EXHIBIT 10.16

PREPARED BY AND UPON RECORDATION RETURN TO:

Kennedy Covington Lobdell & Hickman, L.L.P.
100 North Tryon Street, Suite 4200
Charlotte, North Carolina 28202-4006
Attention:  John Nicholas Suhr, Jr., Esq.

Tax Map Parcel # _______________________

LOAN NO.: 26-5950380                                    THE MAYFLOWER APARTMENTS
                                                        VIRGINIA BEACH, VIRGINIA


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


                                 CRIT-VA, INC.,
                                   as Grantor

                                       to


                                  TRSTE, INC.,
                                   as Trustee

                               For the benefit of


                           FIRST UNION NATIONAL BANK,
                                 as Beneficiary

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

                      DEED OF TRUST AND SECURITY AGREEMENT

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

                             Date: December 12, 2000


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






<PAGE>


                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                                        PAGE
                                                                                                                        ----
<S>                                                                                                                     <C>
ARTICLE I. COVENANTS OF GRANTOR...........................................................................................8

         1.1      Warranties of Grantor...................................................................................8

         1.2      Defense of Title.......................................................................................12

         1.3      Performance of Obligations.............................................................................12

         1.4      Insurance..............................................................................................12

         1.5      Payment of Taxes.......................................................................................15

         1.6      Tax and Insurance Impound Account......................................................................16

         1.7      Intentionally Deleted..................................................................................17

         1.8      Replacement Reserve....................................................................................17

         1.9      Casualty and Condemnation..............................................................................20

         1.10     Construction Liens.....................................................................................23

         1.11     Rents..................................................................................................23

         1.12     Leases.................................................................................................24

         1.13     Alienation and Further Encumbrances....................................................................26

         1.14     Payment of Utilities, Assessments, Charges, Etc........................................................31

         1.15     Access Privileges and Inspections......................................................................31

         1.16     Waste; Alteration of Improvements......................................................................31

         1.17     Zoning.................................................................................................32

         1.18     Financial Statements and Books and Records.............................................................32

         1.19     Further Documentation..................................................................................34

         1.20     Payment of Costs; Reimbursement to Beneficiary.........................................................34

         1.21     Security Interest......................................................................................36

         1.22     Security Agreement.....................................................................................36

         1.23     Easements and Rights-of-Way............................................................................38

         1.24     Compliance with Laws...................................................................................38

         1.25     Additional Taxes.......................................................................................39

         1.26     Secured Indebtedness...................................................................................39

         1.27     Grantor's Waivers......................................................................................39

         1.28     SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.......................................................40

         1.29     Attorney-in-Fact Provisions............................................................................41

         1.30     Management.............................................................................................41

         1.31     Hazardous Waste and Other Substances...................................................................42

         1.32     Indemnification; Subrogation...........................................................................46

         1.33     Covenants with Respect to Indebtedness, Operations, Fundamental Changes of Grantor.....................47

         1.34     Repair and Remediation Reserve.........................................................................51

         1.35     ERISA..................................................................................................52

         1.36     Springing Lock-Box Account.............................................................................53


ARTICLE II. EVENTS OF DEFAULT............................................................................................54


         2.1      Events of Default......................................................................................54
</TABLE>

<PAGE>


<TABLE>
<S>                                                                                                                     <C>
ARTICLE III. REMEDIES....................................................................................................56


         3.1      Remedies Available.....................................................................................56

         3.2      Application of Proceeds................................................................................59

         3.3      Right and Authority of Receiver or Beneficiary in the Event of Default; Power of Attorney..............59

         3.4      Occupancy After Foreclosure............................................................................61

         3.5      Notice to Account Debtors..............................................................................61

         3.6      Cumulative Remedies....................................................................................61

         3.7      Payment of Expenses....................................................................................62


ARTICLE IV. MISCELLANEOUS TERMS AND CONDITIONS...........................................................................62


         4.1      Time of Essence........................................................................................62

         4.2      Release of Deed of Trust...............................................................................62

         4.3      Certain Rights of Beneficiary..........................................................................62

         4.4      Waiver of Certain Defenses.............................................................................62

         4.5      Notices................................................................................................62

         4.6      Successors and Assigns; Joint and Several Liability....................................................63

         4.7      Severability...........................................................................................63

         4.8      Gender.................................................................................................63

         4.9      Waiver; Discontinuance of Proceedings..................................................................63

         4.10     Section Headings.......................................................................................64

         4.11     GOVERNING LAW..........................................................................................64

         4.12     Counting of Days.......................................................................................64

         4.13     Relationship of the Parties............................................................................64

         4.14     Application of the Proceeds of the Note................................................................64

         4.15     Unsecured Portion of Indebtedness......................................................................64

         4.16     Cross-Default; Cross-Collateralization.................................................................64

         4.17     Interest After Sale....................................................................................65

         4.18     Inconsistency with Other Loan Documents................................................................65

         4.19     Construction of this Document..........................................................................65

         4.20     No Merger..............................................................................................65

         4.21     Rights With Respect to Junior Encumbrances.............................................................65

         4.22     Beneficiary May File Proofs of Claim...................................................................66

         4.23     Fixture Filing.........................................................................................66

         4.24     After-Acquired Trust Property..........................................................................66

         4.25     No Representation......................................................................................66

         4.26     Counterparts...........................................................................................66

         4.27     Personal Liability.....................................................................................67

         4.28     Recording and Filing...................................................................................67

         4.29     Entire Agreement and Modifications.....................................................................67

         4.30     Maximum Interest.......................................................................................67

         4.31     Interest Payable by Beneficiary........................................................................68

         4.32     Secondary Market.......................................................................................68

         4.33     Dissemination of Information...........................................................................68

         4.34     Contemporaneous Notes, Contemporaneous Mortgages and Contemporaneous Assignments of Leases and
                  Rents..................................................................................................68
</TABLE>


                                       2
<PAGE>

<TABLE>
<S>                                                                                                                     <C>
         4.35     Certain Matters Relating to Trust Property Located in the Commonwealth of Virginia.....................69


ARTICLE V. CONCERNING THE TRUSTEE........................................................................................70


         5.1      Certain Rights.........................................................................................70

         5.2      Retention of Money.....................................................................................71

         5.3      Successor Trustees.....................................................................................71

         5.4      Perfection of Appointment..............................................................................71

         5.5      Succession Instruments.................................................................................71

         5.6      No Representation by Trustee or Beneficiary............................................................71
</TABLE>


                                       3
<PAGE>

                      DEED OF TRUST AND SECURITY AGREEMENT


         THIS DEED OF TRUST AND  SECURITY  AGREEMENT  (this  "Deed of Trust") is
made as of December  12,  2000 by  CRIT-VA,  INC.,  a Virginia  corporation,  as
Grantor ("Grantor"),  whose address is 306 East Main Street, Richmond,  Virginia
23219, to TRSTE, INC., a Virginia  corporation,  as Trustee  ("Trustee") with an
address at 213 South Jefferson Street, Roanoke,  Virginia 24011, for the benefit
of FIRST UNION NATIONAL  BANK, a national  banking  association,  as Beneficiary
("Beneficiary"),  whose  address is One First Union  Center,  301 South  College
Street, Mailcode NC 0166, Charlotte,  North Carolina 28288, Attention:  Contract
Finance.

                              W I T N E S S E T H:
                              --------------------

         THAT  FOR AND IN  CONSIDERATION  OF THE SUM OF TEN AND  NO/100  DOLLARS
($10),  AND OTHER VALUABLE  CONSIDERATION,  THE RECEIPT AND SUFFICIENCY OF WHICH
ARE HEREBY  ACKNOWLEDGED,  GRANTOR HEREBY IRREVOCABLY GRANTS,  BARGAINS,  SELLS,
CONVEYS,  TRANSFERS,  PLEDGES, SETS OVER AND ASSIGNS, WITH POWER OF SALE, all of
Grantor's  estate,  right,  title and interest (if any) in, to and under any and
all of the following described property, whether now owned or hereafter acquired
by Grantor (exclusive of any of the following owned or leased by tenants leasing
all or part of the  Improvements  (as hereinafter  defined)  (Grantor's  estate,
right, title and interest in all such property being referred to,  collectively,
as the "Trust Property"):

         (A)      All  that  certain  real  property  situated  in the  City  of
Virginia Beach, Commonwealth of Virginia, more particularly described on Exhibit
A attached hereto and  incorporated  herein by this reference (the  "Premises"),
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 Grantor therein or thereto, either at law or in equity,
in possession or in expectancy, now 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 Premises (the
"Improvements", the Premises and the Improvements being referred to as the "Real
Property");

         (C)      All  furniture,   furnishings,   fixtures,  goods,  equipment,
inventory or personal property owned by Grantor and now or hereafter located on,
attached to or used in and about the  Improvements,  including,  but not limited
to,  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,  disposal  and  incinerating  equipment,  and  all  fixtures  and
appurtenances  thereto,  and such other goods and chattels and personal property
owned by Grantor and 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 Premises or Improvements,  and, to
the extent



                                       4
<PAGE>

assignable,  all warranties and guaranties  relating thereto,  and all additions
thereto and substitutions and replacements therefor;

         (D)      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 Premises 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  Real  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 Grantor;

         (E)      To  the  extent  assignable,   all  water,   ditches,   wells,
reservoirs and drains and all water, ditch, well,  reservoir and drainage rights
which are  appurtenant to, located on, under or above or used in connection with
the Premises or the  Improvements,  or any part  thereof,  together (i) with 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 Premises 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 Premises and/or  Improvements,  including,
without limitation,  all reservations of or commitments 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 Premises;

         (G)      All funds now or hereafter on deposit in the Impound  Account,
the  Replacement  Reserve  and the  Repair  and  Remediation  Reserve  (each  as
hereinafter defined);

         (H)      (i) All leases  (including,  without  limitation  oil, gas and
mineral leases),  licenses,  concessions and occupancy  agreements of all or any
part of the Premises or the  Improvements  (each,  a "Lease" and,  collectively,
"Leases"), whether written or oral, now or hereafter entered into and all rents,
royalties,  issues,  profits,  bonus money,  revenue,  income,  rights and other
benefits (collectively, the "Rents") of the Premises or the Improvements, now or
hereafter  arising from the use or  enjoyment  of all or any portion  thereof or
from any  present or future  Lease or other  agreement  arising  from any of the
Leases (as hereinafter  defined) or arising from any of the General  Intangibles
(as  hereinafter  defined)  and  all  cash or  securities  deposited  to  secure
performance  by the  tenants,  lessees  or  licensees  (each,  a  "Tenant"  and,
collectively,  "Tenants"),  as applicable,  of their  obligations under any such
Leases  whether said cash or securities  are to be held until the  expiration of
the terms of said Leases or applied to one or more of the  installments  of rent
coming due prior to the  expiration  of said  terms,  subject to,  however,  the
provisions contained in Section 1.11 of this Deed of Trust;

         (I)      To the extent assignable: (i) all contracts and agreements now
or hereafter  entered  into by Grantor or binding  upon Grantor  relating to the
management,  maintenance  or  operation  of  any  part  of the  Premises  or the
Improvements  (collectively,  the "Contracts") and all revenue, income and other
benefits thereof, including, without limitation,  management



                                       5
<PAGE>

agreements, service contracts, maintenance contracts, equipment leases, personal
property leases and (ii) any contracts or documents  relating to construction on
any  part  of the  Premises  or the  Improvements  (including  plans,  drawings,
surveys, tests, reports, bonds and governmental approvals);

         (J)      To the extent  assignable,  all present and future real estate
tax refunds and monetary  deposits  given to any public or private  utility with
respect  to  utility  services  furnished  to any  part of the  Premises  or the
Improvements;

         (K)      To the  extent  assignable,  all  present  and  future  funds,
accounts, instruments, accounts receivable, documents, causes of action, claims,
general intangibles  (including,  without limitation,  trademarks,  trade names,
service marks and symbols now or hereafter  used in connection  with any part of
the  Premises  or the  Improvements,  all  names by which  the  Premises  or the
Improvements  may be  operated or known,  all rights to carry on business  under
such names,  and all rights,  interest and  privileges  which Grantor has or may
have as developer or declarant under any covenants, restrictions or declarations
now or hereafter  relating to the Premises or the Improvements) and all notes or
chattel paper  relating to the  ownership,  operation or maintenance of the Real
Property  (exclusive of any of the foregoing  owed to tenants or any other third
parties) (collectively, the "General Intangibles");

         (L)      To  the  extent  assignable,   all  water  taps,  sewer  taps,
certificates  of  occupancy,   permits,  licenses,   franchises,   certificates,
consents, approvals and other rights and privileges now or hereafter obtained in
connection  with the  Premises  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  Premises  or the
Improvements;

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

         (N)      To the extent  assignable,  all right,  title and  interest of
Grantor in any  insurance  policies or binders now or hereafter  relating to the
Trust Property, 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 and condemnation awards; and

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

         IN TRUST TO SECURE:



                                       6
<PAGE>

         (1)      The debt  evidenced  by that  certain  Promissory  Note  (such
Promissory Note, together with any and all renewals, amendments,  modifications,
consolidations and extensions thereof, is hereinafter referred to as the "Note")
of even date with this Deed of Trust,  made by  Grantor  payable to the order of
Beneficiary  in the principal  face amount of Ten Million Five Hundred  Thousand
and No/100 Dollars ($10,500,000.00), together with interest 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 agreements, documents or instruments now or hereafter evidencing, securing or
otherwise relating to the Debt (as hereinafter defined) and described on Exhibit
C attached  hereto,  the  Contemporaneous  Notes (as hereinafter  defined),  the
Contemporaneous   Mortgages  (as  hereinafter   defined),   the  Contemporaneous
Assignments  (as  hereinafter  defined),  (together  with any and all  renewals,
amendments, extensions,  modifications and restatements thereof, are hereinafter
collectively  referred to as the "Loan  Documents") and the payment of all other
sums herein or therein covenanted to be paid;

         (3)      Any and all additional advances made by Beneficiary to protect
or preserve the Trust Property or the lien or security  interest  created hereby
on the Trust  Property,  or for taxes,  assessments  or  insurance  premiums  as
hereinafter  provided  or  for  performance  of  any  of  Grantor's  obligations
hereunder or under the other Loan  Documents or for any other  purpose  provided
herein or in the other Loan Documents; and

         (4)      Any  and  all  other  indebtedness  now  owing  or  which  may
hereafter  be  owing  by  Grantor  to  Beneficiary  under  the  Loan  Documents,
including,  without  limitation,  all  prepayment  fees,  however  and  whenever
incurred or evidenced,  whether express or implied, direct or indirect, absolute
or  contingent,  or due or to  become  due,  and  all  renewals,  modifications,
consolidations, replacements and extensions thereof.

(All of the sums  referred  to in  Paragraphs  (1)  through (4) above are herein
referred to as the "Debt").

         TO HAVE AND TO HOLD the Trust Property unto Trustee, its successors and
assigns forever, for the benefit of Beneficiary, its successors and assigns, and
Grantor  does hereby bind itself,  its  successors  and assigns,  to WARRANT AND
FOREVER  DEFEND the title to the Real  Property  (and such other  portion of the
Trust Property as may constitute real property under applicable law), subject to
the Permitted  Encumbrances (as hereinafter defined), to Beneficiary and Trustee
against every person  whomsoever  lawfully  claiming or to claim the same or any
part thereof;

         PROVIDED,  HOWEVER,  that if the  principal  and interest and all other
sums due or to become  due under  the Note or under  the other  Loan  Documents,
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 the Debt shall have been paid and all other  covenants  contained in
the Loan  Documents  shall have been  performed,  then, in such case, the liens,


                                       7
<PAGE>

security  interests,  estates and rights  granted by this Deed of Trust shall be
satisfied and the estate,  right, title and interest of Beneficiary in the Trust
Property shall cease,  and upon payment to Beneficiary of all costs and expenses
incurred  for the  preparation  of the release  hereinafter  referenced  and all
recording  costs if allowed  by law,  Beneficiary  shall  promptly  satisfy  and
release this Deed of Trust of record and the lien hereof by proper instrument.

                                   ARTICLE I.
                              COVENANTS OF GRANTOR

         For the purpose of further  securing the Debt and for the protection of
the security of this Deed of Trust,  for so long as the Debt or any part thereof
remains unpaid, Grantor covenants and agrees as follows:

         1.1      Warranties of Grantor.  Grantor, for itself and its successors
and  assigns,   does  hereby  represent,   warrant  and  covenant  to  and  with
Beneficiary, its successors and assigns, that:

                  (a)      Grantor has good,  marketable  and  indefeasible  fee
simple title to the Real Property,  subject only to those matters  expressly set
forth as  exceptions to or  subordinate  matters in the title  insurance  policy
insuring  the lien of this Deed of Trust  delivered  as of the date  hereof (the
"Title Insurance  Policy"),  excepting  therefrom all preprinted and/or standard
exceptions (such items being the "Permitted  Encumbrances"),  and has full power
and lawful authority to grant, bargain, sell, convey, assign, transfer, encumber
and mortgage  its  interest in the Trust  Property in the manner and form hereby
done or intended.  Grantor  will  preserve its interest in and title to the Real
Property and will forever warrant and defend the same to Beneficiary 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 Encumbrances.  The
foregoing  warranty of title shall survive the foreclosure of this Deed of Trust
and shall inure to the benefit of and be enforceable by Beneficiary in the event
Beneficiary acquires title to or ownership of the Trust Property pursuant to any
foreclosure;

                  (b)      No bankruptcy or insolvency  proceedings  are pending
or contemplated by Grantor or, to the best knowledge of Grantor, against Grantor
or by or against  any  endorser or cosigner of the Note or of any portion of the
Debt, or any guarantor or indemnitor under the Indemnity and Guaranty  Agreement
and the Environmental  Indemnity  Agreement executed in connection with the Note
or the loan evidenced thereby and secured hereby (the "Indemnitor");

                  (c)      All  written  certificates,  written  affidavits  and
written  statements  made by Grantor to Beneficiary in connection  with the loan
evidenced by the Note 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 materially 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, and are, binding and enforceable  against Grantor
in  accordance  with the  respective  terms  thereof and do not in any  material
respect contravene,  result in a breach of or constitute a default (nor upon



                                       8
<PAGE>

the  giving of  notice or the  passage  of time or both will same  constitute  a
default) under the partnership agreement,  articles of incorporation,  operating
agreement or other organizational  documents of Grantor or any material contract
or  agreement  to which  Grantor  is a party or by which  Grantor  or any of its
property may be bound and do not violate or contravene  in any material  respect
any law, order, decree, rule or regulation to which Grantor is subject;

                  (e)      Grantor  is  not  required  to  obtain  any  consent,
approval or authorization from or to file any declaration or statement with, any
governmental  authority  or 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)      Grantor  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 Grantor in connection  with the execution and delivery
of, and the performance by Grantor of its obligations under, the Loan Documents;

                  (g)      Grantor 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 for the  purpose of  purchasing  or  acquiring  any "margin
stock"  within the meaning of  Regulation 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  Regulation  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)      Grantor and, if Grantor is a partnership, any general
partner of Grantor, has filed all federal,  state and local tax returns required
to be filed as of the date hereof and has paid or made  adequate  provision  for
the payment of all  federal,  state and local  taxes,  charges  and  assessments
payable  by  Grantor  and its  general  partner,  if any as of the date  hereof.
Grantor and its general  partners,  if any,  believe that their  respective  tax
returns  properly  reflect  the  income and taxes of  Grantor  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)      Grantor 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
Grantor do not  constitute  "plan  assets" of one or more such plans  within the
meaning of 29 C.F.R. Section 2510.3-101;

                  (k)      The  Premises  and the  Improvements  and the current
intended  use  thereof  by  Grantor  comply in all  material  respects  with all
applicable  restrictive covenants,  zoning ordinances,  subdivision and building
codes, flood disaster laws, health and environmental laws


                                       9
<PAGE>

and regulations and all other ordinances,  orders or requirements  issued by any
state, federal or municipal authorities having or claiming jurisdiction over the
Trust Property.  The Premises and  Improvements  constitute one or more separate
tax  parcels  for  purposes of ad valorem  taxation.  To the best of  Borrower's
knowledge,  information and belief, the Premises 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;

                  (l)      All utility services necessary and sufficient for the
use,  occupancy  and  operation of the Premises and the  Improvements  for their
current intended  purposes are available to the Real Property,  including water,
storm sewer, sanitary sewer, gas, electric, cable and telephone facilities;

                  (m)      All streets,  roads,  highways and bridges  necessary
for access for the current use,  occupancy and operation of the Premises and the
Improvements  have  been  completed,   to  the  best  of  Grantor's   knowledge,
information  and belief,  have been dedicated to and accepted by the appropriate
municipal  authority  and  are  open  and  available  to the  Premises  and  the
Improvements without further condition or cost to Grantor;

                  (n)      All curb cuts, driveways and traffic signals (if any)
shown on the survey delivered to Beneficiary prior to the execution and delivery
of this Deed of Trust (the  "Survey") are existing and, to the best of Grantor's
knowledge,  information and belief,  have been fully approved by the appropriate
governmental authority;

                  (o)      There are no judicial,  administrative,  mediation or
arbitration  actions,  suits or  proceedings  pending or  threatened  against or
affecting  Grantor  (or,  if Grantor  is a  partnership  or a limited  liability
company, any of its general partners or members) or the Trust Property which, if
adversely  determined,  would  have a material  adverse  effect on (a) the Trust
Property,  (b)  the  business,   prospects,  profits,  operations  or  condition
(financial  or  otherwise)  of  Grantor,   (c)  the  enforceability,   validity,
perfection or priority of the lien of any Loan  Document,  or (d) the ability of
Grantor to perform any  obligations  under any Loan  Document  (collectively,  a
"Material Adverse Effect");

                  (p)      The  Trust  Property  is free from  delinquent  water
charges, sewer rents, taxes and assessments;

                  (q)      As of the  date  of  this  Deed of  Trust,  the  Real
Property is free from unrepaired material damage caused by fire, flood, accident
or other casualty;

                  (r)      As of the date of this Deed of Trust,  no part of the
Premises or the Improvements  has been taken in condemnation,  eminent domain or
like  proceeding nor is any such proceeding  pending or, to Grantor's  knowledge
and belief, threatened;

                  (s)      Grantor possesses all material  franchises,  patents,
copyrights,  trademarks,  trade names,  licenses and permits  necessary  for the
conduct of its business substantially as now conducted;



                                       10
<PAGE>

                  (t)      Except  as  may   otherwise   be   disclosed  in  the
Engineering  Report (as hereinafter  defined),  (i) the Improvements are in good
repair and (ii) 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;

                  (u)      Grantor has delivered to  Beneficiary  true,  correct
and complete copies of all Contracts and all amendments thereto or modifications
thereof;

                  (v)      Each  Contract   constitutes  the  legal,  valid  and
binding  obligation  of Grantor  and,  to the best of  Grantor's  knowledge  and
belief,  is enforceable  against any other party thereto.  No default exists, or
with the passing of time or the giving of notice or both would exist,  under any
Contract which would, in the aggregate, have a Material Adverse Effect;

                  (w)      Grantor and the Trust Property are free from any past
due obligations for sales and payroll taxes;

                  (x)      There  are  no  security   agreements   or  financing
statements  affecting all or any portion of the Trust  Property of Grantor other
than (i) as  disclosed  in writing by Grantor to  Beneficiary  prior to the date
hereof and (ii) the Loan Documents;

                  (y)      Grantor has delivered to Beneficiary a true,  correct
and  complete  schedule  (the  "Rent  Roll") of all Leases  affecting  the Trust
Property as of the date hereof,  which  accurately and completely  sets forth in
all  material  respects  for each such  Lease,  the  following:  the name of the
Tenant,  the lease expiration date, the base rent payable,  the security deposit
held thereunder and any other material provisions of such Lease;

                  (z)      No Tenant under any Lease has, as of the date hereof,
paid rent more than thirty (30) days in advance, and the rents under such Leases
have not been waived, released, or otherwise discharged or compromised;

                  (aa)     The  Real  Property  forms  no part  of any  property
owned,  used or claimed by Grantor as its  residence  or  homestead  and, to the
extent  permitted by applicable law, Grantor hereby disclaims and renounces each
and every  claim that the Real  Property  is exempt  from  forced  sale upon the
occurrence  and  continuance  of an Event of  Default  as a result  of such Real
Property being Grantor's residence or homestead;

                  (bb)     Grantor is not a "foreign  person" within the meaning
of Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended,  and the
related Treasury Department regulations, including temporary regulations; and

                  (cc)     As of the  date  hereof,  Cornerstone  Realty  Income
Trust,  Inc., a Virginia  corporation  (the "REIT") is the sole  shareholder  of
Grantor.  The REIT's  interest in Grantor is owned by the REIT free and clear of
all mortgages, assignments, pledges and security interests and free and clear of
all warrants, options and rights to purchase.



                                       11
<PAGE>

         1.2      Defense  of Title.  If,  while this Deed of Trust is in force,
the title to the Real  Property  or the  interest  of  Beneficiary  in the Trust
Property 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 except for the Permitted Encumbrances, Grantor,
at Grantor'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  Beneficiary,  the  prosecution  or defense of  litigation,  and the
compromise  or  discharge  of  claims  made  against  said  title  or  interest.
Notwithstanding  the  foregoing,  if an Event of  Default  has  occurred  and is
continuing under this Section,  Beneficiary may, without limiting or waiving any
other rights or remedies of Beneficiary hereunder,  take such steps with respect
thereto as Beneficiary  shall deem necessary or proper and any and all costs and
expenses incurred by Beneficiary in connection therewith, together with interest
thereon  at the  Default  Interest  Rate (as  defined in the Note) from the date
incurred by  Beneficiary  until  actually paid by Grantor,  shall be immediately
paid by  Grantor 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.

