<PAGE>   1
                                                                  EXHIBIT 10.144

     
                                 PROMISSORY NOTE
                                [Biloxi Property]

U.S. $1,173,750.00                                            March 20, 1998
                                                              Phoenix, Arizona

                  FOR  VALUE  RECEIVED,   the  undersigned   PREFERRED  EQUITIES
CORPORATION,  a Nevada corporation ("Maker"),  promises to pay to FINOVA CAPITAL
CORPORATION,  a Delaware corporation ("Lender"),  or order, at such place as the
holder of this Note  ("Holder") may from time to time  designate in writing,  in
lawful money of the United  States of America,  the  principal  sum of up to ONE
MILLION ONE  HUNDRED  AND  SEVENTY-THREE  THOUSAND  SEVEN  HUNDRED AND FIFTY AND
NO/100  DOLLARS (U.S.  $1,173,750.00),  or so much thereof as has been disbursed
and not repaid, together with interest on the unpaid principal balance from time
to time  outstanding from the date hereof until paid, as more fully provided for
below.

                  This Note is executed  pursuant  to the terms of that  certain
Second Amended and Restated and Consolidated  Loan and Security  Agreement dated
effective  as of  May  15,  1997  between  Maker  and  Lender,  as  amended  and
supplemented  by that  certain  Letter  Agreement  of even date  herewith by and
between Maker and Lender (the "Letter Agreement") (such Amended and Restated and
Consolidated  Loan and Security  Agreement,  as amended and  supplemented by the
Letter  Agreement  and as  otherwise  amended  to  date,  and as may be  further
amended,  is herein the "Loan  Agreement").  All capitalized terms not otherwise
defined herein shall have the meanings  ascribed to them in the Loan  Agreement,
the applicable provisions of which are incorporated herein by reference.

                  Interest  due under this Note  shall (a)  accrue  daily on the
basis  of the  actual  number  of days  in the  computation  period,  and (b) be
calculated on the basis of a year consisting of 360 days.  Interest shall accrue
initially at an annual  interest rate ("Initial  Interest  Rate") equal to Prime
(as  hereinafter  defined) in effect on the date of the  initial  advance of the
loan evidenced by this Note ("Initial  Prime") plus two and one-quarter  percent
(2.250%) per annum,  subject to adjustment on each Interest Rate Change Date (as
hereinafter  defined),  but in no event to  exceed  the  maximum  contract  rate
permitted under the Applicable Usury Law (as hereinafter defined).  The interest
rate shall change on each Interest Rate Change Date by adding to or  subtracting
from the Initial Interest Rate, as the case may be, the change,  if any, between
Initial Prime and Prime in effect on the  applicable  Interest Rate Change Date.
As used in this Note, the following capitalized terms shall have the meaning set
forth opposite them below:

                           "Prime"  shall  mean  the rate of  interest  publicly
         announced,  from time to time, by Citibank,  N.A.,  New York,  New York
        ("Citibank"),  as the  corporate  base

<PAGE>   2
        rate of interest charged by Citibank to its most creditworthy commercial
        borrowers notwithstanding the fact that some borrowers  of Citibank  may
        borrow from Citibank at rates of less than such announced Prime rate;
        and

                 "Interest Rate Change Date" means (a) the first business day 
        of Citibank  during the calendar month following the date of the initial
        advance  of the loan  evidenced  by this Note and (b) the first business
        day of Citibank during each successive month thereafter.

                  Interest  shall be payable  monthly in arrears  commencing  on
April 1,  1998 and on the first day of each  month  thereafter.  Notwithstanding
anything  herein to the  contrary,  if not sooner  paid,  the  entire  principal
balance of this Note,  together with accrued and unpaid interest thereon and all
other  sums due and owing  hereunder,  shall be due and  payable  in full on the
first  anniversary of the date hereof (the "Maturity Date");  provided,  that so
long as:  (i) there  does not exist on the  original  Maturity  Date an Event of
Default,  or an event, act or failure to act which with notice,  passage of time
or both would  constitute  an Event of Default,  (ii) Lender has  received  from
Maker,  not less than  thirty  (30) days prior to the  original  Maturity  Date,
written notice of Maker's desire to extend the original Maturity Date, and (iii)
Maker has paid to  Lender in  immediately  available  funds,  on or prior to the
original  Maturity Date, a renewal fee in the amount of two and one-half percent
(2.50%) of the outstanding and unpaid  principal  balance of this Note as of the
original Maturity Date, then the Maturity Date in all events shall be the second
anniversary of the date hereof.

                  Payments of principal  and/or interest shall, at the option of
Holder, earn interest after they are due at a rate ("Overdue Rate") equal to (a)
two percent (2%) per annum above the rate otherwise payable hereunder or (b) the
maximum contract rate permitted under the Applicable Usury Law, whichever of (a)
or (b) is lesser.  Furthermore,  in the event of the  occurrence  of an Event of
Default (as the term "Event of  Default" is defined in the Loan  Agreement)  the
unpaid  principal  balance of this Note shall,  at the option of Holder,  accrue
interest at the Overdue Rate.

                  All  payments  made under  this Note  shall be  applied  first
against amounts due hereunder or under the Loan Agreement,  other than principal
and interest;  second,  against  interest  then due under this Note;  and third,
against the principal of this Note.

                  In the event any  installment  of  principal  and/or  interest
required to be made in connection with the indebtedness  evidenced hereby is not
paid when due and,  except in the case of the  final  installment,  for which no
grace period is allowed,  such default  continues for five (5) days after notice
thereof to Maker or an Event of  Default  occurs,  Holder  may,  at its  option,
without notice or demand,  declare immediately due and payable the entire unpaid
principal balance hereof, all accrued and unpaid interest thereon, and all other
charges owing in connection with the loan evidenced hereby.


                                       2

<PAGE>   3
                  The contracted  for rate of interest of the loan  contemplated
hereby,  without  limitation,  shall consist of the following:  (i) the interest
rate, calculated and applied to the principal balance of this Note in accordance
with the provisions of this Note; (ii) the Overdue Rate,  calculated and applied
to the amounts due under this Note in  accordance  with the  provisions  hereof;
(iii) the  Biloxi  Advance  Loan Fee  (defined  in the  Letter  Agreement),  all
Mortgage  Loan Fees,  Project  Incentive  Fees and other Fees as provided in the
Loan Agreement;  and (iv) all Additional Sums (as hereinafter  defined), if any.
Maker agrees to pay an effective  contracted  for rate of interest  which is the
sum of the above referenced elements.

                  All fees,  charges,  goods, things in action or any other sums
or things of value (other than amounts  described  in the  immediately  previous
paragraph),  paid or payable by Maker  (collectively,  the  "Additional  Sums"),
whether  pursuant to this Note, the Loan  Agreement,  the other Documents or any
other   documents  or   instruments  in  any  way  pertaining  to  this  lending
transaction,  or otherwise with respect to this lending transaction,  that under
any  applicable  law may be deemed to be interest  with  respect to this lending
transaction,  for the purpose of any  applicable  law that may limit the maximum
amount of interest to be charged with respect to this lending transaction, shall
be payable by Maker as, and shall be deemed to be, additional interest,  and for
such purposes  only,  the agreed upon and  "contracted  for rate of interest" of
this lending transaction shall be deemed to be increased by the rate of interest
resulting from the Additional Sums.

                  Prepayment  from time to time of the principal  amount of this
Note is permitted without penalty;  provided,  that in the event a prepayment of
this Note occurs as a result of an  acceleration by Lender of this Note pursuant
to Lender's right to declare an acceleration thereof under the terms of the Loan
Agreement,  then Maker shall pay to Lender a  prepayment  premium  equal to five
percent (5.0%) of the principal being prepaid.

                  In the event  that  Holder  institutes  legal  proceedings  to
enforce this Note and Holder is the prevailing party in such  proceeding,  Maker
agrees to pay Holder, in addition to any indebtedness due and unpaid,  all costs
and expenses of such  proceedings,  including,  without  limitation,  attorneys'
fees.

                  Holder  shall  not by any act or  omission  or  commission  be
deemed to waive any of its rights or remedies hereunder unless such waiver be in
writing  and  signed by an  authorized  officer  of Holder  and then only to the
extent  specifically  set forth  therein;  a waiver on one occasion shall not be
construed as  continuing or as a bar to or waiver of such right or remedy on any
other  occasion.  All remedies  conferred  upon Holder by this Note or any other
instrument or agreement connected herewith or related hereto shall be cumulative
and none is  exclusive  and  such  remedies  may be  exercised  concurrently  or
consecutively at Holder's option.

                  Every  person or entity at any time  liable for the payment of
the indebtedness evidenced hereby waives:  presentment for payment,  protest and
demand;  notice of protest,  

                                       3
<PAGE>   4
demand,  dishonor  and  nonpayment  of  this  Note;  and  trial  by  jury in any
litigation  arising  out of,  relating  to or  connected  with  this Note or any
instrument  given as  security  herefor.  Every  such  person or entity  further
consents  that Holder may renew or extend the time of payment of any part or the
whole of the  indebtedness  at any time and from time to time at the  request of
any other person or entity liable therefor.  Any such renewals or extensions may
be made  without  notice to any person or entity  liable for the  payment of the
indebtedness evidenced hereby.

                  This Note is given and  accepted as  evidence of  indebtedness
only and not in payment or satisfaction of any indebtedness or obligation.

                  Time  is of  the  essence  with  respect  to  all  of  Maker's
obligations and agreements under this Note.

                  This Note and all of the provisions,  conditions, promises and
covenants  hereof  shall be binding in  accordance  with the terms  hereof  upon
Maker,  its  successors  and assigns,  provided  nothing  herein shall be deemed
consent to any  assignment  restricted  or  prohibited  by the terms of the Loan
Agreement. If more than one (1) person or other entity has executed this Note as
Maker, the obligations of such persons and entities shall be joint and several.

                  This Note has been executed and delivered in Phoenix, Arizona,
and the obligations of Maker  hereunder shall be performed in Phoenix,  Arizona.
THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ARIZONA AND, TO
THE EXTENT THEY PREEMPT THE LAWS OF SUCH STATE,  THE LAWS OF THE UNITED  STATES.
Maker (a) hereby  irrevocably  submits itself to the process,  jurisdiction  and
venue  of the  courts  of the  State of  Arizona,  Maricopa  County,  and to the
process, jurisdiction and venue of the United States District Court for Arizona,
for the purposes of suit, action or other proceedings arising out of or relating
to this Note or the  subject  matter  hereof  brought by Holder and (b)  without
limiting the generality of the foregoing, hereby waives and agrees not to assert
by way of motion,  defense or otherwise in any such suit,  action or  proceeding
any claim  that  Maker is not  personally  subject  to the  jurisdiction  of the
above-named  courts,  that such  suit,  action or  proceeding  is  brought in an
inconvenient  forum or that the  venue of such  suit,  action or  proceeding  is
improper.

