Exhibit 10.43

PREPARED BY:
ANDREW M. CONDLIN
WILLIAMS, MULLEN, CHRISTIAN & DOBBINS
PO BOX 1320
RICHMOND, VA 23210-1320


                                  DEED OF TRUST

                                       AND

                               SECURITY AGREEMENT

                                   Granted By

                            SPURLOCK ADHESIVES, INC.
                             a Virginia Corporation


                                       TO


                                 OTTO W. KONRAD

                                       and

                                 BRUCE H. MATSON

                                    Trustees

                                    Securing

                          KEYBANK NATIONAL ASSOCIATION










                                                     DATE: As of October 1, 1997


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                                  DEED OF TRUST

                                       AND

                               SECURITY AGREEMENT
                         (COLLATERAL INCLUDES FIXTURES)

         THIS DEED OF TRUST AND SECURITY  AGREEMENT is made as of the 1st day of
October, 1997, from SPURLOCK ADHESIVES, INC., a Virginia corporation ("Grantor")
to OTTO W. KONRAD and BRUCE H. MATSON  (collectively,  the "Trustee") as Trustee
for the benefit of KEYBANK NATIONAL ASSOCIATION,  and its successors and assigns
("Beneficiary").

         Capitalized terms herein are defined in Article II.

                                    ARTICLE I

                                    RECITALS

         1.1 The  Loan--Grantor  is indebted to Beneficiary  for the Loan in the
aggregate  principal  sum of Seven  Million Six Hundred  Eighty  Thousand  Eight
Hundred Twenty Two Dollars ($7,680,822) as evidenced by the Note of Grantor.

         1.2 Obligations Secured--This Deed of Trust is partial security for (a)
the full and  punctual  payment of the Loan  according to the terms of the Note,
(b) the payment of all sums due to Beneficiary or Trustee according to the terms
of any of the Loan Documents,  and (c) the performance of, and compliance  with,
all of the obligations of the Grantor contained in the Loan Documents.

                                   ARTICLE II

                                   DEFINITIONS

         Whenever  capitalized in this Deed of Trust,  the following terms shall
have the meaning given in this Article II, unless the context clearly  indicates
a contrary intent.

         2.1 Beneficiary--"Beneficiary"  means KEYBANK NATIONAL ASSOCIATION, its
successors and assigns, and any subsequent holder of the Note.

         2.2 Controlling  Party--"Controlling  Party" means any Person, directly
or  indirectly,  possessing  the power to direct or cause the  direction  of the
management and policies of any trust or entity  comprising the Grantor,  whether
through the ownership or control of voting  securities or rights, by contract or
otherwise.

         2.3 Deed of Trust--"Deed of Trust" means this instrument,


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including  all  current  and future  supplements,  amendments,  and  attachments
thereto.

         2.4  Default--"Default"  means:  (a) the failure of Grantor to perform,
cause to be performed,  abide by, comply with, or observe any duty or obligation
imposed upon Grantor by the Loan  Documents;  (b) the breach of any of Grantor's
warranties  or  covenants  contained  in  any  of  the  Loan  Documents;  (c)  a
misrepresentation  by Grantor,  its  counsel,  or any other  Person on behalf of
Grantor,  in any of the  Loan  Documents;  and  (d)  any  event,  happening,  or
condition  which would  constitute  an Event of Default if not cured  within any
applicable grace period.

         2.5 Encumbrances--"Encumbrances"  include all liens, mortgages, rights,
leases, restrictions,  easements, deeds of trust, covenants,  agreements, rights
of way, rights of redemption, security interests,  conditional sales agreements,
land installment contracts, options, and all other burdens or charges.

         2.6 Event of  Default--"Event  of Default"  has the  meaning  given and
provided in Section 10.1.

         2.7  Grantor--"Grantor"  means,  jointly  and  severally,  the  parties
identified as such in the  introductory  paragraph of this Deed of Trust,  their
successors and assigns,  including any subsequent owner of all or any portion of
Grantor's interest in the Trust Property.

         2.8 Guaranty--"Guaranty"  means the Guaranty Payment and Performance in
favor of the  Beneficiary  executed by  Spurlock  Industries,  Inc.,  a Virginia
corporation,  pursuant to which it guaranties,  among other things, the full and
prompt  payment and  performance  of the  Grantor's  obligations  under the Loan
Documents, subject, however, to the limitations therein contained.

         2.9 Land--"Land" means the land more particularly  described in Exhibit
A to this Deed of Trust.

         2.10 Law--"Law" means all federal,  state,  county, and municipal laws,
regulations, rules, and ordinances, and all rules, regulations and orders of any
other  governmental  authority  including common law and rulings,  decisions and
interpretations of all judicial, quasi-judicial, and administrative bodies.

         2.11  Lease--"Lease"  means each  lease  which  purports  to convey any
interest of Grantor in any portion of the Trust Property and includes  subleases
and assignments of leases and Rents.

         2.12  Legal   Action--"Legal   Action"  includes  all  suits  or  other
proceedings  brought  at law or in equity or before any


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<PAGE>

administrative  agency,  governmental  body, or  arbitrator  which in any manner
relate  to the  Trust  Property  or arise  out of or  relate  to any of the Loan
Documents.

         2.13  Loan--"Loan"  means the extension of credit by the Beneficiary to
the  Grantor in the  aggregate  principal  amount of Seven  Million  Six Hundred
Eighty  Thousand Eight Hundred Twenty Two Dollars  ($7,680,622)  as evidenced by
the Reimbursement Agreement and the Term Loan Note.

         2.14 Loan  Documents--"Loan  Documents"  means this Deed of Trust,  the
Term Loan Note, the Reimbursement Agreement, the Guaranty, and any and all other
certificates,   opinions,  assignments  and  documents  executed  in  connection
herewith or therewith, and all current and future supplements,  amendments,  and
attachments thereto.

         2.15 Note of  Grantor  or  Note--"Note  of  Grantor"  or  "Note"  means
collectively, the Term Loan Note and the Reimbursement Agreement, evidencing the
Loan, including all current and future supplements,  amendments,  extensions and
attachments thereto.

         2.16 Operate--"Operate" means to operate, use, manage, lease, contract,
and control,  including the right to repair, renew, replace, alter, add, better,
and improve.

         2.17 Intentionally omitted.

         2.18 Permitted  Encumbrances--"Permitted  Encumbrances" means this Deed
of Trust  and all  Encumbrances  as to which  Beneficiary  has  given  its prior
written  approval,  liens  arising for real estate  taxes or public  charges for
sewage,  water,  drainage or other public  improvements not yet due and payable,
Leases not in  violation of Section 7.4 and all liens  permitted  under the Loan
Documents.  Permitted  Encumbrances shall include those exceptions  specified on
Exhibit B.

         2.19 Person--"Person" means any individual,  corporation,  partnership,
association, trust, joint venture, or any other legal entity.

         2.20     Property--"Property" has the meaning given in Section 3.3.

         2.21 Real  Property--"Real  Property" means the Land, together with the
improvements and rights  identified in Section 3.1 and all other portions of the
Trust  Property  which may legally be deemed to be real  property  under Section
3.7.

         2.22 Reimbursement  Agreement--means the letter of credit reimbursement
agreement  dated as of  October  1,  1997 by and  between



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the Grantor and the  Beneficiary,  pursuant to which,  among other  things,  the
Beneficiary  agrees to issue the Letter of Credit (as defined  therein)  and the
Grantor agrees to reimburse the  Beneficiary  for amounts drawn under the Letter
of Credit, as said  reimbursement  agreement may be supplemented as amended from
time to time.

         2.23 Rents--"Rents"  includes all rents,  profits,  royalties,  issues,
revenues,  income, proceeds,  earnings, and products generated by or arising out
of the Trust Property.

         2.24 Risk--"Risk"  includes risk of loss or damage by fire,  lightning,
windstorm,  hail, explosion,  riot, riot attending a strike, civil strife, civil
commotion,  aircraft,  vehicles,  smoke, vandalism,  malicious mischief,  boiler
explosion,  and any other risk customarily  insured against by persons operating
property similar in kind to the Trust Property.

         2.25  Taking--"Taking"  includes any taking by  condemnation or eminent
domain, any sale in lieu of condemnation under threat thereof, the alteration of
the grade of any street,  or any other injury to or decrease in the value of the
Trust  Property by any public or  quasi-public  authority or  corporation or any
other person having the power of eminent domain.

         2.26 Taxes--"Taxes" includes all taxes, excises,  documentary stamp and
transfer  taxes,  recording  taxes,  assessments,   water  rents,  sewer  rents,
metropolitan district charges, sanitary district charges, public dues, and other
public  charges  levied or assessed upon the Trust  Property,  upon the Loan, or
upon any Loan Document.

         2.27 Tenant--"Tenant"  means any lessee of Grantor under any Lease, and
any sub-lessee or assignee of a Lease.

         2.28 Term Loan Note--"Term  Loan Note" means the $1,500,000  Promissory
Note dated as of October 10, 1997 from the Grantor to the Beneficiary.

         2.29  Trustee--"Trustee"  means  that  person  or  entity  named in the
introductory  paragraph  including any additional,  successor,  replacement,  or
substitute trustee appointed pursuant to Section 9.2.

         2.30 Trust Property--"Trust  Property" has the meaning given in Section
3.6.

         2.31 Uniform Commercial  Code--"Uniform Commercial Code" means Virginia
Uniform  Commercial Code - Secured  Transactions  (Virginia Code Section 8.9-101
et. seq.) and any amendments thereto or reenactments thereof.


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                                   ARTICLE III

                                GRANTING CLAUSES

         3.1 Lien on Real  Property--The  Grantor,  in consideration of the Loan
and other  valuable  consideration,  the  receipt and  sufficiency  of which are
hereby  acknowledged,  has  granted,  bargained,  sold and conveyed and by these
presents  does hereby  grant,  bargain,  sell and convey unto the  Trustee,  its
heirs,  successors and assigns in trust, with power of sale, for the benefit and
security of the Beneficiary and subject to the terms and conditions  hereinafter
set forth, in fee simple,  forever, the property described in Exhibit A attached
hereto as a part hereof, together with (a) all buildings and improvements now or
hereafter located thereon, (b) all rights,  rights of way, air rights,  riparian
rights,   franchises,    licenses,    easements,    tenements,    hereditaments,
appurtenances,  accessions  and other  rights and  privileges  now or  hereafter
belonging to the Land or the buildings and improvements thereupon,  now owned or
hereafter acquired by the Grantor.

         3.2 Lien on Fixtures and Personal  Property--The Grantor further grants
and assigns to the Trustee for the benefit and security of the  Beneficiary  all
of the  machines,  apparatus,  equipment,  fixtures  and  articles  of  personal
property now or  hereafter  located on the Land or in any  improvements  thereon
(other than that owned by any Tenant),  and all the right, title and interest of
the  Grantor  in and to any of such  property  which may be subject to any title
retention or security  agreement or instrument having priority over this Deed of
Trust.

         3.3 Property--All of the property  described in Sections 3.1 and 3.2 is
hereinafter collectively called the "Property".

         3.4 Lien on Leases  and Rents and  Other  Rights--The  Grantor  further
grants  and  assigns  to  the  Trustee  for  the  benefit  and  security  of the
Beneficiary (a) all Leases and Rents, including, without limitation, all cash or
security  deposits  to  secure  performance  by  Tenants  (whether  such cash or
securities  are to be held until the expiration of the terms of Leases or are to
be applied to one or more of the  installments  of rent  coming due  immediately
prior to the  expiration of such terms),  (b) all of the estate,  right,  title,
use, claim and demand of every nature whatsoever, at law or in equity, which the
Grantor may now have or may  hereafter  acquire  in, to or with  respect to, the
Property,  and (c) all right,  title and  interest  of the Grantor in and to all
extensions,  betterments,  renewals,  substitutes and  replacements  of, and all
additions and appurtenances to, the Property,  hereafter acquired by or released
to the Grantor, or constructed, assembled or placed by or for the Grantor on the
Property, and all


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conversions of the security constituted thereby.

         3.5 Lien on Insurance  Policies and  Condemnation  Awards--The  Grantor
further  grants and assigns to the Trustee all insurance  policies and insurance
proceeds  pertaining  to the  Property  and all  awards or  payments,  including
interest  thereon  and the right to  receive  the  same,  which may be made with
respect  to any of the  Property  as a result of any  Taking or any injury to or
decrease in the value of the Property.

         3.6 The Trust  Property--All of the property  described in this Article
III is collectively called the "Trust Property."

         3.7 Security Interest Under the Uniform Commercial Code--Any portion of
the Trust Property which by law is or may be real property shall be deemed to be
a part  of the  Real  Property  for the  purposes  of this  Deed of  Trust.  The
remainder of the Trust Property shall be subject to the Uniform Commercial Code,
and this Deed of Trust  shall  constitute  a  Security  Agreement  with  respect
thereto.  Grantor hereby grants to the  Beneficiary a security  interest in that
portion of the Trust  Property  not deemed a part of the Real  Property  for the
purpose of securing  performance of all of Grantor's  obligations under the Loan
Documents.  With  respect to such  security  interest  (a) the  Beneficiary  may
exercise all rights  granted or to be granted a secured  party under the Uniform
Commercial Code as enacted in Virginia,  and (b) upon the occurrence of an Event
of  Default  as  defined  hereunder,  the  Beneficiary  shall  have a  right  of
possession  superior  to any right of  possession  of the  Grantor or any person
claiming through or on behalf of the Grantor.

         3.8 Limitation on  Security--Notwithstanding  any amount  otherwise due
Beneficiary   pursuant  to  the  terms  of  the  Note,  the  maximum   principal
indebtedness secured hereby is Two Million Dollars ($2,000,000).

                                   ARTICLE IV

                         HABENDUM CLAUSE AND DEFEASANCES

         4.1 Habendum  Clause--TO  HAVE AND TO HOLD the Trust  Property unto the
Trustee and its heirs,  successors and assigns, in fee simple forever,  upon the
terms and trust herein set forth.

         4.2  Termination of the Trust--If all obligations of Grantor under this
Deed of Trust and the other Loan Documents, are paid and satisfied in accordance
with the terms hereof and thereof, the estate hereby granted shall cease and the
Trust Property shall be released to the Grantor, at the cost of the Grantor.



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                                    ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

         5.1 Warranty of Title and Further Assurances--The Grantor covenants and
warrants that the Grantor is seized of the Trust Property in fee simple and that
it has the right and authority to convey the Trust Property in fee simple;  that
the  same  are  free  and  clear  of  all  Encumbrances   except  for  Permitted
Encumbrances;  that  Grantor  warrants  generally  title to the  Trust  Property
against the claims of all persons  whomsoever  with English  covenants of title;
and that it will  execute  such  further  assurances  as may be requested by the
Trustee or Beneficiary.

         5.2  Existence,  Good  Standing,  Power and  Authority of  Grantor--The
Grantor is a Virginia corporation  organized and in good standing under the laws
of the  Commonwealth  of  Virginia,  and will  maintain  its good  standing  and
existence until all of Grantor's  obligations under the Loan Documents have been
performed and satisfied.  The execution and delivery of the Loan Documents,  the
performance of the  transactions  contemplated  by the Loan  Documents,  and the
performance  of  Grantor's  and  any  guarantor's  obligations  under  the  Loan
Documents,  have been  duly  authorized  by all  necessary  action  and will not
conflict with or result in a breach of Law or any agreement or other  instrument
to which  Grantor or any  guarantor is bound.  The Loan  Documents are valid and
binding on Grantor and any guarantor thereof and are enforceable against Grantor
and  each  such  guarantor  in  accordance  with  their  respective   terms,  as
applicable.