         1.3      Performance  of  Obligations.  Grantor  shall pay when due the
principal  of and the interest on the Debt in  accordance  with the terms of the
Note.  Grantor  shall also pay all charges,  fees and other sums  required to be
paid by Grantor as provided in the Loan Documents,  in accordance with the terms
of the Loan Documents, and shall observe, perform and discharge all obligations,
covenants and agreements to be observed,  performed or discharged by Grantor set
forth in the Loan  Documents in accordance  with their terms.  Further,  Grantor
shall promptly  perform and comply in all material  respects with all covenants,
conditions,  obligations and prohibitions required of Grantor in connection with
any  other  document  or  instrument  affecting  title to the Real  Property  or
Grantor's  interest in the Trust  Property,  or any part thereof,  regardless of
whether such document or instrument is superior or  subordinate  to this Deed of
Trust.

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

                  (a)      Insurance   against  loss  or  damage  to  the  Trust
Property by fire,  windstorm,  tornado  and hail and against  loss and damage by
such other,  further and additional risks as may be now or hereafter embraced by
an "all-risk"  or "special  form" type of insurance  policy.  The amount of such
insurance  shall  be not  less  than  one  hundred  percent  (100%)  of the full
replacement cost (insurable value) of the Improvements (as established by an MAI
appraisal),  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 Beneficiary's election,
by  reference  to  such  indices,   appraisals  or  information  as  Beneficiary
determines in its reasonable  discretion in order to reflect increased value due
to inflation. Absent such annual adjustment, each policy shall contain inflation
guard  coverage  insuring  that the policy limit will be increased  over time to
reflect the effect of inflation.  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.  Grantor shall also
maintain insurance against loss or damage to furniture,  furnishings,  fixtures,
equipment and other items (whether personalty or



                                       12
<PAGE>

fixtures)  owned by Grantor  and  included  in the Trust  Property  and owned by
Grantor from time to time to the extent applicable.  Each policy 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 Beneficiary's approval. The maximum deductible shall
be $25,000.00.

                  (b)      Commercial General Liability Insurance against claims
for personal injury,  bodily injury,  death and property damage occurring on, in
or about the Premises or the Improvements in amounts not less than $1,000,000.00
per occurrence and  $2,000,000.00 in the aggregate plus umbrella  coverage in an
amount  not less  than  $2,000,000.  Beneficiary  hereby  retains  the  right to
periodically  review the amount of said liability  insurance being maintained by
Grantor  and to require an increase  in the amount of said  liability  insurance
should Beneficiary deem an increase to be reasonably prudent under then existing
circumstances.

                  (c)      Boiler and  machinery  insurance is required if steam
boilers  or other  pressure-fired  vessels  are in  operation  at the  Premises.
Minimum  liability   coverage  per  accident  must  equal  the  greater  of  the
replacement cost (insurable  value) of the  Improvements  housing such boiler or
pressure-fired machinery or $2,000,000.00. If one or more large HVAC units is in
operation at the Premises,  "Systems Breakdowns" coverage shall be required,  as
determined by Beneficiary.  Minimum  liability  coverage per accident must equal
the value of such unit(s).

                  (d)      If the  Improvements  or any part thereof is situated
in an area designated by the Federal  Emergency  Management Agency ("FEMA") as a
special flood hazard area (Zone A or Zone V), flood insurance in an amount equal
to the lesser of: (i) the minimum amount required,  under the terms of coverage,
to  compensate  for any  damage or loss on a  replacement  basis (or the  unpaid
balance of the Debt if  replacement  cost coverage is not available for the type
of  building  insured),  or (ii)  the  maximum  insurance  available  under  the
appropriate  National  Flood  Insurance   Administration  program.  The  maximum
deductible  shall be  $3,000.00  per  building  or a higher  minimum  amount  as
required by FEMA or other applicable law.

                  (e)      During the period of any construction,  renovation or
alteration of the existing  Improvements  which exceeds the lesser of 10% of the
original principal amount of the Note or $500,000,  at Beneficiary's  request, a
completed  value,  "All Risk"  Builder's  Risk form or "Course of  Construction"
insurance  policy in  non-reporting  form, in an amount  reasonably  approved by
Beneficiary,  may be  required.  During  the period of any  construction  of any
addition to the existing  Improvements,  a completed value, "All Risk" Builder's
Risk form or "Course of Construction" insurance policy in non-reporting form, in
an amount reasonably approved by Beneficiary, shall be required

                  (f)      When required by applicable  law,  ordinance or other
regulation,  Worker's  Compensation and Employer's  Liability Insurance covering
all persons subject to the worker's  compensation laws of the state in which the
Trust Property is located.

                  (g)      Business income (loss of rents)  insurance in amounts
sufficient to compensate  Grantor for all Rents or income during a period of not
less than twelve (12) months.



                                       13
<PAGE>

The amount of coverage shall be adjusted annually to reflect the Rents or income
payable during the succeeding twelve (12) month period.

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

         All such  insurance  shall  (i) be with  insurers  fully  licensed  and
authorized  to do business in the state within which the Premises is located and
who have  and  maintain  a  rating  of at  least A from  Standard  &  Poors,  or
equivalent,  (ii)  contain the  complete  address of the Premises (or a complete
legal  description),  (iii) be  prepaid  for three  (3)  months  (provided  that
Beneficiary may require up to twelve (12) months be prepaid in the event Grantor
is required to make payments to the Impound  Account  pursuant to Section 1.6(c)
hereof),  and (iv) be subject to the  approval of  Beneficiary  as to  insurance
companies  (provided  such  approval  as to a  particular  company  shall not be
withheld if the foregoing  minimum rating  requirement  is satisfied),  amounts,
content,  forms of policies,  method by which  premiums are paid and  expiration
dates,  and (v) include a standard,  non-contributory,  mortgagee  clause naming
EXACTLY:

         First Union National Bank,
         its Successors and Assigns ATIMA
         Attn.:  Structured Products Servicing
         8739 Research Drive, URP-4
         Charlotte, NC  28262-1075

(A) as an additional insured under all liability insurance policies,  (B) as the
first mortgagee on all property  insurance policies and (C) as the loss payee on
all loss of rents or loss of business income insurance policies.

         Grantor shall, as of the date hereof,  deliver to Beneficiary  evidence
that said  insurance  policies have been prepaid as required above and certified
copies of such insurance policies and original  certificates of insurance signed
by an authorized  agent of the applicable  insurance  companies  evidencing such
insurance  satisfactory to  Beneficiary.  Grantor shall renew all such insurance
and deliver to Beneficiary certificates and policies evidencing such renewals at
least thirty (30) days before any such insurance  shall expire.  Grantor further
agrees that each such  insurance  policy:  (i) shall provide for at least thirty
(30) days' prior written notice to Beneficiary  prior to any policy reduction or
cancellation  for any reason other than  non-payment of premium and at least ten
(10) days' prior written notice to Beneficiary  prior to any cancellation due to
non-payment  of premium;  (ii) shall contain an  endorsement or agreement by the
insurer that any loss shall be payable to  Beneficiary  in  accordance  with the
terms of such policy  notwithstanding  any act or  negligence  of Grantor  which
might otherwise  result in forfeiture of such  insurance;  (iii) shall waive all
rights of subrogation against  Beneficiary;  (iv) in the event that the Premises
or the  Improvements  constitutes a legal  non-conforming  use under  applicable
building,  zoning or land use laws or ordinances,  shall include an ordinance or
law coverage endorsement which will



                                       14
<PAGE>

contain  Coverage A: "Loss Due to  Operation  of Law" (with a minimum  liability
limit equal to  Replacement  Cost With Agreed  Value  Endorsement),  Coverage B:
"Demolition  Cost" and Coverage C: "Increased Cost of  Construction"  coverages;
and (v) may be in the form of a blanket policy  provided that, in the event that
any such coverage is provided in the form of a blanket  policy,  Grantor  hereby
acknowledges  and agrees that failure to pay any portion of the premium therefor
which is not allocable to the Trust Property or by any other action not relating
to the Trust Property which would otherwise  permit the issuer thereof to cancel
the  coverage  thereof,  would  require  the Trust  Property  to be insured by a
separate,  single-property policy. The blanket policy must properly identify and
fully protect the Trust Property as if a separate policy were issued for 100% of
Replacement  Cost at the time of loss and  otherwise  meet all of  Beneficiary's
applicable  insurance  requirements set forth in this Section 1.4. To the extent
permitted by applicable  law, in the event of foreclosure of this Deed of Trust,
or other transfer of title to the Trust Property in  extinguishment  in whole or
in part of the Debt,  all  right,  title and  interest  of Grantor in and to all
proceeds payable under such policies then in force concerning the Trust Property
shall thereupon vest in the purchaser at such foreclosure,  or in Beneficiary or
other  transferee in the event of such other transfer of title.  Approval of any
insurance by Beneficiary  shall not be a  representation  of the solvency of any
insurer or the  sufficiency  of any amount of  insurance.  In the event  Grantor
fails to provide,  maintain, keep in force or deliver and furnish to Beneficiary
the  policies of  insurance  required by this Deed of Trust or evidence of their
renewal as required  herein,  Beneficiary  may, but shall not be  obligated  to,
procure such insurance and Grantor shall pay all amounts advanced by Beneficiary
therefor,  together with interest  thereon at the Default Interest Rate from and
after the date  advanced  by  Beneficiary  until  actually  repaid  by  Grantor,
promptly  upon demand by  Beneficiary.  Any amounts so advanced by  Beneficiary,
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  Debt.
Beneficiary  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  Beneficiary has caused the insurance to be placed with the insurer after
failure of Grantor to furnish such insurance. Grantor shall not obtain insurance
for the Trust Property in addition to that required by  Beneficiary  without the
prior written  consent of  Beneficiary,  which consent will not be  unreasonably
withheld  provided that (i)  Beneficiary  is a named insured on such  insurance,
(ii)  Beneficiary  receives  complete  copies of all  policies  evidencing  such
insurance,  and  (iii)  such  insurance  complies  with  all of  the  applicable
requirements set forth herein.

         1.5      Payment  of  Taxes.  Grantor  shall  pay or  cause to be paid,
except to the extent  Beneficiary  is to pay the same pursuant to Section 1.6(a)
of this Deed of Trust, all taxes and assessments  which are or may become a lien
on the Trust  Property or which are  assessed  against or imposed upon the Trust
Property.  If paid by Grantor,  Grantor shall furnish  Beneficiary 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,
Grantor  may,  in good  faith,  by  appropriate  proceedings  and upon notice to
Beneficiary,  contest the validity,  applicability or amount of any asserted tax
or assessment so long as (a) such contest is diligently pursued, (b) Beneficiary
determines, in its reasonable subjective opinion, that such contest suspends the
obligation to pay the tax and that nonpayment of such tax or assessment will not
result in the sale, loss,  forfeiture or diminution of



                                       15
<PAGE>

the Trust Property or any part thereof or any interest of  Beneficiary  therein,
and  (c)  prior  to the  earlier  of the  commencement  of such  contest  or the
delinquency  date of the asserted  tax or  assessment,  Grantor  deposits in the
Impound Account (as hereinafter  defined) an amount determined by Beneficiary to
be  reasonably  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  Grantor  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 Trust  Property  may be sold,
lost or forfeited.

         1.6      Tax and Insurance Impound Account. (a) Grantor shall establish
and  maintain  at all  times  while  this Deed of Trust  continues  in effect an
impound  account (the "Impound  Account") with  Beneficiary  for payment of real
estate  taxes  and  assessments  and  insurance  on the  Trust  Property  and as
additional  security for the Debt.  Simultaneously  with the  execution  hereof,
Grantor shall deposit in the Impound Account an amount determined by Beneficiary
to be  necessary  to ensure that there will be on deposit  with  Beneficiary  an
amount which,  when added to the monthly  payments  subsequently  required to be
deposited  with   Beneficiary   hereunder  on  account  of  real  estate  taxes,
assessments and insurance  premiums,  will result in there being on deposit with
Beneficiary  in the  Impound  Account an amount  sufficient  to pay the next due
installment of real estate taxes and  assessments on the Trust Property at least
one (1) month prior to the  earlier of (a) the due date  thereof or (b) any such
date by which Grantor or Beneficiary is required by law to pay same and the next
due annual  insurance  premiums with respect to the Trust  Property at least one
(1) month prior to the due date thereof. Commencing on the first monthly payment
date under the Note and continuing thereafter on each monthly payment date under
the Note, Grantor shall pay to Beneficiary, concurrently with and in addition to
the  monthly  payment  due under  the Note and until the Debt is fully  paid and
performed,  deposits in an amount equal to  one-twelfth  (1/12) of the amount of
the annual  real  estate  taxes and  assessments  that will next  become due and
payable  on the Trust  Property,  plus  one-twelfth  (1/12) of the amount of the
annual  premiums  that will next  become due and payable on  insurance  policies
which  Grantor  is  required  to  maintain  hereunder,  each  as  estimated  and
determined by Beneficiary.  So long as no Event of Default has occurred,  and no
event has occurred or failed to occur which with the passage of time, the giving
of notice, or both would constitute an Event of Default (a "Default"),  all sums
in the Impound  Account shall be held by Beneficiary  in the Impound  Account to
pay said  taxes,  assessments  and  insurance  premiums  before the same  become
delinquent.   Grantor  shall  be   responsible   for  ensuring  the  receipt  by
Beneficiary,  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 Event of Default has occurred, Beneficiary 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,  Beneficiary  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



                                       16
<PAGE>

thereof. No interest on funds contained in the Impound Account, if any, shall be
paid by Beneficiary to Grantor.

                  (b)      Notwithstanding  anything herein or in any other Loan
Document to the contrary,  at any time prior to the Maturity Date (as defined in
the  Note),  unless and until an Event of Default  shall  have  occurred  and be
continuing,  Grantor  shall not be  required  to make  deposits  to the  Impound
Account  as  required  by Section  1.6(a) of this Deed of Trust with  respect to
insurance  premiums  (the  "Insurance  Obligations")  provided  that each of the
following conditions is satisfied at all times:

                  (i)      Simultaneously  with the  execution  hereof,  Grantor
         shall deposit in the Impound Account the equivalent of three (3) months
         of insurance premiums; and

                  (ii)     Grantor  timely  delivers  satisfactory  evidence  of
         payment for and renewal of the insurance policy or policies as required
         hereunder.

                  (c)      If an Event of  Default  shall have  occurred  and be
continuing, including, without limitation, with respect to Grantor's obligations
under  Section 1.4 and Section  1.6(a) (as modified by Section  1.6(b))  hereof,
upon Beneficiary's request, Grantor shall promptly commence making full payments
to the Impound Account pursuant to Section 1.6(a) above.

                  (d)      Notwithstanding  anything  to  the  contrary  herein,
Beneficiary shall not require Grantor to commence making payments to the Impound
Account if a default  occurs with regard to the payment and  performance  of the
Insurance  Obligations  so long as such default  shall not have  resulted in the
expiration,  termination  or lapse of  insurance as required  under  Section 1.4
hereof and so long as Grantor  shall have cured such  default by the  earlier of
(1) seven (7) days after written notice  thereof from  Beneficiary to Grantor or
(2) prior to the date on which nonpayment of premiums would result in the lapse,
expiration or termination of insurance as required by Section 1.4 hereof.

         1.7      Intentionally Deleted.

         1.8      Replacement Reserve.

                  (a)      As  additional  security for the Debt,  Grantor shall
establish and maintain at all times while this Deed of Trust continues in effect
a repair and replacement  reserve (the  "Replacement  Reserve") with Beneficiary
for payment of costs and  expenses  incurred by Grantor in  connection  with the
performance of work related to the maintenance, replacement and/or repair of the
Trust  Property,  including  without  limitation,  work to the roofs,  chimneys,
gutters,  downspouts,  paving,  curbs,  ramps,  driveways,  balconies,  porches,
patios,  exterior  walls,  exterior doors and doorways,  windows,  elevators and
mechanical and HVAC equipment and such other work as Grantor deems  necessary or
appropriate  (collectively,  the  "Repairs").  Commencing  on the first  monthly
Payment Date under the Note and  continuing  thereafter on each monthly  Payment
Date under the Note, Grantor shall pay to Beneficiary,  concurrently with and in
addition to the monthly  payments due under the Note and until the Debt is fully
paid and performed,  a deposit to the Replacement  Reserve in an amount equal to
$4,416.67  per  month.  So



                                       17
<PAGE>

long as no Event of Default  has  occurred  and is  continuing,  all sums in the
Replacement  Reserve shall be held by Beneficiary in the Replacement  Reserve to
pay the  costs  and  expense  of  Repairs.  So long as no Event of  Default  has
occurred and is continuing, Beneficiary shall, to the extent funds are available
for such purpose in the Replacement Reserve, disburse to Grantor the amount paid
or  incurred  by  Grantor  in  performing  such  Repairs  within  ten (10)  days
following:  (a) the receipt by Beneficiary of a written request from Grantor for
disbursement  from the Replacement  Reserve and a certification  by Grantor that
the  applicable  item  of  Repair  has  been  completed;  (b)  the  delivery  to
Beneficiary of invoices, receipts, cancelled checks or other evidence reasonably
satisfactory to Beneficiary,  verifying the cost of performing the Repairs;  (c)
for disbursement requests with individual items costing in excess of $50,000.00,
the delivery to  Beneficiary of affidavits,  lien waivers,  cancelled  checks or
other  evidence   reasonably   satisfactory  to  Beneficiary  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
material or labor to the Trust Property have been paid all amounts due for labor
and materials  furnished to the Trust Property;  (d) for  disbursement  requests
with individual  items costing in excess of $50,000.00,  delivery to Beneficiary
of a certification  from a third party acceptable to Beneficiary  describing the
completed  Repairs and verifying the  completion of the Repairs and the value of
the completed Repairs;  and (e) for disbursement  requests with individual items
costing in excess of $50,000.00, delivery to Beneficiary of a new certificate of
occupancy or local  equivalent  for the portion of the  Improvements  covered by
such  Repairs,  if said new  certificate  of  occupancy is required by law, or a
certification  by Grantor  that no new  certificate  of  occupancy  is required.
Beneficiary shall not be required to make advances from the Replacement  Reserve
more frequently  than once in any ninety (90) day period.  In making any payment
from the  Replacement  Reserve,  Beneficiary  shall be  entitled to rely on such
request  from  Grantor  without  any  inquiry  into the  accuracy,  validity  or
contestability of any such amount.  Beneficiary may, at Grantor's expense,  make
or cause to be made  during the term of this Deed of Trust an annual  inspection
of the Trust Property to determine the need, as determined by Beneficiary in its
reasonable  judgment,  for further Repairs of the Trust  Property.  In the event
that such  inspection  reveals  that further  Repairs of the Trust  Property are
required,  Beneficiary  shall provide Grantor with a written  description of the
required  Repairs  and Grantor  shall  respond  within  thirty (30) days of such
request,  and,  thereafter,  Grantor shall make such Repairs, as may be mutually
agreed  upon by Grantor  and  Beneficiary  and within such time period as may be
mutually agreed upon. Funds contained in the Replacement Reserve shall be placed
in an  interest-bearing  account upon receipt and interest  thereon  credited to
Grantor as provided in Section 4.31 hereof.

                  (b)      As   additional   security   for  the   payment   and
performance by Grantor of all duties, responsibilities and obligations under the
Note  and  the  other  Loan  Documents,   Grantor  hereby   unconditionally  and
irrevocably assigns, conveys, pledges, mortgages, transfers, delivers, deposits,
sets over and confirms  unto  Beneficiary,  and hereby  grants to  Beneficiary a
security  interest in  Grantor's  right,  title and interest in, (i) the Impound
Account,  the Replacement  Reserve,  the Repair and Remediation  Reserve and any
other reserve or escrow account  established  pursuant to the terms hereof or of
any other Loan Document (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



                                       18
<PAGE>

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.
Grantor  hereby  authorizes  and consents to the account into which the Reserves
have been deposited being held in  Beneficiary's  name or the name of any entity
servicing  the Note for  Beneficiary  and hereby  acknowledges  and agrees  that
Beneficiary,  or at Beneficiary's  election,  such servicing  agent,  shall have
exclusive  control  over said  account.  Notice of the  assignment  and security
interest  granted to  Beneficiary  herein may be delivered by Beneficiary at any
time to the financial  institution  wherein the Reserves have been  established,
and  Beneficiary,  or  such  servicing  entity,  shall  have  possession  of all
passbooks or other  evidences of such accounts.  Grantor hereby assumes all risk
of loss with  respect to amounts on  deposit  in the  Reserves,  unless  finally
determined by a court of competent jurisdiction to have been caused by the gross
negligence  or willful  misconduct of  Beneficiary.  Grantor  hereby  knowingly,
voluntarily  and  intentionally  stipulates,  acknowledges  and agrees  that the
advancement  of the funds from the  Reserves as set forth herein is at Grantor's
direction  and is not the  exercise  by  Beneficiary  of any right of set-off or
other remedy upon a Default or an Event of Default. If an Event of Default shall
occur  hereunder  or  under  any  other  of the  Loan  Documents  and  shall  be
continuing, Beneficiary may, without notice or demand on Grantor, 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,
reasonable  attorneys'  fees,  costs  and  expenses)  to the  Debt or any  other
obligations  of  Grantor  under  the  other  Loan  Documents  in such  manner as
Beneficiary  shall deem appropriate in its sole discretion,  and the excess,  if
any, shall be paid to Grantor, (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 or Event of
Default.

                  (c)      The Reserves shall not, unless  otherwise  explicitly
required by applicable law, be or be deemed to be escrow or trust funds, but, at
Beneficiary's  option and in Beneficiary's  discretion,  may either be held in a
separate  account or be  commingled  by  Beneficiary  with the general  funds of
Beneficiary.  The  Reserves are solely for the  protection  of  Beneficiary  and
entail no  responsibility  on  Beneficiary's  part  beyond  the  payment  of the
respective items for which they are held following receipt of bills, invoices or
statements  therefor in accordance with the terms hereof and beyond the allowing
of due credit for the sums actually  received.  Upon  assignment of this Deed of
Trust by  Beneficiary  and assumption by assignee of  Beneficiary's  obligations
hereunder,  any funds in the  Reserves  shall be turned over to the assignee and
any  responsibility  of  Beneficiary,  as assignor,  with respect  thereto shall
terminate.  If the funds in the  applicable  Reserve  shall exceed the amount of
payments  actually  applied by Beneficiary  for the purposes and items for which
the  applicable  Reserve is held,  such excess may be credited by Beneficiary on
subsequent  payments  to be made  hereunder  or, at the  option of  Beneficiary,
refunded to Grantor.  If,  however,  the  applicable  Reserve  shall not contain
sufficient  funds to pay the sums  required  by the dates on which such sums are
required to be on deposit in such  account,  Grantor  shall,  within thirty (30)
days after receipt of written notice thereof,  deposit with Beneficiary the full
amount of any such deficiency. If Grantor shall fail to deposit with Beneficiary
the full amount of such deficiency as provided above, Beneficiary shall have the
option,  but not the  obligation,  to make  such  deposit,  and all  amounts  so
deposited by



                                       19
<PAGE>

Beneficiary,  together with interest  thereon at the Default  Interest Rate from
the date so deposited by Beneficiary  until  actually paid by Grantor,  shall be
immediately paid by Grantor 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 Debt. If
there is an Event of Default  under this Deed of Trust that shall have  occurred
and be continuing,  Beneficiary may, but shall not be obligated to, apply at any
time the balance then  remaining in any or all of the Reserves  against the Debt
in whatever order Beneficiary shall subjectively  determine. No such application
of any or all of the Reserves shall be deemed to cure any Event of Default. Upon
full payment of the Debt in accordance with its terms or at such earlier time as
Beneficiary  may  elect,  the  balance  of any or all of the  Reserves  then  in
Beneficiary's  possession shall be paid over to Grantor and no other party shall
have any right or claim thereto.

