any change in the registrant's internal control
     over financial  reporting that occurred during the registrant's most recent
     fiscal quarter that has  materially  affected,  or is reasonably  likely to
     materially  affect,  the  registrant's   internal  control  over  financial
     reporting; and;

5. The registrant's other certifying  officer(s) and I have disclosed,  based on
our most recent evaluation of internal control over financial reporting,  to the
registrant's  auditors  and the audit  committee  of the  registrant's  board of
directors:

     a) all significant  deficiencies  and material  weaknesses in the design or
     operation of internal control over financial reporting which are reasonably
     likely to adversely  affect the  registrant's  ability to record,  process,
     summarize and report financial information; and

     b) any fraud,  whether or not material,  that involves  management or other
     employees who have a significant role in the registrant's  internal control
     over financial reporting.

Date: August 14, 2003

/s/ Peter P. Hausback
_________________________________________
Peter P. Hausback
Vice President, Chief Financial Officer


Exhibit 32.1

                       WESTCOAST HOSPITALITY CORPORATION

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION
                     906 OF THE SARBANES-OXLEY ACT OF 2002

In connection  with the Quarterly  Report of WestCoast  Hospitality  Corporation
(the  "Company")  on Form 10-Q for the period ending June 30, 2003 as filed with
the Securities  and Exchange  Commission on the date hereof (the  "Report"),  I,
Arthur M. Coffey, President and Chief Executive Officer of the Company, certify,
pursuant  to 18  U.S.C.  1350,  as  adopted  pursuant  to  Section  906  of  the
Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and

(2) The  information  contained in the Report fairly  presents,  in all material
respects, the financial condition and result of operations of the Company.

/s/ Arthur M. Coffey
_________________________________________________
Arthur M. Coffey
President and Chief Executive Officer
August 14, 2003


Exhibit 32.2

                       WESTCOAST HOSPITALITY CORPORATION

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION
                     906 OF THE SARBANES-OXLEY ACT OF 2002

In connection  with the Quarterly  Report of WestCoast  Hospitality  Corporation
(the  "Company")  on Form 10-Q for the period ending June 30, 2003 as filed with
the Securities  and Exchange  Commission on the date hereof (the  "Report"),  I,
Peter P. Hausback,  Vice President and Chief  Financial  Officer of the Company,
certify,  pursuant to 18 U.S.C.  1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and

(2) The  information  contained in the Report fairly  presents,  in all material
respects, the financial condition and result of operations of the Company.

/s/ Peter P. Hausback
___________________________________________________
Peter P. Hausback
Vice President and Chief Financial Officer
August 14, 2003