         5.3 Environmental Protection. The Grantor represents and warrants that:
(i)  the  Grantor  has no  knowledge  of the  presence  of or of any  discharge,
spillage, uncontrolled loss, seepage or filtration of oil, petroleum or chemical
liquids  or  solids,  liquid  or  gaseous  products  or any  hazardous  waste or
hazardous substance (the "Hazard"), as those terms are used in the Comprehensive
Environmental  Response,  Compensation  and  Liability  Act of  1980,  42  U.S.C
ss.ss.9601 et seq., as amended by the Superfund  Amendments and  Reauthorization
Act of 1986;  the Resource  Conservation  and  Recovery Act of 1976.  (the Solid
Waste Disposal Act or RCRA), 42 U.S.C. ss.ss.6901 et seq., as amended; the Toxic
Substance  Control  Act  (TSCA) 15 U.S.C.  ss.ss.2601  et seq.,  or in any other
federal, state or local law governing hazardous substances,  as such laws may be
amended from time to time, (collectively,  the "Act"), at, upon, under or within
the  Property;  and (ii) the  Grantor has not caused or  permitted  to occur and
shall use its best efforts not to permit to exist, any condition which may cause
or constitute a Hazard at, upon, under or within the Property. The term "Hazard"
includes but is not limited to  asbestos,  polychlorinated  biphenyl  (PCBs) and


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lead  based  paints.   Notwithstanding  the  foregoing,  the  Grantor  makes  no
representation  or warranty under Section 5.3(i) with respect to (a) those items
set forth in the Findings Report Preliminary Environmental Inspections, prepared
by  Froehling & Robertson,  Inc.,  dated June 25, 1996, a copy of which has been
delivered  to the  Beneficiary,  (b)  discharges  made in the  normal  course of
business  pursuant to applicable  permits for the benefit of Grantor pursuant to
applicable  law, and (c)  discharge,  spillage,  uncontrolled  loss,  seepage or
filtration of any Hazard which is deminimus  and is occurring  during the normal
course of business.

                  5.3.1 The Grantor  further  represents  and warrants  that (i)
neither the Grantor nor, to the best of its  knowledge,  any other party,  is or
will be involved in operations upon the Property, which operations could lead to
(a) the  imposition  of liability on the Grantor or on any other  subsequent  or
former owner of the Property under the Act; or (b) the creation of a lien on the
Property  under the Act or under any similar laws or  regulations;  and (ii) the
Grantor has not  permitted,  and will not permit,  any tenant or occupant of the
Property to engage in any activity that could impose  liability under the Act on
such  tenant or  occupant,  on the  Grantor or on any other  owner of any of the
Property.

                  5.3.2 The  Grantor  has  complied,  and shall  comply,  in all
material  respects with the requirements of the Act and related  regulations and
with  all  similar  laws  and  regulations  and  shall  notify  the  Beneficiary
immediately  in the event of any Hazard or the discovery of any Hazard at, upon,
under or  within  the  Property.  The  Grantor  shall  promptly  forward  to the
Beneficiary  copies  of all  orders,  notices,  permits,  applications  or other
communications  and reports in connection with any Hazard or the presence of any
Hazard  or any  other  matters  relating  to the  Act or  any  similar  laws  or
regulations, as they may affect the Property.

                  5.3.3  Promptly  upon the written  request of the  Beneficiary
from time to time,  when the Beneficiary  has a reasonable  basis therefor,  the
Grantor  shall  provide  to  the  Beneficiary,  at  the  Grantor's  expense,  an
environmental  site  assessment or  environmental  audit report,  prepared by an
environmental  engineering  firm  acceptable  in the  reasonable  opinion of the
Beneficiary,  to assess with a reasonable  degree of  certainty  the presence or
absence of any Hazard and the  potential  costs in  connection  with  abatement,
cleanup or removal of any Hazard found on, under, at or within the Property.

                  5.3.4 The Grantor shall defend and  indemnify the  Beneficiary
and hold the Beneficiary  harmless from and against all actual loss,  liability,
damage and expense,  including reasonable  attorneys' fees, suffered or incurred
by the  Beneficiary,  whether as holder of this Deed of Trust,  as  mortgagee in
possession,  or as  successor-in-interest to Grantor by foreclosure deed or deed
in


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lieu of  foreclosure,  under or on  account  of the Act or any  similar  laws or
regulations, including the assertion of any lien thereunder: (i) with respect to
any Hazard,  or the presence of any Hazard affecting the Property whether or not
the same  originates or emanates from the Property,  including any loss of value
of the Property as a result of the foregoing; and (ii) with respect to any other
matter  affecting  the Property  within the  jurisdiction  of the  Environmental
Protection Agency, any other federal agency, or any state or local environmental
agency.  Provided,  however, the Grantor's  obligations under this Section shall
not apply to any loss, liability, damage or expense which is attributable to any
Hazard resulting from actions on the part of the Beneficiary,  whether as holder
of this Deed of Trust, as mortgagee in possession,  or as  successor-in-interest
to  Grantor  by  foreclosure  deed or deed in lieu of  foreclosure,  under or on
account of the Act or any similar laws or  regulations,  including the assertion
of any lien  thereunder,  or any  successor-in-interest  to or  assignee  of the
Beneficiary.  The Grantor's  obligation  under this Section shall arise upon the
discovery  of the  presence  of any  Hazard  under  the Act  whether  or not the
Environmental  Protection Agency, any other federal agency or any state or local
environmental  agency has taken or threatened any action in connection  with the
presence of any Hazard.

                  5.3.5  In the  event of any  Hazard,  or the  presence  of any
hazardous substance  affecting the Property,  whether or not the same originates
or emanates from the Property or any contiguous real estate,  and if the Grantor
shall  fail  to  comply  with  any of the  requirements  of the  Act or  related
regulations  or any  other  environmental  law or  regulation  within  the  time
established by any regulatory agency,  the Beneficiary may at its election,  but
without the obligation to do so: (i) give such notices and/or cause such work to
be performed at the Property;  and/or (ii) take any and all other actions as the
Beneficiary  shall  reasonably deem necessary or advisable in order to abate the
Hazard, remove the hazardous substance or cure the Grantor's noncompliance.  Any
amounts so paid by the  Beneficiary  pursuant  to this  Section,  together  with
interest thereon at the highest rate of interest  permitted under the Promissory
Note from the date of payment by the  Beneficiary,  shall be immediately due and
payable by the Grantor to the  Beneficiary  and until paid shall be added to and
become a part of the indebtedness  under the Loan Documents and shall be secured
by this Deed of Trust.

                  5.3.6 The  provisions  of this Section 5.3 are for the benefit
of the Beneficiary  only and cannot be assigned to any other party,  whatsoever,
except  by  assignment  of the  Note  and  the  Loan  Documents  by the  current
Beneficiary to a successor lender.



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                                   ARTICLE VI

               COVENANTS, RIGHTS, AND DUTIES OF GRANTOR GENERALLY

         6.1 Covenant to Pay Loan and to Perform  Obligations under the Terms of
the Loan Documents--The Grantor covenants that it will punctually (a) pay to the
Beneficiary  the  principal  and  interest  of the Loan and all other  costs and
indebtedness  secured  hereby  according to the terms of the Note and other Loan
Documents,  and (b) perform and  satisfy  all other  obligations  of the Grantor
under the Loan Documents.

         6.2  Compliance  with  Laws--The  Grantor  shall comply with all Laws a
breach  of  which  would  materially  and  adversely  affect  (a) the  financial
condition  of  the  Grantor,   (b)  the  ability  to  use  buildings  and  other
improvements  on the Land for the  purposes  for  which  they were  designed  or
intended,  (c) the value or status  of the Trust  Property,  or (d) the value or
status of the Trustee's title to the Trust Property.

         6.3      Notice with Respect to Ownership and Control of Grantor--

                  6.3.1  If  Grantor  is a  corporation,  it will  at all  times
promptly  notify  Beneficiary  of all changes in the  ownership  of the stock of
Grantor.  At any time Beneficiary may request,  Grantor shall furnish a complete
statement,  sworn to under penalty of perjury by an officer of Grantor,  setting
forth all of the stockholders,  officers,  directors and Controlling  Parties of
Grantor,  and the extent of their respective stock ownership or control.  In the
event the Grantor is aware of any other Person  having a beneficial  interest in
such stock,  the statement  shall also set forth the name of such Person and the
extent of their interest.

                  6.3.2  If  Grantor  is a  partnership,  it will  at all  times
promptly notify Beneficiary of all changes in ownership of partnership interests
of Grantor and the ownership  interest of the Grantor's general partner.  At any
time Beneficiary may request, Grantor shall furnish a complete statement,  sworn
to under penalty of perjury by a general partner of Grantor setting forth all of
the partners of Grantor and the extent of their respective  partnership interest
or control  and the equity  holders of the  Grantor's  general  partner  and the
extent of their equity interests. In the event any other Person has a beneficial
interest in such  partnership or general  partnership  interests,  the statement
shall also set forth the name of such Person and the extent of their interest.

         6.4 Statement of Amount Owing and  Defenses--Within ten (10) days after
request from the Beneficiary,  the Grantor shall certify, in writing, the amount
of principal and interest then owing on the Loan and whether the Grantor has any
defenses or offsets with



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respect to the Loan.

         6.5  Changes  in  Applicable  Tax  Laws--In  the  event  (a) any Law is
hereafter  enacted which imposes a Tax upon the Loan, any of the Loan Documents,
or the transactions  evidenced or contemplated by any of the Loan Documents,  or
(b) any Law now in force governing the taxation of deeds of trust, debts secured
by deeds of trust,  or the manner of collecting any such Tax shall be changed or
modified,  in any manner,  so as to impose a Tax upon the Loan,  any of the Loan
Documents,  or the  transactions  evidenced or  contemplated  by any of the Loan
Documents,  (including, without limitation, a requirement that revenue stamps be
affixed to any or all of the Loan Documents),  the Grantor will pay any such Tax
promptly upon notice from Beneficiary that such Tax is due. If the Grantor fails
to make prompt payment,  or if any Law either  prohibits the Grantor from making
the payment or would penalize the Beneficiary if Grantor makes the payment, then
the failure, prohibition, or penalty shall entitle the Beneficiary, after ninety
(90) days notice and failure of the Grantor to pay off the Loan in full, without
penalty or  premium,  to  exercise  all rights  hereunder  as though an Event of
Default had occurred.

         6.6 Further  Assurances and Continuation  Statements--The  Grantor from
time to time will  execute,  acknowledge,  deliver and record,  at the Grantor's
sole cost and expense, all further instruments, deeds, conveyances, supplemental
deeds of trust, assignments,  financing statements, transfers, and assurances as
in the  opinion  of the  Beneficiary's  counsel,  reasonably  exercised,  may be
necessary (a) to preserve,  continue, and protect the interest of the Trustee or
the Beneficiary in the Trust  Property,  (b) to perfect the grant to the Trustee
of every part of the Trust  Property,  (c) to  facilitate  the execution of this
trust,  (d) to secure the rights and remedies of the Trustee and the Beneficiary
under this Deed of Trust and the other Loan Documents, or (e) to transfer to any
new Trustee or purchaser at a sale  hereunder  the Trust  Property,  funds,  and
powers now or hereafter held in trust hereunder.  The Grantor, at the request of
the Beneficiary,  shall promptly execute any continuation statements required by
the Uniform  Commercial  Code to  maintain  the lien on any portion of the Trust
Property subject to the Uniform Commercial Code.

         6.7  Expenses--The  Grantor  shall  reimburse the  Beneficiary  and the
Trustee  for any  sums,  including  reasonable  attorney's  fees  and  expenses,
incurred  or expended by them (a) in  connection  with any action or  proceeding
reasonably  necessary  or  prudent  to  sustain  the  lien,  security  interest,
priority,  or  validity of any Loan  Document,  (b) to protect or enforce any of
their rights under the Loan Documents, (c) for any title examination relating to
the title to the Trust Property undertaken after a Default, or (d) for any other
purpose contemplated by the Loan Documents.  The Grantor shall, upon demand, pay
all such sums accruing  from the time the


                                       11
<PAGE>

expense is paid and notice  thereof is received  if such  expense is not paid by
the Grantor  within seven (7) days of receipt of such  notice.  All such sums so
expended by the Beneficiary  and/or the Trustee shall be secured by this Deed of
Trust. In any action or proceeding to foreclose this Deed of Trust or to recover
or collect the Loan,  the  provisions  of Law  allowing  the  recovery of costs,
disbursements,  and allowances  shall be in addition to the rights given by this
Section 6.7.

                                   ARTICLE VII

                  RIGHTS AND DUTIES OF GRANTOR WITH RESPECT TO
                    MANAGEMENT AND USE OF THE TRUST PROPERTY

         7.1 Control by the Grantor--Until the happening of an Event of Default,
the Grantor  shall have the right to possess and enjoy the Trust  Property  and,
except as prohibited by the Loan Documents, to receive the Rents.

         7.2  Intentionally Omitted.

         7.3  Intentionally Omitted.

         7.4  Leases--The  Grantor  will comply with its  obligations  under all
Leases.  The  Grantor,  within  ten (10) days  after  written  request  from the
Beneficiary, shall deliver to the Beneficiary a detailed list and description of
all  Leases  with  copies  thereof  and such  additional  information  as may be
reasonably requested by the Beneficiary. Grantor will transfer and assign to the
Beneficiary,  in a form satisfactory to the Beneficiary,  Grantor's  interest in
any Lease as  further  security  for the  obligations  secured  hereby.  No such
assignment  shall  impose  upon the  Beneficiary  any  liability  to perform the
Grantor's  obligations  under any Lease. The Beneficiary  reserves the right, at
its  request,  to review and  approve  any and all Leases of any  portion of the
Trust Property.

         7.5 Enforcement of Leases,  Amendment,  Waiver,  etc.--The Grantor will
enforce all Leases according to their terms. The Grantor shall not (a) cancel or
terminate, or consent to or accept any cancellation,  termination,  or surrender
of any Lease,  or permit any event within the  Grantor's  control to occur which
would  terminate or cancel any Lease,  (b) amend or modify any Lease,  (c) waive
any  default  under or  breach  of any  Lease,  (d)  consent  to or  permit  any
prepayment  or discount of rent or advance rent under any Lease,  except for the
current month or following month, or (e) give any consent,  waiver,  or approval
under any Lease or take any other  action  with  respect to any Lease  which may
impair the value of the  Beneficiary's  interest  in the Trust  Property  or the
position or interest of the Trustee with respect to the Trust Property.  Grantor
shall comply with and perform all duties and obligations



                                       12
<PAGE>

imposed upon or assumed by it in all Leases.

         7.6  Subordination and  Attornment--In  the event of a sale pursuant to
this Deed of Trust, each Tenant shall,  upon request,  attorn to and acknowledge
any purchaser at  foreclosure  or grantee in lieu of foreclosure as landlord and
the  purchaser  will not be required  to credit any Tenant  under any Lease with
rent paid more than one (1) month in  advance.  All Leases  shall be subject and
subordinate to the Loan Documents  (including any  modifications and amendments)
and any additional  financing or refinancing of the Trust Property by or for the
Beneficiary.

         7.7  Restriction  on Assignment of Rents--The  Grantor shall not assign
the Rents  arising  from the Trust  Property or any part thereof or any interest
therein  without the prior  written  consent of the  Beneficiary.  Any attempted
assignment,  pledge, hypothecation,  or grant without such consent shall be null
and void.