                  It is the intent of the  parties to comply  with the usury law
("Applicable  Usury  Law")  applicable  pursuant  to the terms of the  preceding
paragraph or such other usury law which is  applicable  if the law chosen by the
parties is not. Accordingly, it is agreed that notwithstanding any provisions to
the contrary in this Note, or in any of the documents securing payment hereof or
otherwise relating hereto, in no event shall this Note or such documents require
the  payment or permit  the  collection  of  interest  in excess of the  maximum
contract rate permitted by the  Applicable  Usury Law. In the event (a) any such
excess of interest  otherwise would be contracted for,  charged or received from
Maker or otherwise in  

                                       4
<PAGE>   5

connection  with  the  loan  evidenced  hereby,  or  (b)  the  maturity  of  the
indebtedness  evidenced by this Note is  accelerated in whole or in part, or (c)
all or part of the principal or interest of this Note shall be prepaid,  so that
under any of such circumstance the amount of interest  contracted for, shared or
received in connection with the loan evidenced hereby,  would exceed the maximum
contract rate permitted by the Applicable  Usury Law, then in any such event (1)
the provisions of this paragraph shall govern and control, (2) neither Maker nor
any other person or entity now or hereafter  liable for the payment  hereof will
be  obligated  to pay the amount of such  interest  to the extent  that it is in
excess of the maximum  contract rate permitted by the Applicable  Usury Law, (3)
any such  excess  which may have been  collected  shall be either  applied  as a
credit against the then unpaid  principal amount hereof or refunded to Maker, at
Holder's  option,  and (4) the effective rate of interest will be  automatically
reduced to the maximum amount of interest permitted by the Applicable Usury Law.
It is further agreed, without limiting the generality of the foregoing,  that to
the extent  permitted  by the  Applicable  Usury Law:  (x) all  calculations  of
interest which are made for the purpose of  determining  whether such rate would
exceed the maximum  contract rate permitted by the Applicable Usury Law shall be
made by amortizing, prorating, allocating and spreading during the period of the
full  stated  term of the  loan  evidenced  hereby,  all  interest  at any  time
contracted  for,  charged or received from Maker or otherwise in connection with
such loan;  and (y) in the event that the effective rate of interest on the loan
should at any time exceed the maximum contract rate allowed under the Applicable
Usury Law, such excess  interest that would  otherwise  have been  collected had
there  been no  ceiling  imposed  by the  Applicable  Usury Law shall be paid to
Holder from time to time,  if and when the  effective  interest rate on the loan
otherwise falls below the maximum amount  permitted by the Applicable Usury Law,
to the extent that interest paid to the date of calculation  does not exceed the
maximum  contract rate permitted by the  Applicable  Usury Law, until the entire
amount of interest  which would have  otherwise been collected had there been no
ceiling imposed by the Applicable Usury Law has been paid in full. Maker further
agrees that should the maximum  contract rate permitted by the Applicable  Usury
Law be increased at any time  hereafter  because of a change in the law, then to
the extent not  prohibited by the  Applicable  Usury Law, such  increases  shall
apply to all  indebtedness  evidenced hereby  regardless of when incurred;  but,
again to the extent  not  prohibited  by the  Applicable  Usury Law,  should the
maximum contract rate permitted by the Applicable Usury Law be decreased because
of a change in the law,  such  decreases  shall  not  apply to the  indebtedness
evidenced hereby regardless of when incurred.

                  In the event of any  conflict  or  inconsistency  between  the
provisions of this Note and the provisions of the Loan Agreement, the provisions
of the Loan Agreement shall control.

                  This Note is secured by a  Deed of Trust, Assignment of  Rents
and  Proceeds and  Security  Agreement of even date herewith executed  by Maker,
as Trustor, for the  benefit of Lender, as Beneficiary, and encumbering real and
personal property  situated  in Harrison 

                                       5
<PAGE>   6
County,  Mississippi,  as  more  particularly  described  therein,  by the  Loan
Agreement and by certain other Mortgages now existing or hereafter arising.

                                     "MAKER"

                                      PREFERRED EQUITIES CORPORATION, 
                                      a Nevada corporation


                                      By:
                                         ---------------------------------------
                                           Name: Charles G. Baltuskonis
                                           Its: Vice President and
                                           Chief Accounting Officer

Federal Taxpayer
Identification Number:  88-0106662

Address:
4310 Paradise Road
Las Vegas,  Nevada  89109
Attention:  President

                                       6
<PAGE>   7


This instrument was prepared by                         Indexing Instructions:
and after recording return to:

Randall S. Dalton, Esq.
Gammage & Burnham
Two North Central Avenue, 18th Floor
Phoenix, Arizona  85004
Phone: 602/256-0566


                          DEED OF TRUST, ASSIGNMENT OF
                    RENTS AND PROCEEDS AND SECURITY AGREEMENT
                                [BILOXI PROPERTY]


                  THIS  DEED OF TRUST,  ASSIGNMENT  OF RENTS  AND  PROCEEDS  AND
SECURITY  AGREEMENT  (this "Deed of Trust") is made as of the 20th day of March,
1998,  by  and  among  PREFERRED  EQUITIES  CORPORATION,  a  Nevada  corporation
("Trustor"),  whose mailing  address is 4310 Paradise  Road,  Las Vegas,  Nevada
89109-6597,  and Jim B. Tohill, 633 N. State Street, Jackson,  Mississippi 39202
("Trustee"),   for  the  benefit  of  FINOVA  CAPITAL  CORPORATION,  a  Delaware
corporation  ("Beneficiary"),  having an office and mailing address at 7272 East
Indian School Road, Suite 410, Scottsdale, Arizona 85251 (Attn: Vice President -
Law).

                              W I T N E S S E T H:

                  Beneficiary  has loaned to Trustor the  principal sum of up to
One Million  One  Hundred  Seventy-Three  Thousand  Seven  Hundred and Fifty and
No/100  United  States  Dollars (U.S.  $1,173,750.00)  (the  "Loan"),  under the
circumstances set forth in the Loan Agreement,  as defined below,  which Loan is
evidenced  by a  Promissory  Note of even  date  herewith  (as from time to time
modified, extended, amended, renewed, replaced or restated, the "Note").

                                    ARTICLE I
                                GRANTING CLAUSES

                  NOW,  THEREFORE,  in consideration for the making of the Loan,
for the purpose of securing (a) the timely  repayment of the Loan,  as evidenced
by the Note,  with interest  thereon,  (b) the timely  repayment of that certain
Second Amended and Restated Promissory Note dated May 15, 1997 (the "Receivables
Note") in the principal  amount of  Seventy-Five  Million  United States Dollars
(U.S.  $75,000,000.00),  (c) the timely repayment of that certain Second Amended
and Restated  Promissory Note  [Headquarters and FCFC 

                                       1
<PAGE>   8
Property] dated as of June 5, 1996 (the "Office Note") in the original principal
amount  of Six  Million  Seven  Hundred  Seventy-Three  Thousand  Seven  Hundred
Seventy-Eight and 74/100 United States Dollars (U.S. $6,773,778.74), as amended,
(d) the timely  repayment of that certain  Promissory  Note (the "Towers  Note")
dated as of December 13, 1995,  as amended  pursuant to that  Amendment No. 1 to
Promissory  Note [Towers  Lobby]  dated as of August 16,  1996,  in the original
principal  amount of One  Million Two Hundred  Eighty-Six  Thousand  One Hundred
Twenty-Six  and No/100 United States Dollars (U.S.  $1,286,126.00),  as amended,
(e) the timely  repayment of that  certain  Promissory  Note (the "Ida  Building
Addition Note") dated as of December 13, 1995 in the original  principal  amount
of One Million Five Hundred Thousand United States Dollars (U.S. $1,500,000), as
amended,  (f) the timely  repayment of that certain  Promissory Note (the "Aloha
Bay Note") dated as of September  22, 1995 in the original  principal  amount of
Three Million Six Hundred Thousand United States Dollars (U.S.  $3,600,000),  as
amended,  (g) the timely  repayment  of that certain  Promissory  Note (the "Ida
Building  One Note")  dated as of January  26,  1995 in the  original  principal
amount of Two Million Nine Hundred Ninety-Nine Thousand Seven Hundred and No/100
United States Dollars (U.S. $2,999,700.00), as amended, (h) the timely repayment
of that certain  Promissory Note (the "Ida Building Two Note") dated as of April
27,  1995  in the  original  principal  amount  of  One  Million  Seven  Hundred
Fifty-Five  Thousand and No/100 United States Dollars (U.S.  $1,755,000.00),  as
amended,  (i) the timely repayment of that certain Promissory Note (the "Winnick
Building Addition Note") dated as of December 13, 1995 in the original principal
amount  of  Two  Million  One  Hundred  Thousand  United  States  Dollars  (U.S.
$2,100,000.00),  as amended, (j) the timely repayment of that certain Promissory
Note (the "Second Winnick  Building  Addition Note") dated as of May 15, 1997 in
the original principal amount of One Million Eight Hundred Eighteen Thousand and
No/100 Dollars (U.S. $1,818,000.00), as amended, (k) the timely repayment of the
Note,  (l) the timely  repayment  of any and all  indebtedness  evidenced by any
Project Note as may be executed by Trustor for the benefit of Beneficiary  after
the date hereof and as contemplated by the Loan Agreement hereinafter described,
(m) the timely payment of the Hartsel  Springs Ranch  Incentive Fee  ("Incentive
Fee") in the  amount of  Thirty-One  Thousand  Forty and  No/100  United  States
Dollars (U.S.  $31,040.00),  the obligation for payment of which is set forth in
the Loan  Agreement  hereafter  described,  (n) the full,  timely  and  faithful
performance  of and  compliance  with  ("Performance")  all  the  covenants  and
conditions made by Trustor herein,  in the Note, in the Receivables Note, in the
Office Note, in the Towers Note, in the Ida Building Addition Note, in the Aloha
Bay Note,  in the Ida  Building One Note,  in the Ida Building Two Note,  in the
Winnick Building Addition Note, in the Second Winnick Building Addition Note, in
any Project Note, in the Second Amended and Restated and  Consolidated  Loan and
Security Agreement between Trustor and Beneficiary dated effective as of May 15,
1997,  as amended and  supplemented  by that certain  Letter  Agreement  [Biloxi
Property] by and between  Trustor and  Beneficiary  of even date herewith (as so
amended and supplemented, as further amended and supplemented to date and as may
be  subsequently  amended,   restated,   supplemented  or  extended,  the  "Loan
Agreement"),  in the Documents (as defined in the Loan  Agreement),  and in each
and every  other  document  executed  in  connection  therewith,  other than the
Environmental Certificate

                                       2                                       
<PAGE>   9
with Representations, Covenants and Warranties of even date herewith executed in
connection with the Premises (the  "Environmental  Certificate")  and in any and
all modifications,  extensions, renewals, replacements or restatements of any of
the foregoing (this Deed of Trust,  the Note, the  Receivables  Note, the Office
Note, the Towers Note,  the Ida Building  Addition Note, the Aloha Bay Note, the
Ida Building One Note, the Ida Building Two Note, the Winnick Building  Addition
Note,  the Second  Winnick  Building  Addition  Note, any Project Note, the Loan
Agreement, the Documents and the other documents (exclusive of the Environmental
Certificate),  as from time to time  modified,  extended,  renewed,  replaced or
restated,  are collectively  referred to as the "Loan Documents"),  and also (o)
the payment of any and all other indebtedness,  direct or contingent (other than
arising out of the Environmental Certificate),  that may now or hereafter become
owing to  Beneficiary  from Trustor or any  successor-in-ownership  of the Trust
Property (all of the foregoing secured obligations collectively "Obligations" or
individually "Obligation", some of which Obligations consist of a line of credit
to be used  primarily for business or commercial  purposes  entitled to the lien
protection  afforded by Sections  89-1-49 and 89-5-21 of the Mississippi Code of
1972, as amended),  Trustor hereby irrevocably grants, conveys, bargains, sells,
assigns,  warrants and confirms unto Trustee,  its  successors  and assigns,  in
trust,  with power of sale and right of entry and  possession,  all of Trustor's
right,  title and  interest  in and to the real  estate  located  in the  Second
Judicial District of Harrison County,  Mississippi,  and more fully described in
Exhibit A attached hereto and by this reference incorporated herein ("Premises")
(the Premises and other rights,  titles and interests hereby granted,  conveyed,
bargained, sold and assigned to Trustee and/or Beneficiary as provided below are
collectively  referred to as the "Trust Property").  For purposes of the laws of
the State of Mississippi  governing limitations on actions, the latest date that
any of the Notes is finally due and payable is May 31, 2010.