         1.9      Casualty  and  Condemnation.  Grantor  shall give  Beneficiary
prompt  written  notice of the  occurrence  of any  casualty  affecting,  or the
institution of any  proceedings for eminent domain or for the  condemnation  of,
the Trust Property or any portion  thereof.  Subject to the following  sentence,
all insurance proceeds on the Trust Property,  and all causes of action, claims,
compensation,  awards and recoveries for any damage,  condemnation  or taking of
all or any part of the Trust  Property or for any damage or injury to it for any
loss or diminution in value of the Trust Property, shall be paid to Beneficiary.
Beneficiary  may  participate in any suits or  proceedings  relating to any such
proceeds,  causes of action,  claims,  compensation,  awards or recoveries,  and
Beneficiary  is hereby  authorized,  in its own name or in  Grantor's  name,  to
adjust  any loss  covered by  insurance  or any  condemnation  claim or cause of
action,  and to settle or compromise  any claim or cause of action in connection
therewith,  and  Grantor  shall  from time to time  deliver to  Beneficiary  any
instruments required to permit such participation;  provided,  however, that, so
long as no Event of Default shall have occurred and be  continuing,  Beneficiary
shall not have the right to  participate  in the  adjustment  of any loss or the
receipt of any sums  hereunder  which is not in excess of the lesser of (i) five
percent  (5%) of the then  outstanding  principal  balance  of the Note and (ii)
$200,000,  and Grantor may receive such funds from any loss not in excess of the
foregoing directly to be used for repair or restoration of the Trust Property in
accordance with the terms hereof.  Beneficiary  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 less than forty  percent  (40%) of
the Improvements  located on the Premises have been taken or destroyed,  then if
and so long as:

                           (1)      no  Event of  Default  has  occurred  and is
         continuing hereunder or under any of the other Loan Documents, and

                           (2)      the Trust  Property  can,  in  Beneficiary's
         reasonable  judgment,  with diligent restoration or repair, be returned
         in all material  respects to a condition  substantially the same as the
         condition  thereof that existed prior to the casualty or partial taking
         causing the loss or damage  within the earlier to occur of (i) nine (9)
         months after the receipt of insurance  proceeds or condemnation  awards
         by either Grantor or Beneficiary, and (ii) sixty (60) days prior to the
         stated maturity date of the Note, and



                                       20
<PAGE>

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

                           (4)      there are sufficient sums available (through
         insurance proceeds or condemnation  awards and contributions by Grantor
         or otherwise,  the full amount of which shall, at Beneficiary's option,
         have been deposited with  Beneficiary)  for such  restoration or repair
         (including,  without limitation,  for any reasonable costs and expenses
         of  Beneficiary  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

                           (5)      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 Trust  Property  and debt  service on the Debt in full
         with  the  same  coverage  ratio   considered  by  Beneficiary  in  its
         determination to make the loan secured hereby, and

                           (6)      in the event that the insurance  proceeds or
         condemnation  awards  received as a result of such  casualty or partial
         taking  exceed  the  lesser  of (i)  five  percent  (5%)  of  the  then
         outstanding  principal  balance of the Note and (ii) $200,000,  Grantor
         shall  have  delivered  to  Beneficiary,  at  Grantor's  sole  cost and
         expense,   an  appraisal  report  in  form  and  substance   reasonably
         satisfactory to Beneficiary  appraising the value of the Trust Property
         as  proposed  to be  restored  or  repaired  to be not  less  than  the
         appraised value of the Trust Property  considered by Beneficiary in its
         determination to make the loan secured hereby, and

                           (7)      Grantor   so   elects  by   written   notice
         delivered to Beneficiary  within fifteen (15) days after  settlement of
         the aforesaid insurance or condemnation claim, then, Beneficiary shall,
         solely for the purposes of such restoration or repair,  advance so much
         of the  remainder of such sums as may be required for such  restoration
         or repair,  and any funds deposited by Grantor therefor,  to Grantor 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
         reasonable  prior approval by Beneficiary of plans and  specifications,
         contractors  and form of  construction  contracts and the furnishing to
         Beneficiary of permits,  bonds,  lien waivers,  invoices,  receipts and
         affidavits from contractors and  subcontractors,  in form and substance
         reasonably  satisfactory  to  Beneficiary in its  discretion,  with any
         remainder  being  applied  by  Beneficiary  for  payment of the Debt in
         whatever order Beneficiary directs in its absolute discretion.

                  (b)      In all other cases,  namely,  in the event that forty
percent  (40%) or more of the  Improvements  located on the  Premises  have been
taken or  destroyed  or  Grantor  does not elect to  restore or repair the Trust
Property   pursuant  to  clause  (a)  above  or  otherwise  fails  to  meet  the
requirements of clause (a) above, then, in any of such events, Beneficiary shall
elect, in Beneficiary's  absolute  discretion and without regard to the adequacy
of Beneficiary's security, to



                                       21
<PAGE>

do  either of the  following:  (1) apply  the  remainder  of such sums  received
pursuant  to  this  Section  to  the  payment  of the  Debt  in  whatever  order
Beneficiary   directs  in  its  absolute  discretion  (and,  if  required  under
applicable law so to do, to accelerate the maturity date of the Note and declare
any and all of the Debt to be immediately  due and payable),  with any remainder
being paid to Grantor, or (2) notwithstanding  that Grantor may have elected not
to restore or repair the Trust  Property  pursuant to the  provisions of Section
1.9(a)(7) above,  require Grantor to restore or repair the Trust Property 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 deposit by
Grantor with Beneficiary,  within thirty (30) days after demand therefor, of any
deficiency  reasonably  determined  by  Beneficiary  to be necessary in order to
assure the  availability  of  sufficient  funds to pay for such  restoration  or
repair,  including Beneficiary's costs and expenses to be incurred in connection
therewith,   the   reasonable   prior  approval  by  Beneficiary  of  plans  and
specifications,   contractors  and  form  of  construction   contracts  and  the
furnishing to Beneficiary of permits,  bonds, lien waivers,  invoices,  receipts
and  affidavits  from  contractors  and  subcontractors,  in form and  substance
reasonably  satisfactory  to  Beneficiary  in  its  discretion,  and  apply  the
remainder  of such sums toward  such  restoration  and repair,  with any balance
thereafter  remaining  being applied by  Beneficiary  for payment of the Debt in
whatever order Beneficiary directs in its absolute  discretion.  Notwithstanding
Section 1.9(b)(1) hereof,  Beneficiary shall not accelerate the maturity date of
the Note  pursuant to Section  1.9(b)(1) if the  Mortgaged  Property is released
from the lien of this Deed of Trust in connection  with a Defeasance (as defined
in the Note) in accordance with Section 1.5(d) of the Note.

Any reduction in the Debt resulting from  Beneficiary's  application of any sums
received  by it  hereunder  shall take  effect  only when  Beneficiary  actually
receives  such sums and elects to apply such sums to the Debt and, in any event,
the unpaid portion of the Debt shall remain in full force and effect and Grantor
shall not be  excused in the  payment  thereof.  Partial  payments  received  by
Beneficiary,  as described in the preceding sentence,  shall be applied first to
the final payment due under the Note and  thereafter to  installments  due under
the  Note in the  inverse  order  of  their  due  date.  If  Grantor  elects  or
Beneficiary  directs  Grantor to restore or repair the Trust  Property after the
occurrence  of a casualty  or partial  taking of the Trust  Property as provided
above, Grantor shall promptly and diligently, at Grantor'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 Trust Property as nearly as practicable to its value,  condition and
character  immediately  prior to such  casualty or partial  taking in accordance
with the foregoing provisions and Grantor shall pay to Beneficiary all costs and
expenses of Beneficiary  incurred in administering said rebuilding,  restoration
or repair,  provided that Beneficiary makes such proceeds or award available for
such  purpose.  Grantor  agrees to execute  and  deliver  from time to time such
further  instruments as may be requested by Beneficiary to confirm the foregoing
assignment to Beneficiary of any award, damage,  insurance proceeds,  payment or
other compensation.  Beneficiary is hereby irrevocably constituted and appointed
the attorney-in-fact of Grantor (which power of attorney shall be irrevocable so
long as any portion of the Debt is outstanding,  shall be deemed coupled with an
interest,  shall survive the voluntary or involuntary dissolution of Grantor and
shall not be  affected  by any  disability  or  incapacity  suffered  by Grantor
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



                                       22
<PAGE>

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 acquittances therefor.

         1.10     Construction Liens.  Grantor shall pay when due all claims and
demands of mechanics, materialmen, laborers and others for any work performed or
materials  delivered for the Premises or the  Improvements;  provided,  however,
that,  Grantor  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  Beneficiary  and provided that neither the Trust  Property nor any
interest  therein would be in any danger of sale, loss or forfeiture as a result
of such proceeding or contest. In the event Grantor shall contest any such claim
or demand,  Grantor  shall  promptly  notify  Beneficiary  of such  contest  and
thereafter shall, upon Beneficiary's  reasonable request, if an Event of Default
shall have occurred and is continuing,  promptly provide a bond, cash deposit or
other  security   sufficient  to  pay  such  claim  to  Beneficiary  to  protect
Beneficiary's  interest  and  security  should the contest be  unsuccessful.  If
Grantor shall fail to immediately discharge or provide security against any such
claim or demand as  aforesaid,  Beneficiary  may do so and any and all  expenses
incurred by Beneficiary,  together with interest thereon at the Default Interest
Rate from the date incurred by Beneficiary until actually paid by Grantor, shall
be  immediately  paid by  Grantor 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
Debt.

         1.11     Rents.  As additional and collateral  security for the payment
of the Debt and  cumulative of any and all rights and remedies  herein  provided
for, Grantor hereby  absolutely and presently  assigns to Beneficiary  Grantor's
right,  title and interest (if any) in all  existing and future  Rents.  Grantor
hereby grants to Beneficiary the sole,  exclusive and immediate  right,  without
taking  possession  of the  Trust  Property,  to  demand,  collect  (by  suit or
otherwise),  receive and give valid and  sufficient  receipts for any and all of
said Rents, for which purpose Grantor does hereby  irrevocably make,  constitute
and  appoint  Beneficiary  its  attorney-in-fact  with  full  power  to  appoint
substitutes  or a trustee to  accomplish  such purpose  (which power of attorney
shall be irrevocable so long as any portion of the Debt is outstanding, shall be
deemed  to  be  coupled  with  an  interest,  shall  survive  the  voluntary  or
involuntary  dissolution  of Grantor and shall not be affected by any disability
or incapacity  suffered by Grantor  subsequent to the date hereof).  Beneficiary
shall be  without  liability  for any loss  which  may arise  from a failure  or
inability  to collect  Rents,  proceeds or other  payments.  However,  until the
occurrence  and  continuance  of an Event of Default under this Deed of Trust or
under any other of the Loan Documents,  Grantor shall have a license to collect,
receive,  use and enjoy the Rents when due and prepayments  thereof for not more
than one (1)  month  prior  to the due date  thereof.  Upon the  occurrence  and
continuance  of an Event  of  Default,  Grantor's  license  shall  automatically
terminate  without notice to Grantor and  Beneficiary  may  thereafter,  without
taking possession of the Trust Property, collect the Rents itself or by an agent
or receiver.  From and after the  termination of such license,  Grantor shall be
the agent of  Beneficiary  in collection  of the Rents,  and all of the Rents so
collected  by  Grantor  shall  be held in  trust  by  Grantor  for the  sole and
exclusive benefit of Beneficiary,  and Grantor shall,  within three (3) business
days after receipt of any Rents,  pay the same to  Beneficiary  to be applied by
Beneficiary  as hereinafter  set forth.  Neither the demand for or collection of
Rents by  Beneficiary  shall  constitute  any  assumption by  Beneficiary of any
obligations under any agreement  relating  thereto.  Beneficiary is obligated to
account  only  for  such  Rents  as  are  actually   collected  or  received  by
Beneficiary.  Grantor



                                       23
<PAGE>

irrevocably  agrees and consents that the respective  payors of the Rents shall,
upon demand and notice from  Beneficiary of the occurrence and continuance of an
Event of Default,  pay said Rents to Beneficiary  without liability to determine
the actual  existence of any Event of Default  claimed by  Beneficiary.  Grantor
hereby waives any right, claim or demand which Grantor may now or hereafter have
against any such payor by reason of such  payment of Rents to  Beneficiary,  and
any such payment shall discharge such payor's obligation to make such payment to
Grantor.  All Rents  collected or received by Beneficiary may be applied against
all expenses of collection, including, without limitation, reasonable attorneys'
fees,  against  costs of  operation  and  management  of the Trust  Property and
against  the  Debt,  in  whatever  order or  priority  as to any of the items so
mentioned as Beneficiary  directs in its sole subjective  discretion and without
regard to the adequacy of its security.  Neither the exercise by  Beneficiary of
any rights under this Section nor the application of any Rents to the Debt shall
cure or be deemed a waiver  of any Event of  Default.  The  assignment  of Rents
hereinabove granted shall continue in full force and effect during any period of
foreclosure  or  redemption  with  respect to the Trust  Property.  Grantor  has
executed  an  Assignment  of Leases and Rents dated of even date  herewith  (the
"Assignment")  in favor of  Beneficiary  covering  all of the  right,  title and
interest of Grantor, as landlord,  lessor or licensor, in and to any Leases. All
rights and remedies  granted to  Beneficiary  under the  Assignment  shall be in
addition to and  cumulative  of all rights and remedies  granted to  Beneficiary
hereunder.

         1.12     Leases.

                  (a)      Prior  to  execution  of any  Leases  of space in the
Improvements  after the date hereof,  Grantor shall submit to  Beneficiary,  for
Beneficiary's prior approval, which approval shall not be unreasonably withheld,
a copy  of  the  form  Lease  Grantor  plans  to use  in  leasing  space  in the
Improvements  or at the  Trust  Property,  but only to the  extent  such form is
materially adversely modified from the form submitted to Beneficiary at or prior
to the date hereof.  No further  submittals  of the form Lease shall be required
unless the form is  materially  adversely  modified  from the form most recently
approved by Beneficiary.  All such Leases of space in the Improvements or at the
Trust Property shall be on terms consistent with the terms for similar leases in
the market area of the Premises, 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 Premises,  and shall be for a term of
not less than three (3) months or greater  than one (1) year.  Such Leases shall
also  provide  for  security  deposits in  reasonable  amounts  consistent  with
prevailing  market  conditions.  Grantor  shall also submit to  Beneficiary  for
Beneficiary's  approval,  which approval shall not be unreasonably withheld, any
proposed  material adverse  modification of the form Lease of the  Improvements.
Grantor  shall not  execute  any Lease for all or a  substantial  portion of the
Trust 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 with respect to the Trust  Property,  now or hereafter  existing,  on the
part of the landlord,  lessor or licensor  thereunder to be kept and  performed.
Grantor shall furnish to Beneficiary, within thirty (30) days after a request by
Beneficiary to do so, but in any event by January 1 of each year, a current Rent
Roll,  certified by Grantor as being true and correct,  containing  the names of
all Tenants with respect to the Trust  Property,  the terms of their  respective
Leases,  the spaces



                                       24
<PAGE>

occupied  and the  rentals  or fees  payable  thereunder  and the amount of each
Tenant's security deposit.

                  (b)      Grantor shall not do or suffer to be done any act, or
omit to take any action, that might result in a default by the landlord,  lessor
or  licensor  under any such Lease or allow the Tenant  thereunder  to  withhold
payment of rent or cancel or  terminate  same and shall not  further  assign any
such Lease or any such  Rents.  Grantor,  at no cost or expense to  Beneficiary,
shall enforce, short of termination,  the performance and observance of each and
every  condition  and  covenant  of each of the  parties  under such  Leases and
Grantor shall not anticipate,  discount, release, waive, compromise or otherwise
discharge any rent payable under any of the Leases.  Grantor shall not,  without
the prior written consent of Beneficiary, 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 Trust  Property is located.  Grantor 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.

                  (c)      Upon the  occurrence  and  continuance of an Event of
Default under this Deed of Trust,  whether  before or after the whole  principal
sum secured hereby is declared to be immediately  due or whether before or after
the institution of legal proceedings to foreclose this Deed of Trust, forthwith,
upon  demand  of  Beneficiary,  Grantor  shall  surrender  to  Beneficiary,  and
Beneficiary  shall be entitled to take actual  possession of, the Trust Property
or any part thereof  personally,  or by its agent or  attorneys.  In such event,
Beneficiary shall have, and Grantor hereby gives and grants to Beneficiary,  the
right,  power and  authority  to make and enter into Leases with  respect to the
Trust  Property  or  portions  thereof  for such  rents and for such  periods of
occupancy and upon  conditions and provisions as Beneficiary  may deem desirable
in its sole discretion,  and Grantor expressly  acknowledges and agrees that the
term of any such Lease may extend beyond the date of any foreclosure sale of the
Trust Property, it being the intention of Grantor that in such event Beneficiary
shall be deemed  to be and  shall be the  attorney-in-fact  of  Grantor  for the
purpose of making and  entering  into  Leases of parts or  portions of the Trust
Property  for the rents and upon the terms,  conditions  and  provisions  deemed
desirable to Beneficiary in its sole  discretion and with like effect as if such
Leases had been made by Grantor as the owner in fee simple of the Trust Property
free and clear of any  conditions  or  limitations  established  by this Deed of
Trust.  The  power  and  authority  hereby  given  and  granted  by  Grantor  to
Beneficiary  shall be  deemed  to be  coupled  with an  interest,  shall  not be
revocable  by Grantor so long as any portion of the Debt is  outstanding,  shall
survive the  voluntary or  involuntary  dissolution  of Grantor and shall not be
affected by any disability or incapacity  suffered by Grantor  subsequent to the
date hereof. In connection with any action taken by Beneficiary pursuant to this
Section,  Beneficiary  shall not be liable  for any loss  sustained  by  Grantor
resulting from any failure to let the Trust  Property,  or any part thereof,  or
from any other act or omission of  Beneficiary  in managing the Trust  Property,
nor shall Beneficiary be obligated to perform or discharge any obligation,  duty
or liability  under any Lease covering the Trust Property or any part thereof or
under or by reason of this  instrument  or the  exercise  of rights or  remedies
hereunder.  Grantor shall, and does hereby,  indemnify Beneficiary for, and hold
Beneficiary harmless from, any and all claims, actions, demands,



                                       25
<PAGE>

liabilities,  loss or damage which may or might be incurred by Beneficiary under
any such  Lease or under  this  Deed of Trust or by the  exercise  of  rights or
remedies  hereunder and from any and all claims and demands whatsoever which may
be  asserted  against  Beneficiary  by  reason  of any  alleged  obligations  or
undertakings on its part to perform or discharge any of the terms,  covenants or
agreements  contained in any such Lease other than those finally determined by a
court  of  competent  jurisdiction  to  have  resulted  solely  from  the  gross
negligence or willful  misconduct of Beneficiary.  Should  Beneficiary incur any
such  liability,  the amount  thereof,  including,  without  limitation,  costs,
expenses and reasonable  attorneys' fees,  together with interest thereon at the
Default Interest Rate from the date incurred by Beneficiary  until actually paid
by Grantor,  shall be  immediately  due and payable to Beneficiary by Grantor on
demand  and  shall be  secured  hereby  and by all of the other  Loan  Documents
securing all or any part of the Debt.  Nothing in this  Section  shall impose on
Beneficiary  any duty,  obligation  or  responsibility  for the  control,  care,
management  or repair of the Trust  Property,  or for the carrying out of any of
the terms and conditions of the Lease,  nor shall it operate to make Beneficiary
responsible  or liable  for any waste  committed  on the Trust  Property  by the
Tenants or by any other parties or for any  dangerous or defective  condition of
the Trust Property,  or for any negligence in the management,  upkeep, repair or
control of the Trust Property.  Grantor hereby assents to, ratifies and confirms
any and all actions of  Beneficiary  with  respect to the Trust  Property  taken
under this Section.

         1.13     Alienation and Further Encumbrances.

                  (a)      Grantor acknowledges that Beneficiary has relied upon
the principals of Grantor and their experience in owning and operating the Trust
Property and  properties  similar to the Trust  Property in connection  with the
closing of the loan evidenced by the Note.  Accordingly,  except as specifically
allowed hereinbelow in this Section and notwithstanding anything to the contrary
contained  in Section  4.6 hereof,  in the event that the Trust  Property or any
part  thereof  or  interest  therein  shall  be  sold,  conveyed,  disposed  of,
alienated,  hypothecated, leased (except to Tenants of space in the Improvements
in  accordance  with the  provisions  of  Section  1.12  hereof  and  except for
condemnation),  assigned,  pledged,  mortgaged,  further encumbered or otherwise
transferred  or Grantor shall be divested of its title to the Trust  Property or
any  interest   therein,   in  any  manner  or  way,   whether   voluntarily  or
involuntarily,  without the prior  written  consent of  Beneficiary  being first
obtained,  which consent may be withheld in Beneficiary's sole discretion,  then
the same shall  constitute  an Event of Default and  Beneficiary  shall have the
right,  at its option,  to declare any or all of the Debt,  irrespective  of the
maturity  date  specified  in the  Note,  immediately  due  and  payable  and to
otherwise exercise any of its other rights and remedies contained in Article III
hereof. For the purposes of this Section: (i) in the event either Grantor or any
of its  general  partners  or  members  is a  corporation  or  trust,  the sale,
conveyance,  transfer  or  disposition  of  more  than  50%  of the  issued  and
outstanding  capital stock of Grantor or any of its general  partners or members
or of the  beneficial  interest of such trust (or the  issuance of new shares of
capital stock in Grantor or any of its general  partners or managing  members so
that immediately  after such issuance (in one or a series of  transactions)  the
total capital stock then issued and  outstanding  is more than 150% of the total
immediately  prior to such  issuance)  shall be  deemed to be a  transfer  of an
interest  in the Trust  Property;  and (ii) in the event  Grantor or any general
partner or  managing  member of Grantor is a limited or general  partnership,  a
joint venture or a limited liability  company,  a change of more than 50% in



                                       26
<PAGE>

the  ownership  interests  in any  general  partner,  any joint  venturer or any
managing member,  either voluntarily,  involuntarily or otherwise,  or the sale,
conveyance, transfer, disposition,  alienation,  hypothecation or encumbering of
all or any portion of the interest of any such general  partner,  joint venturer
or  managing  member in  Grantor or such  general  partner  or  managing  member
(whether in the form of a beneficial or partnership interest or in the form of a
power of direction,  control or management, or otherwise), shall be deemed to be
a transfer of an interest in the Trust Property.  Notwithstanding the foregoing,
however, (i) limited partnership  interests in Grantor or in any general partner
or member of  Grantor  shall be  freely  transferable  without  the  consent  of
Beneficiary, (ii) any involuntary transfer caused by the death of Grantor or any
general partner,  shareholder,  joint venturer,  member or beneficial owner of a
trust  shall  not be an Event of  Default  under  this  Deed of Trust so long as
Grantor is reconstituted, if required, following such death and so long as those
persons  primarily  responsible  for the  management  of the Trust  Property and
Grantor remain unchanged as a result of such death or any replacement management
is approved by Beneficiary,  (iii) shares in the REIT may be offered and sold to
investors  in an  offering  of such shares  which has been  registered  with the
Securities and Exchange Commission, or is exempt from such registration, without
regard to the limits  referred  to above,  and (iv)  gifts for  estate  planning
purposes of any individual's interests in Grantor or in any of Grantor's general
partners,  managing  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 an Event of
Default  under  this  Deed of  Trust so long as  Grantor  is  reconstituted,  if
required, following such gift and so long as those persons primarily responsible
for the management of the Trust Property and Grantor remain unchanged  following
such gift or any replacement management is approved by Beneficiary.