         7.8 Alterations and Additional  Improvements--The Grantor shall make no
structural  alterations  or  material  nonstructural  alterations  to the  Trust
Property or construct any additional improvements on the Land, without the prior
written  consent of the  Beneficiary,  which consent  shall not be  unreasonably
delayed or withheld. All alterations or improvements consented to by Beneficiary
shall be completed  and paid for by the Grantor  within a reasonable  time.  All
such alterations or improvements  shall be erected (a) in a good and workmanlike
manner strictly in accordance with all applicable Law, (b) entirely on the Land,
(c) without encroaching upon any easement,  right of way, or land of others, (d)
so as not to violate any applicable use,  height,  set-back or other  applicable
restriction,  and (e) without  permitting any  mechanic's  lien to attach to the
Trust  Property  which is not being  contested as permitted in Section 7.13. All
alterations,  additions,  and  new  improvements  to the  Trust  Property  shall
automatically  be a part of the Trust Property and shall be subject to this Deed
of Trust.

         7.9 Restrictions on Sale and Transfer of the Trust  Property--It  shall
be a Default  if  Grantor  shall  permit  the Trust  Property  or the  corporate
interests  in the  Grantor,  or any  part or  portion  thereof  or any  interest
therein,  to be  transferred  (whether by voluntary or  involuntary  conveyance,
merger, operation of law, or otherwise) without the prior written consent of the
Beneficiary which the Beneficiary shall not be obligated to give. Any transferee
of the Trust Property or interest in the Grantor or any part or portion  thereof
or any interest  therein,  by virtue of its  acceptance of the  transfer,  shall
(without in any way affecting  Grantor's  liability under the Loan Documents) be
conclusively  deemed to have agreed to assume primary personal liability for the
performance of the Grantor's obligations under the Loan Documents.  This section
shall not apply to any Taking,  any  disposition


                                       13
<PAGE>

permitted by Section 7.12,  any Lease  entered into in  compliance  with Section
7.4,  or any  disposition  by the  Trustee  or the  Beneficiary  by  foreclosure
hereunder or as otherwise permitted by the Loan Documents.

         7.10  Restriction  on  Encumbrances--It  shall be a Default  if Grantor
shall allow any  Encumbrances,  including  secondary and supplemental  financing
liens,  on the Trust  Property  except the Permitted  Encumbrances.  The Grantor
shall  give the  Beneficiary  prompt  notice  of any  defaults  in or under  any
Permitted  Encumbrances  and any notice of foreclosure or threat of foreclosure.
The Grantor shall comply with its obligations under all Permitted  Encumbrances.
The Beneficiary  may, at its election,  satisfy any  Encumbrance  (other than an
Permitted  Encumbrance  not then in default),  and the Grantor shall, on demand,
reimburse the Beneficiary for any sums advanced for such  satisfaction  accruing
from the date of satisfaction, which sums shall be secured hereby.

         7.11 Maintenance,  Waste, Repair and Inspection--Grantor shall (a) keep
and maintain the Trust  Property in good order,  condition,  and repair and make
all equipment replacements and repairs necessary to insure that the security for
the Loan is not  impaired,  (b) not  commit  or  suffer  any  waste of the Trust
Property,  (c) promptly  protect and conserve any portion of the Trust  Property
remaining  after any damage to, or partial  destruction  of, the Trust Property,
provided any insurance  proceeds which may have been received by the Beneficiary
as a result of such damage or destruction of the Trust Property are given to the
Grantor for such purposes, (d) promptly repair, restore,  replace or rebuild any
portion  of the Trust  Property  which is  damaged or  destroyed,  provided  any
insurance  proceeds which may have been received by the  Beneficiary as a result
of such damage or destruction of the Trust Property are given to the Grantor for
such purposes,  (e) promptly restore the balance of the Trust Property remaining
after any Taking,  provided any insurance  proceeds which may have been received
by the  Beneficiary  as a result  of such  damage  or  destruction  of the Trust
Property are given to the Grantor for such purposes,  (f) permit the Beneficiary
or its designee to inspect the Trust Property at all reasonable  times,  and (g)
not make any  material  change in the grade of the Trust  Property or permit any
excavation of or on the Trust Property.

         7.12 Removal and Replacement of Equipment and Improvements--No  part of
the Trust Property,  except  supplies  consumed in the normal course of business
and  operations,  shall be  removed  from the Land,  demolished,  or  materially
altered without the prior written consent of the Beneficiary, which shall not be
unreasonably  withheld.  Prior to or  simultaneously  with their  removal,  such
fixtures and equipment  shall be replaced with fixtures or equipment of equal or
greater  value.  The  replacement  fixtures  or  equipment  shall be free of all
Encumbrances,  shall  automatically be subject to the lien and security interest
of this Deed of Trust,  and  shall



                                       14
<PAGE>

automatically  be subject to the granting  clauses hereof.  Upon the sale of any
removed  fixtures and equipment  which are not replaced,  the proceeds  shall be
applied as a prepayment  of the Loan, to be applied to  installments  in inverse
order of maturity.  All sales shall be conducted  in a  commercially  reasonable
manner with a bona fide effort to obtain a sale price of at least market value.

         7.13 Taxes and Permitted  Contests--The Grantor will pay and discharge,
as the  same  shall  become  due  and  payable,  (i)  all  its  obligations  and
liabilities,  including  all  claims  or  demands  of  materialmen,   mechanics,
carriers,  warehousemen,  landlords  and other like persons  which,  in any such
case, if unpaid,  might by law give rise to a lien upon the Trust Property,  and
(ii) all lawful  Taxes,  assessments  and  charges or levies made upon it or its
property or assets,  by any  Government  except where any of the items in clause
(i) or (ii) of this  Section 7.13 may be  diligently  contested in good faith by
appropriate  proceedings,  and the Grantor shall have set aside on its books, if
required under generally  accepted  accounting  principles in the United States,
appropriate reserves for the accrual of any such items.

         7.14 Restrictive  Covenants,  Zoning,  etc.--No  restrictive  covenant,
zoning change, or other restriction  affecting the Trust Property may be entered
into,  requested by or consented to by Grantor without the prior written consent
of the Beneficiary which consent shall not be unreasonably withheld or delayed.

         7.15  Preservation  of  Appurtenances--The  Grantor  will do all things
necessary to preserve intact and unimpaired, all easements,  appurtenances,  and
other  interests  and rights in favor of, or  constituting  any  portion of, the
Trust Property.

         7.16 Real Estate Tax  Service--Beneficiary  may require the Grantor, at
its sole cost and expense,  to cause to be furnished  to  Beneficiary  a prepaid
real estate tax service  contract to annually  check and report on the status of
real estate taxes for the Trust Property throughout the term of the Loan.

         7.17. Escrow. If required by the Beneficiary, the Grantor shall deposit
with the  Beneficiary,  on the tenth (10) day of each  month  during the term of
this Deed of Trust, an additional amount as determined by the Beneficiary in its
reasonable discretion,  to sufficiently discharge the obligations of the Grantor
for:  (a) the payment of Taxes,  assessments,  levies,  fees,  rents,  and other
public  charges  imposed  upon or  assessed  against  the Trust  Property or the
revenues,  rents,  issues,  income,  or profits thereof,  as provided in Section
7.13; (b) the payment of premiums for fire, casualty, and other hazard insurance
and flood  insurance,  as provided by Sections  8.1,  8.2,  8.3 and 8.4, for the
purpose of



                                       15
<PAGE>

providing a fund to assure the  payment of the  aforesaid  expenses  when and as
they come due; and (c) if applicable,  any owner's association fee,  condominium
association  fee, or any other similar fee,  cost,  assessment  or charge.  Such
amounts shall be applied to the payment of the  obligations  in respect to which
such amounts were deposited or, at the option of the Beneficiary, to the payment
of  such  obligations  in  such  order  of  priority  as the  Beneficiary  shall
determine,  on or before the date they  become  delinquent.  If the  Beneficiary
determines, prior to the due date of any of the aforementioned obligations, that
the  amount  then on  deposit  shall be  insufficient  for the  payment  of such
obligations  in full,  the  Grantor,  within ten (10) days after  demand,  shall
deposit the amount of the deficiency with the  Beneficiary.  The Beneficiary may
also pay any amount as  provided  herein and add the amount to the  indebtedness
hereby secured.

         Any amounts  deposited with the Beneficiary or the Trustees pursuant to
this Section are hereby  pledged as  additional  security for the payment of the
Loan and other  obligations  under the Loan Documents  (collectively,  the "Loan
Obligations")  and the  Grantor  does  hereby  grant a security  interest to the
Beneficiary in such amounts. Any amounts deposited with the Beneficiary pursuant
to the  provisions  of this  Section  shall not be,  nor be deemed to be,  trust
funds,  nor shall they operate to curtail or reduce the Loan  Obligations.  Such
funds so deposited with the Beneficiary or the Trustee  pursuant to this Section
shall be maintained in an escrow account with the Beneficiary, without interest,
separate and apart from the Grantor's other funds. The Beneficiary  shall not be
liable for any failure to apply to the payment of the  obligations in respect to
which such amounts were deposited unless the Grantor,  while no Event of Default
exists  hereunder,  shall  have  requested  the  Beneficiary  in writing to make
application  of such deposits  then on hand to the payment of particular  escrow
items, which request shall be accompanied by the bills therefor. The Beneficiary
may,  in its sole  discretion,  at any time and  from  time to time,  waive  the
requirements of this Section 7.17.

         Notwithstanding  any other  provision of this Section 7.17, the Grantor
shall not be required to make any payment  required  under this  Section 7.17 if
such  payment is required to be paid to or on behalf of any  beneficiary  by any
deed of trust  encumbering  the Trust Property (each a "Senior Trust") as of the
date hereof.

                                  ARTICLE VIII

                           INSURANCE AND CONDEMNATION

         8.1 Casualty  Insurance  and  Allocation in Event of Loss-- The Grantor
shall  keep any  improvements  constructed  on the Land and  personalty  thereon
insured against loss by fire casualty, and such other hazards and contingencies,
including but not limited to



                                       16
<PAGE>

lightning, hail, windstorm,  explosion, malicious mischief and vandalism, as are
covered by  extended  coverage  policies in effect in the area where the Land is
located and such other risks as may be reasonably  specified by the  Beneficiary
from time to time,  all for the  benefit of the  Beneficiary.  Coverage  for the
peril of  sprinkler  leakage  must be  included  as a covered  cause of loss for
buildings equipped with automatic sprinkler systems designed to discharge water,
or a chemical gas, or any other  extinguishing  agents.  Beneficiary may require
boiler and  machinery  insurance  to cover  sudden and  accidental  breakdown of
specific  types of  equipment,  including  for  example,  boilers,  heating  and
ventilating  systems,  refrigeration  equipment,  air conditioning units, pumps,
compressors,  motors, blowers, generators and transformers.  All insurance shall
be written on policy  forms and by  insurance  companies  licensed  and lawfully
operating  in the  jurisdiction  in which the Real  Property  is located  with a
rating of "A-" or  better  and Class IX or  better  according  to A.M.  Best Co.
Insurance   Guide  and  reasonably   satisfactory  to  the  Beneficiary  or  the
beneficiary of any Senior Trust, and with respect to casualty  insurance,  shall
be in an  amount  equal  or  greater  to  the  full  replacement  value  of  any
improvements and personalty upon the Land, as determined by an appraisal of such
improvements  and personalty,  acceptable to the Beneficiary and paid for by the
Grantor,  but  in  any  event  all  insurance  policies  shall  be in an  amount
sufficient to prevent  co-insurance  liability,  shall name the Beneficiary as a
mortgagee  and loss payee,  as its  interest  may  appear,  shall state that the
insurance coverage shall not be affected by any act or neglect of the Grantor or
owner of the insured  Trust  Property and shall be endorsed such that the losses
thereunder shall be payable to the Beneficiary,  as its interest may appear, and
not to the Grantor and the  Beneficiary or the Trustee,  jointly.  The policy or
policies  of  insurance   shall  include  a  replacement   cost  or  restoration
endorsement and a waiver of subrogation  endorsement reasonably  satisfactory to
the Beneficiary. Originals or certified true copies of the policy or policies of
such  insurance,  any  endorsements  thereto and all renewals  thereof  shall be
manually  signed and  delivered  to and  retained  by the  Beneficiary,  and the
Grantor shall provide the  Beneficiary  with receipts  evidencing the payment of
all premiums due on such policies and the renewals  thereof not less than thirty
(30) days prior to the renewal or expiration date thereof. All policies required
hereby  shall  provide  and shall  bear an  endorsement  that they  shall not be
canceled, terminated, endorsed or amended without not less than thirty (30) days
prior written notice to the Beneficiary.  The Grantor shall give the Beneficiary
prompt notice of any loss covered by such insurance,  and, the Beneficiary shall
have the right to adjust and  compromise  such loss,  to  collect,  receive  and
receipt the  proceeds of  insurance  for such loss and to endorse the  Grantor's
name upon any check in payment thereof and, for such purposes the Grantor hereby
constitutes  and appoints the Beneficiary as its attorney in fact with the power
of  attorney   granted  hereby  deemed  to  be  coupled


                                       17
<PAGE>

with an  interest  and  irrevocable.  All monies  received as payment for a loss
covered  by an  insurance  policy  shall be paid over to the  Beneficiary  to be
applied, at the option of the Beneficiary,  either to the prepayment of the Loan
or to the payment of other charges or expenses  actually incurred by the Grantor
in the  restoration,  reconstruction,  repair,  renovation or replacement of the
affected  portion  of the Trust  Property,  provided  that any  election  by the
Beneficiary   to  apply   insurance   proceeds  to  the  cost  of   restoration,
reconstruction,   renovation,   repair  or  replacement   shall  be  subject  to
satisfaction  of the following  conditions:  (i) such  restoration,  renovation,
repair  or  rebuilding  shall,  in  the  judgment  of  the  Beneficiary,  attain
completion within the term of the Loan; (ii) such insurance  proceeds,  together
with  undisbursed  Loan  proceeds and any amounts the Grantor  deposits with the
Beneficiary for such purpose are sufficient to fully restore,  renovate,  repair
or  rebuild  the  damaged or  destroyed  Trust  Property;  and (iii) no event or
circumstance  has occurred and is existing which with the giving of notice,  the
passing of time or both would  constitute an Event of Default under this Deed of
Trust or the other Loan Documents,  otherwise, such proceeds shall be applied in
payment of the Loan. The Beneficiary reserves the right to require the escrow of
insurance premiums during the term of the Loan.

         8.2  Liability  Insurance--The  Grantor  will  maintain  liability  and
indemnity  insurance  with  respect to the Trust  Property in an amount not less
than  $2,000,000  and with such  companies,  and  subject  to the same terms and
conditions  specified in Section 8.1 above  (excepting that such insurance shall
not have to list Beneficiary as mortgagee and loss payee or state that insurance
coverage  shall not be affected by any act or neglect of the Grantor or owner of
the insured property), and as the Beneficiary may reasonably direct and approve.
Evidence of such  coverage  in the form of a certified  copy of the policy or an
insurance certificate must be supplied to Beneficiary.

         8.3 Business Interruption  Insurance--The  Grantor shall also carry and
maintain rental interruption  insurance on the Trust Property in the same manner
and under the same  conditions as provided in Section 8.1 covering debt service,
real  estate  taxes  and  insurance  premiums  for a period  of at least six (6)
months.

         8.4 Flood  Insurance.  In the event that all or any portion of the Real
Property currently or at any time in the future is determined to be located in a
specially  designated  flood  hazard area by the  Secretary of Housing and Urban
Development or the Director of the Federal Emergency Management Agency, pursuant
to the  provisions  of the National  Flood  Insurance  Act of 1968, or the Flood
Disaster  Protection  Act of 1973,  as  amended,  the Grantor  shall  obtain and
maintain  flood  hazard  insurance  in the full  insurable  value  of the  Trust
Property or any portion of the Real  Property  located  within such area, or the
full amount of flood


                                       18
<PAGE>

insurance  available,  naming the Beneficiary as loss payee, as its interest may
appear,  and  complying  with all other  conditions  as  provided in Section 8.1
above.  The Grantor  shall be  required to provide  flood  hazard  insurance  as
described, unless the Grantor's insurance broker certifies to the Beneficiary in
writing that the Real  Property is not in a flood  hazard area.  The proceeds of
any loss payable under a flood insurance policy shall be applied,  at the option
of the  Beneficiary,  as set forth in Section 8.1 above with respect to casualty
insurance proceeds.