                  TOGETHER  WITH all of Trustor's  right,  title and interest in
and to all  buildings  and other  improvements  now or hereafter  erected on the
Trust Property,  all building  materials at any time intended to be incorporated
into the  improvements  now or hereafter  erected on the Trust  Property and all
fixtures, equipment,  machinery,  appliances,  furniture,  furnishings and other
articles of personal property of Trustor of every kind and nature whatsoever now
or hereafter located on the Trust Property, and used, intended for use or usable
in  connection  with the  operation of the Trust  Property,  including,  without
limitation,  all heating, lighting,  laundry,  incinerating and power equipment,
engines,  pipes,  pumps,  tanks,  motors,  conduits,   switchboards,   plumbing,
cleaning, fire prevention,  fire extinguishing,  refrigerating,  ventilating and
communications apparatus, air cooling and air conditioning apparatus, elevators,
escalators,  shades,  awnings,  screens,  storm  doors and  windows,  wall beds,
stoves,  ranges,  refrigerators,  freezers,  food and beverage  preparation  and
serving  equipment,   cabinets,   partitions,   ducts,  compressors,   canopies,
furnishings,  garbage and rubbish disposals,  counters, bathtubs, sinks, basins,
carpets, floor and wall coverings,  drapes, swimming pool equipment,  inventory,
merchandise  and  proceeds  therefrom  and all  substitutions  and  replacements
therefor;  it being  understood  and agreed  that all such  property is part and
parcel of the Trust Property and  appropriated  to the use thereof,  and whether

                                       3
<PAGE>   10

affixed or annexed to the Trust  Property or not,  shall for the purpose of this
Deed of Trust be deemed  conclusively  to be a portion of the  security  for the
Performance of the Obligations;

                  TOGETHER WITH all of the right, title and interest of Trustor,
now  or  hereafter   acquired  in  and  to  all  and  singular  the   tenements,
hereditaments, rights of way, easements, riparian rights, water and water rights
and water  rights  applications  appurtenant  or  pertaining  to the Premises or
necessary for the operation of the Premises for its intended purpose, as well as
all rights in ditches for the  irrigation  of the Trust  Property  and shares of
stock  evidencing such rights,  and such other rights,  liberties and privileges
now or hereafter belonging or appertaining thereto;

                  TOGETHER   WITH,   subject  to  the   assignment   thereof  to
Beneficiary  pursuant to Article  III hereof or  otherwise,  all income,  rents,
royalties,  revenues,  issues, profits, fees, accounts,  accounts receivable and
other proceeds of the Trust Property,  including, without limitation, all of the
right, title and interest of Trustor,  now or hereafter  acquired,  as lessor or
seller,  as the  case  may be,  in and to all  leases,  subleases,  assignments,
co-occupancy  or  co-tenancy  agreements,  sales  contracts,  installment  sales
agreements and purchase  money notes  pertaining to the Trust  Property,  or any
part thereof, and all security documents related to any of the foregoing;

                  TOGETHER WITH all right, title and interest of Trustor, now or
hereafter  acquired,  in and to any and all strips and gores of land adjacent to
and used in  connection  with the Premises and all right,  title and interest of
Trustor,  now owned or hereafter  acquired,  in, to and under the ways, streets,
sidewalks and alleys now or hereafter adjoining the Premises;

                  TOGETHER   WITH,   subject  to  any   assignment   thereof  to
Beneficiary, all of Trustor's rights as "declarant", "developer", "owner" and/or
otherwise under the governing  documents or restrictive  covenants affecting the
Trust Property,  if any,  including,  without  limitation,  owners'  association
charters or  articles or  certificates  of  incorporation,  bylaws and rules and
regulations   related  thereto,  if  any,  whether  now  or  hereafter  existing
(collectively, the "Project Documents");

                  TOGETHER  WITH,  insofar as  permitted by  applicable  law and
subject to any  assignment  thereof to  Beneficiary,  any  licenses,  contracts,
management  contracts  or  agreements  pursuant  to  which  any  third  party is
rendering  services  to  Trustor,   franchise  agreements,   insurance  policies
pertaining to the ownership, operation or maintenance of the Trust Property (but
only  to the  extent  they  so  pertain),  to the  extent  assignable,  permits,
authorizations or certificates,  now or hereafter required or used in connection
with the ownership, operation or maintenance of the Trust Property;

                  TOGETHER   WITH,   subject  to  any   assignment   thereof  to
Beneficiary, all intangibles,  choses in action, names, logos, trademarks, trade
names and copyrights now or 

                                       4
<PAGE>   11
hereafter used in connection with the Trust Property (except with respect to the
name "Ramada Vacation Suites");

                  TOGETHER WITH all  replacements,  substitutions or renewals of
or additions  to, all  products of, and all books,  records and files of Trustor
pertaining in whole or in part to any of the foregoing;

                  AND  TOGETHER  WITH,  subject  to the  assignment  thereof  to
Beneficiary,  to the extent hereinafter  provided,  all proceeds and payments of
the conversion,  voluntary or involuntary, of any of the foregoing, into cash or
otherwise,  including, without limitation, all accounts, all condemnation awards
in respect to any taking by eminent  domain or  otherwise  payable to the extent
hereinafter  provided,  and  all  proceeds  of  any  insurance  required  to  be
maintained by Trustor pursuant to this Deed of Trust, whether payable to Trustor
or otherwise.

                  TO HAVE AND TO HOLD the Trust  Property  with all and singular
the rights, easements and appurtenances thereunto appertaining unto Trustee, its
successors  and assigns  forever,  in trust for the benefit and  security of the
Beneficiary, for the purposes and uses herein set forth.

                  PROVIDED   ALWAYS  that  upon   Performance   of  all  of  the
Obligations, this Deed of Trust shall be subject to termination and reconveyance
and shall be  released  in the manner  provided  by law,  but at the  expense of
Trustor; otherwise to be and remain in full force and effect.

                                   ARTICLE II
                    REPRESENTATIONS, WARRANTIES AND COVENANTS

                  TO  BETTER  SECURE  THE  OBLIGATIONS,   TRUSTOR,  JOINTLY  AND
SEVERALLY  IF MORE THAN ONE,  REPRESENTS,  WARRANTS,  COVENANTS  AND AGREES WITH
TRUSTEE AND BENEFICIARY AS FOLLOWS:

                  2.1 Trustor; Good Standing;  Authority to Convey;  Performance
                      of the Obligations.

                           (a)  Trustor  is a  corporation  duly  organized  and
         validly  existing and in good  standing  under the laws of the State of
         Nevada and is  qualified  to do business  and in good  standing in each
         jurisdiction where the location or nature of the properties used or its
         business,  as the same is being or is proposed to be  conducted,  makes
         such  qualification  necessary (except where failure to do so would not
         (i) adversely affect Beneficiary's ability to realize upon this Deed of
         Trust or the other security for the  Performance of the  Obligations or
         (ii) materially adversely affect the business or financial condition of
         Trustor  or the  ability  of Trustor  to  complete  Performance  of the
   
                                       5
<PAGE>   12
         Obligations),   with  powers  and  authority  adequate  for  executing,
         delivering and Performing under the Loan Documents, for undertaking and
         Performing the Obligations, and for carrying on its business and owning
         its property. Trustor shall, until Trustor has completed Performance of
         all  of  the   Obligations,   maintain   such  powers,   authority  and
         qualifications.

                           (b)  Trustor  has good  right and power to convey the
         Trust  Property  and to execute  and  deliver  this Deed of Trust.  All
         action necessary and required by Trustor's  governance documents and by
         all applicable laws for the obtaining of the Loan and for the execution
         and  delivery  of this  Deed of  Trust  and all  other  Loan  Documents
         executed and  delivered in  connection  with the Loan has been duly and
         effectively taken; and this Deed of Trust is and will be, and all other
         Loan Documents are and will be legal,  valid,  binding and  enforceable
         against  Trustor in accordance  with their  respective  terms (subject,
         however,  to  bankruptcy,  insolvency,   reorganization,   arrangement,
         moratorium,  or other  similar laws relating to or affecting the rights
         of creditors  generally and general  principles of equity),  and do not
         violate the usury laws of the State where the Premises are located. The
         execution,  delivery and Performance of the Obligations of this Deed of
         Trust  and the  other  Loan  Documents  do not and  will  not  violate,
         constitute  a  default  under,  or  (other  than  the  lien in favor of
         Beneficiary)  result in the creation or imposition of any lien,  charge
         or encumbrance upon any of the properties or assets of Trustor pursuant
         to the terms of,  any  provision  of:  any law,  regulation,  judgment,
         decree,  order,  franchise or permit  applicable to Trustor;  Trustor's
         governance documents;  or any contract or other agreement or instrument
         to which Trustor is a party or by which Trustor or Trustor's assets are
         bound.  Except for such  consents as have been  disclosed in writing to
         Beneficiary and have been obtained and are in full force and effect, no
         consent of any  government or agency  thereof,  or of any other person,
         firm or entity not a party hereto is or will be required as a condition
         to the valid execution,  delivery, performance or enforceability of the
         Loan Documents.

                           (c)   Trustor   shall   Perform   when  due  all  the
                                 Obligations.

                  2.2      Title.

                           (a)  Trustor  is  lawfully   seized  of  a  good  and
         marketable  title  in fee  simple  in the  Premises  and of a good  and
         marketable   title  in  fee  simple  as  to  the  buildings  and  other
         improvements  erected  thereon and has good and legal title to the rest
         of the Trust Property.  The Trust Property is free from liens,  claims,
         restrictions   or   encumbrances,   except  for  such  liens,   claims,
         restrictions or encumbrances as are listed in Exhibit B attached hereto
         and by this reference incorporated herein ("Permitted Encumbrances").

                                       6
<PAGE>   13
                           (b)  Trustor  does hereby  warrant and shall  forever
         defend the Trust Property against the claims of all persons whatsoever.

                  2.3      Insurance.

                           (a) Throughout the term of the Deed of Trust, Trustor
         shall provide, maintain and deliver or cause to be provided, maintained
         and delivered, at no cost or expense to Beneficiary,  such insurance as
         is from time to time required in writing by the Beneficiary, written by
         such  insurers,  in such  amounts  and  forms  and  with  such  limits,
         deductibles and retentions as are satisfactory to Beneficiary.

                           (b) Reserved.

                           (c) A complete  certified  copy of each policy signed
         by an authorized insurance company  representative,  shall be delivered
         to the Beneficiary from time to time, as requested by Beneficiary.

                           (d) If any  policy  required  by  Beneficiary  is not
         received  by  Beneficiary  as  required  by  Beneficiary,   Beneficiary
         reserves  the  right to  procure  such  insurance  and pay the  premium
         therefor;  and  such  sum  shall,  without  notice  or  demand,  become
         immediately  due and payable with interest from the date of its advance
         until received by Beneficiary  from Trustor at the Overdue Rate (as the
         term "Overdue Rate" is defined in the Note) and secured hereby.  In any
         event,  failure to deliver any  required  insurance  policy  within the
         requirements  prescribed in this Deed of Trust will constitute an Event
         of Default and require immediate cure by the Trustor.

                           (e) Trustor shall furnish to  Beneficiary,  from time
         to time upon  request,  within  fifteen  (15) days  following  any such
         request,  a  certificate  signed  by the  Trustor  and the  appropriate
         insurance  carrier  representative  containing  a detailed  list of the
         insurance policies then outstanding and in force on the Trust Property.

                           (f) Trustor shall promptly notify  Beneficiary of any
         damage to or destruction of the Trust Property costing more than Twenty
         Five Thousand  Dollars  ($25,000) to repair or restore,  whether or not
         the same is covered by  insurance,  and if so covered,  shall  promptly
         make proof of loss relating thereto. Beneficiary may make proof of loss
         to the Trust  Property if not made promptly by Trustor.  Trustor hereby
         authorizes  Beneficiary,  at Beneficiary's  option,  to be named as the
         loss-payee on any  insurance  policy and to adjust or compromise in the
         name of Trustor any loss covered by any  insurance  policy on the Trust
         Property;  provided,  however,  that  Beneficiary's  right to adjust or
         compromise  any loss  shall be  available  to  Beneficiary  only if the
         Project  Documents give Trustor the right to adjust or compromise  such
         loss. As between  Trustor and  Beneficiary,  Trustor hereby  authorizes
         Beneficiary,  at  

                                       7
<PAGE>   14
         Beneficiary's  option,  to collect and receipt the  proceeds  from any 
         such policy and use such proceeds as set forth in Section 2.3(g) below.
         To the extent, but only to the extent, that the Project Documents 
         provide that  insurance  proceeds  would be payable to Trustor,  such
         proceeds shall be paid directly to Beneficiary instead of to Trustor or
         Trustor and Beneficiary jointly.