                  (b)      Notwithstanding  the  foregoing  provisions  of  this
Section,  Beneficiary shall consent to an unlimited number of sales, conveyances
or  transfers of the Trust  Property in its  entirety,  together  with all Other
Mortgaged  Properties (as defined in Section 4.34 hereof)  (hereinafter,  each a
"Sale") to any person or entity  provided that each of the  following  terms and
conditions are satisfied as to each Sale:

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

                           (2)      Except  in  the  case  of a  Sale  permitted
         pursuant to subparagraph (c) below,  Grantor, or its successor pursuant
         to the  proposed  or any prior  Sale  under  the  terms and  conditions
         hereof,   gives  Beneficiary  written  notice  of  the  terms  of  such
         prospective Sale not less than sixty (60) days before the date on which
         such Sale is  scheduled  to close and,  concurrently  therewith,  gives
         Beneficiary all such information  concerning the proposed transferee of
         the Trust Property (hereinafter,  "Buyer") as Beneficiary would require
         in evaluating an initial extension of credit to a borrower under a loan
         comparable  to the  Loan  and  pays  to  Beneficiary  a  non-refundable
         application  fee in the  amount of $5,000.  Beneficiary  shall have the
         right to approve or  disapprove  the  proposed  Buyer.  In  determining
         whether  to  give or  withhold  its  approval  of the  proposed  Buyer,
         Beneficiary  shall consider the Buyer's  experience and track record in
         owning and  operating  facilities  similar to the Trust  Property,  the
         Buyer's financial  strength,  the Buyer's general business standing and
         the Buyer's relationships and experience with



                                       27
<PAGE>

         contractors,  vendors,  tenants,  lenders and other business  entities;
         provided,  however, that,  notwithstanding  Beneficiary's  agreement to
         consider  the  foregoing  factors  in  determining  whether  to give or
         withhold such approval,  such approval shall be given or withheld based
         on what Beneficiary reasonably determines to be commercially reasonable
         in Beneficiary's sole discretion and, if given, may be given subject to
         such reasonable conditions as Beneficiary may deem appropriate;

                           (3)      Except  in  the  case  of a  Sale  permitted
         pursuant to subparagraph (c) below,  Grantor, or its successor pursuant
         to  a  prior  Sale  under  the  terms  and  conditions   hereof,   pays
         Beneficiary,   concurrently   with  the   closing  of  such   Sale,   a
         non-refundable  assumption fee in an amount equal to all  out-of-pocket
         costs  and  expenses,   including,   without   limitation,   reasonable
         attorneys'  fees,  incurred by Beneficiary in connection with the Sale,
         plus an amount  equal to one-half  of one  percent  (0.50%) of the then
         outstanding  principal  balance of the Note.  Notwithstanding  anything
         contained herein or in any of the other Loan Documents to the contrary,
         if the  aggregate  principal  balance  of the Note,  together  with the
         Contemporaneous Notes, at the time of such sale exceeds $75,000,000.00,
         the  assumption  fee shall be an  amount  equal to one  quarter  of one
         percent (0.25%);

                           (4)      The Buyer assumes and agrees to pay the Debt
         (or ratifies such obligation) subject to the provisions of Section 4.27
         hereof and, prior to or concurrently with the closing of such Sale, the
         Buyer  executes,  without  any cost or  expense  to  Beneficiary,  such
         assumption (or ratification, as applicable) documents and agreements as
         Beneficiary  shall  reasonably  require to evidence and effectuate said
         assumption  and  delivers  such  legal  opinions  as  Beneficiary   may
         reasonably require;

                           (5)      The  current  Indemnitor  or  its  successor
         ratifies its obligations under its guaranty or indemnity agreement or a
         party  associated  with the Buyer  approved by  Beneficiary in its sole
         discretion  assumes the obligations of the current Indemnitor under its
         guaranty or  indemnity  agreement  and such party  associated  with the
         Buyer  executes,  without  any cost or  expense to  Beneficiary,  a new
         guaranty  or  indemnity  agreement  in form  and  substance  reasonably
         satisfactory  to  Beneficiary  and  delivers  such  legal  opinions  as
         Beneficiary may reasonably require;

                           (6)      Upon   request   if   reasonably   required,
         Grantor,  or its  successor  pursuant to the proposed or any prior Sale
         under the terms and conditions hereof,  and the Buyer execute,  without
         any  cost or  expense  to  Beneficiary,  new  financing  statements  or
         financing statement  amendments and any additional documents reasonably
         requested by Beneficiary;



                                       28
<PAGE>

                           (7)      Upon   request   if   reasonably   required,
         Grantor,  or its  successor  pursuant to the proposed or any prior Sale
         under the terms and conditions hereof, delivers to Beneficiary, without
         any cost or expense to Beneficiary,  such endorsements to Beneficiary's
         title  insurance  policy,   hazard  insurance  policy  endorsements  or
         certificates as Beneficiary  may deem reasonably  necessary at the time
         of the  Sale,  all in form and  substance  reasonably  satisfactory  to
         Beneficiary,   including,   without   limitation,   an  endorsement  or
         endorsements to Beneficiary'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  subparagraph  (4) of this
         Section,  with no  additional  exceptions  added to such policy  except
         those approved by Beneficiary in its discretion,  and insuring that fee
         simple title to the Real Property is vested in the Buyer;

                           (8)      Grantor,  or its  successor  pursuant to the
         proposed  or any prior  Sale  under the  terms and  conditions  hereof,
         executes  and delivers to  Beneficiary,  without any cost or expense to
         Beneficiary,  a  release  of  Beneficiary,  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  reasonably  satisfactory to Beneficiary and shall be binding
         upon the Buyer;

                           (9)      Subject to the  provisions  of Section  4.27
         hereof and the  provisions of  subparagraph  (c) of this Section,  such
         Sale  is not  construed  so as to  relieve  Grantor,  or its  successor
         pursuant  to the  proposed  or any  prior  Sale  under  the  terms  and
         conditions  hereof, 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,  whether or not same is  discovered  prior or  subsequent  to the
         closing of such Sale,  and Grantor,  or its  successor  pursuant to the
         proposed  or any prior  Sale  under the  terms and  conditions  hereof,
         executes,  without any cost or expense to  Beneficiary,  such documents
         and agreements as Beneficiary shall reasonably  require to evidence and
         effectuate the ratification of said personal  liability.  Grantor shall
         be released from and relieved of any personal  liability under the Note
         or any of the other Loan Documents for any acts or events  occurring or
         obligations arising after the closing of such Sale which are not caused
         by or  arising  out of any  acts or  events  occurring  or  obligations
         arising prior to or simultaneously with the closing of such Sale;

                           (10)     Subject to the  provisions  of  subparagraph
         (c) below,  such Sale is not  construed  so as to relieve  any  current
         Indemnitor  or its successor of its  obligations  under any guaranty or
         indemnity  agreement  for any acts or events  occurring or  obligations
         arising prior to or  simultaneously  with the closing of such Sale, and
         each such current Indemnitor  executes,  without any cost or expense to
         Beneficiary,   such  documents  and  agreements  as  Beneficiary  shall
         reasonably  require to evidence and effectuate the ratification of each
         such guaranty and  indemnity  agreement.  Each such current  Indemnitor
         shall be released from and relieved of any of its obligations under any
         guaranty or indemnity  agreement  executed in connection  with the loan
         secured hereby for any acts or events occurring or obligations  arising
         after the  closing of such Sale which



                                       29
<PAGE>

         are not caused by or  arising  out of any acts or events  occurring  or
         obligations arising prior to or simultaneously with the closing of such
         Sale;

                           (11)     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
         of the  Buyer.  The Buyer and such  constituent  partners,  members  or
         shareholders of Buyer (as the case may be), as Beneficiary may require,
         shall be  single-purpose,  single-asset  "bankruptcy  remote" entities,
         whose formation  documents shall be approved by counsel to Beneficiary.
         An  individual  recommended  by the Buyer and  approved by  Beneficiary
         shall serve as an Independent  Director (as defined in Section  1.33(z)
         of this Deed of Trust) of the Buyer (if the Buyer is a corporation)  or
         the Buyer's corporate  general partner or an independent  member or, in
         Beneficiary'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;

                           (12)     The Buyer,  if required by Beneficiary  and,
         in the case of  clauses  (i) and (ii)  herein  only if the  outstanding
         principal balance of the Loan is in excess of $7,500,000, shall furnish
         an opinion of counsel  satisfactory  to Beneficiary and its counsel (i)
         that the Buyer's formation  documents provide for the matters described
         in subparagraph  (11) of this Section 1.13(b),  (ii) that the assets of
         the Buyer will not be consolidated  with the assets of any other entity
         (including  the  Buyer's  general  partner  or  members,  if  any),  as
         applicable,  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  members,   (iii)  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, (iv) that
         the Buyer and any entity which is a  controlling  stockholder,  general
         partner  or  member of Buyer,  have  been  duly  organized,  and are in
         existence  and  good  standing,  and (v)  with  respect  to such  other
         matters, as Beneficiary may request; and

                           (13)     If required  under the  operative  documents
         with  respect  to  a  Secondary  Market   Transaction  (as  hereinafter
         defined),  Beneficiary shall have received evidence in writing from the
         Rating Agency to the effect that the proposed  transfer 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  Beneficiary's  good faith
         judgment,  such transfer  shall not have an adverse effect on the level
         of rating obtainable in connection with the loan secured hereby.

                  (c)      Notwithstanding  anything  contained herein or in any
of the other Loan Documents to the contrary,  Grantor shall have a one-time free
right to transfer or Sale (including,



                                       30
<PAGE>

without  limitation,  by  merger or  consolidation  or by other  disposition  of
assets) of the Trust Property and all Other Mortgaged  Properties so long as (1)
Grantor gives  Beneficiary  written notice of the terms of such transfer or sale
not less than thirty (30) days before the date on which such transfer or Sale is
scheduled to close,  (2) the Buyer has total assets of at least  $750,000,000.00
and  financial   statements   evidencing  such  value  have  been  presented  to
Beneficiary  and (3)  Grantor  shall  have  submitted,  in  lieu  of the  $5,000
application   fee  stated  in  subparagraph   (b)(2)  above,  a   non-refundable
application  fee in the amount of $15,000.00.  In the event of any such transfer
or Sale pursuant to this subparagraph (c), the provisions of clauses (2) and (3)
of subparagraph (b) of this Section 1.13 shall not apply.

         1.14     Payment of Utilities, Assessments, Charges, Etc. Grantor shall
pay when due all  utility  charges  which are  incurred  by Grantor or which may
become a charge or lien  against  any  portion  of the Trust  Property  for gas,
electricity,  water and sewer  services  furnished  to the  Premises  and/or the
Improvements and all other assessments or charges of a similar nature (excluding
taxes and assessments  escrowed in the Impound Account),  or assessments payable
pursuant to any restrictive covenants,  whether public or private, affecting the
Premises  and/or the  Improvements or any portion  thereof,  whether or not such
assessments  or charges are or may become  liens  thereon.  Notwithstanding  the
foregoing,  Grantor  may, in good faith,  by  appropriate  proceedings  and upon
notice to  Beneficiary,  contest the  validity,  applicability  or amount of any
asserted  utilities,  assessments  or other  charges that may become a charge or
lien  against any portion of the Trust  Property as long as (a) such  contest is
diligently pursued,  (b) Beneficiary  determines,  in its reasonable  subjective
opinion,  that such contest  suspends the obligation to pay such utility charges
or assessments  and that  non-payment  of such charges or  assessments  will not
result in the sale, loss,  forfeiture or diminution of the Trust Property or any
part  thereof  or any  interest  of  Beneficiary  therein,  and (c) prior to the
earlier of commencement of such contest or the delinquency  date of the asserted
charge or assessment,  Grantor deposits the Impound Account an amount determined
by  Beneficiary  to be  reasonably  adequate to cover  payment of such charge or
assessment and a reasonable additional sum to cover possible interest, costs and
penalties;  provided,  however, that Grantor shall promptly cause to be paid any
amount adjudged by a court of competent  jurisdiction be due, with all interest,
costs and penalties  thereon,  promptly after such judgment becomes final beyond
any appeal period; and provided,  further,  that in any event such contest shall
be concluded and the charges or assessments  shall be paid prior to the date any
writ or order is issued  under  which the Trust  Property  may be sold,  lost or
forfeited.

         1.15     Access Privileges and Inspections. Beneficiary and the agents,
representatives  and employees of  Beneficiary  shall,  subject to the rights of
Tenants,  have full and free access to the Premises and the Improvements and any
other location where books and records concerning the Trust Property are kept at
all  reasonable  times and,  except in the event of an emergency,  upon not less
than three (3) days  prior  notice  (which  notice  may be  telephonic)  for the
purposes of inspecting the Trust  Property and of examining,  copying and making
extracts from the books and records of Grantor  relating to the Trust  Property.
Grantor shall lend assistance to all such agents,  representatives and employees
of Beneficiary.

         1.16     Waste;  Alteration of Improvements.  Grantor shall not commit,
suffer or permit any waste on the Trust Property nor take any actions that might
invalidate any insurance  carried



                                       31
<PAGE>

on the  Trust  Property.  Grantor  shall  maintain  the Trust  Property  in good
condition and repair. No part of the Improvements may be removed,  demolished or
materially  altered,  without the prior written consent of Beneficiary except as
provided herein. Without the prior written consent of Beneficiary, Grantor shall
not  commence  construction  of any  improvements  on the  Premises  other  than
improvements  required for the maintenance or repair of the Trust Property or as
otherwise provided herein.

         1.17     Zoning. Without the prior written consent of Beneficiary,  not
to be unreasonably  withheld or delayed,  Grantor shall not seek, make,  suffer,
consent to or acquiesce in any change in the zoning or  conditions of use of the
Premises  or the  Improvements.  Grantor  shall  have the same  right to contest
zoning, conditions on use and other land use matters and/or any proposed changes
in the same in a manner  similar to the  provisions  relating to the contests of
Environmental Laws as provided for in Section 1.31 hereof.  Grantor shall comply
with and make all  payments  required  under the  provisions  of any  covenants,
conditions or restrictions  affecting the Premises or the Improvements.  Grantor
shall  comply with all  existing  and future  requirements  of all  governmental
authorities having  jurisdiction over the Real Property.  Grantor shall keep all
licenses, permits, franchises and other approvals necessary for the operation of
the Trust  Property in full force and  effect.  Grantor  shall  operate the Real
Property as an apartment  development and incidental and ancillary uses or other
lawful use approved by Beneficiary for so long as the Debt is  outstanding.  If,
under applicable zoning  provisions,  the use of all or any part of the Premises
or the  Improvements is or becomes a nonconforming  use, Grantor shall not cause
or permit such use to be  discontinued  or abandoned  without the prior  written
consent of Beneficiary.  Further,  without  Beneficiary's prior written consent,
Grantor  shall not file or subject any part of the Premises or the  Improvements
to any  declaration of condominium  or  co-operative  or convert any part of the
Premises or the  Improvements  to a condominium,  co-operative  or other form of
multiple ownership and governance.

         1.18     Financial Statements and Books and Records. Grantor shall keep
accurate  books  and  records  of  account  of the  Trust  Property  and its own
financial affairs  sufficient to permit the preparation of financial  statements
therefrom  in  accordance  with  generally   accepted   accounting   principles.
Beneficiary  and its duly  authorized  representatives  shall  have the right to
examine, copy and audit Grantor's records and books of account at all reasonable
times. Prior to the first Sale hereunder,  and for so long as this Deed of Trust
continues in effect,  Grantor shall provide to  Beneficiary,  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  Beneficiary  as being true and correct by the chief  financial
officer  of the  REIT,  and,  with  respect  to  the  financial  statements  and
information  set forth in  subsection  (e)  hereof,  audited  by an  independent
certified public  accountant,  be prepared in accordance with generally accepted
accounting  principles  consistently  applied  and  be  in  form  and  substance
acceptable to Beneficiary:

                  (a)      monthly  balance  sheets and  statement of operations
for the Trust  Property,  within  thirty  (30) days after the end of each of the
first (1st) twelve (12) calendar months following the date hereof; and



                                       32
<PAGE>

                  (b)      quarterly  balance sheets and statement of operations
for the Trust  Property,  within  thirty  (30) days after the end of each March,
June,  September and December  commencing with the first (1st) of such months to
occur following the first (1st) anniversary of the date hereof;

                  (c)      copy of the REIT's 10-Q as filed with the  Securities
and  Exchange  Commission,  within  forty-five  (45) days  after the end of each
calendar quarter following the date hereof;

                  (d)      annual balance sheets and statement of operations for
the Trust Property;

                  (e)      the REIT's annual financial statements, within ninety
(90) days after the end of each fiscal year of the REIT;

                  (f)      annual  occupancy   summary  for  the  Real  Property
setting  forth the occupancy  rates,  average daily room rates and room revenues
for each month of the preceding calendar year, as well as annual averages of the
same,  and such other  information as may  customarily  be reflected  thereon or
reasonably requested by Beneficiary.

         Following  the first  Sale  hereunder,  and for so long as this Deed of
Trust continues in effect, Grantor shall provide to Beneficiary,  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  Beneficiary  as being true and correct by Grantor or the person
or entity to which  they  pertain,  as  applicable,  and,  with  respect  to the
financial statements and information set forth in subsection (d) hereof, audited
by an independent  certified public  accountant,  be prepared in accordance with
generally accepted accounting principles consistently applied and be in form and
substance acceptable to Beneficiary:

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

                  (b)      monthly operating  statements for the Trust Property,
within  fifteen  (15) days after the end of each of the first (1st)  twelve (12)
calendar months following the date hereof; and

                  (c)      quarterly   operating   statements   for  the   Trust
Property,  within thirty (30) days after the end of each March, June,  September
and December  commencing  with the first (1st) of such months to occur following
the first (1st) anniversary of the date hereof;

                  (d)      annual  balance  sheets  for the Trust  Property  and
annual financial statements for Grantor and each Indemnitor,  within ninety (90)
days after the end of each calendar year; and

                  (e)      such  other  information  with  respect  to the Trust
Property,  Grantor,  the  principals  or general  partners in Grantor,  and each
Indemnitor,  which may be reasonably requested from time to time by Beneficiary,
within a reasonable time after the applicable request.



                                       33
<PAGE>

         If any of the aforementioned materials are not furnished to Beneficiary
within the  applicable  time periods or  Beneficiary  is  dissatisfied  with the
contents   of  any  of  the   foregoing   and  has   notified   Grantor  of  its
dissatisfaction,  in addition to any other  rights and  remedies of  Beneficiary
contained  herein,  Beneficiary  shall have the right,  but not the  obligation,
after Grantor's  failure to cure such  satisfaction  within thirty (30) business
days following  Grantor's receipt of such notice, to obtain the same by means of
an audit by an independent  certified public accountant selected by Beneficiary,
in which event  Grantor  agrees to pay, or to  reimburse  Beneficiary  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.

         1.19     Further  Documentation.  Grantor  shall,  on  the  request  of
Beneficiary  and at the expense of  Grantor:  (a)  promptly  correct any defect,
error or omission  which may be discovered in the contents of this Deed of Trust
or in the contents of any of the other Loan  Documents;  (b)  promptly  execute,
acknowledge,  deliver and record or file such  further  instruments  (including,
without limitation,  further mortgages, deeds of trust, security deeds, security
agreements,  financing  statements,  continuation  statements and assignments of
rents  or  leases)  and  promptly  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  and to  subject  to the liens and  security
interests  hereof and thereof  any  property  intended  by the terms  hereof and
thereof to be covered hereby and thereby,  including  specifically,  but without
limitation,   any   renewals,   additions,   substitutions,    replacements   or
appurtenances to the Trust Property; (c) promptly execute, acknowledge, deliver,
procure and record or file any document or instrument  (including  specifically,
without  limitation,  any financing  statement)  reasonably  deemed advisable by
Beneficiary to protect,  continue or perfect the liens or the security interests
hereunder  against the rights or  interests of third  persons;  and (d) promptly
furnish to Beneficiary,  upon Beneficiary's request, a duly acknowledged written
statement  and  estoppel  certificate  addressed  to such  party or  parties  as
directed by  Beneficiary  and in form and  substance  supplied  by  Beneficiary,
setting  forth all  amounts  due under the Note,  stating  whether  any Event of
Default has  occurred  hereunder  and is  continuing,  and  stating  whether any
offsets or defenses exist against the Debt.

         1.20     Payment of Costs; Reimbursement to Beneficiary.  Grantor shall
pay all reasonable costs and expenses of every character  reasonably incurred in
connection with the closing of the loan evidenced by the Note and secured hereby
or otherwise  attributable  or  chargeable  to Grantor as the owner of the Trust
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. If Grantor defaults in any such payment, which default is not cured within
any applicable  grace or cure period,  Beneficiary  may, after  reasonable prior
written notice to Grantor, pay the same and Grantor shall reimburse  Beneficiary
on demand  for all such  costs and  expenses  incurred  or paid by  Beneficiary,
together with such interest  thereon at the Default Interest Rate from and after
the date of  Beneficiary's  making such payment until  reimbursement  thereof by
Grantor.  Any such sums  disbursed by  Beneficiary,  together with such interest
thereon,  shall be additional  indebtedness  of Grantor  secured by this Deed of
Trust and by all of the other  Loan  Documents  securing  all or any part of the
Debt.  Further,  Grantor shall  promptly  notify  Beneficiary  in writing of any
litigation or



                                       34
<PAGE>

threatened litigation affecting the Trust Property, or any other demand or claim
which, if enforced,  could impair or threaten to impair  Beneficiary's  security
hereunder.  Without  limiting  or  waiving  any other  rights  and  remedies  of
Beneficiary  hereunder,  if Grantor  fails to perform  any of its  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 might adversely affect Beneficiary's  interest in
the  Trust  Property  or  Beneficiary's  right to  enforce  its  security,  then
Beneficiary  may, at its  option,  with or without  notice to Grantor,  make any
appearances,  disburse  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  Grantor  to perform  its  covenants  and  agreements  (without,
however,  waiving any default of Grantor).  Grantor  agrees to pay on demand all
expenses  of  Beneficiary  or Trustee  incurred  with  respect to the  foregoing
(including,  but not limited to,  reasonable fees and disbursements of counsel),
together with interest  thereon at the Default  Interest Rate from and after the
date on which  Beneficiary or Trustee  incurs such expenses until  reimbursement
thereof by Grantor. Any such expenses so incurred by Beneficiary,  together with
interest thereon as provided above, shall be additional  indebtedness of Grantor
secured  by this Deed of Trust and by all of the other Loan  Documents  securing
all or any part of the  Debt.  The  necessity  for any such  actions  and of the
amounts  to be paid  shall  be  determined  by  Beneficiary  in its  discretion.
Beneficiary is hereby  empowered to enter and to authorize  others to enter upon
the  Trust  Property  or any part  thereof  for the  purpose  of  performing  or
observing  any such  defaulted  term,  covenant  or  condition  without  thereby
becoming  liable to Grantor or any person in possession  holding under  Grantor.
Grantor  hereby  acknowledges  and agrees  that the  remedies  set forth in this
Section 1.20 shall be exercisable by Beneficiary,  and any and all payments made
or costs or expenses  incurred by Beneficiary in connection  therewith  shall be
secured hereby and shall be, without demand,  immediately repaid by Grantor with
interest  thereon at the Default  Interest Rate,  notwithstanding  the fact that
such  remedies  were  exercised  and such  payments  made and costs  incurred by
Beneficiary  after the  filing by  Grantor  of a  voluntary  case or the  filing
against Grantor of an involuntary  case pursuant to or within the meaning of the
Bankruptcy Reform Act of 1978, as amended, 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  Grantor,  Beneficiary,  any
Indemnitor,  the Debt or any of the Loan Documents.  Grantor hereby  indemnifies
and holds Beneficiary harmless from and against all loss, cost and expenses with
respect to any Event of Default hereof, any liens (i.e.,  judgments,  mechanics'
and materialmen's  liens, or otherwise),  charges and encumbrances filed against
the Trust  Property,  and from 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
Premises or the  Improvements or any nuisance made or suffered  thereon,  except
those that are due to Beneficiary's  gross  negligence or willful  misconduct as
finally  determined  by a court of competent  jurisdiction,  including,  without
limitation,  in any case,  reasonable  attorneys'  fees,  costs and  expenses as
aforesaid,  whether at pretrial,  trial or appellate  level,  and such indemnity
shall survive  payment in full of the Debt.  This Section shall not be construed
to require  Beneficiary to incur any expenses,  make any appearances or take any
actions.



                                       35
<PAGE>

         1.21     Security  Interest.  This  Deed of Trust is also  intended  to
encumber  and  create a  security  interest  in, and  Grantor  hereby  grants to
Beneficiary a security  interest in, Grantor's right,  title and interest in all
sums on deposit  with  Beneficiary  pursuant to the  provisions  of Section 1.6,
Section 1.8 and Section 1.34 hereof or any other Section  hereof or of any other
Loan Document and Grantor's right,  title and interest (if any) in all fixtures,
chattels, accounts,  equipment,  inventory, contract rights, general intangibles
and other personal  property  included within the Trust 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 Premises or the Improvements in any manner.  It is
hereby  agreed  that  to the  extent  permitted  by  law,  all of the  foregoing
Collateral  consisting of furniture,  fixtures and equipment is to be deemed and
held to be a part of and  affixed  to the  Premises  and the  Improvements.  The
foregoing security interest shall also cover Grantor's leasehold interest in any
of the foregoing  property which is leased by Grantor.  Grantor shall, from time
to time upon the  request  of  Beneficiary,  supply  Beneficiary  with a current
inventory of all of the  Collateral in which  Beneficiary  is granted a security
interest  hereunder,  in such  detail as  Beneficiary  may  reasonably  require.
Grantor  shall  promptly  replace all of the  Collateral  subject to the lien or
security  interest of this Deed of Trust when worn or obsolete  with  Collateral
comparable to the worn out or obsolete Collateral when new and will not, without
the prior  written  consent of  Beneficiary,  remove  from the  Premises  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  similar
suitability and value as above provided,  owned by Grantor free and clear of any
lien or  security  interest  except  that  created by this Deed of Trust and the
other Loan Documents. All of the Collateral shall be kept at the location of the
Premises  except  as  otherwise  required  by the  terms of the Loan  Documents.
Grantor  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 a security
agreement  between  Grantor and  Beneficiary  with respect to the  Collateral in
which Beneficiary is granted a security interest  hereunder,  and, cumulative of
all other rights and remedies of Beneficiary  hereunder,  Beneficiary shall have
all of the rights and remedies of a secured party under any  applicable  Uniform
Commercial  Code.  Grantor  hereby  agrees to execute  and deliver on demand and
hereby irrevocably  constitutes and appoints Beneficiary the attorney-in-fact of
Grantor to execute and deliver and, if appropriate, to file with the appropriate
filing  officer or  office,  such  security  agreements,  financing  statements,
continuation  statements  or other  instruments  as  Beneficiary  may request or
require in order to impose,  perfect or continue the  perfection  of the lien or
security interest created hereby. To the extent specifically provided herein and
subject to the rights of Tenants  under the Leases and the terms and  provisions
thereof, Beneficiary shall have the right of possession of all cash, securities,
instruments,  negotiable  instruments,  documents,  certificates  and any  other
evidences  of cash or other  property or evidences of rights to cash rather than
property,  which are now or hereafter a part of the Trust Property,  and Grantor
shall promptly deliver the same to Beneficiary, endorsed to Beneficiary, without
further  notice from  Beneficiary.  Grantor agrees to furnish  Beneficiary  with
notice of any change in the name, identity, organizational structure, residence,
or  principal  place of business or mailing  address of Grantor  within ten (10)
days of the effective date of any such change.  Upon the occurrence of any Event
of Default, Beneficiary shall have the rights and remedies as prescribed in this
Deed



                                       36
<PAGE>

of Trust,  or as prescribed  by general law, or as prescribed by any  applicable
Uniform Commercial Code, all at Beneficiary's  election.  Any disposition of the
Collateral  following the occurrence and  continuance of an Event of Default may
be conducted by an employee or agent of Beneficiary.  Any person, including both
Grantor and  Beneficiary,  shall be eligible to purchase  any part or all of the
Collateral at any such disposition. Expenses of retaking, holding, preparing for
sale,  selling  or  the  like  (including,  without  limitation,   Beneficiary's
reasonable  attorneys' fees and legal expenses),  together with interest thereon
at the  Default  Interest  Rate  from the date  incurred  by  Beneficiary  until
actually  paid by  Grantor,  shall be paid by  Grantor  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 Debt.  Beneficiary shall have the right to enter upon the
Premises and the  Improvements  or any real  property  where any of the property
which is the subject of the security  interest granted herein is located to take
possession  of,  assemble  and  collect  the same or to render it  unusable,  or
Grantor,  upon demand of  Beneficiary,  shall assemble such property and make it
available to Beneficiary at the Premises, or at a place which is mutually agreed
upon or, if no such place is agreed upon,  at a place  reasonably  designated by
Beneficiary to be reasonably convenient to Beneficiary and Grantor. If notice is
required by law,  Beneficiary  shall give  Grantor at least ten (10) days' prior
written  notice of the time and place of any public  sale of such  property,  or
adjournments  thereof,  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
Grantor, 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 Grantor.  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 shall be deemed
to have been a public sale conducted in a commercially reasonable manner if held
contemporaneously  with a foreclosure  sale as provided in Section 3.1(e) hereof
upon  giving the same  notice  with  respect  to the sale of the Trust  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 Beneficiary  pursuant to any applicable Uniform
Commercial Code:

                  (a)      In  the  event  of  a  foreclosure  sale,  the  Trust
Property may, at the option of Beneficiary, be sold as a whole; and

                  (b)      It  shall  not be  necessary  that  Beneficiary  take
possession of the aforementioned  Collateral,  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

                  (c)      Beneficiary  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  Beneficiary,  including  the  sending of notices and the conduct of the
sale, but in the name and on behalf of Beneficiary.