         8.5  Condemnation  and  Allocation  of  Condemnation   Awards--Grantor,
immediately upon obtaining  knowledge of the institution of any proceeding for a
Taking,  will notify the  Beneficiary  of such  proceedings.  The Trustee or the
Beneficiary may participate in any such proceedings, and Grantor will, from time
to time, deliver to the Trustee or the Beneficiary all instruments  requested by
them to permit such participation.  Any award or payment made as a result of any
Taking shall be paid to the  Beneficiary,  to be applied by the  Beneficiary  in
it's sole  discretion to restore or repair the Trust Property or to repayment of
the amounts due under the Note and the other Loan Documents, in inverse order of
maturity.  The application of any award or payment as a repayment of amounts due
under the Note and the other Loan Documents shall take effect only on the actual
date of the receipt of the payment or award by the Beneficiary. In the event any
payment or award is used to restore the Trust  Property,  as aforesaid,  neither
the  Trustee  nor  the  Beneficiary  shall  be  obligated  to see to the  proper
allocation  thereof  nor  shall any  amount  so used be deemed a payment  of any
indebtedness  secured by this Deed of Trust.  Payments  or awards to be used for
restoration  purposes,  as  aforesaid,  shall  be  held by the  Beneficiary  and
disbursed  under the same terms and conditions as provided for  disbursement  of
insurance proceeds in Section 8.1.

         8.6 Senior  Trust--Notwithstanding  anything  to the  contrary  in this
Article VIII, all rights of Beneficiary  set forth in this Article VIII shall be
limited by the rights of any beneficiary of any Senior Trust, if any.

                                   ARTICLE IX

                                   THE TRUSTEE

         9.1 Endorsement and Execution of Documents--Upon the written request of
the Beneficiary,  the Trustee may,  without  liability or notice to the Grantor,
execute,  consent to, or join in any instrument or agreement in connection  with
or  necessary to  effectuate  the  purposes of the Loan  Documents.  The Grantor
hereby  irrevocably  designates  the  Beneficiary  as  its  attorney-in-fact  to
execute,  acknowledge, and deliver, on the Grantor's behalf and in


                                       19
<PAGE>

the Grantor's  name, all  instruments  or agreements  necessary to implement the
provisions of Section 3.7,  contemplated by Section 6.6, or necessary to further
perfect the lien created by this Deed of Trust on the Trust Property. This power
of attorney shall be deemed to be coupled with an interest and shall survive any
disability of the Grantor.

         9.2 Substitution of Trustee--The Beneficiary shall at any time have the
irrevocable right to remove the Trustee herein named without notice or cause and
to appoint its successor by an instrument in writing, duly acknowledged, in such
form as to entitle such written  instrument  to be recorded in Virginia,  and in
the  event  of the  death  or  resignation  of the  Trustee  herein  named,  the
Beneficiary  shall  have the right to  appoint  his  successor  by such  written
instrument,  and any Trustee so appointed  shall be vested with the title to the
Trust Property hereinbefore described,  and shall possess all the powers, duties
and  obligations  herein  conferred on the Trustee in the same manner and to the
same extent as though it were named herein as Trustee.

         9.3  Multiple  Trustees--Any  Trustee,  individually,  may exercise all
powers  granted to two or more Trustees  collectively,  without the necessity of
the joinder of the other Trustees.

         9.4  Terms of  Trustee's  Acceptance--The  Trustee  accepts  the  trust
created by this Deed of Trust upon the following terms and conditions:

                  9.4.1 The  Trustee  may  exercise  any of its  powers  through
appointment of attorneys-in-fact or agents.

                  9.4.2 The Trustee  shall not be liable for any matter or cause
arising under this Deed of Trust or in connection  therewith except by reason of
its own willful misconduct.

                  9.4.3 The Trustee,  after an Event of Default,  may select and
employ legal counsel at the expense of Grantor.

                  9.4.4 The  Trustee  shall be under no  obligation  to take any
action upon any Event of Default  unless it is furnished  security or indemnity,
in form satisfactory to the Trustee,  against costs,  expenses,  and liabilities
which may be incurred by the Trustee.

                  9.4.5 The Trustee shall have no duty to take any action except
upon written demand of the parties to whom is then owed fifty-one  percent (51%)
or more of the then outstanding principal balance of the Note.

                  9.4.6 The Trustee  may resign  upon  thirty (30) days


                                       20
<PAGE>

written notice to the Beneficiary.

         9.5 Trustee's  Reimbursement--The  Grantor shall  reimburse the Trustee
for all reasonable disbursements and expenses incurred by reason of this Deed of
Trust.

         9.6 Save Harmless Clause--The Grantor shall indemnify and save harmless
the  Beneficiary  and the Trustee,  singularly  and jointly,  from all costs and
expenses,  including reasonable attorneys' fees, incurred by them or any of them
by reason of this Deed of Trust,  including any Legal Action  brought by a third
party or the Grantor to which  Beneficiary  or the Trustee shall become a party.
Any money so paid or expended  by  Beneficiary  or the Trustee  shall be due and
payable upon demand together with interest, if not paid within seven (7) days of
receipt of demand by the Grantor, accruing from the time the expense is paid and
notice  thereof is  received by the Grantor and shall be secured by this Deed of
Trust.

                                    ARTICLE X

                                     DEFAULT

         10.1 Event of  Default--The  occurrence of any of the  following  shall
constitute an Event of Default.

                  10.1.1   Breach   of   Representations   and   Warranties--Any
representation  or warranty made by the Grantor herein which shall prove to have
been incorrect in any material respect when made or shall be breached.

                  10.1.2 Insurance Provisions--The failure of Grantor to perform
its obligations set forth in Section 8.1, 8.2, 8.3 or 8.4.

                  10.1.3  Assignment of Rents--Any  attempted  assignment by the
Grantor of the whole or any part of the Rents in contravention of Section 7.7.

                  10.1.4  Prohibited  Transfer or  Encumbrance--Any  transfer or
event in violation of the provisions of Sections 7.9 or 7.10.

                  10.1.5 Loss of License--The  loss of any franchise  agreement,
license or permit  necessary for the operation,  occupancy,  or use of the Trust
Property,  other  than as a result  of  casualty  or  condemnation,  which  loss
continues  for a period thirty (30) days after receipt by Grantor (or refusal of
delivery) of written notice given in accordance with the provisions of this Deed
of Trust.

                  10.1.6  Cross  Default.  The  default by the Grantor or


                                       21
<PAGE>

by any guarantor of payment or  performance  of the Grantor under any obligation
or indebtedness to the Beneficiary,  whether now existing or hereafter  arising,
which default is not cured within any applicable cure or grace period.

                  10.1.7 Default Under  Mortgage--The  occurrence of an Event of
Default  under (i) the  certain  Arkansas  Mortgage  with Power of Sale  between
Grantor and Beneficiary dated as of October 1, 1997, or (ii) any Senior Trust or
(iii) the certain  Mortgage and Security  Agreement  dated as of October 1, 1997
from the County of Saratoga Industrial Development Agency and the Grantor to the
Beneficiary.

                  10.1.8  Default  Under Loan  Documents--The  occurrence  of an
Event of Default under any of the other Loan Documents.

                  10.1.9 Other  Defaults--The  failure of the Grantor to perform
or observe  any of its  obligations  or  covenants  under this Deed of Trust not
previously  specifically  referred to in this Article X, which failure continues
for a period of seven (7) days after receipt by Grantor (or refusal of delivery)
of written notice given in accordance  with the provisions of this Deed of Trust
in the event of a  monetary  default  or for a period of thirty  (30) days after
receipt  by  Grantor  (or  refusal  of  delivery)  of  written  notice  given in
accordance  with  the  provisions  of  this  Deed of  Trust  in the  event  of a
non-monetary  default.  The  failure of the Grantor to perform or observe any of
its  obligations  or covenants  constituting  an Event of Default under any Loan
Document not previously  specifically  referred to in this Article X, subject to
any applicable cure period.

         10.2 Payment or Performance by  Beneficiary--Upon  the occurrence of an
Event of Default,  Beneficiary may, at its option, make any payments or take any
other  actions it deems  necessary  or desirable to cure the Event of Default or
conserve the Trust  Property.  The Grantor  shall,  upon demand,  reimburse  the
Beneficiary  for all sums so advanced or expenses  incurred by it, from the date
of advance  or payment of the same,  which sums shall be secured by this Deed of
Trust.  The Trustee or the Beneficiary may enter upon the Trust Property without
prior notice to the Grantor in the event of an emergency  (but  otherwise  after
reasonable  prior  notice to the  Grantor) or judicial  process and may take any
action to enforce its rights under this  Section  10.2 without  liability to the
Grantor, except for its gross negligence or willful misconduct.

         10.3  Possession  by  Beneficiary--Upon  the  occurrence of an Event of
Default,  the  Beneficiary  may  enter  upon and take  possession  of the  Trust
Property without notice to the Grantor,  judicial process, or the appointment of
a receiver.  The Beneficiary may exclude all persons from the Trust Property and
may


                                       22
<PAGE>

proceed to Operate the Trust  Property  and receive all Rents.  The  Beneficiary
shall have the right to Operate the Trust  Property and carry on the business of
the Grantor,  either in the name of the Grantor or  otherwise.  The  Beneficiary
shall not be liable to the Grantor for taking  possession of the Trust Property,
as aforesaid, nor shall Beneficiary be required to make repairs or replacements,
and Beneficiary  shall be liable to account only for Rents actually  received by
it. All Rents  collected by the  Beneficiary  shall be applied (a) first, to pay
all expenses incurred in taking possession of the Trust Property, (b) second, to
pay costs and expenses to operate the Trust Property,  and/or to comply with the
terms of the Loan Documents, including reasonable attorney's fees, (c) third, to
pay all sums secured by the Loan Documents in the order of priority  selected by
Beneficiary,  and (d) fourth,  with the balance,  if any, to the Grantor or such
other Person as may be entitled  thereto.  No  assignment of Leases shall impose
upon Trustee or Beneficiary any liability to perform Grantor's obligations under
such Leases.

         10.4  Acceleration  of the Note--Upon an Event of Default,  Beneficiary
may,  at its option and  without  further  notice or demand,  declare the entire
balance  of the  Note and all  other  amounts  due  under  the  Loan  Documents,
immediately  due and  payable.  Acceleration  of  maturity,  once claimed by the
Beneficiary,  may at the  option of the  Beneficiary,  be  rescinded  by written
acknowledgment to that effect by the Beneficiary,  but the tender and acceptance
of  partial  payments  alone  shall  not in  any  way  affect  or  rescind  such
acceleration of maturity.

         10.5  Collection of  Rents--Upon  the occurrence of an Event of Default
and written demand by the Beneficiary to the Tenants, all Rents shall be payable
directly to the Beneficiary.

         10.6 Foreclosure--Except as otherwise specifically provided herein, any
sale of the Trust  Property  shall be made in accordance  with the provisions of
Section  55-59,  55-59.1,  55-59.2,  55-59.3,  55-59.4  and 55-63 of the Code of
Virginia, as amended, or other applicable general local laws of the Commonwealth
of Virginia  and/or  judicial rules of procedure  relating to the foreclosure of
deeds of trust,  either by strict foreclosure or foreclosure by sale, or in part
by  each  such  method.  Any  sale  of the  Trust  Property  may be  made  after
advertising the time,  terms and place of sale if permitted by law for three (3)
consecutive days, in a daily newspaper,  which is published in, or has a general
circulation  in, the county or city wherein the Trust Property is situated.  Any
such sale may be made by the payment of cash upon settlement of the sale or upon
such terms, including payment terms, as the Trustees may deem necessary,  proper
or advisable,  except as  specifically  limited by applicable law or court rule.
Any such sale may be of the entire Trust Property as the Trustees, in their sole
and absolute  discretion,  deem  necessary,  proper,  or  convenient.  The



                                       23
<PAGE>

Trust Property  conveyed  hereby shall  constitute  security for the Loan to the
full extent of the value of the Trust  Property  without  limitation and without
regard to the value upon which any state, city, or county recordation taxes have
been computed and/or paid.


                  10.6.1 Rights  Incident to Sale.  The Grantor  agrees that the
Beneficiary  or the  Trustees  may,  incident to any sale of the Trust  Property
under this Deed of Trust, exercise the powers and rights as herein set forth:

                           (a)      Application  of  Proceeds.  Upon the sale of
the Trust  Property,  the proceeds  shall be applied in accordance  with Section
55.59.4(3) of the Code of Virginia, as amended.

                           (b)      Payment Before Sale. In the event the amount
due on the principal debt hereby secured and the interest  thereon shall be paid
after the commencement of any foreclosure  proceeding,  including any proceeding
in connection  with an assent to decree or power of sale, but before sale of the
Trust  Property,  the Grantor  shall be  required to pay all costs and  expenses
incident to or resulting from any such foreclosure  proceeding,  including,  but
not limited to the expenses of any advertisement or notice, all court costs, the
counsel fees incurred by the  Beneficiary  and the Trustee,  and a trustees' fee
based on a reasonable hourly rate.

                           (c)      Beneficiary  May Bid. At any sale made under
this Deed of Trust, whether made under the power of sale herein granted or under
or by virtue of judicial proceedings,  by assent to decree or power of sale, the
Beneficiary, or any wholly-owned subsidiary of the Beneficiary,  may bid for and
acquire  the Trust  Property  or any part  thereof  and in lieu of  paying  cash
therefor may, if permitted by law,  make  settlement  for the purchase  price by
crediting upon the indebtedness of the Grantor secured by this Deed of Trust the
net sales price after deducting therefrom the expenses and costs of the sale and
any other sums which the  Beneficiary is authorized to deduct under this Deed of
Trust. Furthermore, in the event the Beneficiary, or any wholly-owned subsidiary
of the Beneficiary, is the successful bidder at any sale made under this Deed of
Trust, the Beneficiary,  or any wholly-owned  subsidiary of the Beneficiary,  if
permitted by law, shall not be required to pay either an initial  deposit or any
interest in connection with such sale.

                  10.6.2  Automatic  Acceleration.  Should  there occur an event
which would, with the giving of notice, the passage of time, or both, constitute
an Event of Default  hereunder and if a voluntary or involuntary  petition under
the United States  Bankruptcy Code thereafter is filed by or against the Grantor
while such event  remains  uncured,  to the extent  permitted by law, the entire
principal balance of the Promissory Note then outstanding,


                                       24
<PAGE>

all accrued interest thereon and all other amounts secured by this Deed of Trust
shall be automatically  accelerated and due and payable and the default interest
rate provided for in the  Promissory  Note shall  automatically  apply as of the
date of the first occurrence of the event which, with the giving of notice,  the
passage of time or both,  would  constitute  an Event of  Default,  without  any
notice, demand or action of any type of the part of the Trustee or Beneficiary.

         10.7 Deficiency of Proceeds--If, after a foreclosure sale, a deficiency
exists in the net proceeds of such sale,  the  Beneficiary  shall be entitled to
collect the deficiency from the Grantor and other persons liable therefor.

         10.8 Insurance or Condemnation After  Deficiency--If the Trust Property
is sold at a foreclosure sale prior to receipt of an insurance or a condemnation
award or payment,  the  Beneficiary  shall receive and apply the proceeds of the
award or payment toward the  satisfaction  of any deficiency  resulting from the
foreclosure sale, whether or not a deficiency judgment is sought,  recovered, or
denied.