                           (g) To the extent,  but only to the extent,  that the
         Project Documents  provide that insurance  proceeds would be payable to
         Trustor,  the  proceeds  of  all  insurance  shall,  at the  option  of
         Beneficiary, be applied by Beneficiary in reduction of the indebtedness
         secured hereby in such order as Beneficiary shall determine whether the
         same  be  then  matured  or  unmatured  (unless  otherwise  elected  by
         Beneficiary,  no such  application  shall be  deemed  to be an  advance
         payment of any subsequently accruing fixed sum), used to fulfill any of
         the Obligations,  or paid over, subject to such terms and conditions as
         Beneficiary  may in its sole but  reasonable  discretion  then  impose,
         wholly  or in  part to  Trustor  by  Beneficiary  for  the  repair  and
         restoration  of the Trust  Property or for any other  purpose or object
         satisfactory  to  Beneficiary.  If insurance  proceeds are paid over to
         Trustor  for  the  purpose  of  repair  and  restoration  of the  Trust
         Property, Beneficiary,  without limitation of its right to impose other
         terms and  conditions,  may require  receipt and approval by itself and
         its  architect  of plans  and  specifications  for the work to be done;
         disbursement of proceeds not more frequently than monthly for work done
         against invoices, lien waivers, title insurance policy endorsements and
         architect's  certifications;  title policy  endorsements,  retention of
         holdbacks until completion of construction and expiration of mechanic's
         lien periods;  and receipt of assurance  adequate to Beneficiary in its
         sole judgment that the proceeds  remaining after  disbursement  will be
         sufficient  to complete  such repair and  replacement.  Trustor  hereby
         assigns  to  Beneficiary  for  the  uses  and  purposes  aforesaid  all
         insurance  required  by this  Deed of Trust and the  proceeds  thereof.
         Beneficiary  shall not be responsible for the insolvency of any insurer
         or any  insurance  underwriter.  Furthermore,  other than to the extent
         resulting   from  the  gross   negligence  or  willful   misconduct  of
         Beneficiary, Beneficiary shall not be responsible for such insurance or
         for the  collection of any insurance  moneys.  Application of insurance
         proceeds by Beneficiary,  regardless of the manner or order,  shall not
         waive  Performance  of the  Obligations,  cure or waive any  default by
         Trustor in the Performance of the Obligations,  or invalidate or affect
         any act done hereunder  because of any such default.  Beneficiary shall
         not be obligated to see to the proper application of insurance proceeds
         paid over to Trustor.

                  2.4     Condemnation of Title or Use; Eminent Domain; Special
                          Provisions.

                           (a) All awards  heretofore  or hereafter  made by any
         public or  quasi-public  authority  to the present  and all  subsequent
         owners of the Trust  Property  by virtue of an exercise of the right of
         eminent domain by such authority,  including,  

                                       8


<PAGE>   15
          without  limitation,  any  award  for  a  taking  (whether  direct  or
          indirect) of title,  possession or right of access to a public way, or
          for any  change  of grade or  streets  affecting  the  Trust  Property
          (collectively,   "Condemnation   Awards"),   are  hereby  assigned  to
          Beneficiary.   Beneficiary,  at  its  option,  is  hereby  authorized,
          directed and empowered to collect and receive the proceeds of any such
          awards  from  the  authorities  making  the  same  and to give  proper
          receipts and acquittances  therefor.  Such proceeds shall be received,
          held,  applied  and used as set forth in Section  2.3(g)  hereof  with
          respect to insurance proceeds.  If prior to the receipt by Beneficiary
          of such award or payment  the Trust  Property  shall have been sold on
          foreclosure of this Deed of Trust, Beneficiary shall have the right to
          receive such award or payment to the extent of any deficiency found to
          be due upon such sale, with interest thereon,  at the rate provided in
          the Note, notwithstanding any rule of law or provision, if any, herein
          or in any of the other Loan Documents forbidding  deficiency judgments
          or personal  liability,  and whether or not a  deficiency  judgment on
          this Deed of Trust shall have been sought or denied.  Upon  request by
          Beneficiary,  Trustor  shall  make,  execute  and  deliver any and all
          assignments  and  other  instruments  sufficient  for the  purpose  of
          effectuating  the  assignment  of  all  such  awards  to  Beneficiary.
          Beneficiary  shall have the right to intervene and  participate in any
          proceeding for and in connection  with any taking  referred to in this
          Section 2.4(a); provided, however, that if such intervention shall not
          be  permissible  or  permitted  by the court,  Trustor  shall,  at its
          expense, consult with Beneficiary,  its attorneys and experts and make
          all  reasonable  efforts to cooperate with them in any defense of such
          proceedings.  Trustor shall not, without  Beneficiary's  prior written
          consent, enter into any agreement for the taking of the Trust Property
          or any part thereof with any person or persons  authorized  to acquire
          the same by condemnation or eminent domain.

                           (b) Anything to the contrary herein  notwithstanding,
         for so long as any part of the Trust Property is subject to the Project
         Documents,  any and all  insurance  proceeds  arising  from  damage  or
         destruction to the Trust Property and any and all  Condemnation  Awards
         received by Beneficiary  shall be delivered and paid out by Beneficiary
         to the Insurance Trustee,  if any, under the Project  Documents,  to be
         distributed  and used in accordance  with the provisions of the Project
         Documents.

                  2.5      Restrictions on Transfer, Merger and Consolidation; 
                           No Additional Liens.

                           (a) To the extent not  prohibited by  applicable  law
         and  except  as may  be  expressly  permitted  herein  or in  the  Loan
         Agreement,  Trustor  shall not,  without the prior  written  consent of
         Beneficiary:  (i) sell,  convey,  lease,  sublease,  assign,  mortgage,
         pledge,  encumber or otherwise  transfer the Trust Property or any part
         thereof other than the sale of Units (as defined in the Loan Agreement)
         in the ordinary  course of business or (ii) assign or  hypothecate  any
         rent,  issues,  profits or proceeds from the Trust Property (other than
         Purchaser  Notes and  Purchaser  

                                       9
<PAGE>   16
 
          Mortgages,  as each of those terms is defined in the Loan  Agreement).
          Any such act shall be expressly  subject to this Deed of Trust and the
          prior lien created  hereby,  and written consent of Beneficiary to any
          one such act shall not be construed  to be a waiver of this  provision
          with respect to any subsequent act.

                           (b) Without limiting the generality of the foregoing,
         neither  Trustor nor any other  person have or shall have,  without the
         prior written consent of Beneficiary,  any right, power or authority to
         create, incur, permit, or suffer to be placed or imposed upon the Trust
         Property any lien,  security  interest or other  charge or  encumbrance
         whatsoever,  except this Deed of Trust, the Permitted  Encumbrances and
         such other liens and  security  interests,  if any, as may be expressly
         permitted  herein.  If any such  prohibited  lien shall arise,  Trustor
         shall promptly  discharge such lien;  provided,  however,  that Trustor
         shall have the right to contest in good faith,  with due  diligence and
         appropriate  proceedings,  at no cost or  expense to  Beneficiary,  the
         validity,  applicability, or amount of any such lien, provided further,
         however,  that Trustor,  prior to commencing  such contest,  shall have
         furnished  to  Beneficiary  a bond or  other  security  in  such  form,
         substance and amount as is reasonably satisfactory to Beneficiary.

                  2.6      Taxes, Assessments.

                           (a)  TRUSTOR  SHALL PAY OR CAUSE TO BE PAID WHEN DUE,
         AND INDEMNIFY AND HOLD HARMLESS Trustee, Beneficiary, their successors,
         assigns and shareholders and the directors, officers, employees, agents
         and  servants  of the  foregoing  from all  taxes  (including,  without
         limitation,  revenue and documentary stamp taxes,  intangible taxes, ad
         valorem real estate and personal property taxes),  assessments,  water,
         sewer  and  other  utility  rates,  rents  and  charges,   license  and
         registration  fees and excises,  together with any penalties,  fines or
         interest thereon, in each case whether general or special,  ordinary or
         extraordinary, foreseen or unforeseen, of every character in respect of
         the  Trust  Property  or any of the Loan  Documents,  which at any time
         prior to Performance of the  Obligations  may be imposed on or become a
         lien upon (i) Trustee or  Beneficiary,  (ii) the Trust  Property or any
         part thereof or any rent or other income or proceeds  therefrom,  (iii)
         the  occupancy,  operation,  use,  possession  or  disposition  thereof
         (including,  without  limitation,  any  disposition  in exercise of the
         rights of Beneficiary  arising from an Event of Default (as hereinafter
         defined)),  or (iv) any activity conducted on or in connection with the
         Trust  Property or part  thereof (all such taxes,  assessments,  rents,
         rates, charges, fees, excises and any such penalties, fines or interest
         thereon,   collectively   "Impositions"   ).  The   Obligation  to  pay
         Impositions  shall  not  apply to any  Imposition  measured  by the net
         income payable by Beneficiary in consequence of the receipt of payments
         of principal and/or interest called for in the Note or commitment fees,
         if any,  paid in  connection  with  the  Loan.  The  Obligation  to pay
         Impositions  shall  include  the  Obligation  to pay  any  increase  to
         Beneficiary  in federal income taxes 

                                       10
<PAGE>   17
          owing to such  jurisdictions  as a result  of  inclusion  in income of
          Beneficiary  of any amount  required by this Section 2.6(a) to be paid
          to or for Beneficiary.

                           (b) If  claim  is made  against  Beneficiary  for any
         Imposition,  Beneficiary will use reasonable efforts to promptly notify
         Trustor thereof (but failure to do so shall not prejudice Beneficiary's
         rights hereunder).

                           (c) If the burden of any Imposition  cannot  lawfully
         be shifted from  Beneficiary to Trustor,  then all sums hereby secured,
         without any deduction, shall, at the option of the Beneficiary,  become
         due and payable upon demand,  notwithstanding anything contained herein
         or any law heretofore or hereafter enacted.

                           (d)  Trustor  has filed or caused to be filed all tax
         returns  which are required to be filed by it and (except to the extent
         being  contested  in good faith and for the  payment of which  adequate
         security  has been  provided)  has paid or  caused to be paid all taxes
         shown to be due or payable on such  returns and all  Impositions  which
         are due and payable.

                           (e) Trustor shall furnish to Beneficiary  receipts or
         other evidence  satisfactory  to Beneficiary  showing payment of all ad
         valorem real estate and personal property taxes and assessments  within
         30 days of the final due date of such  taxes and  assessments.  If such
         receipts or other evidence of payment is not provided,  Beneficiary may
         take such action as Beneficiary deems necessary,  at Trustor's expense,
         to obtain such evidence of payment.

                           (f)  Trustor  shall have the right to contest in good
         faith,  with due diligence and appropriate  proceedings,  at no cost or
         expense to Beneficiary,  the validity,  applicability or amount of such
         Impositions;  provided, however, that Trustor, prior to commencing such
         contest,  shall have  furnished to Beneficiary a bond or other security
         in such form,  substance  and amount as is reasonably  satisfactory  to
         Beneficiary.