The name and  address  of  Grantor  (as  Debtor  under  any  applicable  Uniform
Commercial Code) are:

                           CRIT-VA, Inc.
                           306 East Main Street


                                       37
<PAGE>

                           Richmond, Virginia  23219
                           Attention:  Glade M. Knight

The name and  address of  Beneficiary  (as Secured  Party  under any  applicable
Uniform Commercial Code) are:

                           FIRST UNION NATIONAL BANK
                           Commercial Real Estate Finance Group
                           One First Union Center
                           301 South College Street
                           Mailcode NC 0166
                           Loan Number:  26-5950380
                           Charlotte, North Carolina  28288
                           Attention:     Contract Finance

         1.23     Easements  and  Rights-of-Way.  Grantor  shall  not  grant any
easement or  right-of-way  with respect to all or any portion of the Premises or
the Improvements  without the prior written consent of Beneficiary,  which shall
not be unreasonably  withheld or delayed.  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 Trust Property free from, and despite the terms of,
such grant of easement or right-of-way.  If Beneficiary consents to the grant of
an easement or  right-of-way,  Beneficiary  agrees to grant such consent without
charge to Grantor other than reasonable expenses, including, without limitation,
reasonable  attorneys' fees,  incurred by Beneficiary in the review of Grantor's
request and in the preparation of documents effecting the subordination.

         1.24     Compliance  with Laws.  (a) Grantor  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  Trust  Property,
including,  but not limited to, those concerning  employment and compensation of
persons  engaged in  operation  and  maintenance  of the Trust  Property and any
environmental or ecological requirements,  even if such compliance shall require
structural changes to the Trust Property;  provided, however, that, Grantor may,
upon providing  Beneficiary with security  satisfactory to Beneficiary,  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 Trust  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.
Grantor  shall not use or occupy,  or allow the use or  occupancy  of, the Trust
Property  in any  manner  which  violates  any Lease of or any  other  agreement
applicable to the Trust  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 increases the premium of, any insurance then in force
with respect thereto.

                  (b)      Grantor  agrees that the Trust  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,




                                       38
<PAGE>

without limitation, the Americans with Disabilities Act Accessibility Guidelines
for Buildings and Facilities  (collectively,  the "Access Laws"). Grantor agrees
to give prompt notice to Beneficiary of the receipt by Grantor of any complaints
related  to  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 the date
hereof of any law of the state in which the Trust  Property is located or of any
other governmental entity deducting from the value of the Trust Property for the
purpose  of taxing any lien or  security  interest  thereon,  or  imposing  upon
Beneficiary  the payment of the whole or any part of the taxes or assessments or
charges or liens herein  required to be paid by Grantor,  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, Beneficiary 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 Debt or  Beneficiary,  then,  and in any such
event, Grantor, upon demand by Beneficiary,  shall pay such taxes,  assessments,
charges or liens, or reimburse Beneficiary therefor;  provided, however, that if
in the  opinion of counsel for  Beneficiary  (a) it might be unlawful to require
Grantor 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,  Beneficiary  may elect,  by notice in writing  given to
Grantor,  to declare  all of the Debt to be and  become due and  payable in full
thirty (30) days from the giving of such  notice,  and, in  connection  with the
payment of such Debt, no prepayment  premium or fee shall be due unless,  at the
time of such  payment,  an Event of Default or a Default shall have occurred and
is continuing,  which Default or Event of Default is unrelated to the provisions
of this Section 1.25, in which event any applicable prepayment premium or fee in
accordance with the terms of the Note shall be due and payable.

         1.26     Secured  Indebtedness.  It is understood  and agreed that this
Deed of Trust shall secure payment of not only the indebtedness evidenced by the
Note but also any and all substitutions,  replacements,  renewals and extensions
of the Note, any and all  indebtedness  and obligations  arising pursuant to the
terms hereof and any and all  indebtedness  and obligations  arising pursuant to
the terms of any of the  other  Loan  Documents,  all of which  indebtedness  is
equally secured with and has the same priority as any amounts advanced as of the
date hereof. It is agreed that any future advances made by Beneficiary to or for
the  benefit of Grantor  from time to time under this Deed of Trust or the other
Loan  Documents and whether or not such  advances are  obligatory or are made at
the option of  Beneficiary,  or otherwise,  made for any purpose,  within twenty
(20) years from the date hereof,  and all interest  accruing  thereon,  shall be
equally  secured by this Deed of Trust and shall have the same  priority  as all
amounts,  if any,  advanced as of the date hereof and shall be subject to all of
the terms and provisions of this Deed of Trust.

         1.27     Grantor's  Waivers.  To the  full  extent  permitted  by  law,
Grantor agrees that Grantor 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 Debt prior to any sale
of the Trust 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



                                       39
<PAGE>

right under any statute to redeem all or any part of the Trust Property so sold.
Grantor,  for Grantor and Grantor's  successors and assigns, and for any and all
persons ever  claiming any  interest in the Trust  Property,  to the full extent
permitted by law, hereby knowingly, intentionally and voluntarily, with and upon
the advice of competent counsel: (a) waives, releases,  relinquishes and forever
forgoes all rights of valuation,  appraisement, stay of execution, reinstatement
and notice of election or  intention  to mature or declare due the Debt  (except
such notices as are  specifically  provided for herein);  (b) waives,  releases,
relinquishes  and  forever  forgoes all right to a  marshaling  of the assets of
Grantor,  including  the  Trust  Property,  to a sale in the  inverse  order  of
alienation,  or to direct the order in which any of the Trust  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 Trust Property sold as an entirety; and (c)
waives,  releases,  relinquishes  and forever  forgoes all rights and periods of
redemption  provided under  applicable law. To the full extent permitted by law,
Grantor  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 other  matters  whatever to defeat,  reduce or affect the right of
Beneficiary  under  the  terms  of this  Deed of  Trust  to a sale of the  Trust
Property,  for the collection of the Debt without any prior or different  resort
for  collection,  or the  right of  Beneficiary  under the terms of this Deed of
Trust  to the  payment  of the  Debt out of the  proceeds  of sale of the  Trust
Property in preference to every other claimant  whatever.  Furthermore,  Grantor
hereby  knowingly,  intentionally  and voluntarily,  with and upon the advice of
competent  counsel,  waives,  releases,  relinquishes  and  forever  forgoes 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 Debt to the
fullest  extent  permitted by law.  Grantor  covenants  and agrees that upon the
commencement of a voluntary or involuntary  bankruptcy  proceeding by or against
Grantor,  Grantor shall not seek a supplemental stay or otherwise shall not seek
pursuant  to 11 U.S.C.  Section  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  Beneficiary to enforce
any rights of  Beneficiary  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.

         1.28     SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.

                  (a)      GRANTOR,  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 IN WHICH THE PREMISES
IS LOCATED 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  SITTING IN THE COUNTY IN WHICH THE
PREMISES IS LOCATED,  (iii) SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND (iv)
TO THE  FULLEST  EXTENT  PERMITTED  BY LAW,  AGREES  THAT IT WILL NOT  BRING ANY
ACTION,  SUIT OR PROCEEDING IN ANY OTHER FORUM



                                       40
<PAGE>

(BUT NOTHING  HEREIN SHALL AFFECT THE RIGHT OF  BENEFICIARY TO BRING ANY ACTION,
SUIT OR PROCEEDING IN ANY OTHER FORUM).

                  (b)      GRANTOR,  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 DEBT OR ANY CONDUCT, ACT OR OMISSION OF BENEFICIARY OR GRANTOR, OR ANY OF
THEIR RESPECTIVE DIRECTORS,  OFFICERS,  PARTNERS,  MEMBERS, EMPLOYEES, AGENTS OR
ATTORNEYS,  OR ANY OTHER PERSONS AFFILIATED WITH BENEFICIARY OR GRANTOR, IN EACH
OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

         1.29     Attorney-in-Fact  Provisions. With respect to any provision of
this  Deed of Trust  or any  other  Loan  Document  whereby  Grantor  grants  to
Beneficiary a power-of-attorney, provided no Event of Default has occurred under
this Deed of Trust, Beneficiary shall first give Grantor written notice at least
five (5) days prior to acting  under such power,  which notice shall demand that
Grantor first take the proposed  action within such period and advising  Grantor
that if it fails to do so,  Beneficiary  will so act under the power;  provided,
however,  that, in the event that a Default or an Event of Default has occurred,
or if  necessary  to prevent  imminent  death,  serious  injury,  damage,  loss,
forfeiture  or  diminution  in value to the Trust  Property  or any  surrounding
property or to prevent any adverse affect on Beneficiary's interest in the Trust
Property,  Beneficiary may act immediately and without first giving such notice.
In such  event,  Beneficiary  will give  Grantor  notice of such  action as soon
thereafter as reasonably practical.

         1.30     Management.  The  management of the Trust Property shall be by
either:  (a) Grantor,  the REIT or an entity affiliated with Grantor or the REIT
reasonably  approved by  Beneficiary  for so long as Grantor or said  affiliated
entity is managing the Trust Property consistent with the provisions of the Loan
Documents; or (b) a professional property management company reasonably approved
by  Beneficiary.  If  management  is  by  a  third-party  professional  property
management  company not  affiliated  with Grantor or the REIT,  such  management
shall be pursuant to a written agreement reasonably approved by Beneficiary.  In
no event shall any manager be removed or replaced or the terms of any management
agreement  materially  adversely  modified or amended  without the prior written
consent of  Beneficiary.  After an Event of Default or a material  default under
any  management  contract then in effect,  which default is not cured within any
applicable grace or cure period,  Beneficiary shall have the right to terminate,
or to direct  Grantor to terminate,  such  management  contract upon thirty (30)
days' notice and to retain,  or to direct  Grantor to retain,  a new  management
agent reasonably approved by Beneficiary. All Rents generated by or derived from
the Trust Property shall first be utilized for current expenses  attributable to
the  ownership  and  operation  of  the  Trust  Property,   including,   without
limitation,  current expenses relating to Grantor's  liabilities and obligations
with respect to this Deed of Trust and the other Loan Documents, and none of the
Rents  generated  by or derived  from the Trust  Property  shall be  diverted by
Grantor and utilized  for any other  purposes  until all such  current  expenses
attributable  to the  ownership  and  operation of the Trust  Property have been
fully paid and satisfied.



                                       41
<PAGE>

         1.31     Hazardous Waste and Other Substances.

                  (a)      Grantor hereby represents and warrants to Beneficiary
that, as of the date hereof: (i) to the best of Grantor's knowledge, information
and  belief,  none of  Grantor  nor the  Trust  Property  nor any  Tenant at the
Premises nor the operations conducted thereon is in direct or indirect violation
of or otherwise exposed to any liability under any local,  state or federal law,
rule or regulation or common law duty  pertaining to human health as affected by
the  environment,  natural  resources  or the  environment,  including,  without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (42 U.S.C.  Section  9601 et seq.),  the Resource  Conservation  and
Recovery  Act of 1976 (42  U.S.C.  Section  6901 et  seq.),  the  Federal  Water
Pollution  Control Act (33 U.S.C.  Section 1251 et seq.),  the Clean Air Act (42
U.S.C. Section 7401 et seq.), the Emergency Planning and Community-Right-to-Know
Act (42 U.S.C.  Section 11001 et seq.),  the  Endangered  Species Act (16 U.S.C.
Section 1531 et seq.), the Toxic Substances Control Act (15 U.S.C.  Section 2601
et seq.), the Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.)
and the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et seq.),
including any regulations promulgated pursuant to said laws, all as amended from
time to time ("Environmental  Laws") or otherwise exposed to any liability under
any  Environmental  Law relating to or affecting the Trust Property,  whether or
not used by or within the  control  of  Grantor;  (ii) to the best of  Grantor's
knowledge,  information and belief, no hazardous,  toxic or harmful  substances,
wastes,  materials,  pollutants or contaminants (including,  without limitation,
materials  containing more than 1% asbestos,  lead based paint,  polychlorinated
biphenyls, petroleum or petroleum products or byproducts,  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 (collectively,  "Hazardous Substances")
are located on, in or under or have been handled,  generated,  stored, processed
or disposed of on or released or discharged  from the Trust Property  (including
underground  contamination),  except for those substances used by Grantor or any
Tenant in the ordinary course of their  respective  businesses and in compliance
with all  Environmental  Laws and where such would not reasonably be expected to
give rise to liability under  Environmental Laws; (iii) to the best of Grantor's
knowledge, information and belief, radon is not present at the Trust Property in
excess or in violation of any  applicable  thresholds or standards or in amounts
that require  under  applicable  law  disclosure to any tenant or occupant of or
invitee  to the Trust  Property  or to any  governmental  agency or the  general
public;  (iv) to the best of Grantor's  knowledge,  information and belief,  the
Trust Property is not subject to any private or governmental lien or judicial or
administrative  notice or action arising under  Environmental Laws; (v) there is
no pending,  nor, to  Grantor's  knowledge,  information  or belief,  threatened
litigation  arising  under  Environmental  Laws  affecting  Grantor or the Trust
Property; (vi) to the best of Grantor's knowledge, information and belief, there
are no and have been no existing or closed  underground  storage  tanks or other
underground storage  receptacles for Hazardous  Substances or landfills or dumps
on the Trust Property;  (vii) Grantor has received no notice of, and to the best
of  Grantor's  knowledge  and belief,  there  exists no  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  Trust   Property,   nor  does  Grantor  know  of  any  basis  for  such  an
investigation,  action,  proceeding  or claim;  (viii)  Grantor has  received no
notice



                                       42
<PAGE>

of and, to the best of Grantor's  knowledge and belief,  there has been no claim
by any party that any use,  operation  or  condition  of the Trust  Property has
caused any  nuisance or any other  liability  or adverse  condition on any other
property, nor does Grantor know of any basis for such an investigation,  action,
proceeding or claim.

                  (b)      Grantor has not received nor to the best of Grantor's
knowledge,   information   and  belief  has  there  been  issued,   any  notice,
notification,  demand, request for information,  citation,  summons, or order in
any way  relating to any actual,  alleged or  potential  violation  or liability
arising under Environmental Laws.

                  (c)      To the best of Grantor's  knowledge,  information and
belief, the Trust Property is not listed or, to the best of Grantor's knowledge,
information  and belief,  proposed for listing on the National  Priorities  List
promulgated  pursuant  to CERCLA,  on CERCLIS  (as  defined in CERCLA) or on any
similar federal or state list of sites requiring environmental  investigation or
clean-up.

                  (d)      Grantor    shall    comply   with   all    applicable
Environmental  Laws.  Grantor shall keep or cause the Trust  Property to be kept
free from Hazardous  Substances  (except those substances used by Grantor or any
Tenant in the  ordinary  course of their  respective  businesses  and  except in
compliance  with all  Environmental  Laws and where such would not reasonably be
expected to give rise to liability under  Environmental  Laws) and in compliance
with all  Environmental  Laws,  Grantor 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 in
quantities  or conditions  that would violate or give rise to any  obligation to
take remedial or other action under any applicable  Environmental  Laws. Without
limiting the generality of the foregoing, during the term of this Deed of Trust,
Grantor shall not install in the  Improvements  or permit to be installed in the
Improvements any asbestos or asbestos-containing materials.

                  (e)      Grantor shall promptly notify  Beneficiary if Grantor
shall  become aware of (i) the actual or  potential  existence of any  Hazardous
Substances  on the Trust  Property  other than those  occurring  in the ordinary
course of Grantor's  business and which do not violate,  or would not  otherwise
give rise to liability  under  Environmental  Laws,  (ii) any direct or indirect
violation of, or other  exposure to liability  under,  any  Environmental  Laws,
(iii)  any lien,  action or notice  affecting  the  Trust  Property  or  Grantor
resulting  from any  violation  or alleged  violation of or liability or alleged
liability   under  any   Environmental   Laws,   (iv)  the  institution  of  any
investigation,  inquiry or proceeding  concerning  Grantor or the Trust Property
pursuant  to  any  Environmental   Laws  or  otherwise   relating  to  Hazardous
Substances, or (v) the discovery of any occurrence,  condition or state of facts
which would  render any  representation  or warranty  contained  in this Deed of
Trust  incorrect in any material  respect if made at the time of such discovery.
Immediately upon receipt of same,  Grantor,  shall deliver to Beneficiary copies
of any and all  requests  for  information,  complaints,  citations,  summonses,
orders,  notices,  reports or other communications,  documents or instruments in
any way relating to any actual,  alleged or potential  violation or liability of
any nature whatsoever arising under Environmental Laws and relating to the Trust
Property or to Grantor. Grantor shall remedy or cause to be remedied in a timely
manner  (and in any  event  within  the  time  period  permitted  by  applicable
Environmental



                                       43
<PAGE>

Laws) any violation of Environmental  Laws or any condition that could give rise
to liability under Environmental  Laws. Without limiting the foregoing,  Grantor
shall,  at  its  own  expense,  take  all  actions  as  required  by  applicable
Environmental  Laws,  for the  clean-up  of any and all  portions  of the  Trust
Property  or  other  affected  property,   including,  without  limitation,  all
investigative,   monitoring,   removal,  containment  and  remedial  actions  in
accordance with all applicable Environmental Laws (and in all events in a manner
reasonably  satisfactory  to  Beneficiary)  and shall further pay or cause to be
paid, at no expense to Beneficiary, all clean-up, administrative and enforcement
costs of  applicable  governmental  agencies  which may be asserted  against the
Trust Property.  Notwithstanding  the foregoing,  Grantor may, in good faith, by
appropriate proceedings and upon notice to Beneficiary,  contest the validity or
applicability  of any  such  Environmental  Laws  to any  portion  of the  Trust
Property as long as (a) such  contest is  diligently  pursued,  (b)  Beneficiary
determines, in its reasonable subjective opinion, that such contest suspends the
requirement  for Grantor to comply with such  Environmental  Laws.  Prior to the
earlier  commencement  of such contest or the  delinquency  date of any asserted
costs related thereto,  Grantor shall deposit into the Impound Account an amount
determined by  Beneficiary to the reasonably  adequate  covered  payment of such
costs and a reasonable  additional  sum to cover  possible  interest,  costs and
penalties;  provided,  however, that Grantor shall promptly cause to be paid any
amount adjudged by a court of competent  jurisdiction be due, with all interest,
costs and penalties  thereon,  promptly after such judgment  becomes final;  and
provided,  further,  that in any event such contest  shall be concluded  and the
charges  or  assessments  shall  be paid  prior to the date any writ or order is
issued under which the Trust  Property may be sold,  lost or  forfeited.  In the
event Grantor fails to do so, Beneficiary may, if required by Environmental Laws
(and  after  reasonable  prior  written  notice  to  Grantor),  but shall not be
obligated to, cause the Trust  Property or other  affected  property to be freed
from any  Hazardous  Substances  or  otherwise  brought  into  conformance  with
Environmental Laws and any and all costs and expenses incurred by Beneficiary in
connection  therewith,  together with interest  thereon at the Default  Interest
Rate from the date incurred by Beneficiary until actually paid by Grantor, shall
be  immediately  paid by  Grantor 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
Debt.  Grantor hereby grants to Beneficiary and its agents and employees  access
to the Trust Property and a license to remove any items deemed by Beneficiary to
be Hazardous Substances and to do all things Beneficiary shall deem necessary to
bring the Trust Property into conformance with Environmental Laws.

                  (f)      Grantor  covenants and agrees, at Grantor's sole cost
and expense,  to  indemnify,  defend (at trial and  appellate  levels,  and with
attorneys,  consultants and experts reasonably  acceptable to Beneficiary),  and
hold Beneficiary harmless from and against any and all liens, damages (including
without  limitation,   punitive  or  exemplary  damages),   losses,  liabilities
(including,  without  limitation,  strict  liability),  obligations,  settlement
payments,  penalties,  fines,  assessments,   citations,   directives,   claims,
litigation,   demands,   defenses,   judgments,   suits,   proceedings,   costs,
disbursements  or expenses of any kind as required by  applicable  Environmental
Laws 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  Beneficiary or the Trust Property,  and arising from or out of:
(i) any  violation or alleged  violation  of, or liability or alleged  liability
under, any Environmental Law; (ii) the presence, release or threat of release of


                                       44
<PAGE>

or exposure to any Hazardous  Substances or radon on, in, under or affecting all
or any portion of the Trust  Property or any  surrounding  areas,  regardless of
whether or not caused by or within the control of Grantor;  (iii) any transport,
treatment,  recycling,  storage,  disposal or arrangement  therefor of Hazardous
Substances  whether on the Trust Property,  originating from the Trust Property,
or otherwise  associated  with Grantor or any operations  conducted on the Trust
Property at any time; (iv) the failure by Grantor to comply fully with the terms
and  conditions of this Section 1.31;  (v) the breach of any  representation  or
warranty  contained  in this  Section  1.31 in any  material  respect;  (vi) the
enforcement of this Section 1.31,  including,  without  limitation,  the cost of
assessment,  investigation,  containment,  removal and/or remediation of any and
all Hazardous  Substances  from all or any portion of the Trust  Property or any
surrounding areas as required by applicable  Environmental Laws, 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 Trust
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 Environmental Laws in connection with all or any portion
of the Trust Property or any surrounding  areas. The indemnity set forth in this
Section  1.31 shall also  include any  diminution  in the value of the  security
afforded by the Trust Property or any future reduction in the sales price of the
Trust  Property  by reason of any matter  set forth in this  Section  1.31.  The
foregoing  indemnity shall  specifically  not include any such costs relating to
Hazardous  Substances  which  are  initially  placed  on,  in or under the Trust
Property  after  foreclosure  or other taking of title to the Trust  Property by
Beneficiary or its successor or assigns. Beneficiary's rights under this Section
shall survive  payment in full of the Debt and shall be in addition to all other
rights of  Beneficiary  under  this Deed of Trust,  the Note and the other  Loan
Documents.

                  (g)      Upon  Beneficiary's  request,  at any time during the
continuance  of an Event of Default or at such  other  time as  Beneficiary  has
reasonable  grounds  to  believe,  and  so  notifies  Grantor,   that  Hazardous
Substances  are or have  been  released,  stored  or  disposed  of on the  Trust
Property,  or on property contiguous with the Trust Property,  or that the Trust
Property may be in violation of the Environmental Laws, Grantor shall perform or
cause to be performed, at Grantor's sole cost and expense and in scope, form and
substance reasonably satisfactory to Beneficiary,  an inspection or audit of the
Trust Property prepared by a hydrogeologist  or environmental  engineer or other
appropriate  consultant  approved  by  Beneficiary  indicating  the  presence or
absence  of  Hazardous  Substances  on the Trust  Property,  the  compliance  or
non-compliance status of the Trust Property and the operations conducted thereon
with  applicable  Environmental  Laws,  or an  inspection  or audit of the Trust
Property  prepared by an engineering or consulting firm  reasonably  approved by
Beneficiary indicating the presence or absence of friable asbestos or substances
containing  asbestos in excess of 1% or lead or  substances  containing  lead or
lead based paint ("Lead Based Paint") on the Trust Property. If Grantor fails to
provide  reports of such  inspection or audit within thirty (30) days after such
request,   Beneficiary  may  order  the  same,  and  Grantor  hereby  grants  to
Beneficiary  and its employees  and agents  access to the Trust  Property and an
irrevocable  license to undertake  such  inspection  or audit.  The cost of such
inspection or audit, together with interest thereon at the Default Interest Rate
from the date incurred by Beneficiary  until actually paid by Grantor,  shall be
immediately paid by Grantor 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 Debt.



                                       45
<PAGE>

                  (h)      Reference  is  made  to  that  certain  Environmental
Indemnity  Agreement of even date  herewith by and among  Grantor,  the REIT and
Beneficiary (the "Environmental  Indemnity  Agreement").  The provisions of this
Deed of Trust and the Environmental  Indemnity  Agreement shall be read together
to  maximize  the  coverage  with  respect to the  subject  matter  thereof,  as
determined by Beneficiary.