         10.9  Remedies  Cumulative--All  rights,  powers,  and  remedies of the
Beneficiary or the Trustee provided for in the Loan Documents are cumulative and
concurrent  and shall be in addition  to and not  exclusive  of any  appropriate
legal or equitable  remedy  provided by Law or contract.  Exercise of any right,
power, or remedy shall not preclude the  simultaneous or subsequent  exercise of
any other by the Beneficiary or the Trustee.

         10.10 Rights under the Uniform Commercial  Code--Upon the occurrence of
an Event of Default,  the  Beneficiary  may, at its option,  proceed against any
portion of the Trust Property which consists of personal  property in accordance
with  Beneficiary's  rights and remedies under the Uniform  Commercial Code. The
Grantor shall,  upon request of Beneficiary,  assemble and make available to the
Beneficiary  those  portions  of the Trust  Property  which  consist of personal
property at a place to be designated by the  Beneficiary and the Beneficiary may
exercise  all the rights  and  remedies  of a secured  party  under the  Uniform
Commercial  Code. Any notices  required by the Uniform  Commercial Code shall be
deemed  reasonable if mailed certified mail, return receipt  requested,  postage
prepaid,  by the  Beneficiary to the Grantor at least five (5) days prior to the
event as to which notice is given.

         10.11  Incorporation  of  Statutory   Provisions--Except  as  otherwise
expressly  provided herein,  this Deed of Trust shall be construed to impose and
confer upon the  parties  hereto,  and the  Beneficiary  hereunder,  all duties,
rights and  obligations  prescribed in Section 55-59 and Section 55-59.1 through
55-59.4 of the Code of Virginia (1950), as amended, and in effect as of the


                                       25
<PAGE>

date of acknowledgment  hereof,  and further to incorporate herein the following
provisions  by short form  references  below,  of  Section  55-60 of the Code of
Virginia (1950), as amended:

                  Exemptions waived.

                  Subject to all (call) upon default.

                  Renewal, extension or reinstatement not permitted.

                  Any Trustee may act.

         10.12  Trustee's  Bond--The  Grantor  waives any right to  require  the
person authorized to make the sale to post a bond in any foreclosure proceeding.

         10.13  Appointment  of a  Receiver--Upon  the occurrence of an Event of
Default,  the Beneficiary shall be entitled without giving notice to the Grantor
(the Grantor  hereby  waiving any  requirement  of such notice) to the immediate
appointment of a receiver for the Trust Property, without regard to the value of
the Trust  Property  or the  solvency  of any person  liable for  payment of the
amounts due under the Loan Documents.

                                   ARTICLE XI

                                  MISCELLANEOUS

         11.1  Waivers--No  term of any Loan  Document  shall be  deemed  waived
unless the  waiver  shall be in writing  and  signed by the  parties  making the
waiver.  Any  failure by the  Beneficiary  to insist upon the  Grantor's  strict
performance  of any of the  terms of the Loan  Documents  shall not be deemed or
construed as a waiver of those or any other terms.  Any delay in  exercising  or
enforcing  any rights with respect to a Default or an Event or Default shall not
bar the Beneficiary  from exercising any rights under the Loan Documents,  or at
law or in equity.


<PAGE>



         11.2     Consents--

                  11.2.1 The Beneficiary may (a) release any person liable under
the Loan Documents, (b) release any part of the security, (c) extend the time of
payment  of the  Loan,  and/or  (d)  modify  the  terms of the  Loan  Documents,
regardless of  consideration  and without  notice to or consent by the holder of
any  subordinate  lien  on  the  Trust  Property.   No  release,   extension  or
modification  of the  security  held under the Loan  Documents  shall  impair or
affect  the lien of this  Deed of Trust or the  priority  of such  lien over any
subordinate lien.

                  11.2.2 Regardless of whether a Person has been given


                                       26
<PAGE>

notice or has given its prior consent,  such Person shall not be relieved of any
obligation  under  any  Loan  Documents  by  reason  of (a) the  failure  of the
Beneficiary,  the Trustee, or any other Person to take any action, foreclose, or
otherwise  enforce any provision of the Loan  Documents,  (b) the release of any
other Person liable under any Loan  Document,  (c) the release of any portion of
the security  under the Loan  Documents,  or (d) any  agreement  or  stipulation
between any subsequent  owners of the Trust Property and  Beneficiary  extending
the time of payment or modifying the terms of any Loan Document.

         11.3  Headings--All  Article and Section  headings are for  convenience
only and shall not be  interpreted to enlarge or restrict the provisions of this
Deed of Trust.

         11.4 Notices--All  notices shall be sent to the respective addresses of
the parties as follows:

         If to the Beneficiary or Trustee:

                  KEYBANK NATIONAL ASSOCIATION
                  66 South Pearl Street
                  Albany, New York  12207

                  Attention:  Corporate Banking Division

         With a copy to:

                  Kevin J. Kelley
                  CRANE, KELLEY,  GREENE AND PARENTE 
                  90 State Street 
                  Albany, New York 12207

         If to the Grantor:

                  H. Norman Spurlock
                  P.O. Box 8
                  Route 460 East
                  Waverly, Virginia 23890

         With a copy to:

                  c/o William L. Pitman
                  Williams, Mullen, Christian & Dobbins
                  1021 E. Cary Street
                  P.O. Box 1320
                  Richmond, Virginia 23210

         Any notice or demand required or permitted in connection with this Deed
of Trust shall be in writing and made by in person  delivery  or  registered  or
certified mail,  return receipt  requested,


                                       27
<PAGE>

postage prepaid,  addressed to the appropriate party at the appropriate  address
set forth below or to such other  address as may be  hereafter  specified by the
party  entitled to notice by at least ten (10) days' prior written  notice,  and
shall be considered  given as of the date of delivery,  in the case of in person
delivery, or mailing, in the case of registered or certified mail.

         11.5 Binding  Effect--No  transfer of any portion of the Trust Property
or any interest  therein shall relieve any transferor of its  obligations  under
the Loan  Documents.  No  transferor of any  obligation  under any Loan Document
shall be relieved of its  obligations by any  modification  of any Loan Document
subsequent to the transfer.

         11.6  Amendment--No  Loan  Document  may be modified  except in writing
signed by (a) the Beneficiary and (b) the Grantor.

         11.7  Severability--In  the event any  provision  of this Deed of Trust
shall be held invalid or unenforceable  by any court of competent  jurisdiction,
such holding shall not invalidate or render  unenforceable  any other  provision
hereof.

         11.8  Notices  from  Governmental   Authorities   Affecting  The  Trust
Property--Any  notice from any governmental or  quasi-governmental  authority or
corporation  with respect to the Trust  Property sent to or known by the Grantor
shall be promptly transmitted to the Beneficiary.

         11.9 Applicable  Law--This Deed of Trust and Assignment of Leases shall
be governed by the Laws of the State of Virginia.

         11.10 Time of the  Essence--Time  is of the essence with respect to the
Loan Documents.

         11.11  Effect of  Payments--Any  payment or other  performance  made in
accordance  with the Loan  Documents by any Person other than Grantor  shall not
entitle such Person to any right of subrogation under the Loan Documents, unless
expressly consented to in writing by the Beneficiary.

         11.12 Word Forms--The use of any gender,  tense, or conjugation  herein
shall be  applicable  to all genders,  tenses and  conjugations.  The use of the
singular shall include the plural and the plural shall include the singular. For
example,  whenever the term  "Grantor"  is used herein,  the term shall refer to
each party  constituting  the Grantor jointly and severally and individually and
collectively.

         11.13 WAIVER OF JURY TRIAL--THE  GRANTOR WAIVES THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR  PROCEEDING  BASED  UPON,  OR RELATED



                                       28
<PAGE>

TO, THE LOAN OR THIS DEED OF TRUST. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND
VOLUNTARILY  MADE BY THE GRANTOR AND THE  GRANTOR  ACKNOWLEDGES  THAT EXCEPT FOR
BENEFICIARY'S AND TRUSTEE'S  AGREEMENT TO LIKEWISE WAIVE THEIR RIGHTS TO A TRIAL
BY JURY  NEITHER THE  BENEFICIARY,  THE  TRUSTEE NOR ANY PERSON  ACTING ON THEIR
BEHALF HAS MADE ANY  REPRESENTATIONS  OF FACT TO INDUCE  THIS WAIVER OF TRIAL BY
JURY  OR IN ANY WAY TO  MODIFY  OR  NULLIFY  ITS  EFFECT.  THE  GRANTOR  FURTHER
ACKNOWLEDGES  THAT IT HAS BEEN  REPRESENTED  (OR HAS HAD THE  OPPORTUNITY  TO BE
REPRESENTED)  IN THE  SIGNING  OF THIS  DEED OF TRUST  NOTE AND ALL  OTHER  LOAN
DOCUMENTS  AND IN THE  MAKING  OF THIS  WAIVER  BY  INDEPENDENT  LEGAL  COUNSEL,
SELECTED OF ITS OWN FREE WILL,  AND THAT IT HAS HAD THE  OPPORTUNITY  TO DISCUSS
THIS WAIVER WITH COUNSEL.  THE GRANTOR FURTHER ACKNOWLEDGES THAT IT HAS READ AND
UNDERSTANDS  THE  MEANING AND  RAMIFICATIONS  OF THIS  WAIVER  PROVISION  AND AS
EVIDENCE OF THIS FACT SIGNS THIS DEED OF TRUST BELOW.

         11.14 Conflict Between This Instrument and Reimbursement  Agreement--To
the extent a conflict  exists between the provisions of this  instrument and the
Reimbursement  Agreement,  the provisions of the  Reimbursement  Agreement shall
control, excepting conflicts arising between the definition of capitalized terms
occurring in both this instrument and the Reimbursement Agreement, in which case
this instrument shall control.



                         SIGNATURES APPEAR ON NEXT PAGE



                                       29
<PAGE>

         WITNESS the  execution  hereof by the  Grantor and the  affixing of the
Grantor's seal.


                                       GRANTOR:

                                       SPURLOCK ADHESIVES, INC.



                                       By: /s/ Phillip S. Sumpter
                                           -------------------------------------
                                       Name: Phillip S. Sumpter
                                             -----------------------------------
                                       Its: Exec. Vice President
                                            ------------------------------------

[SEAL]




COMMONWEALTH OF VIRGINIA       )
                               ) to-wit:
COUNTY OF SUSSEX               )


         I hereby certify that on this 7th day of November,  1997,  came Phillip
S.  Sumpter,  as Exec Vice  President  of SPURLOCK  ADHESIVES,  Inc., a Virginia
corporation,  acknowledged  the execution of this Deed of Trust on behalf of the
corporation.


                                             /s/
                                            -----------------------------------
                                                      Notary Public
                                                     (Notarial Seal)


         My Commission Expires:  11/30/00.



                                       30
<PAGE>


                                    Exhibit A


All that certain lot, piece or parcel of land lying and being situate in Waverly
Magisterial District,  Sussex County,  Virginia, and fronting 1078.63 feet, more
or less, on the southwest  side of Route U.S. 460,  containing  10.00 acres,  as
shown on that  certain  plat of survey  entitled  "MAP  SHOWING A PARCEL OF LAND
SITUATED  WAVERLY  DISTRICT  SUSSEX  COUNTY,  VIRGINIA OWNED BY AND SURVEYED FOR
HAROLD N. & DAPHNE R. SPURLOCK", made by Irving H. Pritchett, III, C.L.S., dated
October 27,  1987,  a copy of which said survey is attached to deed in Deed Book
132, page 211 and recorded in Plat Book 18, page 122, and to which  reference is
made for a more particular description of the property herein conveyed, together
with any appurtenances thereunto appertaining.

Being the same real  estate  conveyed to Spurlock  Adhesives,  Inc.,  a Virginia
corporation,  by deed from Harold N. Spurlock and Daphne R. Spurlock, dated July
21, 1992,  recorded  August 13, 1992,  Clerk's  Office,  Circuit  Court,  Sussex
County, Virginia, Deed Book 132, page 211.



                                       31
<PAGE>


                                    Exhibit B

1. Easement granted  Chesapeake and Potomac  Telephone Company dated October 27,
1967  recorded in Deed Book 70,  Page 183,  grants  easement to place  telephone
apparatus cabinet and right of way adjacent to Route 460.
         Easement  includes  right of access  and the right to trim trees and to
remove obstructions.

2. Deed in Deed Book 24, page 273 contains  reference to an unrecorded  easement
to Postal  Telegraph  Cable  Company.  A plat  recorded  with  deed into  Wright
Chemical  Corporation  in Deed Book 72, page 616  locates  said  easement  along
southern parcel line.
         Easement  includes  right of access  and the right to trim trees and to
remove obstructions.

3.       Easement granted County of Sussex dated July 21, 1997, recorded in Deed
         Book 156,  page 478,  which grants a 20'  easement  for sanitary  sewer
         and/or a water distribution system and to operate and maintain all such
         pipes,  improvements,   conduits,  manholes,  equipment,   accessories,
         sensors, and appurtenances desirable in connection therewith.  Easement
         dedication  includes  the  right  to make  use of  adjoining  land  for
         construction and maintenance of public facilities within the boundaries
         of said easements  Easement  includes right of access and right to trim
         trees and to remove obstructions.

4.       Deed of Trust from Spurlock Industries,  Inc., a Virginia  corporation,
         to Otto W. Konrad and Bruce H. Matson, Trustee(s), dated July 11, 1996,
         recorded July 15, 1996, Deed Book 150, page 626, to secure the original
         principal sum of  $3,639,000.00,  as corrected by Deed of Correction of
         Deed of Trust dated  October 1st, 1997 and recorded  immediately  prior
         hereto.




                                       32
<PAGE>

THIS INSTRUMENT PREPARED BY:
DONALD M. SPEARS, Attorney At Law, ABA #75119





                                ARKANSAS MORTGAGE
                               WITH POWER OF SALE


KNOW ALL MEN BY THESE PRESENTS:

         That this Arkansas Mortgage With Power of Sale (hereinafter referred to
as  MORTGAGE)  made  and  entered  into as of the 1st  day of  October,  1997 by
SPURLOCK ADHESIVES,  INC., a Virginia  Corporation located in Waverly,  Virginia
and whose  principal  place of  business  in  Arkansas  is located in Hot Spring
County,  Arkansas  (hereinafter  referred to as  BORROWER),  in favor of KEYBANK
NATIONAL ASSOCIATION (hereinafter referred to as LENDER).

                                   WITNESSETH:

         That BORROWER, for valuable consideration,  does hereby grant, bargain,
sell,  convey and deliver unto LENDER and unto its successors  and assigns,  the
real property in Hot Spring  County,  Arkansas and described as follows,  to wit
(hereinafter referred to as REAL ESTATE):

         THE SE1/4 OF THE  NE1/4 AND ALSO ALL OF THE SW1/4 OF THE NE1/4  EAST OF
         THE MISSOURI  PACIFIC  RAILROAD,  ALL IN SECTION 16,  TOWNSHIP 4 SOUTH,
         RANGE 16 WEST, HOT SPRING COUNTY, ARKANSAS

         (A) Together  with all buildings  and  improvements  now or at any time
hereafter  located on any land hereinabove  described,  together with all of the
following  equipment now or at any time  hereafter  located in any such building
regardless of method of annexation  or  removability,  including but not limited
to, all


                                       1
<PAGE>

electrical  equipment  including lighting  equipment,  refrigeration and heating
equipment,  ceiling fans, attic and window fans, motors and all other electrical
equipment  except  items  attached  merely  by  plugging  in wall  sockets;  all
furnaces,  heaters,  radiators  and all other  heating  equipment;  all bathtub,
toilets,  sinks,  basins,  pipes  and other  plumbing  equipment;  all  screens,
awnings,  and  window  shades;   permanent  floor  coverings;  all  engines  and
elevators.