                  2.7      Impounds.

                           (a) Upon the occurrence of an Event of Default and at
         all times thereafter, Trustor shall upon written request of Beneficiary
         make  monthly  deposits  with  Beneficiary  of  the  following:  (i) an
         installment of the taxes and special assessments levied or to be levied
         against the Trust  Property and (ii) an  installment  of the premium or
         premiums that will become due and payable to renew the insurance on the
         Trust  Property.  Such  installments  are to be equal to the  estimated
         taxes and  assessments  and premium or premiums for such insurance next
         due (as reasonably estimated by Beneficiary giving due consideration to
         the previous year's tax and premiums),  less all  installments  already
         paid  therefor,  and divided by the number of 

                                       11
<PAGE>   18
          months that are to elapse  before one (1) month prior to the date when
          such  taxes and  assessments  or  premium  or  premiums  shall  become
          delinquent.  If the  Trust  Property  is a part of a larger  tract for
          purposes of real estate taxation,  Trustor shall have or cause to have
          the property taxes assessed  separately;  or, if a separate assessment
          is not possible,  Trustor, upon request of Beneficiary,  will make the
          monthly  deposits for an installment of taxes and special  assessments
          calculated for the larger tract. If amounts paid to Beneficiary  under
          the  provisions of this Section 2.7(a) are  insufficient  to discharge
          the Obligation for such taxes and assessments or insurance premiums as
          the same become due, Trustor shall pay to Beneficiary upon demand such
          additional  sums as may be  required to fully pay and  discharge  this
          Obligation.

                           (b) Nothing in this Section 2.7 shall release Trustor
         of its Obligation to pay taxes,  assessments and insurance  premiums as
         the same  become due and payable to the extent  that  provision  is not
         made for such payment pursuant to the terms of this Section 2.7. To the
         extent not  prohibited  by law,  deposits  made under this  Section 2.7
         shall  not be deemed  to be held in trust  and may be  commingled  with
         Beneficiary's general funds; and Beneficiary shall have no liability to
         Trustor for any interest on such deposits.

                           (c)  If,  by   reason   of  any  Event  of   Default,
         Beneficiary  declares  all  indebtedness  secured  hereby to be due and
         payable,  Beneficiary,  to the extent not prohibited by applicable law,
         may,  at its option  and  without  notice,  then apply any funds in the
         impounds account against such indebtedness in such order as Beneficiary
         may in its  discretion  determine.  Application  of such  funds  to the
         indebtedness  secured  hereby  shall not cure or waive any  default  by
         Trustor in the  Performance  of the  Obligations  or invalidate any act
         done hereunder because of any such default.  The  enforceability of the
         Obligations  herein  relating  to  taxes,   assessments  and  insurance
         premiums shall not be affected except insofar as those Obligations have
         been met by compliance with this Section 2.7.

                           (d) Beneficiary may from time to time, at its option,
         waive,  and  after any such  waiver  reinstate,  any or all  provisions
         hereof  requiring such deposits,  by notice to Trustor.  While any such
         waiver is in  effect,  Trustor  shall  pay  Impositions  and  insurance
         premiums as herein elsewhere provided.

                  2.8 Compliance with Insurance  Terms,  Laws, etc.  Trustor has
complied, and will comply or cause compliance with and will not suffer or permit
any violation of: (a) all terms of any insurance  policy  covering or applicable
to the Trust Property or any part thereof, all requirements of the issuer of any
such policy,  and all orders,  rules,  regulations and other requirements of the
National  Fire  Protection  Association  (or any other body  exercising  similar
functions) applicable to or affecting the Trust Property or any use or condition
of the Trust Property;  and (b) all laws,  ordinances,  regulations,  covenants,
conditions and restrictions  affecting Trustor or the Trust Property;  provided,
however,  that 

                                       12
<PAGE>   19
Trustor  shall have the right to contest in good faith,  with due  diligence and
appropriate proceedings,  at no cost or expense to Beneficiary,  the validity or
applicability  of  such  law,  ordinance,  regulation,  covenant,  condition  or
restriction,  provided further,  however, that Trustor, prior to commencing such
contest,  shall have  furnished to  Beneficiary a bond or other security in such
form, substance and amount as is reasonably satisfactory to Beneficiary.

                  2.9      Alterations, Maintenance, Inspection, Repair.

                           (a) Trustor (i) will not,  without the prior  written
         consent  of  Beneficiary,  make any  material  alteration  to the Trust
         Property  or  remove,  demolish,  or alter  the  design  or  structural
         character  of any  building  now or  hereafter  erected  upon the Trust
         Property,  unless  otherwise  permitted herein or required by law; (ii)
         will not,  without the prior written consent of Beneficiary,  remove or
         permit  the  removal  from the  Premises  of any  fixtures,  equipment,
         machinery,  appliances, fixtures, furniture, furnishings or other items
         of  personal  property  which  constitute  part of the Trust  Property,
         except in the ordinary course of business or unless otherwise permitted
         herein; (iii) will promptly repair or cause to be repaired any portions
         of the Trust  Property that may be damaged or destroyed  (regardless of
         the  sufficiency of insurance and  condemnation  proceeds) and will not
         commit or suffer waste upon the Trust  Property,  but will at all times
         make or cause to be made such  repairs,  maintenance  and  renewals and
         replacements,  or otherwise,  as may be necessary to maintain the Trust
         Property and condition thereof in good order and repair; (iv) will keep
         or cause  the  Trust  Property  to be kept  free of  rubbish  and other
         unsightly  conditions;  (v) will keep or cause all  buildings and other
         improvements on the Trust Property to be kept free of dry rot,  fungus,
         termites and all other harmful or destructive  pests; (vi) will keep or
         cause all ornamental plants,  trees and shrubs on the Trust Property to
         be kept neatly pruned and in good  condition;  and (vii) will complete,
         subject  to  clauses  (i) and  (iii)  above,  promptly,  in a good  and
         workmanlike  manner  and  in  substantial  conformity  with  plans  and
         specifications  approved in writing by Beneficiary any improvements now
         or hereafter commenced.

                           (b) Nothing  contained  in this Deed of Trust  and/or
         any of the other Loan Documents shall constitute any consent or request
         by Trustee or Beneficiary,  express or implied,  for the performance of
         any  labor or  service  or the  furnishing  of any  materials  or other
         property  in respect of the Trust  Property,  or be  construed  to give
         Trustor any right,  power or  authority  to contract  for or permit the
         performance of any labor or services or the furnishing of any materials
         or other  property  in such  fashion as would  permit the making of any
         claim against  Trustee or Beneficiary  in respect  thereof or any claim
         that any lien based on the performance of such labor or services or the
         furnishing  of any such  materials  or other  property is prior to this
         Deed of Trust.  During the performance of any such labor or services or
         the  furnishing of any such materials or other property with respect to
         the Trust  Property or the 

                                       13
<PAGE>   20
         Premises,   Trustor  shall  post  in  conspicuous   locations  notices
         reasonably  sufficient  to advise the  suppliers  of such  services or
         materials of the non-responsibility of Beneficiary with respect to the
         same.

                  2.10     Use; Zoning.

                           (a)  Trustor   shall  use  the  Trust   Property  (if
         developed  from its  present  state of unused  land) for the purpose of
         selling Units.

                           (b) The use of the  Trust  Property  for the  sale of
         Units does not and will not violate any private covenant or restriction
         affecting  the  Trust  Property.   The  Trust  Property  is  zoned  for
         residential  use and the Trust Property is not a part of a larger tract
         of land  owned  or  leased  by  Trustor  or any of its  affiliates,  or
         otherwise  considered  as part of one  zoning  lot,  or, if it is,  any
         authorization  or variance  required for the subdivision of such larger
         tract which a sale of the Trust Property would entail has been obtained
         from all the appropriate  governmental  authorities,  so that the Trust
         Property  constitutes  one  zoning  lot  (including  street  access and
         parking and utility facilities,  if relevant) capable of being conveyed
         as such. The necessary  rights-of-way  for all roads  necessary for the
         full  utilization of the Trust Property for its intended  purposes have
         been acquired, and/or have been dedicated to public use and accepted by
         the appropriate governmental authority.

                           (c) Trustor shall not,  without  Beneficiary's  prior
         written consent,  seek, join in or consent to any change in any private
         covenant,  zoning  law or other  public or private  restriction,  which
         change would limit the use of the Trust Property or any part thereof or
         reduce its fair market value.

                  2.11     Establishment and Maintenance of the Deed of Trust; 
                           Further Assurances.

                           (a) Trustor shall establish and maintain this Deed of
         Trust, subject only to the Permitted  Encumbrances and such other liens
         and security  interests,  if any, as may be expressly permitted herein,
         as a Deed of Trust and lien and security interest on the Trust Property
         and any other  property  intended to be encumbered  and on all renewals
         and  replacements of all such property.  Trustor shall perform all acts
         and execute all  instruments  necessary or required by  Beneficiary  in
         order to permit the immediate  registration  and/or recordation of this
         Deed of Trust at the appropriate  office for the foregoing  purposes in
         the county where the Premises are  located.  Trustor  shall  furnish to
         Beneficiary  from time to time such proof as Beneficiary may reasonably
         request with respect to Trustor's compliance with the foregoing.

                                       14
<PAGE>   21
                           (b)  Trustor  shall  pay  all  expenses  incurred  by
         Trustee  and/or   Beneficiary  in  connection  with  the   preparation,
         completion,  registration  and/or  recordation of this Deed of Trust or
         any other Document.

                           (c) If this  Deed of  Trust or any  provision  hereof
         shall be  deemed  invalidated  in whole  or in part by any  present  or
         future law or any  decision of any court having  jurisdiction,  Trustor
         shall  execute and deliver  such other and further  instruments  and do
         such things as in the sole  opinion of  Beneficiary  will carry out the
         true  intent  and  spirit  of this  Deed of  Trust.  From time to time,
         Trustor shall execute and deliver such further documents and assurances
         as in  the  sole  opinion  of  Beneficiary  may  be  required  to  more
         effectively  subject the Trust Property and any other property intended
         to be  transferred  or  encumbered  to or for the benefit of Trustee or
         Beneficiary as security for the Performance of the Obligations.

                           (d)  Trustor,  at its  sole  cost and  expense,  will
         appear in and  prosecute  or defend any action or  proceeding  that may
         affect  the  priority  of  this  Deed  of  Trust  or  the  security  of
         Beneficiary  hereunder,  and will pay all costs and expenses (including
         the cost of  searching  title and  attorneys'  fees)  incurred  in such
         action or  proceeding.  Beneficiary  may, at its option,  appear in and
         defend any action or  proceeding  purporting  to affect the priority of
         this Deed of Trust or the  security  hereof or the  rights or powers of
         Trustee and/or  Beneficiary.  All amounts paid, suffered or incurred by
         Beneficiary  in exercising  the authority  herein  granted,  including,
         without  limitation,  court costs,  attorneys' fees and other expenses,
         with  interest  at the Note Rate (or at the  Overdue  Rate in the event
         such advance is necessary as a result of the  occurrence of an Event of
         Default or an event which with notice,  passage of time or both,  would
         constitute an Event of Default (an "Incipient Default") ) from the date
         of advance until paid, shall, without notice or demand,  immediately be
         due and payable by Trustor to  Beneficiary  and be secured by this Deed
         of Trust.  The Note Rate means the rate of interest at which the unpaid
         principal  balance of the Note  accrues  in the  absence of an Event of
         Default.