                  (i)      If, prior to the date hereof,  it was determined that
the Trust Property contains Lead Based Paint, Grantor had prepared an assessment
report  describing  the location and  condition of the Lead Based Paint (a "Lead
Based Paint Report").  If, at any time hereafter,  Lead Based Paint is suspected
of being present on the Trust  Property,  Grantor  agrees,  at its sole cost and
expense and within  sixty (60) days  thereafter,  to cause to be prepared a Lead
Based Paint  Report  prepared by an expert,  and in form,  scope and  substance,
acceptable to Beneficiary.

                  (j)      Grantor agrees that if it has been, or if at any time
hereafter it is,  determined that the Trust Property  contains Lead Based Paint,
on  or  before  thirty  (30)  days  following  (i)  the  date  hereof,  if  such
determination was made prior to the date hereof or (ii) such  determination,  if
such determination is hereafter made, as applicable,  Grantor shall, at its sole
cost  and  expenses,  develop  and  implement,  and  thereafter  diligently  and
continuously  carry out (or cause to be developed and implemented and thereafter
diligently  and  continually  to be carried out), an  operations,  abatement and
maintenance  plan for the Lead  Based  Paint on the Trust  Property,  which plan
shall be prepared by an expert, and be in form, scope and substance,  acceptable
to Beneficiary  (together with any Lead Based Paint Report, the "O&M Plan"). (If
an O&M Plan has been  prepared  prior to the  date  hereof,  Grantor  agrees  to
diligently and continually carry out (or cause to be carried out) the provisions
thereof.)  Compliance  with the O&M Plan shall  require or be deemed to require,
without  limitation,  the proper  preparation  and  maintenance  of all records,
papers and forms required under the Environmental Laws.

         1.32     Indemnification; Subrogation.

                  (a)      Grantor shall indemnify,  defend and hold Beneficiary
harmless  against:  (i) any and all claims for  brokerage,  leasing,  finders or
similar fees which may be made relating to the Trust  Property or the Debt,  and
(ii) any and all liability,  obligations,  losses, damages,  penalties,  claims,
actions,   suits,  costs  and  expenses  (including   Beneficiary's   reasonable
attorneys'  fees) of  whatever  kind or nature  which may be  asserted  against,
imposed on or incurred by Beneficiary in connection  with the Debt, this Deed of
Trust, the Trust Property,  or any part thereof,  or the exercise by Beneficiary
of any rights or  remedies  granted  to it under  this Deed of Trust;  provided,
however,  that  nothing  herein  shall  be  construed  to  obligate  Grantor  to
indemnify,  defend and hold  harmless  Beneficiary  from and against any and all
liabilities,  obligations,  losses, damages, penalties,  claims, actions, suits,
costs and expenses  enacted  against,  imposed on or incurred by  Beneficiary by
reason of Beneficiary's  willful misconduct or gross negligence or in connection
with Beneficiary effecting a Secondary Market Transaction.

                  (b)      If  Beneficiary  is  made a  party  defendant  to any
litigation or any claim is threatened or brought against Beneficiary  concerning
the making or enforcement of the Debt,  this Deed of Trust,  the Trust Property,
or any part thereof, or any interest therein, or the



                                       46
<PAGE>

construction,  maintenance,  operation or occupancy or use thereof, then Grantor
shall  indemnify,  defend and hold  Beneficiary  harmless  from and  against all
liability  by  reason  of  said  litigation  or  claims,   including  reasonable
attorneys'  fees and expenses  incurred by Beneficiary in any such litigation or
claim, whether or not any such litigation or claim is prosecuted to judgment. If
Beneficiary  commences  an action  against  Grantor to enforce  any of the terms
hereof or to  prosecute  any breach by Grantor of any of the terms  hereof or to
recover any sum secured hereby,  Grantor shall pay to Beneficiary its reasonable
attorneys'  fees and expenses.  The right to such  attorneys'  fees and expenses
shall be deemed to have accrued on the commencement of such action, and shall be
enforceable  whether or not such action is  prosecuted  to judgment.  If Grantor
breaches any term of this Deed of Trust,  Beneficiary may engage the services of
an attorney or  attorneys to protect its rights  hereunder,  and in the event of
such engagement  following any breach by Grantor,  Grantor shall pay Beneficiary
reasonable attorneys' fees and expenses incurred by Beneficiary,  whether or not
an action is actually  commenced  against Grantor by reason of such breach.  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
Beneficiary and Beneficiary'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, any appellate counsel
fees,  if  applicable,  and any  allocation  charges  and  allocation  costs  of
Beneficiary's in-house counsel.

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

         1.33     Covenants   with   Respect   to   Indebtedness,    Operations,
Fundamental  Changes  of  Grantor.  Grantor  hereby  represents,   warrants  and
covenants as of the date hereof and until such time as the Debt is paid in full,
that  Grantor  has  been,  is,  and shall  remain a  Single-Purpose  Entity  (as
hereinafter  defined).  Grantor has complied and will at all times comply, or if
Grantor is a limited  partnership or a limited liability  company,  each general
partner or the SPE Member (as  hereinafter  defined) of Grantor  (each,  an "SPE
Equity Owner"),  has complied,  will at all times comply, and will cause Grantor
to comply, with each of the representations,  warranties and covenants contained
in this  Section 1.33 as if such  representation,  warranty or covenant was made
directly  by  Grantor  or  such  SPE  Equity  Owner,  as  the  case  may  be.  A
"Single-Purpose  Entity" or "SPE" means a corporation,  limited partnership,  or
limited liability company that:

                  (a)      if a corporation,  must have at least one Independent
Director (as hereinafter defined), or if requested by Beneficiary (which request
Grantor shall comply with within five (5) business  days) in  connection  with a
Secondary Market Transaction,  two Independent Directors,  and must not take any
action that,  under the terms of any  certificate or articles of  incorporation,
by-laws,  or any voting trust  agreement  with respect to such  entity's  common
stock,  requires the  unanimous  affirmative  vote of 100% of the members of the
board of directors unless all of the directors,  including,  without limitation,
all  Independent   Directors,   shall  have  participated  in  such  vote  ("SPE
Corporation"); provided, however, the foregoing



                                       47
<PAGE>

Independent  Director  requirement  shall not apply  unless and until a Sale and
pursuant to the requirements of Section 1.13(b)(11) hereof;

                  (b)      if a limited  partnership,  must  have  each  general
partner be an SPE Corporation;

                  (c)      if  a  limited  liability  company,   must  have  one
managing  member  (the "SPE  Member")  and such  managing  member must be an SPE
Corporation.  Only the SPE  Member  may be  designated  as a  manager  under the
Grantor's  operating  agreement  and  pursuant  to the law where the  Grantor is
organized.  Grantor may be a single member Delaware  limited  liability  company
without an SPE  Corporation  managing member so long as Grantor has two "special
members" who shall serve as Independent Directors of Grantor; provided, however,
the foregoing  Independent Director requirement shall not apply unless and until
a Sale and pursuant to the requirements of Section 1.13(b)(11) hereof;

                  (d)      was and will be  organized  solely for the purpose of
(i) owning an interest in the Trust Property and the Other Mortgaged Properties,
(ii) acting as a general partner of a limited  partnership that owns an interest
in the Trust Property and the Other Mortgaged Properties, or (iii) acting as the
member  of a  limited  liability  company  that  owns an  interest  in the Trust
Property and the Other Mortgaged Properties;

                  (e)      will not, nor will any  partner,  limited or general,
member or shareholder thereof, as applicable,  amend, modify or otherwise change
its partnership certificate,  partnership agreement,  articles of incorporation,
by-laws,  operating  agreement,  articles of  organization,  or other  formation
agreement or document,  as applicable,  in any material term or manner,  or in a
manner which adversely affects  Grantor's  existence as a single purpose entity,
bankruptcy-remote entity;

                  (f)      will  not   liquidate  or  dissolve  (or  suffer  any
liquidation  or  dissolution),  or  enter  into any  transaction  of  merger  or
consolidation,  or acquire by purchase or otherwise all or substantially all the
business or assets of, or any stock or other evidence of beneficial ownership of
any entity;

                  (g)      has not and will not guarantee, pledge its assets for
the  benefit  of, or  otherwise  become  liable on or in  connection  with,  any
obligation of any other person or entity;

                  (h)      does not own and will not own any  asset  other  than
(i) the Trust Property, (ii) the Other Mortgaged Properties and (iii) incidental
personal  property  necessary  for the  operation of the Trust  Property and the
Other Mortgaged Properties;

                  (i)      is not engaged and will not engage,  either  directly
or  indirectly,  in any  business  other  than  the  ownership,  management  and
operation of the Trust Property and the Other Mortgaged Properties;

                  (j)      will not enter into any  contract or  agreement  with
any general  partner,  affiliate  or member of Grantor,  as  applicable,  or any
affiliate of any general partner or member of



                                       48
<PAGE>

Grantor,  except  upon  terms and  conditions  that are  intrinsically  fair and
substantially  similar to those that would be available on an arms-length  basis
with third parties other than an affiliate;

                  (k)      has not incurred and will not incur any debt, secured
or unsecured,  direct or contingent  (including  guaranteeing  any  obligation),
other than (i) the Debt,  (ii)  affiliate  advances or trade payables or accrued
expenses  incurred in the  ordinary  course of business of  operating  the Trust
Property and the Other Mortgaged Properties  customarily satisfied within thirty
(30) days in an  aggregate  amount,  as to the Trust  Property  or each of Other
Mortgaged  Properties,  not to  exceed  one  percent  (1%)  of  the  outstanding
principal  balance  of the  Note  or the  respective  Contemporaneous  Note,  as
applicable,  and no other  debt will be  secured  (senior,  subordinate  or pari
passu) by the Trust Property;

                  (l)      has not made and will not make any loans or  advances
to any third party (including any affiliate);

                  (m)      is and will be  solvent  and pay its  debts  from its
assets as the same shall become due;

                  (n)      has done or caused to be done and will do all  things
necessary to preserve its existence, and will observe all formalities applicable
to it;

                  (o)      will conduct and operate its business in its own name
and as presently conducted and operated;

                  (p)      will maintain financial statements, books and records
and bank accounts  separate  from those of its  affiliates,  including,  without
limitation, its general partners or members, as applicable;

                  (q)      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,  without limitation,  any affiliate,  general partner, or member, as
applicable,  or any  affiliate of any general  partner or member of Grantor,  as
applicable);

                  (r)      will file its own tax returns;  provided  that for so
long  as  the  Grantor  is  a  qualified  REIT  subsidiary  or  includible  on a
consolidated basis in the tax return of the REIT, Grantor shall only be required
to have its own employer identification number;

                  (s)      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;

                  (t)      will  establish and maintain an office  through which
its business will be conducted  separate and apart from those of its  affiliates
and shall  allocate  fairly and  reasonably  any overhead and expense for shared
office space;



                                       49
<PAGE>

                  (u)      will not  commingle  the funds  and  other  assets of
Grantor with those of any general partner, member,  affiliate,  principal or any
other person;

                  (v)      has 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;

                  (w)      does  not  and  will  not  hold   itself  out  to  be
responsible for the debts or obligations of any other person;

                  (x)      will  pay  any  liabilities  out  of its  own  funds,
including salaries of its employees, not funds of any affiliate;

                  (y)      will use  stationery,  invoices,  and checks separate
from its affiliates; and

                  (z)      As used in this Section 1.33,  "Independent Director"
shall  mean  a duly  appointed  member  of  the  board  of  directors  of an SPE
Corporation or single member Delaware limited liability company who has not been
at any time during the five (5) years preceding his or her initial  appointment,
and shall not be at any time while  serving as  Independent  Director any of the
following: (a) a stockholder,  director (other than in his or her capacity as an
Independent Director), officer, employee, partner, or member of Grantor, any SPE
Equity Owner, any partner, shareholder or member of any SPE Equity Owner, or any
affiliate  of  any of  the  foregoing;  (b) a  stockholder,  director,  officer,
employee,  partner,  or member of any customer of, supplier or service  provider
(including  professionals)  to, or other person who derives more than 10% of its
purchases,  revenues,  compensation,  or other financial  remuneration  from its
activities  with Grantor,  any SPE Equity  Owner,  any partner,  shareholder  or
member of any SPE Equity Owner,  any affiliate of any of the  foregoing,  or any
person or  entity  who  otherwise  is  financially  dependent  upon an  officer,
director, or employee of Grantor, any SPE Equity Owner, any partner or member of
any SPE Equity  Owner,  or any family  member (by blood or marriage) of any such
officer,  director, or employee, or a business entity owned or controlled by any
of the  foregoing;  (c) a person or other  entity  controlling  or under  common
control with any such stockholder, director, officer, employee, partner, member,
customer,  supplier or other person;  or (d) a member of the immediate family of
any  individual  described  in clause  (a),  (b) or (c)  above.  Notwithstanding
anything to the contrary contained herein, the Independent Director of a general
partner  or  managing  member  of  Grantor  shall  be  permitted  to serve as an
Independent  Director of other Special Purpose Entities which are now, or may in
the future be, established by any affiliate of Grantor, or any partner or member
of Grantor. As used in this subsection, 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.  As  used  herein,  the  term
"affiliate" shall mean:

                  (aa)     any person or entity  directly or indirectly  owning,
controlling  or  holding  with  power to vote ten  percent  (10%) or more of the
outstanding voting securities or interests of such other person or entity;



                                       50
<PAGE>

                  (bb)     any  person or entity  ten  percent  (10%) or more of
whose outstanding voting securities are directly or indirectly owned, controlled
or held with power to vote by such other person or entity;

                  (cc)     any   person  or  entity   directly   or   indirectly
controlling,  controlled  by or under  common  control with such other person or
entity;

                  (dd)     any officer, director or partner of such other person
or entity;

                  (ee)     if  such  other  person  or  entity  is  an  officer,
director  or  partner,  any  company for which such person or entity acts in any
such capacity; and

                  (ff)     any close relative or spouse of the specified person.

         1.34     Repair and Remediation  Reserve Prior to the execution of this
Deed of Trust,  Beneficiary  has caused the Trust  Property to be inspected  and
such  inspection  has  revealed  that the Trust  Property  is in need of certain
maintenance,  repairs and/or remedial or corrective work. Contemporaneously with
the execution hereof,  Grantor has established with the Beneficiary a reserve in
the amount of $2,250.00  (the "Repair and  Remediation  Reserve") by  depositing
such amount with Beneficiary. Grantor shall cause each of the items described in
that certain  Engineering  Report (the  "Engineering  Report") entitled Property
Condition Report, dated November 21, 2000 and prepared by Dominion Environmental
Group (the "Deferred  Maintenance") to be completed,  performed,  remediated and
corrected to the satisfaction of Beneficiary and as necessary to bring the Trust
Property  into  compliance  with all  applicable  laws,  ordinances,  rules  and
regulations  on or before the  expiration  of six (6) months after the effective
date  hereof,  as such time period may be extended  by  Beneficiary  in its sole
discretion.  So long as no Event of Default has occurred and is continuing,  all
sums in the Repair and  Remediation  Reserve shall be held by Beneficiary in the
Repair and  Remediation  Reserve to pay the costs and expenses of completing the
Deferred  Maintenance.  So long as no  Event  of  Default  has  occurred  and is
continuing,  Beneficiary  shall,  to the  extent  funds are  available  for such
purpose in the Repair and  Remediation  Reserve,  disburse to Grantor the amount
paid or incurred by Grantor in completing, performing, remediating or correcting
the Deferred  Maintenance or, if greater, the amount reserved for the applicable
Deferred  Maintenance  item,  upon (a) the receipt by  Beneficiary  of a written
request from Grantor for  disbursement  from the Repair and Remediation  Reserve
and a certification by Grantor that the applicable item of Deferred  Maintenance
has been  completed  in  accordance  with the terms of this  Deed of Trust,  (b)
delivery  to  Beneficiary  of  invoices,  receipts,  cancelled  checks  or other
evidence  satisfactory  to  Beneficiary  verifying  the  costs  of the  Deferred
Maintenance to be reimbursed, (c) for disbursement requests for individual items
costing in excess of $50,000.00, delivery to Beneficiary of a certification from
a third party reasonably acceptable to Beneficiary describing the completed work
and (d) for  disbursement  requests for  individual  items  costing in excess of
$50,000.00,  delivery to  Beneficiary  of  affidavits,  lien waivers,  cancelled
checks or other evidence reasonably satisfactory to Beneficiary 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 Trust Property have been paid all amounts due for such
labor and materials  furnished to the Trust Property.  Beneficiary  shall not



                                       51
<PAGE>

be  required  to make  advances  from the Repair and  Remediation  Reserve  more
frequently than twice in any ninety (90) day period.  In making any payment from
the Repair and  Remediation  Reserve,  Beneficiary  shall be entitled to rely on
such  request from Grantor  without any inquiry into the  accuracy,  validity or
contestability  of any such  amount.  Grantor  hereby  grants to  Beneficiary  a
power-of-attorney,  coupled with an interest,  to cause the Deferred Maintenance
to be completed,  performed,  remediated  and corrected to the  satisfaction  of
Beneficiary following the expiration of the six-month period referred to in this
subparagraph  and upon Grantor's  failure to do so in accordance  with the terms
and  conditions of this Section 1.34, and to apply the amounts on deposit in the
Repair  and  Remediation  Reserve  to the  costs  associated  therewith,  all as
Beneficiary  may  determine  in its sole and  absolute  discretion  but  without
obligation to do so. Funds contained in the Repair and Remediation Reserve shall
be placed in an interest-bearing account upon receipt and interest thereon shall
be paid to Grantor as and when amounts are paid to Grantor and in no event later
than six (6) months after the date hereof.

         1.35     ERISA.

                  (a)      Grantor  shall not  engage in any  transaction  which
would cause any  obligation,  or action taken or to be taken,  hereunder (or the
exercise by Beneficiary 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)      Grantor  further  covenants  and agrees to deliver to
Beneficiary such  certifications  or other evidence from time to time throughout
the  term of this  Deed of  Trust,  as  requested  by  Beneficiary  in its  sole
discretion,  that (i) Grantor is not an  "employee  benefit  plan" as defined in
Section 3(32) of ERISA, which is subject to Title I of ERISA, or a "governmental
plan" within the meaning of Section  3(3) of ERISA;  (ii) Grantor 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 Grantor  are  publicly  offered
         securities within the meaning of 29 C.F.R. Section 2510.3-101(b)(2);

                  (2)      Less than 25  percent  of each  outstanding  class of
         equity interests in Grantor are held by "benefit plan investors" within
         the meaning of 29 C.F.R. Section 2510.3-101(f)(2); or

                  (3)      Grantor  qualifies as an "operating  company"  within
         the meaning of 29 C.F.R.  Section  2510.3-101 or an investment  company
         registered under the Investment Company Act of 1940.

                  (c)      Grantor shall  indemnify  Beneficiary  and defend and
hold Beneficiary 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



                                       52
<PAGE>

prohibited   transaction   exemption  under  ERISA  that  may  be  required,  in
Beneficiary's   sole  discretion)  that  Beneficiary  may  incur,   directly  or
indirectly,  as a result of a default under this Section.  This indemnity  shall
survive any termination, satisfaction or foreclosure of this Deed of Trust.

         1.36     Springing   Lock-Box   Account.   At  Beneficiary's   election
following the occurrence  and  continuance of an Event of Default or if the debt
service coverage ratio of the Trust Property and all Other Mortgaged  Properties
falls below  1.15:1,  as  determined  by  Beneficiary,  Beneficiary  may require
Grantor to enter into one or more clearing and deposit agreements  acceptable to
Beneficiary  between  Grantor,  Beneficiary  and one or more  certain  financial
institutions  (which  may  be  Beneficiary  or an  affiliate  or  subsidiary  of
Beneficiary)   acceptable  to  Beneficiary   (together  with  any  modification,
amendment,   substitution  or  replacement  thereof,   hereinafter  collectively
referred to as the  "Lock-Box  Agreement")  in  Beneficiary's  then current form
which shall provide, among other things, that all Rents and other sums collected
from, or arising with respect to, the Trust Property be deposited in the deposit
account (the "Lock-Box  Account")  established in connection  with such Lock-Box
Agreement, which may be an interest-bearing account, and that such amounts shall
be disbursed in accordance with the Lock-Box Agreement. Grantor shall not have a
right of  withdrawal in respect to the Lock-Box  Account.  Grantor shall pay all
reasonable costs and expenses  incurred in creating and maintaining the Lock-Box
Agreement and all of Beneficiary's  reasonable  out-of-pocket costs and expenses
in connection with the  preparation  and negotiation of the Lock-Box  Agreement.
Immediately following  Beneficiary's  election to require that Grantor establish
the Lock-Box  Account,  Grantor shall deliver to  Beneficiary  for delivery,  at
Grantor's expense,  by certified mail, return receipt requested,  to all Tenants
of the Trust Property an irrevocable  written notice in the form attached hereto
as Exhibit D (or such other form as may be attached to the  Lock-Box  Agreement)
directing  such  tenants to pay their  rent and other  amounts  due under  their
leases to the  depository  under the  Lock-Box  Agreement  for deposit  into the
Lock-Box Account. Additionally,  each Lease executed on or after the date of the
Lock-Box  Agreement  affecting any of the Premises or Improvements must provide,
in a manner  approved  by  Beneficiary,  that the Tenant is required to make all
payments  due to Grantor  under the terms of such  lease,  license or  occupancy
agreement to the depository of the Lock-Box Account by check,  cashiers check or
money order made payable to Beneficiary  or its successors or assigns.  Upon the
occurrence and continuance of any Event of Default,  Beneficiary shall apply any
sums then held pursuant to the Lock-Box Agreement (other than security deposits)
to the payment of the Debt in any order in its sole  discretion.  Until expended
or applied,  amounts  held in the  Lock-Box  Account  pursuant  to the  Lock-Box
Agreement (other than security  deposits) shall constitute  additional  security
for the Debt.  The Lock-Box  Agreement,  when and if executed,  shall be a "Loan
Document" for all purposes under the Note, this Deed of Trust and the other Loan
Documents.  Grantor hereby irrevocably  constitutes and appoints Beneficiary the
attorney-in-fact  of Grantor,  coupled  with an  interest,  to,  upon  Grantor's
failure to do so in accordance with the terms hereof, without notice to Grantor,
execute and deliver the Lock-Box  Agreement and the notices to tenants described
in this  Section  1.36 and to take any  other  action  reasonably  necessary  or
desirable in  Beneficiary's  judgment to carry out the intention of this Section
1.36.



                                       53
<PAGE>

                                   ARTICLE II.
                                EVENTS OF DEFAULT

         2.1      Events of  Default.  The  occurrence  of any of the  following
events shall be an Event of Default hereunder:

                  (a)      Grantor  fails  to  pay  any  money  to   Beneficiary
required  hereunder at the time or within any applicable  grace period set forth
herein or in any other Loan Document,  or if no grace period is set forth herein
or therein,  then within seven (7) days after the date of Beneficiary's  written
notice to Grantor that such payment is due (except those  regarding  payments to
be made under the Note,  which failure is subject to any grace periods set forth
in the Note).

                  (b)      Grantor  fails to provide  insurance  as  required by
Section  1.4  hereof  or fails to  perform  any  material  covenant,  agreement,
obligation,  term or condition  set forth in Section 1.31 or Section 1.33 hereof
(provided,  however,  so long as Grantor shall be  undertaking  any  obligations
required under Section 1.31 in accordance with Environmental Laws, Grantor shall
be entitled to such time as may reasonably  required to fulfill such obligations
so long as the  same  are  completed  within  any  timeframe  established  under
applicable law or governmental authority).

                  (c)      Grantor   fails  to  perform   any  other   covenant,
agreement,  obligation,  term or condition set forth herein or in any other Loan
Document,  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
Beneficiary to Grantor;  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 Grantor  commences  to cure such  default  promptly
after  receipt  of written  notice  thereof  from  Beneficiary,  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.

                  (d)      Any  representation or warranty made herein, in or in
connection with any application or commitment  relating to the loan evidenced by
the Note, or in any of the other Loan Documents to  Beneficiary  by Grantor,  by
any general  partner,  manager or member in  Grantor,  or by any  Indemnitor  is
determined  by  Beneficiary  to have been false or  misleading  in any  material
respect  at the time made and any such  false or  misleading  representation  or
warranty has resulted in a Material Adverse Effect.

                  (e)      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 Trust
Property,  Grantor or its general partners or managing  members,  or any portion
thereof or any interest therein, in violation of Section 1.13 hereof.

                  (f)      Grantor,   general  partner  or  managing  member  in
Grantor or any  Indemnitor  becomes  insolvent,  or makes a transfer in fraud of
creditors, or makes an assignment



                                       54
<PAGE>

for  the  benefit  of  creditors,  or  files a  petition  in  bankruptcy,  or is
voluntarily adjudicated insolvent or bankrupt or admits in writing the inability
to pay its debts as they mature,  or petitions or applies to any tribunal for or
consents  to or  fails  to  contest  the  appointment  of a  receiver,  trustee,
custodian  or similar  officer  for  Grantor,  for any such  general  partner or
managing  member of Grantor or for any  Indemnitor or for a substantial  part of
the assets of Grantor, of any such general partner or managing member of Grantor
or of any  Indemnitor,  or commences 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.