         (B)  BORROWER  also pledges any and all mineral  rights  related to the
REAL ESTATE and any and all profits and income accruing in regard to any mineral
rights related to the REAL ESTATE that may be owned by it.

         (C) In addition to pledging the properties as  hereinbefore  mentioned,
BORROWER  also  pledges  any and all  profits,  rents  and  income  accruing  in
connection  with said  properties  including,  but not  limited  to,  insurance,
proceeds and condemnation awards, and all ledgers, books or accounts and records
relating thereto.  However, the right is reserved to the BORROWER to collect the
profits,  rents and income as the same mature and become due and payable, but in
the event of default as to any of the covenants  herein  contained,  then at its
option  the  LENDER  shall have the  right,  without  notice,  to take over said
properties,  manage same,  rent same and collect the rent thereon,  with the net
income so collected being applied to the indebtedness secured by this MORTGAGE.

         TO HAVE  AND TO HOLD  the  aforesaid  property  together  with  all the
hereditament and appurtenances  thereunto belonging or in any wise appertaining,
unto same unto the said LENDER, its successors and assigns forever.

         Except for and specifically excluding the aforesaid mineral


                                       2
<PAGE>

rights, the aforesaid property is hereinafter referred to as the PROPERTY.

         And BORROWER  covenants with LENDER,  its successors and assigns,  that
BORROWER will forever  warrant and defend the title to the PROPERTY  against any
and all lawful claims whatever.

         PROVIDED,  however, the foregoing conveyance is given as a MORTGAGE for
the purpose of securing:

         (a) The payment of (i) a  promissory  note dated as of October 10, 1997
(the "Term Loan Note")  evidencing a loan in the sum of One Million Five Hundred
Thousand Dollars ($1,500,000) and (ii) the Borrower's  obligations to the Lender
under a letter of credit  reimbursement  agreement  by and between  Borrower and
Lender  and  dated as of  October  1, 1997 (the  "Reimbursement  Agreement"  and
collectively  with the Term Loan Note, the "Note") in a maximum principal amount
of Six Million Dollars  ($6,000,000)  both of which are  incorporated  herein by
reference  (hereinafter  referred to as the LOAN), and all successive extensions
and renewals of the indebtedness represented thereby, evidencing an indebtedness
being due and payable as to principal and interest as follows:

         Payable  according  to  the  terms  of  the  Term  Loan  Note  and  the
         Reimbursement Agreement executed in connection with the REAL ESTATE

         (b) and the repayment to the LENDER of the indebtedness  secured hereby
of all  reimbursable  expense  at any time  accruing  to such  LENDER  under the
provisions hereof; and

         (c) The payment of all future and  additional  indebtedness,  direct or
indirect,  created  after  the  date of this  MORTGAGE,  which  may be  owing by
BORROWER (or by any of the persons herein


                                       3
<PAGE>

designated  under the term  "BORROWER")  to the  LENDER at any time prior to the
payment in full with interest of the  indebtedness  or the  foreclosure  of this
MORTGAGE  therefore  (the  event  occurring  first  to  be  controlling);   such
additional  indebtedness to be secured hereby  regardless of whether it shall be
predicated  upon future  loans or  advances  hereafter  made by the  LENDER,  or
obligations hereafter acquired by such LENDER, through assignment or subrogation
or otherwise, or shall represent indirect obligations (created after the date of
this MORTGAGE), based upon any endorsements, guaranties or suretyship; and it is
agreed  that this  MORTGAGE  shall  stand as  security  for all such  future and
additional  indebtedness,  whether it be incurred for any business  purpose that
was related or wholly  unrelated to the purpose of the original loan, or whether
it was  incurred for some  personal or  non-business  purpose,  or for any other
purpose  related or unrelated,  or similar or dissimilar,  to the purpose of the
original loan.

         (d)  NOTWITHSTANDING  ANY AMOUNT OTHERWISE DUE BENEFICIARY  PURSUANT TO
THE TERMS OF THE NOTE, THE MAXIMUM PRINCIPAL  INDEBTEDNESS SECURED HEREBY IS TWO
MILLION DOLLARS ($2,000,000).

                  (1)      The BORROWER Agrees as follows:

                  (a.1) The BORROWER covenants and warrants that the BORROWER is
seized of the PROPERTY in fee simple and that it has the right and  authority to
convey  the  PROPERTY  in fee  simple;  that the same are free and  clear of all
ENCUMBRANCES,  as hereinafter  defined,  except for PERMITTED  ENCUMBRANCES,  as
hereinafter  defined;  that BORROWER  warrants  generally  title to the PROPERTY
against claims of all persons whomsoever;  and that it will execute such further
assurances as may be requested by the LENDER.

                  (a.2) The BORROWER is in good  standing  under the laws of the
State of Arkansas,  and will maintain its good standing and



                                        4
<PAGE>

existence until all of BORROWER's obligations under this MORTGAGE, the NOTE, the
VIRGINIA  DEED  OF  TRUST,  as  hereinafter  defined,  and  any  and  all  other
certificates,   opinions,  assignments  and  documents  executed  in  connection
herewith or therewith, and all current and future supplements,  amendments,  and
attachments  thereto  (hereinafter  referred to as the LOAN DOCUMENTS) have been
performed and satisfied.  The execution and delivery of the LOAN DOCUMENTS,  the
performance of the  transactions  contemplated  by the LOAN  DOCUMENTS,  and the
performance  of  BORROWER's  and any  guarantor's  obligations  under  the  LOAN
DOCUMENTS,  have been  duly  authorized  by all  necessary  action  and will not
conflict with or result in a breach of law or any agreement or other  instrument
to which  BORROWER or any guarantor is bound.  The LOAN  DOCUMENTS are valid and
binding on  BORROWER  and any  guarantor  thereof  and are  enforceable  against
BORROWER and each such guarantor in accordance with their  respective  terms, as
applicable.

                  (b)  The  BORROWER  represents  and  warrants  that:  (i)  the
BORROWER  has no knowledge  of the  presence of or of any  discharge,  spillage,
uncontrolled  loss,  seepage or filtration of oil, petroleum or chemical liquids
or solids,  liquid or  gaseous  products  or any  hazardous  waste or  hazardous
substance  (hereinafter  referred to as the HAZARD),  as those terms are used in
the  Comprehensive  Environmental  Response,  Compensation  and Liability Act of
1980, 42 U.S.C  ss.ss.9601 et seq., as amended by the Superfund  Amendments  and
Reauthorization Act of 1986; the Resource Conservation and Recovery Act of 1976.
(the  Solid  Waste  Disposal  Act or RCRA),  42 U.S.C.  ss.ss.6901  et seq.,  as
amended; the Toxic Substance Control Act (TSCA) 15 U.S.C. ss.ss.2601 et seq., or
in any other federal, state or local law governing hazardous substances, as such
laws may be amended from time to time, (hereinafter referred to as the ACT), at,
upon,  under or within the  PROPERTY;  and (ii) the  BORROWER  has not caused or
permitted  to occur and shall use its best  efforts not to permit to exist,


                                       5
<PAGE>

any condition  which may cause or constitute a HAZARD at, upon,  under or within
the  PROPERTY.  The term  "HAZARD"  includes  but is not  limited  to  asbestos,
polychlorinated  biphenyl  (PCBs) and lead  based  paints.  Notwithstanding  the
foregoing,  the  BORROWER  makes no  representation  or warranty  under  Section
(1)(b)(i) with respect to (a) those items set forth in the Phase I Environmental
Audit  performed by Sherwood  Environmental  Consultants,  Inc.,  dated June 26,
1996, a copy of which has been delivered to the LENDER,  (b) discharges  made in
the normal course of business pursuant to applicable  permits for the benefit of
BORROWER pursuant to applicable law, and (c) discharge,  spillage,  uncontrolled
loss,  seepage or filtration of any HAZARD,  which is deminimus and is occurring
during the normal course of business,  

                  (c) The BORROWER  further  represents  and  warrants  that (i)
neither the BORROWER nor, to the best of its knowledge,  any other party,  is or
will be involved in operations upon the PROPERTY, which operations could lead to
(a) the  imposition  of liability on the BORROWER or on any other  subsequent or
former owner of the PROPERTY under the ACT; or (b) the creation of a lien on the
PROPERTY  under the ACT or under any similar laws or  regulations;  and (ii) the
BORROWER has not permitted,  and will not permit,  any tenant or occupant of the
PROPERTY to engage in any activity that could impose  liability under the ACT on
such  tenant or  occupant,  on the  BORROWER or on any other owner of any of the
PROPERTY.

                  (d) The  BORROWER  has  complied,  and  shall  comply,  in all
material  respects with the requirements of the ACT and related  regulations and
with all similar laws and regulations and shall notify the LENDER immediately in
the event of any HAZARD or the discovery of any HAZARD at, upon, under or within
the PROPERTY.  The BORROWER shall  promptly  forward to the LENDER copies of all
orders,  notices,  permits,  applications or other communications and reports in
connection  with any HAZARD or the  presence of any HAZARD or any other  matters
relating to the ACT


                                       6
<PAGE>

or any similar laws or regulations, as they may affect the PROPERTY.

                  (e) Promptly upon the written  request of the LENDER from time
to time,  when the LENDER has a reasonable  basis  therefor,  the BORROWER shall
provide  to the  LENDER,  at  the  BORROWER's  expense,  an  environmental  site
assessment  or  environmental   audit  report,   prepared  by  an  environmental
engineering firm acceptable in the reasonable  opinion of the LENDER,  to assess
with a reasonable  degree of certainty the presence or absence of any HAZARD and
the potential  costs in  connection  with  abatement,  cleanup or removal of any
HAZARD found on, under, at or within the PROPERTY. 

                  (f) The  BORROWER  shall defend and  indemnify  the LENDER and
hold the LENDER harmless from and against all actual loss, liability, damage and
expense,  including  reasonable  attorneys'  fees,  suffered  or incurred by the
LENDER,  whether as holder of this MORTGAGE,  as mortgagee in possession,  or as
successor-in-interest  to  BORROWER  by  foreclosure  deed  or  deed  in lieu of
foreclosure,  under or on account of the ACT or any similar laws or regulations,
including


                                       7
<PAGE>

the  assertion of any lien  thereunder:  (i) with respect to any HAZARD,  or the
presence of any HAZARD affecting the PROPERTY whether or not the same originates
or emanates from the PROPERTY,  including any loss of value of the PROPERTY as a
result of the foregoing; and (ii) with respect to any other matter affecting the
PROPERTY within the jurisdiction of the  Environmental  Protection  Agency,  any
other federal  agency,  or any state or local  environmental  agency.  Provided,
however,  the BORROWER's  obligations  under this Section shall not apply to any
loss, liability, damage or expense which is attributable to any HAZARD resulting
from actions on the part of the LENDER,  whether as holder of this MORTGAGE,  as
mortgagee in possession,  or as successor-in-interest to BORROWER by foreclosure
deed  or deed in lieu of  foreclosure,  under  or on  account  of the ACT or any
similar laws or regulations,  including the assertion of any lien thereunder, or
any  successor  in  interest  to or  assignee  of  the  LENDER.  The  BORROWER's
obligation  under this Section shall arise upon the discovery of the presence of
any HAZARD under the ACT whether or not the Environmental Protection Agency, any
other  federal  agency or any state or local  environmental  agency has taken or
threatened any action in connection with the presence of any HAZARD.

                  (g) In  the  event  of any  HAZARD,  or  the  presence  of any
hazardous substance  affecting the PROPERTY,  whether or not the same originates
or emanates from the PROPERTY or any contiguous real estate, and if the BORROWER
shall  fail  to  comply  with  any of the  requirements  of the  ACT or  related
regulations  or any  other  environmental  law or  regulation  within  the  time
established  by any  regulatory  agency,  the  LENDER may at its  election,  but
without the obligation to do so: (i) give such notices and/or cause such work to
be performed at the PROPERTY;  and/or (ii) take any and all other actions as the
LENDER  shall  reasonably  deem  necessary  or  advisable  in order to abate the
HAZARD, remove the hazardous substance or cure the BORROWER's noncompliance. Any
amounts so paid by the LENDER  pursuant to this Section,  together with interest
thereon at the highest rate of interest  permitted  under the NOTE from the date
of payment by the LENDER,  shall be immediately  due and payable by the BORROWER
to the  LENDER  and  until  paid  shall  be  added  to and  become a part of the
indebtedness under the LOAN DOCUMENTS and shall be secured by this MORTGAGE.

                  (h) The  provisions of Section  (1)(b),  (c), (d), (e) (f) and
(g) are for the  benefit of the LENDER  only and cannot be assigned to any other
party,  whatsoever,  except by assignment of the NOTE and the LOAN  DOCUMENTS by
the current LENDER to a successor lender.

                  (i) The BORROWER  covenants that it will punctually (i) pay to
the  LENDER  the  principal  and  interest  of the LOAN and all other  costs and
indebtedness  secured  hereby  according to the


                                       8
<PAGE>

terms of the NOTE and other LOAN  DOCUMENTS,  and (ii)  perform  and satisfy all
other obligations of the BORROWER under the LOAN DOCUMENTS.

                  (j) The BORROWER  shall comply with all laws a breach of which
would  materially  and  adversely  affect  (a) the  financial  condition  of the
BORROWER,  (b) the ability to use buildings and other  improvements  on the REAL
ESTATE for the purposes for which they were designed or intended,  (c) the value
or status of the PROPERTY,  or (d) the value or status of the LENDER's  title to
the  PROPERTY.  

                  (k) BORROWER will at all times  promptly  notify LENDER of all
changes  in the  ownership  of the stock of  BORROWER.  At any time  LENDER  may
request, BORROWER shall furnish a complete statement,  sworn to under penalty of
perjury  by an  officer  of  BORROWER,  setting  forth all of the  stockholders,
officers, directors and Controlling Parties of BORROWER, and the extent of their
respective stock ownership or control. In the event the BORROWER is aware of any
other individual, corporation,  partnership,  association, trust, joint venture,
or  any  other  legal  entity  (hereinafter  referred  to as  PERSON)  having  a
beneficial  interest in such stock,  the statement shall also set forth the name
of such PERSON and the extent of their interest.  

                  (l) Within ten (10) days after  request  from the LENDER,  the
BORROWER  shall certify,  in writing,  the amount of principal and interest then
owing on the LOAN and  whether the  BORROWER  has any  defenses or offsets  with
respect to the LOAN.  

                  (m) In the  event  (a)  any  law is  hereafter  enacted  which
imposes any taxes,  excises,  documentary  stamp and transfer  taxes,  recording
taxes,  assessments,  water rents, sewer rents,  metropolitan  district charges,
sanitary  district  charges,  public dues,  and other public  charges  levied or
assessed upon the  PROPERTY,  upon the LOAN,  or the  transactions  evidenced or
contemplated by any of the LOAN DOCUMENTS (hereinafter referred to as TAXES), or
(b) any law now in force  governing the taxation


                                       9
<PAGE>

of mortgages,  debts secured by mortgages,  or the manner of collecting any such
TAX shall be changed or modified,  in any manner, so as to impose a TAX upon the
LOAN, any of the LOAN DOCUMENTS,  or the transactions  evidenced or contemplated
by any of the LOAN DOCUMENTS, (including, without limitation, a requirement that
revenue  stamps be affixed to any or all of the LOAN  DOCUMENTS),  the  BORROWER
will pay any such TAX promptly  upon notice from LENDER that such TAX is due. If
the BORROWER fails to make prompt  payment,  or if any law either  prohibits the
BORROWER from making the payment or would  penalize the LENDER if BORROWER makes
the payment, then the failure, prohibition, or penalty shall entitle the LENDER,
after ninety (90) days notice and failure of the BORROWER to pay off the LOAN in
full, without penalty or premium,  to exercise all rights hereunder as though an
EVENT OF DEFAULT, as hereinafter  defined,  had occurred.