                  2.12 Right of  Beneficiary  to Act. If there be commenced  any
action or proceedings  affecting the Trust Property or the title thereto,  or if
Trustee or  Beneficiary  be made a party to any action or proceeding  because of
its status  hereunder,  or if Trustor  defaults in the Performance of any of its
Obligations,   then  Beneficiary,  or  Trustee  upon  written  instruction  from
Beneficiary  (the  legality  thereof to be  determined  solely by  Beneficiary),
without  obligation  to do so, may procure such  abstracts or other  evidence of
title as it deems necessary;  may appear in any such action as Beneficiary deems
advisable;  perform such  Obligations  and for such  purposes may enter upon the
Trust  Property;  and  shall  become  subrogated  to the lien and  rights of all
persons to whom payments have been made in performing the  Obligations.  For any
of  such  purposes,   including  court  costs,  attorneys'  fees  and  expenses,
Beneficiary  may  advance  such sums of money as it deems  necessary.  Such sums
advanced,  with  interest  from the  date of  advance  at the Note  Rate (or the
Overdue  Rate  

                                       15
<PAGE>   22
in the event such advance is necessary as a result of the occurrence of an Event
of Default or Incipient  Default) until paid,  shall,  without notice or demand,
immediately  be due from Trustor to  Beneficiary  and be secured by this Deed of
Trust.  Beneficiary  shall  be the  sole  judge of the  legality,  validity  and
priority  of any  claim,  lien,  encumbrance,  tax,  assessment  and  premium it
discharges   pursuant  hereto  and  of  the  amount  necessary  to  be  paid  in
satisfaction  thereof.  Any action taken by Beneficiary  or Trustee  pursuant to
this Section 2.12 shall not waive  Performance of any Obligation,  cure or waive
any default by Trustor in the Performance of the  Obligations,  or invalidate or
affect  any  act  done  hereunder  because  of  such a  default.  The  foregoing
notwithstanding,  Beneficiary  agrees to use reasonable  efforts to give Trustor
five (5) days prior  written  notice as to the taking of any action  pursuant to
this Section 2.12 unless (i) the delay  incurred in taking such action,  pending
the giving of such notice,  would further  jeopardize  the Trust Property or the
lien of this Deed of Trust or (ii) Beneficiary  takes such action as a result of
the occurrence of an Event of Default.

                  2.13  Risk  of  Loss;   Indemnity.   As  between  Trustor  and
Beneficiary,  Trustor assumes the entire risk of loss of the Trust Property from
any cause  whatsoever and further  assumes all risks and liability for the Trust
Property,  and the use and  operation  thereof,  and for  injuries  or deaths of
persons and damage to property,  however arising from or incident to such use or
operation,  whether such injury or death to persons be of agents or employees of
Trustor or of third  parties  and such  damage to  property  be of Trustor or of
others. TRUSTOR SHALL SAVE AND HOLD HARMLESS and defend Trustee and Beneficiary,
their successors,  assignees and shareholders (including corporate shareholders)
and the directors,  officers,  employees,  agents and servants of the foregoing,
from any and all losses,  costs,  expenses (including court costs and attorneys'
fees), damages, demands, claims, suits, proceedings (whether civil or criminal),
orders  and  judgments,  penalties,  fines  and other  sanctions  (collectively,
"Damages")  arising or incurred because of or incident to (a) the Trust Property
or  the  actual  or  alleged  management,   control,   condition,   destruction,
disposition, use or operation thereof; (b) any brokerage fees arising from or in
connection with the making of the Loan, (c) any  incorrectness  in the assurance
which the Trustor hereby gives: (i) that there are no present  violations on the
Premises of any enforceable covenants,  conditions, or restrictions;  (ii) that,
except to the extent shown as Permitted Encumbrances, there are no encroachments
of buildings, structures, or improvements located on the Premises onto adjoining
lands,  nor any  encroachments  onto  said  land of  buildings,  structures,  or
improvements  located on adjoining  lands;  (d)(i) any future  violations on the
Premises  of any  covenants,  conditions,  or  restrictions  occurring  prior to
acquisition  of title to said estate or interest  by the  Beneficiary,  provided
such violations  result in loss or impairment of the lien of this Deed of Trust,
or result in loss or  impairment  of the title to said estate or interest if the
Beneficiary shall acquire such title in satisfaction of the indebtedness secured
by this  Deed of Trust;  (ii)  unmarketability  of the  title to said  estate or
interest  by  reason  of any  violations  on the  Premises,  occurring  prior to
acquisition  of title to the  Premises  by the  Beneficiary,  of any  covenants,
conditions or  restrictions;  (e) any interest or claims not shown by the public
records  which  could be  ascertained  by an  inspection  of the  Premises;  (f)
easements  or  claims  of  easements  not  shown by  public  records;  and;  (g)
discrepancies, conflicts and boundary 

                                       16
<PAGE>   23
lines, shortage in area,  encroachments and any facts which a correct survey and
inspection of the Premises would disclose, and which are not shown by the public
records,  unless in any of the foregoing cases, the Damages arise from the gross
negligence   or   willful   misconduct   of  the   person  or   entity   seeking
indemnification.  On written  request by a person or other entity covered by the
above  agreement of  indemnity,  Trustor  shall  undertake,  at its own cost and
expense,  on  behalf  of such  indemnitee,  using  counsel  satisfactory  to the
indemnitee,  the  defense  of any  legal  action  or  proceeding  to which  such
indemnitee  shall be a party,  provided  that such  action or  proceeding  shall
result from, or grow or arise out of any of the events set forth in this Section
2.13.

                  2.14  Non-Default  Status.  Except as disclosed in the exhibit
delivered pursuant to paragraph 8.3(a) of the Loan Agreement,  Trustor is not in
default  of any  payment on account of  indebtedness  for  borrowed  money or in
violation of or default  under any material term of any  agreement,  instrument,
undertaking,  or  order,  decree  or  judgment  of  any  court,  arbitration  or
governmental  authority  to which it is a party or by which it or its assets are
bound. Trustor is fully familiar with all of the covenants, terms and conditions
of the Loan  Documents  and is not in  default  thereunder.  No act or event has
occurred which after notice and/or lapse of time would constitute such a default
or an Event of Default.

                  2.15 Approvals and Reports. Trustor has obtained or has caused
to be obtained all necessary consents, licenses, permits, franchises,  approvals
and exemption  certificates and has made or caused to be made all  registrations
or declarations with each government or any agencies or departments thereof that
are  required  in  connection  with the Trust  Property  and the use  thereof as
contemplated herein; and the same are in full force and effect. All such filings
and  reports  delivered  to any  governmental  authority  have  been  truthfully
completed  and duly filed;  and true and complete  copies of such  applications,
consents,  licenses,  permits,  franchises,  exemption certificates,  approvals,
filings and reports have been delivered to  Beneficiary.  Trustor  undertakes to
continue in full force and effect all of the  foregoing  and will obtain any new
or additional  governmental approvals as become necessary for the Performance of
the Obligations.

                  2.16  Litigation.  There  is no  action,  litigation  or other
proceeding  pending  or  threatened  before  any  arbitration  tribunal,  court,
governmental  agency or administrative  body against Trustor which, if adversely
determined,  would adversely affect  Beneficiary's  ability to realize upon this
Deed of Trust or the other security for the  Performance  of the  Obligations or
would  materially  adversely  affect the  business  or  financial  condition  of
Trustor,  or impair  the  ability  of Trustor  to  complete  Performance  of the
Obligations; or which questions the validity of any of the Loan Documents.

                  2.17 Full Disclosure. Neither this Deed of Trust nor any other
Document,  certificate,  financial  statement or written  material  furnished to
Beneficiary  by or on behalf of  Trustor  in  connection  with the  transactions
contemplated hereby contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the 

                                       17
<PAGE>   24
statements  contained  herein and therein not  misleading.  To the extent any of
such documents is a contract,  such document  constitutes  the legal,  valid and
binding obligation of the parties thereto in accordance with its terms (subject,
however, to bankruptcy, insolvency, reorganization,  arrangement, moratorium, or
other similar laws  relating to or affecting  the rights of creditors  generally
and general  principles  of  equity),  no party  thereto is in material  default
thereunder,  and Trustor knows of no reason why any party thereto has a right to
terminate  the  contract  prematurely  for  failure  of a  stated  condition  or
otherwise.  There is no fact known to Trustor which materially adversely affects
or in the future may (so far as Trustor can now  foresee)  materially  adversely
affect the  business or financial  condition  of Trustor  which has not been set
forth  specifically  in  detail  in the  Loan  Documents  or  the  certificates,
financial  statements or other written  materials  furnished to  Beneficiary  in
connection with the transactions contemplated hereby.

                  2.18     Reserved.

                  2.19     Environmental Representations.

                           (a) Representations, Covenants and Warranties. Except
         as disclosed in the Disclosure Schedule,  attached to the Environmental
         Certificate  as  Exhibit  "B" and  incorporated  therein  by  reference
         (herein  the  "Disclosure  Schedule"),  Trustor,  to  the  best  of its
         knowledge  after due  inquiry  and  investigation,  hereby  represents,
         covenants and warrants to Beneficiary as follows:

                                    (i) Trustor  certifies that it  investigated
                  the present and past uses of the Trust Property,  and employed
                  a qualified environmental  consultant,  acceptable to Trustor,
                  to make  due  inquiry  of all  Operations  and  the  potential
                  existence   and/or  Release  of   Contaminants  at  the  Trust
                  Property.   To  the  best  of  Trustor's  knowledge,   Trustor
                  certifies that such investigation  complied with Beneficiary's
                  guidelines for conducting such investigation.

                                    (ii) The Trust Property is not listed on any
                  federal,  state, or local list  identifying  properties with a
                  known  or  suspected  Release.   Trustor  is  unaware  of  any
                  condition  that, if known to a Governmental  Authority,  would
                  require  (i) the Trust  Property  be  listed or (ii)  Remedial
                  Action.

                                    (iii)  Operations  have never been, and will
                  not be, for the purpose of the  manufacture,  Remedial Action,
                  generation,  Release, or refining of any Contaminant  (whether
                  legal or illegal, accidental or intentional).

                                    (iv)  Trustor  obtained,  and is  and  shall
                  continue to be in compliance  with, all EHS Permits  necessary
                  for the Operations at the Trust Property.


                                       18
<PAGE>   25
                                    (v) No  Environmental  Lien has, is, or will
                  be attached to the Trust Property or any portion thereof.

                                    (vi)  Trustor is not,  has not, and does not
                  anticipate  being,  subject  to any  action by a  Governmental
                  Authority  regarding:  (i) the violation of any  Environmental
                  Requirement;  (ii) any Remedial  Action;  (iii) any  liability
                  arising  out of or related to the  presence  or Release of any
                  Contaminant  resulting from or pertaining to the Operations at
                  the Trust Property.

                                    (vii) Trustor  certifies that to the best of
                  its knowledge  and after  appropriate  inquiry,  except as set
                  forth  in  the   Disclosure   Schedule,   there  has  been  no
                  unauthorized  release  of any  contaminant  at, on,  from,  or
                  beneath the property.

                  The foregoing  representations,  covenants and  warranties are
continuing  and shall be true and correct from the date hereof through the final
payment  of all  indebtedness  owed by  Trustor  to  Beneficiary  and the  final
Performance  of all  Obligations  owed to  Beneficiary,  with the same force and
effect  as if  made  each  day  throughout  such  period.  All  representations,
covenants and warranties survive payment and Performance.

                  Beneficiary  warrants  that it shall act, in its capacity as a
lender,  in  compliance  with all  federal,  state,  and  local  laws  regarding
environmental lender liability,  including,  without limitation,  42 U.S.C.
Section 9607 under the Comprehensive Environmental Response, Compensation and
Liability Act.

                  (b)      Covenant to Clean Up and Notify.

                                    (i) Trustor,  at its own cost, shall perform
                  all Remedial Action:  (i) in accordance with all Environmental
                  Requirements;   (ii)  to  the   reasonable   satisfaction   of
                  Beneficiary;  and (iii) in  accordance  with any  Governmental
                  Authority orders, directives, and/or terms, whether negotiated
                  or imposed.

                                    (ii)   Trustor    shall   give   notice   to
                  Beneficiary immediately,  via certified mail, of any deviation
                  from  any  of  the  above   representations,   covenants   and
                  warranties. Such notification is triggered by, but not limited
                  to  Trustor's:  (i)  receipt of notice  from any  Governmental
                  Authority of any known,  alleged or suspected violation of any
                  Environmental   Requirement;   (ii)  receipt,  or  anticipated
                  receipt,  of any notice from a  Governmental  Authority of the
                  Release of a Contaminant,  violation of an EHS Permit,  and/or
                  damages for personal or property injury or natural  resources,
                  stemming from a violation or Release;  and (iii)  knowledge of
                  the presence of any Contaminant (other than those described in
                  the Disclosure  Schedule) on the Trust Property in a 

                                       19

<PAGE>   26
                  condition  that  may  adversely   impact  the   Environment.
                  Notification  shall include an  explanation of the deviation
                  from the  representation  and warranty and a description  of
                  the  communication  to or  knowledge  on  the  part  of  the
                  Trustor.  Trustor, at Beneficiary's  request,  shall provide
                  all  documents  pertaining  to  any  environmental   matters
                  (including  but  not  limited  to  otherwise  privileged  or
                  confidential   materials).   