                  (g)      A petition is filed or any case,  proceeding or other
action is commenced  against  Grantor,  against any general  partner or managing
member, as the case may be, of Grantor or against any Indemnitor 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 Grantor,  against
any  general  partner  or  managing  member,  as the case may be, of  Grantor or
against any Indemnitor,  as debtor,  or an order,  judgment or decree is entered
appointing,  with or without the consent of Grantor, of any such general partner
or  managing  member,  as the case may be, of  Grantor or of any  Indemnitor,  a
receiver,  trustee,  custodian  or similar  officer  for  Grantor,  for any such
general  partner or managing  member,  as the case may be, of Grantor or for any
Indemnitor,  or for any substantial part of any of the properties of Grantor, of
any such general partner or managing  member,  as the case may be, of Grantor or
of any  Indemnitor,  and if any such event shall  occur,  such  petition,  case,
proceeding, action, order, judgment or decree is not dismissed within sixty (60)
days after being commenced.

                  (h)      The Trust  Property  or any part  thereof is taken on
execution  or  other  process  of law  in any  final  and  non-appealable  legal
proceeding,  without  the right of  redemption  against  Grantor,  other than in
connection  a  condemnation  or the  exercise of the power of eminent  domain or
police power.

                  (i)      Grantor  abandons  all or a  material  portion of the
Trust Property for a period in excess of thirty (30) consecutive days other than
as a result of a force majeure.

                  (j)      The holder of any lien or  security  interest  on the
Trust Property  (without implying the consent of Beneficiary 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.

                  (k)      The Trust Property, or any part thereof, is subjected
to waste or to removal,  demolition or material  alteration so that the value of
the Trust Property is materially  diminished thereby and Beneficiary  determines
that it is not  adequately  protected from any loss,  damage or risk  associated
therewith.



                                       55
<PAGE>

                  (l)      Any  dissolution,  termination,  partial or  complete
liquidation,  merger or  consolidation  of Grantor,  any general  partner or any
managing member, or any Indemnitor.

                  (m)      The occurrence and continuance of an Event of Default
under any of the  Contemporaneous  Notes, the  Contemporaneous  Mortgages or the
Contemporaneous Assignments.

                                  ARTICLE III.
                                    REMEDIES

         3.1      Remedies Available.  If there shall occur and be continuing an
Event of Default under this Deed of Trust, then this Deed of Trust is subject to
foreclosure  as  provided  by law and  Beneficiary  may, at its option and by or
through  a  trustee,   nominee,   assignee  or  otherwise  (including,   without
limitation,  the Trustee),  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 of the
Note  and  declare  any or all of the  Debt 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 Grantor),  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 Trust  Property.  Either in person or by
agent,  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 Trust  Property,  or any part thereof,  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 is  waivable,  in which  case  Grantor  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  Beneficiary's  judgment to complete any  unfinished
construction  on  the  Premises,   to  preserve  the  value,   marketability  or
rentability of the Trust Property,  to increase the income therefrom,  to manage
and operate the Trust Property or to protect the security  hereof,  and all sums
expended by Beneficiary therefor,  together with interest thereon at the Default
Interest Rate, shall be immediately due and payable to Beneficiary by Grantor on
demand  and  shall be  secured  hereby  and by all of the other  Loan  Documents
securing all or any part of the Debt.

                  (c)      Collect Rents.  With or without taking  possession of
the Trust Property, sue or otherwise collect the Rents, including those past due
and unpaid.

                  (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 to a court of competent  jurisdiction  for appointment of a receiver


                                       56
<PAGE>

for all or any part of the  Trust  Property,  as a matter  of  strict  right and
without  notice to  Grantor  and  without  regard to the  adequacy  of the Trust
Property for the  repayment of the Debt or the solvency of Grantor or any person
or  persons  liable  for the  payment  of the  Debt,  and  Grantor  does  hereby
irrevocably  consent  to such  appointment,  waive  any and all  notices  of and
defenses to such appointment and agree not to oppose any application therefor by
Beneficiary, but nothing herein is to be construed to deprive Beneficiary of any
other right, remedy or privilege  Beneficiary 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 Beneficiary to receive
payment of the Rents  pursuant to other terms and  provisions  hereof.  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
Trust  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  Beneficiary,
continue  until  full  payment  of all of the Debt or until  title to the  Trust
Property subject to foreclosure 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  with
respect  to any of the Debt,  pursuant  to  applicable  law,  and sell the Trust
Property or cause the Trust Property subject to foreclosure hereunder to be sold
in accordance with the requirements and procedures  provided by said statutes in
a single parcel or in several parcels at the option of Beneficiary. In the event
foreclosure proceedings are instituted by Beneficiary,  all expenses incident to
such proceedings,  including, but not limited to, reasonable attorneys' fees and
costs,  shall be paid by Grantor and secured by this Deed of Trust and by all of
the other Loan Documents  securing all or any part of the Debt. The Debt and all
other obligations secured by this Deed of Trust, including,  without limitation,
interest at the Default  Interest  Rate 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  Beneficiary  under  the  Loan  Documents,  may  be  bid by
Beneficiary  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
Beneficiary  or its assigns may become the  purchaser of such Trust  Property or
any part thereof.

                  (f)      Judicial  Remedies.  Proceed by suit or suits, at law
or in equity, instituted by or on behalf of Beneficiary, upon written request of
Beneficiary,  to enforce  the  payment of the Debt or the other  obligations  of
Grantor 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 Trust
Property,  and to have all or any part of the  Trust  Property  sold  under  the
judgment or decree of a court of  competent  jurisdiction.  This remedy shall be
cumulative of any other  non-judicial  remedies  available to  Beneficiary  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 Beneficiary.

                  (g)      Sale of  Property.  (i)  Trustee,  at the  request of
Beneficiary,  shall  have the  power  to sell  the  Trust  Property  subject  to
foreclosure  hereunder or any part thereof at public



                                       57
<PAGE>

auction,  in such  manner,  at  such  time,  and  place,  upon  such  terms  and
conditions,  and upon such  public  notice as may be required  or  permitted  by
applicable  law,   consisting  of   advertisement  in  a  newspaper  of  general
circulation  in the  jurisdiction  and for such  period  as  applicable  law may
require  and at such other  times and by such other  methods,  if any, as may be
required by law to convey such Trust  Property in fee simple by  trustee's  deed
with special  warranty of title to and at the cost of the  purchaser,  who shall
not be liable to see to the application of the purchase  money.  The proceeds or
avails of any sale made under or by virtue of this paragraph,  together with any
other  sums  which  then may be held by  Beneficiary  under  this Deed of Trust,
whether under the provisions of this paragraph or otherwise, shall be applied as
provided  in Section  3.2  hereof.  Beneficiary,  Trustee  and any  receiver  or
custodian of the Trust  Property or any part thereof  shall be liable to account
for only those rents, issues, proceeds and profits actually received by it.

                  (ii)     Beneficiary and Trustee,  as applicable,  may adjourn
from  time to time any sale by it to be made  under or by virtue of this Deed of
Trust by  announcement at the time and place appointed for such sale or for such
adjourned sale or sales and, except as otherwise provided by any applicable law,
Beneficiary or Trustee,  without  further notice or  publication,  may make such
sale at the time and place to which the same shall be so adjourned.

                  (iii)    Upon the  completion  of any sale or sales ordered by
Beneficiary  and  made  by  Trustee  under  or  by  virtue  of  this  paragraph,
Beneficiary  or Trustee,  or any officer of any court  empowered to do so, shall
execute  and  deliver  to the  accepted  purchaser  or  purchasers  a  good  and
sufficient instrument, or good and sufficient instruments,  granting, conveying,
assigning and transferring all estate,  right,  title and interest in and to the
property and rights sold. Trustee is hereby  irrevocably  appointed the true and
lawful  attorney-in-fact for Grantor (coupled with an interest), in its name and
stead, to make all necessary conveyances,  assignments, transfers and deliveries
of the property and rights so sold and for that purpose  Trustee may execute all
necessary instruments of conveyance,  assignment, transfer and delivery, and may
substitute  one or more persons with like power,  Grantor  hereby  ratifying and
confirming all that its said  attorney-in-fact or such substitute or substitutes
shall lawfully do by virtue hereof.  Nevertheless,  Grantor,  if so requested by
Trustee  or  Beneficiary,  shall  ratify and  confirm  any such sale or sales by
executing and delivering to Beneficiary,  or to such purchaser or purchasers all
such instruments as may be advisable,  in the sole judgment of Beneficiary,  for
such purpose,  and as may be designated in such request.  Any such sale or sales
made under or by virtue or this paragraph,  whether made under the power of sale
herein  granted or under or by virtue of judicial  proceedings  or a judgment or
decree of foreclosure and sale,  shall operate to divest all the estate,  right,
title,  interest,  claim and demand whatsoever,  whether at law or in equity, of
Grantor in and to the  property  and rights so sold,  and shall,  to the fullest
extent permitted under law, be a perpetual bar both at law and in equity against
Grantor and against any and all persons  claiming or who may claim the same,  or
any party thereof, from, through or under Grantor.

                  (iv)     In the event of any sale  made  under or by virtue of
this Deed of Trust (whether made under the power of sale herein granted or under
or by virtue of judicial  proceedings or a judgment or decree of foreclosure and
sale),  the entire Debt relative to the Trust  Property,  immediately  thereupon
shall,  anything  in the  Note,  this  Deed of  Trust  or any  other of the Loan
Documents to the contrary notwithstanding, become due and payable.



                                       58
<PAGE>

                  (v)      Upon any  sale  under or by  virtue  of this  Deed of
Trust (whether made under the power of sale herein granted or under or by virtue
of  judicial  proceedings  or a  judgment  or decree of  foreclosure  and sale),
Beneficiary  may bid for and acquire the Trust  Property or any part thereof and
in lieu of paying cash therefor may make  settlement  for the purchase  price by
crediting the Debt to and against the net sales price after deducting  therefrom
the expenses of the sale and the costs of the action.

                  (vi)     No recovery of any  judgment  by  Beneficiary  and no
levy of an  execution  under any  judgment  upon the Trust  Property or any part
thereof or upon any other  property  of Grantor  shall  release the lien of this
Deed of Trust upon the Trust Property or any part thereof, or any liens, rights,
powers or remedies of Beneficiary hereunder,  but such liens, rights, powers and
remedies of Beneficiary shall continue  unimpaired until the entire Debt is paid
in full.

                  (h)      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  following the occurrence
and continuance of an Event of Default shall be applied, to the extent funds are
so  available,  to the  following  items  in such  order as  Beneficiary  in its
discretion may determine:

                  (a)      To payment of the reasonable costs, expenses and fees
of  taking  possession  of  the  Trust  Property,  and  of  holding,  operating,
maintaining,  using, leasing,  repairing,  improving,  marketing and selling the
same and of otherwise enforcing  Beneficiary's rights and remedies hereunder and
under the other Loan Documents,  including, but not limited to, receivers' fees,
court  costs,  attorneys',   accountants',   appraisers',  managers'  and  other
professional fees, title charges and transfer taxes.

                  (b)      To payment of all sums expended by Beneficiary  under
the  terms  of any of the  Loan  Documents  and not yet  repaid,  together  with
interest on such sums at the Default Interest Rate.

                  (c)      To  payment  of the  Debt and all  other  obligations
secured by this Deed of Trust,  including,  without limitation,  interest at the
Default  Interest  Rate 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,  subject to  applicable  law,  in any order that  Beneficiary
chooses in its sole discretion.

                  (d)      The  remainder,  if  any,  of  such  funds  shall  be
disbursed to Grantor or to the person or persons legally entitled thereto.

         3.3      Right and Authority of Receiver or Beneficiary in the Event of
Default;  Power of Attorney.  Upon the occurrence and continuance of an Event of
Default,  and entry upon the Trust 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
Beneficiary's  or the  receiver's  sole  discretion,  all at Grantor's  expense,


                                       59
<PAGE>

Beneficiary  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 Trust Property;  (b) take and maintain  possession
of all  documents,  books,  records,  papers and accounts  relating to the Trust
Property; (c) exclude Grantor and its agents, servants and employees wholly from
the Trust Property;  (d) manage and operate the Trust Property; (e) preserve and
maintain  the Trust  Property;  (f) make  repairs and  alterations  to the Trust
Property; (g) 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  Beneficiary  may  in  its  sole
discretion  deem  appropriate  or desirable to place the Trust  Property in such
condition as will, in Beneficiary's sole discretion, make it or any part thereof
readily marketable or rentable;  (h) conduct a marketing or leasing program with
respect to the Trust Property,  or employ a marketing or leasing agent or agents
to do so, directed to the leasing or sale of the Trust Property under such terms
and conditions as Beneficiary  may in its sole  discretion  deem  appropriate or
desirable; (i) employ such contractors, subcontractors, materialmen, architects,
engineers, consultants, managers, brokers, marketing agents, or other employees,
agents, independent contractors or professionals, as Beneficiary may in its sole
discretion deem  appropriate or desirable to implement and effectuate the rights
and powers herein granted;  (j) execute and deliver,  in the name of Beneficiary
as attorney-in-fact and agent of Grantor or in its own name as Beneficiary, such
documents  and  instruments  as  are  necessary  or  appropriate  to  consummate
transactions  authorized  hereunder;  (k) enter such leases,  whether of real or
personal  property,  or tenancy  agreements,  under such terms and conditions as
Beneficiary  may in its sole  discretion  deem  appropriate  or  desirable;  (l)
collect  and  receive the Rents from the Trust  Property;  (m) eject  tenants or
repossess personal property,  as provided by law, for breaches of the conditions
of their leases or other agreements;  (n) sue for unpaid Rents, payments, income
or  proceeds  in the name of Grantor or  Beneficiary;  (o)  maintain  actions in
forcible  entry and detainer,  ejectment for  possession and actions in distress
for rent;  (p) compromise or give  acquittance  for Rents,  payments,  income or
proceeds  that may become  due;  (q)  delegate  or assign any and all rights and
powers  given to  Beneficiary  by this Deed of Trust;  and (r) do any acts which
Beneficiary in its sole discretion deems appropriate or desirable to protect the
security hereof and use such measures, legal or equitable, as Beneficiary may in
its sole  discretion  deem  appropriate or desirable 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 Grantor or
Beneficiary,  at  the  request  of  Beneficiary  following  the  occurrence  and
continuance  of an  Event  of  Default  or as  otherwise  provided  in the  Loan
Documents,  to pay all  amounts  owing  under any lease,  contract,  concession,
license or other agreement to Beneficiary  without proof of the Event of 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 Grantor in so doing)
any request,  notice or demand by Beneficiary  for the payment to Beneficiary of
any Rents 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 Event of
Default  under this Deed of Trust or under any of the other Loan  Documents  has
actually occurred or is then existing.  Grantor hereby  constitutes and appoints
Beneficiary, its assignees,  successors,  transferees and nominees, as Grantor's
true and lawful  attorney-in-fact  and agent, with full



                                       60
<PAGE>

power of substitution in the Trust Property, in Grantor'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
portion  of the Debt is  outstanding.  Any  money  advanced  by  Beneficiary  in
connection with any action taken under this Section 3.3,  together with interest
thereon at the Default Interest Rate from the date of making such advancement by
Beneficiary  until actually paid by Grantor,  shall be a demand obligation owing
by  Grantor  to  Beneficiary  and shall be  secured by this Deed of Trust and by
every other instrument securing all or any portion of the Debt.

         3.4      Occupancy  After   Foreclosure.   In  the  event  there  is  a
foreclosure  sale hereunder  resulting from the occurrence and continuance of an
Event  of  Default,  and  at  the  time  of  such  sale,  Grantor  or  Grantor's
representatives,  successors  or  assigns,  or any other  persons  claiming  any
interest in the Trust Property by, through or under Grantor  (except  Tenants of
space in the Improvements  subject to Leases),  are occupying or using the Trust
Property, or any part thereof,  then, to the extent not prohibited by applicable
law, each and all shall,  at the option of  Beneficiary 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 Trust 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 Trust Property upon the termination
of such tenancy,  the  purchaser  shall be entitled to institute and maintain an
action for unlawful  detainer of the Trust Property in the appropriate  court of
the county in which the Premises is located.

         3.5      Notice to Account Debtors.  Beneficiary may, at any time after
the  occurrence  and  continuance  of an Event of  Default,  notify the  account
debtors and obligors of any accounts,  chattel paper,  negotiable instruments or
other evidences of indebtedness to Grantor included in the Trust Property to pay
Beneficiary  directly.  Grantor  shall at any time or from time to time upon the
request of Beneficiary  following the occurrence and  continuance of an Event of
Default,  provide to Beneficiary 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 Beneficiary 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  Beneficiary  and may be  exercised  in any  order and as often as
occasion  therefor shall arise.  No act of Beneficiary  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  Beneficiary.  No delay or failure by  Beneficiary  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 Event of Default.  Beneficiary  may  exercise any
one or more of its  rights and  remedies  at its  option  without  regard to the
adequacy of its security.



                                       61
<PAGE>

         3.7      Payment  of  Expenses.  Grantor  shall  pay on  demand  all of
Beneficiary's expenses 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,  foreclosure  costs and title  charges,  together  with
interest thereon from and after the date incurred by Beneficiary  until actually
paid by Grantor at the Default  Interest  Rate, 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 Debt.

                                   ARTICLE IV.
                       MISCELLANEOUS TERMS AND CONDITIONS

         4.1      Time of Essence.  Time is of the essence  with  respect to all
provisions of this Deed of Trust.

         4.2      Release of Deed of Trust. If all of the Debt be paid, then and
in that  event  only,  all  rights  under  this Deed of Trust,  except for those
provisions  hereof which by their terms survive,  shall  terminate and the Trust
Property shall become wholly clear of the liens, security interests, conveyances
and assignments  evidenced hereby, which shall be promptly released of record by
Beneficiary  in due form at Grantor's  cost. No release of this Deed of Trust or
the lien hereof shall be valid unless executed by Beneficiary.

         4.3      Certain Rights of  Beneficiary.  Without  affecting  Grantor's
liability for the payment of any of the Debt,  Beneficiary may from time to time
and without notice to Grantor:  (a) release any person liable for the payment of
the Debt;  (b) extend or modify  the terms of  payment  of the Debt;  (c) accept
additional  real  or  personal  property  of any  kind  as  security  or  alter,
substitute  or release any property  securing the Debt;  (d) recover any part of
the Trust 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.

         4.4      Waiver of Certain  Defenses.  No action for the enforcement of
the lien hereof or of any provision hereof shall be subject to any defense which
would not be good and available to the party  interposing  the same in an action
at law upon the Note or any of the other Loan Documents.

         4.5      Notices.   All   notices,    demands,    requests   or   other
communications to be sent by one party to the other hereunder or required by law
shall be in writing and shall be deemed to have been validly  given or served by
delivery of the same in person to the intended  addressee,  or by depositing the
same with Federal Express or another  reputable private courier service for next
business day  delivery,  or by  depositing  the same in the United  States mail,
postage prepaid,  registered or certified mail, return receipt requested, in any
event addressed to the intended  addressee at its address set forth on the first
page of this Deed of Trust or at such other address as may be designated by such
party as herein provided.  All notices,  demands and requests shall be effective
upon such 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.  Rejection or other refusal to accept
or the inability to deliver because of



                                       62
<PAGE>

changed  address of which no notice was given as herein required shall be deemed
to be receipt of the  notice,  demand or  request  sent.  By giving to the other
party  hereto at least  fifteen  (15)  days'  prior  written  notice  thereof in
accordance with the provisions  hereof,  the parties hereto shall have the right
from time to time to change their  respective  addresses and each shall have the
right to specify as its address any other  address  within the United  States of
America.

         4.6      Successors  and  Assigns;  Joint and  Several  Liability.  The
terms, provisions, indemnities, covenants and conditions hereof shall be binding
upon Grantor and the successors and assigns of Grantor, including all successors
in  interest  of  Grantor in and to all or any part of the Trust  Property,  and
shall  inure  to  the  benefit  of   Beneficiary,   its   directors,   officers,
shareholders,  employees and agents and their respective  successors and assigns
and shall  constitute  covenants  running with the land.  All references in this
Deed of Trust to Grantor  or  Beneficiary  shall be deemed to  include  all such
parties' successors and assigns, and the term "Beneficiary" as used herein shall
also  mean and refer to any  lawful  holder or  owner,  including  pledgees  and
participants, of any of the Debt.

         4.7      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,  and any determination  that the application of
any provision of this Deed of Trust 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.

         4.8      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.

         4.9      Waiver;  Discontinuance of Proceedings.  Beneficiary may waive
any single Event of Default by Grantor hereunder without waiving any other prior
or subsequent  Event of Default.  Beneficiary may remedy any Event of Default by
Grantor  hereunder  without waiving the Event of Default  remedied.  Neither the
failure by Beneficiary to exercise,  nor the delay by Beneficiary in exercising,
any right,  power or remedy upon any Event of Default by Grantor hereunder shall
be construed as a waiver of such Event of 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 Beneficiary 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 Grantor  therefrom shall in any event be effective  unless the same
shall be in writing and signed by  Beneficiary,  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  Grantor in any case shall of itself  entitle
Grantor  to  any  other  or  further  notice  or  demand  in  similar  or  other
circumstances.  Acceptance by  Beneficiary of any payment in an amount less than
the amount then due on any of the Debt shall be deemed an  acceptance on account
only and shall not in any way affect the  existence  of an Event of Default.  In
case  Beneficiary  shall have proceeded to invoke any right,  remedy or recourse
permitted hereunder or under the other Loan Documents and shall thereafter elect
to  discontinue or abandon the same for any reason,  Beneficiary  shall have the
unqualified right to do so and, in such an event,  Grantor and Beneficiary shall
be restored to their former



                                       63
<PAGE>

positions with respect to the Debt, the Loan  Documents,  the Trust Property and
otherwise, and the rights,  remedies,  recourses and powers of Beneficiary shall
continue as if the same had never been invoked.

         4.10     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.

         4.11     GOVERNING  LAW.  THIS DEED OF TRUST  WILL BE  GOVERNED  BY AND
CONSTRUED  IN  ACCORDANCE  WITH THE LAWS OF THE STATE IN WHICH THE  PREMISES  IS
LOCATED,  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,  AND  PROVIDED  FURTHER  THAT  THE LAWS OF THE  STATE IN WHICH  THE
PREMISES IS LOCATED SHALL GOVERN AS TO THE CREATION, PRIORITY AND ENFORCEMENT OF
LIENS AND SECURITY INTERESTS IN THE TRUST PROPERTY LOCATED IN SUCH STATE.

         4.12     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 Premises is located,  the
period  shall be deemed to end on the next  succeeding  business  day.  The term
"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.

         4.13     Relationship of the Parties.  The relationship between Grantor
and  Beneficiary  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.

         4.14     Application  of the  Proceeds of the Note.  To the extent that
proceeds  of the Note are used to pay  indebtedness  secured by any  outstanding
lien, security interest, charge or prior encumbrance against the Trust Property,
such  proceeds  have been  advanced  by  Beneficiary  at  Grantor's  request and
Beneficiary  shall be subrogated to any and all rights,  security  interests and
liens  owned  by any  owner  or  holder  of  such  outstanding  liens,  security
interests, charges or encumbrances, irrespective of whether said liens, security
interests, charges or encumbrances are released.

         4.15     Unsecured  Portion  of  Indebtedness.  If any part of the Debt
cannot  be  lawfully  secured  by this Deed of Trust or if any part of the Trust
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.

         4.16     Cross-Default;  Cross-Collateralization.  Grantor acknowledges
that  Beneficiary  has made the loan  evidenced  by the Note to Grantor upon the
security of its collective  interest in the Trust  Property and Other  Mortgaged
Properties  and in reliance upon the  aggregate of the Trust  Property and Other
Mortgaged  Properties  taken  together  being of  greater  value  as  collateral


                                       64
<PAGE>

security than the sum of the Trust Property and Other Mortgaged Properties taken
separately. Grantor agrees that this Deed of Trust and the other Contemporaneous
Mortgages are and will be  cross-collateralized  and  cross-defaulted  with each
other so that (i) an Event of Default  under either this Deed of Trust or any of
the  Contemporaneous  Mortgages shall  constitute an Event of Default under both
this Deed of Trust and the  Contemporaneous  Mortgages which secure the Note and
the  Contemporaneous  Notes;  (ii) an  Event of  Default  under  the Note  shall
constitute  an  Event  of  Default  under  each  of  this  Deed  of  Trust,  the
Contemporaneous  Notes, the  Contemporaneous  Mortgages and the  Contemporaneous
Assignments; and (iii) each of this Deed of Trust, the Contemporaneous Notes and
the  Contemporaneous   Mortgages  and  the  Contemporaneous   Assignments  shall
constitute  security for the Note and the  Contemporaneous  Notes as if a single
blanket lien were placed on the Trust Property and Other Mortgaged Properties as
security for the Note and the Contemporaneous Notes.

         4.17     Interest  After Sale.  In the event the Trust  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  (pursuant to the laws of the state in which the Premises
is located), bear interest at the Default Interest Rate.

         4.18     Inconsistency  with Other Loan Documents.  In the event of any
inconsistency  between the  provisions  hereof and the  provisions in any of the
other Loan  Documents,  it is  intended  that the  provisions  of the Note shall
control over the  provisions of this Deed of Trust,  and that the  provisions of
this Deed of Trust shall control over the provisions of the Assignment of Leases
and Rents, the Guaranty and Indemnity  Agreement,  the  Environmental  Indemnity
Agreement, and the other Loan Documents.

         4.19     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.