                  (n) The BORROWER from time to time will execute,  acknowledge,
deliver  and  record,  at the  BORROWER's  sole cost and  expense,  all  further
instruments, deeds, conveyances,  supplemental mortgages, assignments, financing
statements, transfers, and assurances as in the opinion of the LENDER's counsel,
reasonably exercised,  may be necessary (a) to preserve,  continue,  and protect
the  interest  of the LENDER in the  PROPERTY,  (b) to perfect  the grant to the
LENDER of every part of the PROPERTY,  (c) to  facilitate  the execution of this
MORTGAGE,  (d) to secure  the  rights  and  remedies  of the  LENDER  under this
MORTGAGE and the other LOAN DOCUMENTS,  or (e) to transfer to any purchaser at a
sale hereunder the PROPERTY,  funds, and powers now or hereafter held hereunder.
The  BORROWER,  at the  request  of  the  LENDER,  shall  promptly  execute  any
continuation statements required by the Uniform Commercial Code effective in the
State  of  Arkansas  and  any  amendments   thereto  or   reenactments   thereof
(hereinafter referred to as the UNIFORM COMMERCIAL CODE) to maintain the lien on
any portion of the  PROPERTY  subject to the UNIFORM  COMMERCIAL  CODE.


                                       10
<PAGE>

                  (o) The  BORROWER  shall  reimburse  the  LENDER for any sums,
including reasonable attorney's fees and expenses,  incurred or expended by them
(a) in connection with any action or proceeding  reasonably necessary or prudent
to sustain  the lien,  security  interest,  priority,  or  validity  of any LOAN
DOCUMENT,  (b) to  protect  or  enforce  any of  their  rights  under  the  LOAN
DOCUMENTS,  (c) for any title examination  relating to the title to the PROPERTY
undertaken after an EVENTS OF DEFAULT, or (d) for any other purpose contemplated
by the LOAN  DOCUMENTS.  The  BORROWER  shall,  upon  demand,  pay all such sums
accruing  from the time the  expense is paid and notice  thereof is  received if
such  expense is not paid by the  BORROWER  within  seven (7) days of receipt of
such  notice.  All such sums so expended by the LENDER  shall be secured by this
MORTGAGE.  In any action or proceeding to foreclose  this MORTGAGE or to recover
or collect the LOAN,  the  provisions  of law  allowing  the  recovery of costs,
disbursements,  and allowances  shall be in addition to the rights given by this
Section. 

                  (p) The BORROWER  will comply with its  obligations  under any
lease which  purports  to convey any  interest of BORROWER in any portion of the
PROPERTY, including, without limitation, subleases and assignments of leases and
rents (hereinafter  referred to as LEASES).  The BORROWER,  within ten (10) days
after  written  request from the LENDER,  shall deliver to the LENDER a detailed
list and  description  of all LEASES  with copies  thereof  and such  additional
information as may be reasonably requested by the LENDER. BORROWER will transfer
and assign to the  LENDER,  in a form  satisfactory  to the  LENDER,  BORROWER's
interest in any LEASE as further security for the obligations secured hereby. No
such  assignment  shall  impose  upon the LENDER any  liability  to perform  the
BORROWER's  obligations  under any LEASE.  The LENDER reserves the right, at its
request,  to  review  and  approve  any and all  LEASES  of any  portion  of the
PROPERTY. 

                  (q) The BORROWER  will  enforce all LEASES  according to


                                       11
<PAGE>

their terms.  The BORROWER  shall not (a) cancel or terminate,  or consent to or
accept any cancellation,  termination,  or surrender of any LEASE, or permit any
event within the BORROWER's control to occur which would terminate or cancel any
LEASE,  (b) amend or modify any LEASE,  (c) waive any default under or breach of
any LEASE,  (d)  consent  to or permit any  prepayment  or  discount  of rent or
advance rent under any LEASE,  except for the current month or following  month,
or (e) give any consent,  waiver,  or approval under any LEASE or take any other
action  with  respect to any LEASE  which may  impair the value of the  LENDER's
interest in the PROPERTY.  BORROWER shall comply with and perform all duties and
obligations  imposed upon or assumed by it in all LEASES.  

                  (r) In the event of a sale  pursuant  to this  MORTGAGE,  each
lessee of BORROWER  under any LEASE,  and any  sub-lessee or assignee of a LEASE
(hereinafter  referred  to  as  TENANT)  shall,  upon  request,  attorn  to  and
acknowledge  any purchaser at  foreclosure  or grantee in lieu of foreclosure as
landlord and the  purchaser  will not be required to credit any TENANT under any
LEASE with rent paid more than one (1) month in  advance.  All  LEASES  shall be
subject and subordinate to the LOAN DOCUMENTS  (including any  modifications and
amendments)  and any  additional  financing or refinancing of the PROPERTY by or
for the LENDER.

                  (s)  The  BORROWER  shall  not  assign  any  rents,   profits,
royalties,  issues, revenues, income, proceeds, earnings, and products generated
by or arising out of the PROPERTY or any part  thereof or any  interest  therein
(hereinafter  referred to as the RENTS) without the prior written consent of the
LENDER. Any attempted assignment,  pledge, hypothecation,  or grant without such
consent  shall be null and  void.  

                  (t) The  BORROWER  shall  make no  structural  alterations  or
material  nonstructural  alterations to the PROPERTY or construct any additional
improvements  on the REAL  ESTATE,  without  the prior  written  consent  of the
LENDER,  which  consent  shall not be  unreasonably  delayed  or  withheld.  All
alterations or


                                       12
<PAGE>

improvements  consented  to by  LENDER  shall be  completed  and paid for by the
BORROWER within a reasonable time. All such alterations or improvements shall be
erected (a) in a good and  workmanlike  manner  strictly in accordance  with all
applicable law, (b) entirely on the REAL ESTATE,  (c) without  encroaching  upon
any  easement,  right of way,  or land of others,  (d) so as not to violate  any
applicable  use,  height,  set-back  or other  applicable  restriction,  and (e)
without  permitting any  mechanic's  lien to attach to the PROPERTY which is not
being contested as permitted  hereunder.  All  alterations,  additions,  and new
improvements to the PROPERTY shall  automatically  be a part of the PROPERTY and
shall be  subject  to this  MORTGAGE.  

                  (u) It shall be an EVENT OF DEFAULT if BORROWER  shall  permit
the PROPERTY or the corporate interests in the BORROWER,  or any part or portion
thereof or any  interest  therein,  to be  transferred  (whether by voluntary or
involuntary  conveyance,  merger,  operation of law, or  otherwise)  without the
prior  written  consent of the LENDER which the LENDER shall not be obligated to
give.  Any transferee of the PROPERTY or interest in the BORROWER or any part or
portion  thereof or any interest  therein,  by virtue of its  acceptance  of the
transfer,  shall (without in any way affecting  BORROWER's  liability  under the
LOAN DOCUMENTS) be conclusively deemed to have agreed to assume primary personal
liability  for the  performance  of the  BORROWER's  obligations  under the LOAN
DOCUMENTS.  This Section shall not apply to any disposition permitted by Section
(1)(x),  any LEASE  entered  into in  compliance  with  Section  (1)(p),  or any
disposition by the LENDER by foreclosure  hereunder or as otherwise permitted by
the LOAN DOCUMENTS. 

                  (v) It shall be an EVENT OF DEFAULT if  BORROWER  shall  allow
any liens, mortgages, rights, leases,  restrictions,  easements, deeds of trust,
covenants,  agreements, rights of way, rights of redemption, security interests,
conditional sales agreements, land installment contracts, options, and all other


                                       13
<PAGE>

burdens  or  charges,  including  secondary  and  supplemental  financing  liens
(hereinafter  referred to as the  ENCUMBRANCES),  on the  PROPERTY,  except this
MORTGAGE and all  ENCUMBRANCES  as to which borrower has given its prior written
approval,  liens  arising  for real estate  taxes or public  charges for sewage,
water, drainage or other public improvements not yet due and payable,  LEASE not
in violation of Section (1)(p) and all liens permitted under the LOAN DOCUMENTS,
as  hereinafter  defined,  including,   without  limitation,   those  exceptions
specified on Schedule A (hereinafter referred to as the PERMITTED ENCUMBRANCES).
The BORROWER shall give the LENDER prompt notice of any defaults in or under any
PERMITTED  ENCUMBRANCES  and any notice of foreclosure or threat of foreclosure.
The BORROWER shall comply with its obligations under all PERMITTED ENCUMBRANCES.
The  LENDER  may,  at its  election,  satisfy  any  ENCUMBRANCE  (other  than an
PERMITTED  ENCUMBRANCE not then in default),  and the BORROWER shall, on demand,
reimburse the LENDER for any sums advanced for such  satisfaction  accruing from
the date of satisfaction, which sums shall be secured hereby. 

                  (w) BORROWER  shall (i) keep and maintain the PROPERTY in good
order,  condition,  and repair and make all equipment  replacements  and repairs
necessary  to insure that the security  for the LOAN is not  impaired,  (ii) not
commit or suffer any waste of the PROPERTY,  (iii) promptly protect and conserve
any  portion  of  the  PROPERTY  remaining  after  any  damage  to,  or  partial
destruction  of, the PROPERTY,  provided any insurance  proceeds  which may have
been  received  by the LENDER as a result of such damage or  destruction  of the
PROPERTY are given to the  BORROWER for such  purposes,  (iv)  promptly  repair,
restore,  replace or rebuild  any  portion of the  PROPERTY  which is damaged or
destroyed,  provided any insurance  proceeds which may have been received by the
LENDER as a result of such damage or  destruction  of the  PROPERTY are given to
the BORROWER for such purposes, (v) promptly restore the balance of the PROPERTY
remaining after any



                                       14
<PAGE>

taking by condemnation or eminent domain, any sale in lieu of condemnation under
threat thereof,  the alteration of the grade of any street,  or any other injury
to or  decrease  in the value of the  PROPERTY  by any  public  or  quasi-public
authority or  corporation or any other person having the power of eminent domain
(hereinafter referred to as a TAKING), provided any insurance proceeds which may
have been  received by the LENDER as a result of such damage or  destruction  of
the PROPERTY are given to the BORROWER for such purposes, (vi) permit the LENDER
or its designee to inspect the PROPERTY at all reasonable  times,  and (vii) not
make any material  change in the grade of the PROPERTY or permit any  excavation
of or on the PROPERTY. 

                  (x) No part of the PROPERTY,  except supplies  consumed in the
normal course of business and operations, shall be removed from the REAL ESTATE,
demolished,  or  materially  altered  without the prior  written  consent of the
LENDER,  which shall not be unreasonably  withheld.  Prior to or  simultaneously
with their removal,  such fixtures and equipment shall be replaced with fixtures
or equipment of equal or greater value.  The  replacement  fixtures or equipment
shall be free of all  ENCUMBRANCES,  shall  automatically be subject to the lien
and security  interest of this MORTGAGE,  and shall  automatically be subject to
the granting clauses hereof. Upon the sale of any removed fixtures and equipment
which are not  replaced,  the proceeds  shall be applied as a prepayment  of the
LOAN,  to be applied to  installments  in inverse  order of maturity.  All sales
shall be conducted in a commercially  reasonable  manner with a bona fide effort
to obtain a sale price of at least market  value.  

                  (y) The  BORROWER  will pay and  discharge,  as the same shall
become due and payable,  (i) all its obligations and liabilities,  including all
claims or demands of materialmen,  mechanics, carriers, warehousemen,  landlords
and other like persons  which,  in any such case,  if unpaid,  might by law give
rise to a lien upon the  PROPERTY,  and (ii) all lawful TAXES,


                                       15
<PAGE>

assessments and charges or levies made upon it or its property or assets, by any
Government  except  where any of the items in clause (i) or (ii) of this Section
may be diligently  contested in good faith by appropriate  proceedings,  and the
BORROWER shall have set aside on its books, if required under generally accepted
accounting principles in the United States, appropriate reserves for the accrual
of any  such  items.  

                  (z)  No  restrictive   covenant,   zoning  change,   or  other
restriction  affecting  the  PROPERTY  may  be  entered  into,  requested  by or
consented to by BORROWER  without the prior written  consent of the LENDER which
consent shall not be unreasonably withheld or delayed. 

                  (aa) The  BORROWER  will do all things  necessary  to preserve
intact and  unimpaired,  all easements,  appurtenances,  and other interests and
rights in favor of, or  constituting  any portion of, the PROPERTY.  

                  (bb)  LENDER may require  the  BORROWER,  at its sole cost and
expense,  to cause to be  furnished  to LENDER a prepaid real estate tax service
contract to annually check and report on the status of real estate taxes for the
REAL ESTATE throughout the term of the LOAN. 

                  (cc) If required by the LENDER,  the  BORROWER  shall  deposit
with the  LENDER,  on the tenth (10) day of each  month  during the term of this
MORTGAGE,  an additional  amount as  determined by the LENDER in its  reasonable
discretion,  to sufficiently  discharge the obligations of the BORROWER for: (a)
the payment of TAXES, assessments, levies, fees, rents, and other public charges
imposed upon or assessed  against the PROPERTY or the revenues,  rents,  issues,
income, or profits thereof,  as provided in (1)(y);  (b) the payment of premiums
for fire, casualty, and other hazard insurance and flood insurance,  as provided
by Sections  (1)(dd),  (ee), (ff), and (gg), for the purpose of providing a fund
to assure the payment of the  aforesaid  expenses when and as they come due; and
(c) if



                                       16
<PAGE>

applicable,  any owner's  association fee,  condominium  association fee, or any
other similar fee, cost,  assessment or charge. Such amounts shall be applied to
the payment of the  obligations  in respect to which such amounts were deposited
or, at the option of the  LENDER,  to the  payment of such  obligations  in such
order of  priority  as the LENDER  shall  determine,  on or before the date they
become delinquent. If the LENDER determines, prior to the due date of any of the
aforementioned   obligations,   that  the  amount  then  on  deposit   shall  be
insufficient for the payment of such  obligations in full, the BORROWER,  within
ten (10) days after demand,  shall deposit the amount of the deficiency with the
LENDER. The LENDER may also pay any amount as provided herein and add the amount
to the  indebtedness  hereby  secured.  

         Any amounts  deposited  with the LENDER  pursuant  to this  Section are
hereby  pledged as  additional  security  for the  payment of the LOAN and other
obligations under the LOAN DOCUMENTS  (hereinafter  collectively  referred to as
the LOAN  OBLIGATIONS) and the BORROWER does hereby grant a security interest to
the LENDER in such amounts.  Any amounts  deposited with the LENDER  pursuant to
the  provisions  of this Section shall not be, nor be deemed to be, trust funds,
nor shall they operate to curtail or reduce the LOAN OBLIGATIONS.  Such funds so
deposited  with the LENDER or pursuant to this Section shall be maintained in an
escrow account with the LENDER,  without  interest,  separate and apart from the
BORROWER's  other funds. The LENDER shall not be liable for any failure to apply
to the  payment  of the  obligations  in  respect  to which  such  amounts  were
deposited unless the BORROWER, while no EVENT OF DEFAULT exists hereunder, shall
have  requested the LENDER in writing to make  application of such deposits then
on hand to the  payment of  particular  escrow  items,  which  request  shall be
accompanied by the bills therefor.  The LENDER may, in its sole  discretion,  at
any  time and  from  time to  time,  waive  the  requirements  of this  Section.

         Notwithstanding any other provision of this Section, the


                                       17
<PAGE>

BORROWER  shall not be required to make any payment  required under this Section
if such  payment is required to be paid  pursuant to the terms of any  PERMITTED
ENCUMBRANCE.  