                                    (iii)  In  the  event  of  such   deviation,
                  Trustor  must:  (i)  promptly  comply  with all  Environmental
                  Requirements,  including  but not  limited to those  requiring
                  Remedial Action and/or notification of a Release,  and provide
                  Beneficiary with satisfactory evidence of such compliance; and
                  (ii) provide  Beneficiary,  within thirty (30) days, financial
                  assurance    evidencing,     to    Beneficiary's    reasonable
                  satisfaction,  that sufficient  funds are available to pay the
                  cost of Remedial  Action,  compliance  with any  Environmental
                  Requirement, and discharging any Environmental Liens.

                 (c)         Site Assessment.

                                    (i)    If    Beneficiary    believes    that
                  Contaminants  (other than those  described  in the  Disclosure
                  Schedule) affect the Trust Property, Beneficiary, at any time,
                  may contract for the services of persons ("Site Assessors") to
                  perform environmental site assessments ("Site Assessments") to
                  determine  whether  any  environmental  condition  exists that
                  could  result  in the  diminution  of the  value of the  Trust
                  Property, and/or any liability, cost, or expense to the owner,
                  occupier, or operator of the Trust Property.  Site Assessments
                  may be performed at any time, upon reasonable  notice and with
                  minimal  interference  with  Trustor's  affairs  to the extent
                  practicable,  as determined by Beneficiary.  Site  Assessments
                  must  be  performed  pursuant  to  Beneficiary's   guidelines.
                  Trustor   shall  not  impede  or   interfere   with  the  Site
                  Assessment, and shall cooperate fully with the Site Assessors.
                  The Site  Assessors,  which  term  includes  their  employees,
                  agents,  subcontractors,  and assigns are hereby authorized to
                  enter  upon  the  Trust  Property  for such  purposes  and are
                  further  authorized  to  perform  tests on the Trust  Property
                  necessary to conduct the Site Assessment. Trustor shall supply
                  Site   Assessors   historical  and   operational   information
                  regarding   the  Trust   Property  to   facilitate   the  Site
                  Assessment.  Trustor shall make appropriate personnel,  having
                  knowledge of relevant matters, available for meetings with the
                  Site Assessors. On request, Beneficiary shall make the results
                  of such Site  Assessments  available  to Trustor.  The cost of
                  performing   the   Site   Assessments,    including,   without
                  limitation,  sampling and  monitoring,  the preparation of any
                  reports or studies, and the cost of laboratory analysis, shall
                  be paid by Trustor upon demand.

                                       20
<PAGE>   27
                                     (ii) Prior to a breach, default or Event of
                  Default under or as defined in any Loan Document,  Beneficiary
                  may notify Trustor of its intent to conduct a Site  Assessment
                  and allow Trustor to initiate and pay for the Site  Assessment
                  directly. Unless otherwise agreed, a Site Assessment performed
                  pursuant to this Section 2.19(c) must be: (i) initiated within
                  seven (7)  business  days of the date upon  which  Trustor  is
                  contacted by Beneficiary;  and (ii) completed with a finalized
                  report  delivered to  Beneficiary  within thirty (30) calendar
                  days of the date upon  which  Trustor is  contacted.  The Site
                  Assessors  hired by Trustor must be acceptable to Beneficiary.
                  Beneficiary must be consulted by Trustor and approve the scope
                  of any proposed Site Assessment. Site Assessors must provide a
                  draft and final report discussing their findings.  Beneficiary
                  shall be given the  opportunity  to review and  comment on all
                  draft  reports.  Beneficiary  shall be provided  copies of all
                  draft  and  final  reports.  Any and all  representations  and
                  findings by Site Assessors  shall expressly run to the benefit
                  of Beneficiary.

                  (d)      Indemnify and Hold Harmless.

                                    (i) Trustor shall indemnify, defend and hold
                  harmless Beneficiary, its employees,  shareholders,  officers,
                  directors,   and  agents   from  and   against   any  and  all
                  Environmental Costs.

                                    (ii)   Trustor   agrees,   upon  request  by
                  Beneficiary,   to   contest   and  to   defend   against   all
                  Environmental Costs.  Beneficiary may, without being obligated
                  to, hire counsel,  consultants, and others necessary to defend
                  against any Environmental Costs.

                                    (iii)    Trustor    agrees   to    reimburse
                  Beneficiary   upon  demand  for  any   expenses   incurred  in
                  connection  with any  Environmental  Costs.  The provisions of
                  this Section 2.19 are in addition to any other obligations and
                  liabilities  Trustor may have to Beneficiary at common law, in
                  equity or under documentation  executed in connection with the
                  Loan,  and shall  survive the closing,  funding and payment in
                  full of the Loan, as well as any  foreclosure  of the Loan, or
                  the  granting  of any  deed  in lieu  of  foreclosure  and the
                  recordation  of any  release of the lien of this Deed of Trust
                  or of the Loan Agreement.

                  (e)      Beneficiary's Right to Remove Contaminants.

                                    (i)  Beneficiary  shall have the right,  but
                  not  the  obligation,  without  limiting  Beneficiary's  other
                  rights  and   remedies   under  this  Deed  of  Trust  or  the
                  Environmental Certificate, to enter onto the Trust Property or
                  to take such other actions as it deems  necessary or advisable
                  to  effectuate  a  Remedial  Action,  or to in any  other  way
                  resolve or minimize the impact of, or

                                       21
<PAGE>   28
                  otherwise deal with, any Contaminant on or affecting the Trust
                  Property  in such a manner that may  jeopardize  Beneficiary's
                  security  interest.  Costs and  expenses  paid or  incurred by
                  Beneficiary  in the  exercise  of any  such  rights  shall  be
                  secured by this Deed of Trust and the Loan Agreement and shall
                  be payable by Trustor upon demand.

                                    (ii) Without  limiting  Beneficiary's  other
                  rights and remedies,  Beneficiary  will notify  Trustor of its
                  intent to  undertake a Remedial  Action or any other action as
                  discussed above. Prior to Beneficiary's initiation of any such
                  action, unless otherwise agreed to by Trustor and Beneficiary,
                  Trustor shall have thirty (30) days from the date of receiving
                  Beneficiary's  notice to  complete  the  required  action  and
                  provide     Beneficiary    with    satisfactory     completion
                  documentation.

                           (f) Reliance and Binding Nature. Trustor acknowledges
         that   Beneficiary   has  and  will  rely  upon  the   representations,
         warranties, and indemnification set forth herein and that the execution
         and  delivery of this Deed of Trust is an essential  condition  but for
         which   Beneficiary   would   not   close   or  fund  the   Loan.   The
         representations,   warranties  and  indemnifications  herein  shall  be
         binding upon Trustor, its successors, assigns and legal representatives
         and shall inure to the benefit of Beneficiary, its successors,  assigns
         and legal representatives.

                           (g)  Relation  to  Other  Documents.  All  terms  and
         conditions  contained  in  the  Loan  Documents,   including,   without
         limitation, this Deed of Trust, shall be interpreted to give such terms
         full force and effect.  In the event terms or  conditions  contained in
         this Section 2.19  directly  conflict with or are contrary to terms and
         conditions  contained  in the other Loan  Documents,  and the matter at
         issue  concerns or is related to the Site  Assessment  or indemnity and
         hold harmless  provisions of this Section 2.19, this Section 2.19 shall
         govern and supersede any conflicting requirement.

                  For the purposes of this Section  2.19,  the  following  terms
shall have the following meanings:

                  "Contaminant" means any pollutant, hazardous,  radioactive, or
toxic  substance,  hazardous  waste,  medical,  radioactive,  or special  waste,
petroleum or petroleum-derived substance or waste, asbestos-containing material,
polychlorinated  biphenyls (PCBs), or any hazardous or toxic constituent thereof
and includes, but is not limited to, any substance defined in or regulated under
any Environmental Requirement.

                  "EHS  Permits"  means all  environmental,  health  and  safety
permits,  licenses,  consents, and authorizations  required by any Environmental
Requirement.

                                       22
<PAGE>   29
                  "Environment"  shall have the same  meaning  as defined  under
Environmental   Laws.  If  Environmental  Laws  conflict,   the  most  expansive
definition is used.

                  "Environmental  Conditions" means the presence or release into
the Environment of Contaminants arising out of Operations.

                  "Environmental  Costs"  means  any  and all  claims,  demands,
liabilities,  damages, losses, expenses,  fines, penalties,  judgments,  awards,
settlements  and  costs  (including,   without  limitation,  legal,  accounting,
consulting,   engineering,   construction   and  other  costs)  arising  out  of
Environmental Conditions.  Environmental Costs include, without limitation,  all
past, current and future expenses,  arising out of: (a) any pending,  threatened
or  completed  action by a  Governmental  Authority  or any person or entity for
property   damage,   bodily  injury  or  personal   injury;   (b)  any  inquiry,
investigation,  audit, study,  assessment,  notice of violation,  administrative
complaint,   summons,   citation  directive  or  judicial  complaint;   (c)  any
development  of remedial or response  plans;  and (d) any conduct or activity in
any way associated therewith.

                  "Environmental  Laws" means any applicable  federal,  state or
local laws, statutes,  codes, ordinances,  rules or regulations,  court order or
decree, administrative order or governmental agency guidelines.

                  "Environmental Lien" means a lien in favor of any Governmental
Authority for any: (a) liability  under any  Environmental  Requirement;  or (b)
damages  arising  from,  or costs  incurred by such  Governmental  Authority  in
response to a Release of a Contaminant into the Environment.

                  "Environmental  Requirement"  means all Environmental  Laws or
EHS Permits relating to the Environment,  health or safety,  including,  without
limitation:  (a)  the  use,  handling,  treatment  storage,  or  Release  of any
Contaminant; and (b) workplace or worker safety and health, as authorized by any
Governmental Authority.

                  "Governmental  Authority"  means any  federal,  state or local
agency,  department,  court or other  administrative,  legislative or regulatory
federal,  state or local  governmental body, or any private individual or entity
in place of such entities.

                  "Operations"  means the entire scope of activity  performed or
undertaken at the Trust Property,  past and present, with respect to any and all
Contaminants.

                  "Release" means the actual,  partial,  or threatened  release,
spill,  emission,  escape,  leaking,  pumping,  injection,  deposit,  discharge,
dispersal,  dumping, disposal,  leaching,  placing, production or migrating into
the Environment of any Contaminant.

                                       23
<PAGE>   30
                  "Remedial  Action"  means  actions  required to: (a) clean up,
remove, treat or otherwise address Contaminants in the Environment;  (b) prevent
or minimize the Release of Contaminants  into the Environment;  or (c) determine
if a remedial  response or corrective  action is needed,  design an  appropriate
response,  compile  necessary data and reports,  conduct pre- and  post-remedial
investigation,  monitoring,  operation,  maintenance  and care.  Remedial Action
shall be  undertaken  such that the Trust  Property  is  utilized to its maximum
economic benefit.

                  2.20 Compliance with Americans With Disabilities Act of 1990.

                           (a) Trustor hereby represents, covenants and warrants
         to Beneficiary, its successors and assigns, as follows:

                                    (i)  Trustor  has  made  and  will  make all
                  modifications   and/or   provided   and   will   provide   all
                  accommodations which may be required to be made or provided by
                  Trustor  pursuant to 42 U.S.C. Section 12101,  et seq.,  and
                  all applicable rules and regulations  promulgated  thereunder
                  (the "ADA") in order to accommodate  the needs and
                  requirements of disabled  persons,  including,  without
                  limitation,  disabled employees  of  Trustor  and  shall
                  otherwise  comply or cause compliance with all provisions of
                  the ADA.