         4.20     No  Merger.  It is the  desire and  intention  of the  parties
hereto  that this Deed of Trust and the lien  hereof do not merge in fee  simple
title to the Trust  Property.  It is hereby  understood  and agreed  that should
Beneficiary  acquire  any  additional  or  other  interests  in or to the  Trust
Property or the ownership thereof,  then, unless a contrary intent is manifested
by Beneficiary as evidenced by an appropriate document duly recorded,  this Deed
of Trust  and the lien  hereof  shall  not  merge  in such  other or  additional
interests  in or to the Trust  Property,  toward the end that this Deed of Trust
may be  foreclosed  as if  owned  by a  stranger  to said  other  or  additional
interests.

         4.21     Rights  With  Respect  to Junior  Encumbrances.  Any person or
entity  purporting  to have or to take a junior  mortgage or other lien upon the
Trust  Property  or any  interest  therein  shall be  subject  to the  rights of
Beneficiary to amend, modify,  increase,  vary, alter or supplement this Deed of
Trust,  the Note or any of the other Loan Documents,  and to extend the maturity
date of the Debt,  and to  increase  the  amount  of the  Debt,  and 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



                                       65
<PAGE>

any  collateral  or  security  for the  Debt,  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.

         4.22     Beneficiary  May  File  Proofs  of  Claim.  In the case of any
receivership, insolvency, bankruptcy,  reorganization,  arrangement, adjustment,
composition or other proceedings  affecting  Grantor or the principals,  general
partners  or managing  members in  Grantor,  or their  respective  creditors  or
property, Beneficiary, 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  Beneficiary  allowed in such  proceedings  for the
entire  Debt at the  date of the  institution  of such  proceedings  and for any
additional  amount which may become due and payable by Grantor  hereunder  after
such date.

         4.23     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 Trust Property which are or are to
become  fixtures.  This Deed of Trust  shall also be  effective  as a  financing
statement  covering  minerals or the like  (including  oil and gas) and is to be
filed for record in the real estate  records of the county where the Premises is
situated.  The mailing  address of Grantor and the address of  Beneficiary  from
which  information  concerning  the security  interests  may be obtained are set
forth in Section 1.22 above.

         4.24     After-Acquired  Trust  Property.   All  property  acquired  by
Grantor  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 Grantor and without further
mortgage,  conveyance  or  assignment  become  subject to the lien and  security
interest  created by this Deed of Trust.  Nevertheless,  Grantor shall  execute,
acknowledge,  deliver  and record or file,  as  appropriate,  all and every such
further mortgages,  security agreements,  financing statements,  assignments and
assurances as Beneficiary  shall require for  accomplishing the purposes of this
Deed of Trust.

         4.25     No Representation.  By accepting delivery of any item required
to be observed, performed or fulfilled or to be given to Beneficiary 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,  Beneficiary 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 Beneficiary.

         4.26     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. Any signature page of this Deed of Trust may be
detached from any counterpart of this Deed of Trust without  impairing the legal
effect of any signatures  thereon and may be attached to another  counterpart of
this Deed of Trust  identical  in form  hereto but having  attached to it one or
more additional signature pages.



                                       66
<PAGE>

         4.27     Personal Liability.  Notwithstanding  anything to the contrary
contained  in this Deed of Trust,  the  liability  of Grantor and its  officers,
directors,  general partners,  managers, members and principals for the Debt 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 2.6 of
the Note.

         4.28     Recording  and Filing.  Grantor 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
Beneficiary shall reasonably request, and will pay on demand all such recording,
filing,  re-recording and re-filing taxes, fees and other charges. Grantor shall
reimburse  Beneficiary,  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 Trust Property.

         4.29     Entire Agreement and Modifications. This Deed of Trust and the
other Loan Documents contain the entire agreements  between the parties 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.
This Deed of Trust and the other Loan  Documents  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. Any
alleged amendment,  revision, waiver, discharge, release or termination which is
not so documented shall not be effective as to any party.

         4.30     Maximum Interest.  The provisions of this Deed of Trust and of
all  agreements  between  Grantor  and  Beneficiary,  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  Beneficiary  for the use,  forbearance  or
retention  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
Grantor and Beneficiary  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,  Beneficiary 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 Beneficiary, be paid
over to Grantor, and not to the payment of Interest. All Interest (including any
amounts  or  payments  deemed  to be  Interest)  paid  or  agreed  to be paid to
Beneficiary  shall,  to the extent  permitted by  applicable  law, be amortized,
prorated,  allocated and spread throughout the full period until payment in full
of the principal  balance of the Note so that the Interest thereon for such full
period will not exceed the maximum  amount  permitted by  applicable  law.  This
Section will control all agreements between Grantor and Beneficiary.



                                       67
<PAGE>

         4.31     Interest Payable by Beneficiary. Beneficiary shall cause funds
in the  Replacement  Reserve  and  the  Repair  and  Remediation  Reserve  to be
deposited into interest bearing  accounts of the type customarily  maintained by
Beneficiary or its servicing agent for the investment of similar reserves, which
accounts  may not yield the  highest  interest  rate  then  available.  Interest
payable on such amounts shall be computed based on the daily outstanding balance
in  the  Replacement  Reserve  and  the  Repair  and  Remediation   Reserve,  as
applicable.  Such  interest  shall be  calculated  on a  simple,  non-compounded
interest basis based solely on contributions made to the Replacement Reserve and
the Repair and  Remediation  Reserve by Grantor.  All interest earned on amounts
contributed to the Replacement  Reserve and the Repair and  Remediation  Reserve
shall be retained by Beneficiary  and accumulated for the benefit of Grantor and
added to the balance in the  Replacement  Reserve or the Repair and  Remediation
Reserve,  as  applicable,  and shall be  disbursed  for payment of the items for
which  other  funds in the  Replacement  Reserve or the  Repair and  Remediation
Reserve, as applicable, are to be disbursed.

         4.32     Secondary Market.  Beneficiary may sell, assign,  participate,
transfer or deliver  the Note and the Loan  Documents  to one or more  investors
(directly  or through a trust of other  entity  which may sell  certificates  or
other  instruments to investor) in the secondary  mortgage  market (a "Secondary
Market Transaction").  In connection with such sale, assignment,  participation,
transfer  or  delivery,  Beneficiary  may  retain or assign  responsibility  for
servicing  the loan  evidenced by the Note or may  delegate  some or all of such
responsibility and/or obligations to a servicer,  including, but not limited to,
any subservicer or master servicer, on behalf of the investors.

         4.33     Dissemination of Information. If Beneficiary determines at any
time to sell,  transfer  or assign  the Note,  this Deed of Trust and other Loan
Documents,  and any or all servicing  rights with respect  thereto,  or to grant
participations  therein (the  "Participations")  or issue mortgage  pass-through
certificates or other securities  evidencing a beneficial interest in a rated or
unrated public offering or private placement (the "Securities"), Beneficiary may
forward  to each  purchaser,  transferee,  Beneficiary,  servicer,  participant,
investor,   or  their  respective   successors  in  such  Participations  and/or
Securities  (collectively,  the  "Investors")  or any Rating  Agency rating such
Securities,  each  prospective  Investor and each of the foregoing's  respective
counsel,  all  documents  and  information  which  Beneficiary  now  has  or may
hereafter  acquire  relating to the Debt, to  Beneficiary,  any  guarantor,  any
indemnitor,  and  the  Trust  Property,  which  shall  have  been  furnished  by
Beneficiary  and  any  Indemnitor,   as  Beneficiary   determines  necessary  or
desirable.  If at any time during which the Loan is an asset of a securitization
or is otherwise an asset of any rated  transaction,  "Rating  Agency" or "Rating
Agencies" 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.

         4.34     Contemporaneous   Notes,    Contemporaneous    Mortgages   and
Contemporaneous  Assignments  of Leases  and  Rents.  This Deed of Trust is made
contemporaneously  with  seven (7)  other  promissory  notes,  each of even date
herewith (the "Contemporaneous  Notes"), seven (7) other deeds of trust, each of
even  date  herewith  (the  "Contemporaneous  Mortgages")  and  seven  (7) other
Assignment of Leases and Rents, each of even date herewith (the "Contemporaneous
Assignments"),  given by  Grantor or  CRIT-NC  II, LLC to or for the  benefit of


                                       68
<PAGE>

Beneficiary  covering  properties  listed together with the Trust  Property,  on
Exhibit B attached hereto and incorporated  herein by this reference (the "Other
Mortgaged Properties").

         4.35     Certain  Matters  Relating  to Trust  Property  Located in the
Commonwealth of Virginia. With respect to the Trust Property which is located in
the Commonwealth of Virginia,  notwithstanding  anything contained herein to the
contrary:

                  (a)      Acceleration;   Remedies.  At  any  time  during  the
existence of an Event of Default,  Beneficiary,  at  Beneficiary's  option,  may
declare the Debt to be immediately due and payable  without further demand,  and
may invoke the power of sale and any other remedies permitted by Virginia law or
provided  in  this  Deed  of  Trust  or in  any  other  Loan  Document.  Grantor
acknowledges  that  the  power of sale  granted  in this  Deed of  Trust  may be
exercised by Beneficiary  without prior judicial hearing.  Grantor has the right
to bring an action to assert that an Event of Default does not exist or to raise
any other defense Grantor may have to acceleration and sale.  Beneficiary  shall
be  entitled  to  collect  all costs and  expenses  incurred  in  pursuing  such
remedies,  including attorneys' fees, costs of documentary  evidence,  abstracts
and title reports.

                  If  Beneficiary  invokes  the  power of sale,  Beneficiary  or
Trustee  shall  deliver  a copy of a notice  of sale to  Grantor  in the  manner
prescribed by Virginia law.  Trustee shall give public notice of the sale in the
manner  prescribed by Section  55-59.2 of the Code of Virginia  (1950) and shall
sell the Trust  Property in accordance  with Virginia law.  Grantor  agrees that
publication of a notice of sale once (1) per week for four (4) successive  weeks
in a newspaper  having  general  circulation  in the city or county in which the
Trust  Property  is  located  shall  constitute  sufficient  notice of the sale.
Trustee,  without  demand on  Grantor,  shall sell the Trust  Property at public
auction  to the  highest  bidder  at the time and  place  and  under  the  terms
designated  in the  notice of sale in one or more  parcels  and in such order as
Trustee may  determine.  Trustee may postpone the sale of all or any part of the
Trust  Property by public  announcement  at the time and place of any previously
scheduled sale or by advertising in accordance with Virginia law. Beneficiary or
Beneficiary's designee may purchase the Trust Property at any sale.

                  Trustee shall  deliver to the purchaser at the sale  Trustee's
deed  conveying the Trust Property so sold with special  warranty of title.  The
recitals in  Trustee's  deed shall be prima  facie  evidence of the truth of the
statements made in those recitals.  Trustee shall apply the proceeds of the sale
in the  following  order:  (a) to all costs and expenses of the sale,  including
Trustee's fees of one percent (1%) of the gross sale price,  attorneys' fees and
costs of title evidence;  (b) to the discharge of all taxes, if any, as provided
by Virginia law; (c) to the Debt in such order as Beneficiary,  in Beneficiary's
discretion,  directs;  and (d) the  excess,  if any,  to the  person or  persons
legally entitled to the excess, including, if any, the holders of liens inferior
to this Deed of Trust in the order of their priority,  provided that Trustee has
actual notice of such liens. Trustee shall not be required to take possession of
the  Trust  Property  before  the sale or to  deliver  possession  of the  Trust
Property to the purchaser at the sale.

                  (b)      Statutory  Provisions.  The  following  provisions of
Section 55-60, Code of Virginia (1950), as amended,  are made applicable to this
Deed of Trust:



                                       69
<PAGE>

                           Exemptions waived
                           Subject to all upon default
                           Renewal or extension permitted
                           Substitution of trustee permitted
                           Any trustee may act

                  (C)      WAIVER OF TRIAL BY JURY. GRANTOR AND BENEFICIARY EACH
(A)  COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE
ARISING  OUT OF THIS DEED OF TRUST OR THE  RELATIONSHIP  BETWEEN  THE PARTIES AS
BORROWER  AND LENDER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT
TO TRIAL BY JURY WITH  RESPECT TO SUCH  ISSUE TO THE EXTENT  THAT ANY SUCH RIGHT
EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY
GIVEN BY EACH PARTY,  KNOWINGLY  AND  VOLUNTARILY  WITH THE BENEFIT OF COMPETENT
LEGAL COUNSEL.


                                   ARTICLE V.
                             CONCERNING THE TRUSTEE

         5.1      Certain  Rights.  With the  approval of  Beneficiary,  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 Beneficiary) 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 or her agents or  attorneys,  (iii) to select and employ,  in and
about  the  execution  of his or her  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  Beneficiary  may instruct  Trustee to take to
protect  or  enforce  Beneficiary'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  Trust  Property  for debts
contracted  for or liability or damages  incurred in the management or operation
of the Trust  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.  Grantor will, from
time to time, pay reasonable compensation due to Trustee hereunder and reimburse
Trustee for, and save and hold Trustee harmless  against,  any and all liability
and reasonable  expenses which may be incurred by Trustee in the  performance of
Trustee's duties.



                                       70
<PAGE>

         5.2      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,  and shall be  segregated  from any other  moneys of
Trustee.

         5.3      Successor Trustees. Trustee may resign by the giving of notice
of such  resignation in writing to Beneficiary.  If Trustee shall die, resign or
become  disqualified  from acting in the execution of this trust, or if, for any
reason, Beneficiary, in Beneficiary's sole discretion and with or without cause,
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,  Beneficiary  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 Beneficiary,  and if such  Beneficiary be a
corporation  and such  appointment  be  executed on 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.  Grantor
hereby ratifies and confirms any and all acts which the aforenamed  Trustee,  or
his or her 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. Any prior  election to act
jointly  or  severally  shall  not  prevent  either  or both  of  such  multiple
substitute Trustees from subsequently  executing,  jointly or severally,  any or
all of the provisions hereof.

         5.4      Perfection of  Appointment.  Should any deed,  conveyance,  or
instrument  of any nature be required  from Grantor by any Trustee or substitute
Trustee to more fully and certainly vest in and confirm to Trustee or substitute
Trustee such estates,  rights, powers, and duties, then, upon request by 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 Grantor.

         5.5      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, his or her  predecessor in the rights  hereunder with like effect
as if originally  named as Trustee herein;  but  nevertheless,  upon the written
request of Beneficiary 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 such Trustee's place.

         5.6      No Representation  by Trustee or Beneficiary.  By accepting or
approving  anything  required to be observed,  performed,  or fulfilled or to be
given to Trustee or Beneficiary



                                       71
<PAGE>

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
Beneficiary  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 or Beneficiary.



             [THE BALANCE OF THIS PAGE WAS LEFT BLANK INTENTIONALLY]






                                       72
<PAGE>

         IN WITNESS WHEREOF,  Grantor has executed this Deed of Trust on the day
and year first written above.


                                    GRANTOR:

                                    CRIT-VA, Inc.,
                                    a Virginia corporation


                                    By: /s/ Stanley J. Olander, Jr.
                                       -----------------------------------------
                                       Name:      Stanley J. Olander, Jr.
                                       Title:     Vice President







<PAGE>



STATE/COMMONWEALTH OF  Virginia
                      -------------
CITY/COUNTY OF  Richmond
               ---------------


The foregoing  instrument was acknowledged  before me this 11th day of December,
2000 by Stanley J. Olander, Jr., the Vice President of CRIT-VA, INC., a Virginia
corporation, on behalf of said corporation.


[SEAL]


/s/ Yvonne Z-Burns
-----------------------
Notary Public


My Commission expires: September 30, 2003.
                      --------------------




<PAGE>




                                    EXHIBIT A

                                Legal Description



                                    [OMITTED]

<PAGE>





                                    EXHIBIT B


                               Mortgaged Property

1.       The Mayflower  Apartments,  205-34th Street,  Virginia Beach,  Virginia
         23451.


                           Other Mortgaged Properties

1.       Ashley Park Apartments, 6901 Marlowe Road, Richmond, Virginia 23225.

2.       Arbor Trace  Apartments,  Virginia Beach,  Virginia - 624 Suhtai Court,
         Virginia Beach, Virginia 23451.

3.       The Gables Apartments, 4008 Gaelic Lane, Glen Allen, Virginia 23060.

4.       Trolley Square Apartments, 104 West Franklin Street, Richmond, Virginia
         23220.

5.       Trophy Chase Apartments, 2407 Peyton Drive, Charlottesville, VA 22901.

6.       Summerwalk Apartments,  Concord, North Carolina - 500 Summerlake Drive,
         Concord, North Carolina 28205

7.       Heatherwood  Apartments,  Charlotte,  North Carolina - 5931  Providence
         Road, Charlotte, North Carolina 28226


                              Contemporaneous Notes

1.       $9,500,000.00   Promissory   Note  from   CRIT-VA,   Inc.,  a  Virginia
         corporation,   to  First  Union  National  Bank,  a  national   banking
         association,  secured by Ashley  Park  Apartments,  Richmond,  Virginia
         (Loan No.: 26-5950376).

2.       $8,000,000.00   Promissory   Note  from   CRIT-VA,   Inc.,  a  Virginia
         corporation,   to  First  Union  National  Bank,  a  national   banking
         association,  secured by The Gables  Apartments,  Glen Allen,  Virginia
         (Loan No.: 26-5950385).

3.       $9,500,000.00   Promissory   Note  from   CRIT-VA,   Inc.,  a  Virginia
         corporation,   to  First  Union  National  Bank,  a  national   banking
         association,  secured by Trolley Square Apartments,  Richmond, Virginia
         (Loan No.: 26-5950388).

4.       $15,000,000.00   Promissory   Note  from  CRIT-VA,   Inc.,  a  Virginia
         corporation,   to  First  Union  National  Bank,  a  national   banking
         association,  secured  by  Trophy  Chase  Apartments,  Charlottesville,
         Virginia (Loan No.: 26-5950389).



<PAGE>

5.       $5,000,000.00   Promissory   Note  from   CRIT-VA,   Inc.,  a  Virginia
         corporation,   to  First  Union  National  Bank,  a  national   banking
         association,   secured  by  Arbor  Trace  Apartments,  Virginia  Beach,
         Virginia (Loan No.: 26-5950375).

6.       $6,000,000.00   Promissory  Note  from  CRIT-NC  II,  LLC,  a  Virginia
         corporation,   to  First  Union  National  Bank,  a  national   banking
         association,  secured by Summerwalk Apartments, Concord, North Carolina
         (Loan No.: 26-5950383).

7.       $16,250,000.00  Promissory  Note  from  CRIT-NC  II,  LLC,  a  Virginia
         corporation,   to  First  Union  National  Bank,  a  national   banking
         association,  secured  by  Heatherwood  Apartments,   Charlotte,  North
         Carolina (Loan No.: 26-5950379).


                            Contemporaneous Mortgages


1.       Deed of Trust and Security  Agreement  from  CRIT-VA,  Inc., a Virginia
         corporation,  to TRSTE, Inc., a Virginia corporation, a Trustee for the
         benefit of First Union National Bank, a national  banking  association,
         secured  by Ashley  Park  Apartments,  Richmond,  Virginia  (Loan  No.:
         26-5950376).

2.       Deed of Trust and Security  Agreement  from  CRIT-VA,  Inc., a Virginia
         corporation, to TRSTE, Inc., a Virginia corporation, as Trustee for the
         benefit of First Union National Bank, a national  banking  association,
         secured by The  Gables  Apartments,  Glen  Allen,  Virginia  (Loan No.:
         26-5950385).

3.       Deed of Trust and Security  Agreement  from  CRIT-VA,  Inc., a Virginia
         corporation, to TRSTE, Inc., a Virginia corporation, as Trustee for the
         benefit of First Union National Bank, a national  banking  association,
         secured by Trolley  Square  Apartments,  Richmond,  Virginia (Loan No.:
         26-5950388).

4.       Deed of Trust and Security  Agreement  from  CRIT-VA,  Inc., a Virginia
         corporation, to TRSTE, Inc., a Virginia corporation, as Trustee for the
         benefit of First Union National Bank, a national  banking  association,
         secured by Trophy Chase  Apartments,  Charlottesville,  Virginia  (Loan
         No.: 26-5950389).

5.       Deed of Trust and Security  Agreement  from  CRIT-VA,  Inc., a Virginia
         corporation, to TRSTE, Inc., a Virginia corporation, as Trustee for the
         benefit of First Union National Bank, a national  banking  association,
         secured by Arbor Trace Apartments,  Virginia Beach, Virginia (Loan No.:
         26-5950375).

6.       Deed of Trust and Security  Agreement  from CRIT-NC II, LLC, a Delaware
         limited liability company,  to TRSTE, Inc., a Virginia  corporation,  a
         Trustee  for the  benefit  of First  Union  National  Bank,  a national
         banking association,  secured by Summerwalk Apartments,  Concord, North
         Carolina (Loan No.: 26-5950383).



<PAGE>

7.       Deed of Trust and Security  Agreement  from CRIT-NC II, LLC, a Delaware
         limited liability company,  to TRSTE, Inc., a Virginia  corporation,  a
         Trustee  for the  benefit  of First  Union  National  Bank,  a national
         banking  association,  secured by  Heatherwood  Apartments,  Charlotte,
         North Carolina (Loan No.: 26-5950379).


                           Contemporaneous Assignments

1.       Assignment  of  Leases  and  Rents  from  CRIT-VA,   Inc.,  a  Virginia
         corporation,  in favor of First Union National Bank, a national banking
         association,  secured by Ashley  Park  Apartments,  Richmond,  Virginia
         (Loan No.: 26-5950376).

2.       Assignment  of  Leases  and  Rents  from  CRIT-VA,   Inc.,  a  Virginia
         corporation,  in favor of First Union National Bank, a national banking
         association,  secured The Gables Apartments, Glen Allen, Virginia (Loan
         No.: 26-5950385).

3.       Assignment  of  Leases  and  Rents  from  CRIT-VA,   Inc.,  a  Virginia
         corporation,  in favor of First Union National Bank, a national banking
         association,  secured by Trolley Square Apartments,  Richmond, Virginia
         (Loan No.: 26-5950388).

4.       Assignment  of  Leases  and  Rents  from  CRIT-VA,   Inc.,  a  Virginia
         corporation,  in favor of First Union National Bank, a national banking
         association,  secured  by  Trophy  Chase  Apartments,  Charlottesville,
         Virginia (Loan No.: 26-5950389).

5.       Assignment  of  Leases  and  Rents  from  CRIT-VA,   Inc.,  a  Virginia
         corporation,  in favor of First Union National Bank, a national banking
         association,   secured  by  Arbor  Trace  Apartments,  Virginia  Beach,
         Virginia (Loan No.: 26-5950389).

6.       Assignment of Leases and Rents from CRIT-NC II, LLC, a Delaware limited
         liability  company,  in favor of First Union  National Bank, a national
         banking association,  secured by Summerwalk Apartments,  Concord, North
         Carolina (Loan No.: 26-5950383).

7.       Assignment of Leases and Rents from CRIT-NC II, LLC, a Delaware limited
         liability  company,  in favor of First Union  National Bank, a national
         banking  association,  secured by  Heatherwood  Apartments,  Charlotte,
         North Carolina (Loan No.: 26-5950379).





<PAGE>

                                    EXHIBIT C

                                 Loan Documents


1.       $10,500,000.00  Promissory  Note  from  CRIT-VA,  Inc.  to First  Union
         National Bank

2.       Deed of Trust and Security Agreement from CRIT-VA,  Inc. to First Union
         National Bank

3.       Indemnity and Guaranty  Agreement from Cornerstone Realty Income Trust,
         Inc. to First Union National Bank

4.       Environmental  Indemnity  Agreement from CRIT-VA,  Inc. and Cornerstone
         Realty Income Trust, Inc. to First Union National Bank

5.       Assignment  of Leases  and Rents  from  CRIT-VA,  Inc.  to First  Union
         National Bank

6.       Assignment of Warranties and Other Contract  Rights from CRIT-VA,  Inc.
         to First Union National Bank

7.       Consent and  Agreement of Manager by  Cornerstone  Realty Income Trust,
         Inc. to First Union National Bank

8.       Disbursement Authorization by CRIT-VA, Inc.

9.       Receipt and Closing Certificate by CRIT-VA, Inc. and Cornerstone Realty
         Income Trust, Inc.

10.      Form W-9 by CRIT-VA, Inc.

11.      Residential Lease Certificate by CRIT-VA, Inc.

12.      Personal Property Certificate by CRIT-VA, Inc.

13.      Rent Roll Certificate by CRIT-VA, Inc.

14.      Service Contract Certificate by CRIT-VA, Inc.

15.      UCC-1  Financings  by  CRIT-VA,   Inc.   (Virginia  State   Corporation
         Commission, City of Virginia Beach and City of Richmond, Virginia)



<PAGE>


                                    EXHIBIT D


                              FORM OF TENANT NOTICE

                            [Letterhead of Landlord]

[Name and Address of Tenant]

Re:  [Name of Property, Unit No. __________]

Dear Tenant:
         You are hereby  directed to make all future  payments of rent and other
sums due to the landlord under the Lease payable as follows:

Payable To:     First Union National Bank
                ----------------------------------------------------------------
                c/o [Servicer]
                ----------------------------------------------------------------
Address:
                ----------------------------------------------------------------

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


         Please take  particular  care in making the check  payable  only to the
above-mentioned  name because only checks made  payable to the  referenced  name
will be credited against sums due by you to landlord. Until otherwise advised in
writing by landlord and the above  mentioned  bank (or its successor or assign),
you should continue to make your payments for rent and other sums as directed by
the terms of this letter.

         Thank you in advance for your  cooperation  with this change in payment
procedures.


By:
    --------------------------