                  (dd) The BORROWER shall keep any  improvements  constructed on
the REAL ESTATE and personalty  thereon  insured  against loss by fire casualty,
and  such  other  hazards  and  contingencies,  including  but  not  limited  to
lightning, hail, windstorm,  explosion, malicious mischief and vandalism, as are
covered  by  extended  coverage  policies  in effect in the area  where the REAL
ESTATE is located and such other  risks as may be  reasonably  specified  by the
LENDER from time to time,  all for the benefit of the LENDER.  Coverage  for the
peril of  sprinkler  leakage  must be  included  as a covered  cause of loss for
buildings equipped with automatic sprinkler systems designed to discharge water,
or a chemical gas, or any other extinguishing  agents. LENDER may require boiler
and  machinery  insurance to cover sudden and  accidental  breakdown of specific
types of equipment,  including  for example,  boilers,  heating and  ventilating
systems,  refrigeration equipment,  air conditioning units, pumps,  compressors,
motors, blowers, generators and transformers.  All insurance shall be written on
policy forms and by insurance  companies  licensed and lawfully operating in the
jurisdiction in which the REAL ESTATE is located with a rating of "A-" or better
and Class IX or better according to A.M. Best Co. Insurance Guide and reasonably
satisfactory  to the LENDER or  pursuant  to the terms of the  VIRGINIA  DEED OF
TRUST,  and with respect to casualty  insurance,  shall be in an amount equal or
greater to the full  replacement  value of any  improvements and personalty upon
the  REAL  ESTATE,  as  determined  by an  appraisal  of such  improvements  and
personalty,  acceptable to the LENDER and paid for by the  BORROWER,  but in any
event  all  insurance  policies  shall be in an  amount  sufficient  to  prevent
co-insurance liability,  shall name the LENDER as a mortgagee and loss payee, as
its interest may appear,  shall state that the insurance  coverage  shall not be



                                       18
<PAGE>

affected by any act or neglect of the BORROWER or owner of the insured  PROPERTY
and shall be endorsed  such that the losses  thereunder  shall be payable to the
LENDER, as its interest may appear,  and not to the BORROWER and the LENDER. The
policy or policies of insurance shall include a replacement  cost or restoration
endorsement and a waiver of subrogation  endorsement reasonably  satisfactory to
the LENDER. Originals or certified true copies of the policy or policies of such
insurance,  any endorsements  thereto and all renewals thereof shall be manually
signed and  delivered  to and  retained by the LENDER,  and the  BORROWER  shall
provide the LENDER with receipts  evidencing  the payment of all premiums due on
such  policies and the renewals  thereof not less than thirty (30) days prior to
the renewal or  expiration  date  thereof.  All policies  required  hereby shall
provide  and  shall  bear  an  endorsement  that  they  shall  not be  canceled,
terminated,  endorsed  or amended  without  not less than thirty (30) days prior
written  notice to the LENDER.  The BORROWER shall give the LENDER prompt notice
of any loss covered by such  insurance,  and, the LENDER shall have the right to
adjust and compromise such loss, to collect, receive and receipt the proceeds of
insurance  for such loss and to endorse  the  BORROWER's  name upon any check in
payment  thereof and, for such  purposes the  BORROWER  hereby  constitutes  and
appoints the LENDER as its  attorney in fact with the power of attorney  granted
hereby  deemed to be  coupled  with an  interest  and  irrevocable.  All  monies
received as payment for a loss covered by an insurance policy shall be paid over
to the  LENDER  to be  applied,  at the  option  of the  LENDER,  either  to the
prepayment of the LOAN or to the payment of other  charges or expenses  actually
incurred by the BORROWER in the restoration,  reconstruction, repair, renovation
or  replacement  of the  affected  portion of the  PROPERTY,  provided  that any
election by the LENDER to apply  insurance  proceeds to the cost of restoration,
reconstruction,   renovation,   repair  or  replacement   shall  be  subject  to
satisfaction  of the following 



                                       19
<PAGE>

conditions: (i) such restoration, renovation, repair or rebuilding shall, in the
judgment of the LENDER, attain completion within the term of the LOAN; (ii) such
insurance proceeds,  together with undisbursed LOAN proceeds and any amounts the
BORROWER  deposits  with the LENDER for such  purpose  are  sufficient  to fully
restore,  renovate,  repair or rebuild the damaged or  destroyed  PROPERTY;  and
(iii) no event or  circumstance  has  occurred  and is  existing  which with the
giving of  notice,  the  passing of time or both  would  constitute  an EVENT OF
DEFAULT  under  this  MORTGAGE  or the other  LOAN  DOCUMENTS,  otherwise,  such
proceeds shall be applied in payment of the LOAN. The LENDER  reserves the right
to require the escrow of insurance  premiums  during the term of the LOAN. 

                  (ee)  The  BORROWER  will  maintain  liability  and  indemnity
insurance with respect to the PROPERTY in an amount not less than $2,000,000 and
with such companies,  and subject to the same terms and conditions  specified in
Section  (1)(dd) above  (excepting  that such  insurance  shall not have to list
LENDER as first mortgagee and loss payee or state that insurance  coverage shall
not be  affected  by any act or neglect of the  BORROWER or owner of the insured
property), and as the LENDER may reasonably direct and approve. Evidence of such
coverage  in the  form  of a  certified  copy  of  the  policy  or an  insurance
certificate  must be supplied to LENDER.  

                  (ff)  The  BORROWER  shall  also  carry  and  maintain  rental
interruption  insurance  on the  PROPERTY  in the same manner and under the same
conditions as provided in Section  (1)(dd)  covering  debt service,  real estate
taxes and  insurance  premiums for a period of at least six (6) months.  

                  (gg) In the event that all or any  portion of the REAL  ESTATE
currently  or at any  time  in the  future  is  determined  to be  located  in a
specially  designated  flood  hazard area by the  Secretary of Housing and Urban
Development or the Director of the Federal Emergency Management Agency, pursuant
to the  provisions


                                       20
<PAGE>

of the National Flood  Insurance Act of 1968, or the Flood  Disaster  Protection
Act of 1973,  as amended,  the BORROWER  shall obtain and maintain  flood hazard
insurance in the full insurable value of the PROPERTY or any portion of the REAL
ESTATE  located  within  such  area,  or the  full  amount  of  flood  insurance
available,  naming the LENDER as sole loss  payee and  complying  with all other
conditions as provided in Section (1)(dd) above.  The BORROWER shall be required
to provide flood hazard insurance as described,  unless the BORROWER's insurance
broker certifies to the LENDER in writing that the REAL ESTATE is not in a flood
hazard area.  The proceeds of any loss payable  under a flood  insurance  policy
shall be  applied,  at the option of the LENDER,  as set forth in (1)(dd)  above
with respect to casualty  insurance  proceeds.  

                  (hh) BORROWER,  immediately  upon  obtaining  knowledge of the
institution  of any  proceeding  for a TAKING,  will  notify  the LENDER of such
proceedings.  The LENDER may participate in any such  proceedings,  and BORROWER
will, from time to time, deliver to the LENDER all instruments requested by them
to  permit  such  participation.  Any award or  payment  made as a result of any
TAKING  shall be paid to the  LENDER,  to be  applied by the LENDER in it's sole
discretion  to restore or repair the PROPERTY or to repayment of the amounts due
under the NOTE and the other LOAN DOCUMENTS,  in inverse order of maturity.  The
application of any award or payment as a repayment of amounts due under the NOTE
and the other LOAN  DOCUMENTS  shall take  effect only on the actual date of the
receipt of the payment or award by the LENDER. In the event any payment or award
is used to restore the PROPERTY, as aforesaid, the LENDER shall not be obligated
to see to the proper allocation thereof nor shall any amount so used be deemed a
payment of any indebtedness  secured by this MORTGAGE.  Payments or awards to be
used for  restoration  purposes,  as aforesaid,  shall be held by the LENDER and
disbursed  under the same terms and conditions as provided for  disbursement  of
insurance  proceeds


                                       21
<PAGE>

in Section  (1)(dd).  

                  (ii) Notwithstanding  anything to the contrary in this Section
(1), all rights of LENDER set forth herein shall be limited by the rights of any
beneficiary  of any  PERMITTED  ENCUMBRANCE,  if any. 

         (2) The LENDER may, at its option, declare the entire unmatured portion
of all  indebtedness  secured hereby,  together with all interest accrued on the
entire  secured  debt,  to be  immediately  due and payable,  and the same shall
forewith become immediately due and payable (which  acceleration of maturity may
be accomplished without notice to anyone), in any of the following events (each,
hereinafter referred to as an EVENT OF DEFAULT),  the occurrence of any of which
shall constitute an EVENT OF DEFAULT: 

                  (a) Any representation or warranty made by the BORROWER herein
which shall prove to have been  incorrect in any  material  respect when made or
shall be breached.  

                  (b) The failure of BORROWER  to perform  its  obligations  set
forth in Sections (1)(dd),  (ee), (ff), or (gg)  (insurance).  

                  (c) Any  attempted  assignment by the BORROWER of the whole or
any part of the RENTS in  contravention  of Section (1)(s).  

                  (d) Any transfer or event in violation  of the  provisions  of
Sections  (1)(u) or (v).  

                  (e) The loss of any  franchise  agreement,  license  or permit
necessary for the operation,  occupancy, or use of the PROPERTY, other than as a
result of casualty or  condemnation,  which loss  continues  for a period thirty
(30) days after  receipt by BORROWER (or refusal of delivery) of written  notice
given in accordance with the provisions of this MORTGAGE. 

                  (f) The default by the BORROWER or by any guarantor of payment
or  performance  of the BORROWER  under any  obligation or  indebtedness  to the
LENDER,  whether now existing or hereafter  arising,  which default is not cured
within any  applicable  cure or


                                       22
<PAGE>

grace period.

                  (g) The  occurrence  of an Event of Default  under the DEED OF
TRUST,  from BORROWER to OTTO W. KONRAD and BRUCE H. MATSON,  Trustees,  for the
benefit  of  KEYBANK  NATIONAL  ASSOCIATION,  dated as of  October  1, 1997 (the
"Virginia Deed of Trust"), and recorded  simultaneously  herewith in the Clerk's
Office  of the  Circuit  Court  of the  County  of  Sussex,  Virginia. 

                  (h) The  occurrence  of an EVENT OF DEFAULT under the Mortgage
and Security  Agreement  dated as of October 1, 1997 from the County of Saratoga
Industrial  Development  Agency and the  Borrower to the Lender,  recorded on or
about October 10, 1997 in the Clerk's Office of Saratoga  County,  New York.

                  (i) the  occurrence  of an EVENT  OF  DEFAULT  under  any Loan
Document.  

                  (j) The  failure of the  BORROWER to perform or observe any of
its  obligations or covenants  under this MORTGAGE not  previously  specifically
referred to in this Section (2),  which failure  continues for a period of seven
(7) days after  receipt by BORROWER (or refusal of  delivery) of written  notice
given in  accordance  with the  provisions  of this  MORTGAGE  in the event of a
monetary  default or for a period of thirty (30) days after  receipt by BORROWER
(or  refusal  of  delivery)  of  written  notice  given in  accordance  with the
provisions of this MORTGAGE in the event of a non-monetary  default. The failure
of the  BORROWER  to perform  or observe  any of its  obligations  or  covenants
constituting  an Event  of  Default  under  any LOAN  DOCUMENT,  not  previously
specifically  referred to in this Section (2),  subject to any  applicable  cure
period.  

         (3) In the EVENT OF  DEFAULT  hereunder,  the  LENDER  hereby  shall be
entitled to the following remedies:  

                  (a) The  LENDER  may  enforce  the  lien of this  MORTGAGE  in
respect to all real and personal  property  encumbered  hereby by foreclosure or
otherwise in proceedings  that are prosecuted  simultaneously  or are prosecuted
separately  in such order as the



                                       23
<PAGE>

LENDER may  select.

                  (b) The  LENDER  may  require  the  BORROWER  to  assemble  at
BORROWER's  expense any or all of the personal  property  encumbered  hereby and
make it available to LENDER at a place  specified by LENDER which is  reasonably
convenient  to both  parties;  and LENDER may  enforce  all of its  remedies  in
respect to the  encumbered  personal  property  that may be available  under the
UNIFORM COMMERCIAL CODE. In this latter event all expenses or retaking, holding,
preparing for sale,  selling or the like, as well as all  reasonable  attorneys'
fees and lawful  expenses  incurred by said LENDER in  enforcing  such  remedies
shall be payable to said LENDER by BORROWER  and shall  constitute a part of the
secured  indebtedness. 

         (4) The  BORROWER  hereby  waives any and all  rights of  appraisement,
sale, redemption and homestead under the laws of Arkansas,  and especially under
the Act of May 8, 1899, and Acts amendatory  thereto.  

         (5) All  representations,  warranties,  covenants,  duties,  provisions
concerning insurance and condemnation and all Events of Default specified in the
VIRGINIA DEED OF TRUST,  including such provisions  contained in Articles V, VI,
VII,  VIII and X of the  VIRGINIA  DEED OF  TRUST,  are  incorporated  herein by
reference and made applicable to real property conveyed hereunder.  In the event
of a conflict  between  the  provisions  of the  VIRGINIA  DEED OF TRUST and the
provisions  contained herein, the provisions of the VIRGINIA DEED OF TRUST shall
control unless applicable law otherwise dictates. In construing the provision of
the VIRGINIA DEED OF TRUST and this MORTGAGE,  such provisions  shall be read to
afford LENDER the maximum rights hereunder.  

         (6)  This  MORTGAGE  shall  be  governed  by the  laws of the  State of
Arkansas.

                         SIGNATURES APPEAR ON NEXT PAGE


                                       24
<PAGE>



                  Executed on this 7th day of November, 1997.

                                          SPURLOCK ADHESIVES, INC.



                                          By: /s/ Phillip S. Sumpter
                                              --------------------------------
                                          Its: Exec Vice President
                                               -------------------------------


ATTEST:

/s/ Warren E. Beam
------------------------------
Assistant Secretary
---------------------, --------







                                 ACKNOWLEDGMENT

STATE OF VA                )
                           )ss.
COUNTY OF SUSSEX           )

         Before me, the  undersigned  Notary Public,  in and for said County and
State on this day  personally  appeared  Phillip S.  Sumpter and Warren E. Beam,
known to me to be the  persons  whose  names  are  subscribed  to the  foregoing
instrument and  acknowledged  that they were the Exec.  Vice President and Asst.
Secretary,  respectively,  of Spurlock Adhesives, Inc. and as such officers were
authorized  to execute the  foregoing  and had  executed the  foregoing  and had
executed same for the uses and purposes set forth herein.

         WITNESS my hand and seal on this 7th day of November, 1997


                                              /s/
                                              ------------------------------
                                                       NOTARY PUBLIC


My Commission expires: 11/30/00
                       --------



                                       25
<PAGE>

                                   Schedule A




1.     1998 Real Estate Taxes, taxes and special assessments of subsequent years
       which are due and payable but not delinquent until October 10, 1998.

2.     Encroachment,  overlaps,  discrepancies  or conflicts in boundary  lines,
       shortage  in area,  or other  matters  which  would  be  disclosed  by an
       accurate survey of the land or by making inquiry of persons in possession
       thereof.

3.     Rights of way in favor of all County, State and Municipal roadways.

4.     Loss  arising  from oil,  gas or other  minerals,  or any other  activity
       concerning the sub-surface right or ownership,  including but not limited
       to the right of egress or ingress for said sub-surface purposes.

5.     Any right of way in favor of Missouri Pacific Railroad.

6.     Arkansas  Mortgage  With Power of Sale,  dated July 11, 1996, by Spurlock
       Adhesives,  Inc.,  a Virginia  corporation,  in favor of National  Canada
       Finance  Corporation,  and filed July 15,  1996 and  recorded in Mortgage
       Book 209, page 945 of the records of Hot Spring County, Arkansas.