                                    (ii)  Trustor  has  received  no  notice  or
                  complaint  regarding  any  noncompliance  with  the ADA of the
                  Trust  Property or of Trustor's  employment  practices and, to
                  the best of Trustor's knowledge,  there has been no threatened
                  litigation  alleging any such  noncompliance by Trustor or the
                  Trust Property.

                           (b) Trustor shall promptly  provide  Beneficiary with
         copies of all  notices or claims  which may be  received by Trustor and
         involving claims made by any individual,  entity or governmental agency
         as to any alleged  noncompliance  of the Trust  Property  or  Trustor's
         employment practices with the requirements of the ADA.

                           (c) Trustor shall observe and comply and shall ensure
         that all and other  occupants of the Trust Property  observe and comply
         in all material  respects with all obligations and  requirements of the
         ADA as it applies to the Trust Property,  which shall include,  without
         limitation,  installing or constructing all improvements or alterations
         which may be necessary to cause the Trust  Property to be accessible to
         all persons as and to the extent required by the ADA.

                           (d)  Without  limiting  the  generality  of any other
         provision of this Deed of Trust,  Trustor shall  indemnify,  defend and
         hold  harmless  Beneficiary,   its  successors  and  assigns,  and  the
         directors,  officers,  employees, agents and servants of the foregoing,
         from any and all losses,  costs,  expenses  (including  court costs and

                                       24
<PAGE>   31
         attorneys' fees), damages, demands, claims, suits, proceedings,  orders
         and judgments,  penalties,  fines and other sanctions  arising from any
         claim that the Trust Property or occupant  thereof is not in compliance
         with  the  requirements  of  the  ADA or  that  Trustor  has  otherwise
         discriminated against any disabled person in violation of the ADA.

                                   ARTICLE III

                     ASSIGNMENT OF RENTS AND SALES PROCEEDS;
                               SECURITY AGREEMENT

                  3.1      Assignment of Rents.

                           (a) Trustor hereby  absolutely  assigns and transfers
         to  Beneficiary  (this  "Assignment"):  (i) all the  right,  title  and
         interest of Trustor in and to all existing and future lease agreements,
         occupancy  agreements and use agreements relating to the Trust Property
         or any part thereof (whether written or oral and whether for a definite
         term or month to  month)  (collectively  "Leases"),  (ii) all right and
         power of Trustor to amend, cancel or terminate any Leases and (iii) all
         Trustor's  income,  rents,  royalties,   revenues,   issues,  accounts,
         accounts  receivable,  profits,  fees, and other  proceeds  (including,
         without limitation,  room sales) from the Trust Property  (collectively
         "Rents").  This  Assignment  shall  extend  to and  cover  any  and all
         extensions  and  renewals  of  Leases  and  to  all  security  for  the
         obligations  of the  lessees or  occupants  thereunder  and any and all
         guaranties or  indemnities of or similar  arrangements  with respect to
         any  such   obligations.   This   Assignment  is  given  to  facilitate
         Performance of the Obligations.  In pursuance of this  Assignment,  and
         not in lieu hereof,  Trustor shall,  to the extent this Assignment does
         not  extend  to  future   Leases  and  otherwise   when   requested  by
         Beneficiary, execute and deliver to Beneficiary separate assignments of
         the Leases, the terms of such assignments being incorporated  herein by
         reference.

                           (b) Trustor hereby authorizes and directs the lessees
         and  tenants  of the Trust  Property  that  upon  written  notice  from
         Beneficiary,  all  payments  required  under the Leases,  or in any way
         respecting same, including payments past due, shall be made directly to
         the  Beneficiary  as they  become due.  Trustor  hereby  relieves  such
         lessees and  tenants  from any  liability  to Trustor by reason of such
         payments being made to  Beneficiary.  Nevertheless,  until  Beneficiary
         notifies  in writing  Trustor or such  lessees  and  tenants  that such
         payments are to be made to  Beneficiary,  Trustor  shall be entitled to
         collect  all  Rents.  Beneficiary  is  hereby  authorized  to give such
         notification upon the occurrence of an Event of Default and at any time
         thereafter while such Event of Default is continuing.

                                       25
<PAGE>   32
                           (c) All Rents  collected by Trustor  shall be applied
         in the following manner:

                           FIRST,   to  the   payment  of  all  taxes  and  lien
         assessments  levied and due and  payable  against  the Trust  Property,
         where   provision  for  paying  such  is  not  otherwise  made  to  the
         satisfaction of Beneficiary;

                           SECOND,  to the  payment  of  ground  rents (if  any)
         due and payable with respect to the Trust Property;

                           THIRD, to the payment of the Obligations due and 
         owing to Beneficiary;

                           FOURTH, to the payment of current operating costs and
         expenses (including repairs,  maintenance and necessary acquisitions of
         property  and  expenditures  for  capital   improvements)   arising  in
         connection with the Trust Property; and

                           FIFTH, to Trustor or its designee.

                           All Rents  collected by Beneficiary may be applied to
         the items above listed in any manner that  Beneficiary  deems advisable
         and  without  regard  to  the   aforestated   priorities.   Receipt  by
         Beneficiary  of the Rents  shall not  constitute  a waiver of any right
         that Beneficiary may enjoy under this Deed of Trust or under applicable
         law;  nor shall the receipt and  application  thereof  cure any default
         hereunder, or invalidate or affect any act done in connection with such
         default,  including without limitation,  any foreclosure  proceeding or
         any  foreclosure  sale  authorized by this Deed of Trust and applicable
         law. Beneficiary does not assume any obligation of the lessor under any
         of the Leases, and no liability shall attach to Beneficiary for failure
         or inability to collect any Rents.  Trustor shall (i) timely fulfill or
         perform each and every term, covenant and provision of each Lease to be
         fulfilled  or  performed  by the lessor  thereunder;  (ii) give  prompt
         notice to  Beneficiary  of each  notice  under the Leases  received  by
         Trustor,  together  with a  complete  copy of such  notice;  and  (iii)
         enforce,  short of  termination  thereof,  the  Performance of each and
         every term,  covenant  and  provision of each Lease.  Trustor,  without
         first  obtaining the prior written  consent of  Beneficiary,  will not:
         accept  Rent  payments  for more  than one  month in  advance;  cancel,
         modify, renew, accept the surrender of, or consent to the subordination
         of, any Lease; or in any way release or impair  Beneficiary's  right to
         proceed against (A) any security for the payment and performance of the
         obligations  of the lessees  under the Leases or of any  guarantors  or
         sureties  of any  such  obligations,  or (B) any  person  primarily  or
         secondarily liable for the payment and performance of such obligations.

                                       26
<PAGE>   33
                           (d) This  Assignment is not a delegation of Trustor's
         duties  under the Leases and does not  operate  to make  Beneficiary  a
         mortgagee in possession or place upon  Beneficiary  responsibility  for
         the control,  care,  management or repair of the Trust  Property or for
         the  performance  of any  of the  terms  and  conditions  of any of the
         assigned  Leases nor does this Assignment  operate to make  Beneficiary
         responsible or liable for (i) any waste committed on the Trust Property
         by the tenants or any other  person,  (ii) any  dangerous  or defective
         condition  of  the  Trust  Property  or  (iii)  any  negligence  in the
         management,  upkeep,  repair or control of the Trust Property resulting
         in loss, injury or death to any tenant, invitee, licensee,  employee or
         stranger.  Without  limiting the  generality of any other  provision of
         this Deed of Trust,  TRUSTOR  SHALL AND DOES HEREBY  AGREE TO INDEMNIFY
         AND  TO  HOLD  BENEFICIARY  HARMLESS  from  and  against  any  and  all
         liability,  loss or damage  which may or might be incurred by reason of
         this  Assignment  unless caused by  Beneficiary's  gross  negligence or
         willful misconduct. Should Beneficiary incur any liability by reason of
         this Assignment or in defense of any claim or demand for loss or damage
         as  provided  above,  the  amount  thereof  and all  related  costs and
         expenses, including, without limitation, attorneys' fees, together with
         interest  thereon at the Overdue Rate from the date paid by Beneficiary
         until  repaid by Trustor,  shall be secured  hereby and  Trustor  shall
         reimburse Beneficiary therefor immediately upon demand.

                           (e) Trustor represents and warrants that: (i) Trustor
         is the owner of the  landlord's  interest in the Leases,  if any,  with
         full power and  authority to assign the same  together  with the Rents;
         (ii) there are no  outstanding  assignments or pledges of the Leases or
         Rents; (iii) Trustor has not accepted the payment of any Rents for more
         than one (1)  month in  advance;  and (iv)  there are no  defaults  now
         existing  under any of the  Leases  and there  exists no state of facts
         which,  with the  giving  of  notice  or  lapse of time or both,  would
         constitute a default under any of the Leases.

                  3.2      Security Agreement.

                           (a)  To the  extent  any of  the  Trust  Property  is
         property covered by the Uniform Commercial Code ("UCC Property"),  this
         Deed of Trust  constitutes  a security  agreement  and  Trustor  hereby
         grants to  Beneficiary,  as secured party,  a security  interest in the
         Trust Property and the proceeds thereof in favor of Beneficiary for the
         purpose of  securing  Performance  of the  Obligations.  This  security
         interest shall be self-operative with respect to the UCC Property,  but
         Trustor shall  execute and deliver on demand such security  agreements,
         financing  statements and other  instruments as Beneficiary may request
         in order to impose and/or perfect the lien and security interest hereof
         more specifically upon any of the UCC Property.  Should the lien and/or
         security  interest of this Deed of Trust on any UCC Property be subject
         to a prior security agreement covering such UCC Property, then upon the
         occurrence of an Event of Default, all the right, title and interest of
         Trustor  in and to any and all  

                                       27
<PAGE>   34
         deposits made in connection  with the  transaction  whereby such prior
         security agreement was made are hereby assigned to Beneficiary,
         together with the benefit of any payments now or hereafter made in 
         connection with such transactions.

                           (b) The UCC Property is used  primarily  for business
         (other than farm) purposes.

                           (c)  Trustor  shall  replace or cause to be  replaced
         with  property of equal or greater  value all  portions or items of UCC
         Property which are consumed or worn out in ordinary usage.  Trustor may
         sell or  dispose  of only  that  part  of the UCC  Property  that it is
         obliged to replace  and has  replaced;  and,  unless  Beneficiary  then
         agrees  otherwise  in  writing,  all  proceeds  from any  such  sale or
         disposition  in excess of the  amount  expended  for such  replacements
         shall  promptly  be paid over by  Trustor  to be  applied  against  the
         indebtedness  secured hereby,  whether or not such indebtedness is then
         due and payable.  The  foregoing  notwithstanding,  Trustor may sell or
         dispose and not  replace UCC  Property  which in the  aggregate,  after
         taking into account all other items of UCC Property that have been sold
         or disposed  and not  replaced,  is not of a material  value and is not
         material to or necessary  for the  continued  operation of the Premises
         for the  purposes  for which it is intended;  provided,  however,  that
         unless Beneficiary then agrees otherwise in writing,  all proceeds from
         such sale or  disposition  shall be promptly paid over by Trustor to be
         applied against the  indebtedness  secured hereby,  whether or not such
         indebtedness is then due and payable.

                           (d) Trustor  warrants that its chief executive office
         and  principal  place of business is as set forth at the  beginning  of
         this Deed of Trust.  Trustor further  warrants that the UCC Property is
         located at the Premises.  Trustor shall immediately  notify Beneficiary
         in  writing  of any  change in its  principal  place of  business/chief
         executive  office/residence,  as the case may be,  and of any change in
         location of the UCC  Property  not removed or replaced as  permitted or
         required by the terms of this Deed of Trust.

                           (e) All  covenants of Trustor  contained in this Deed
         of Trust,  whether or not expressly referred to herein,  shall apply to
         the UCC  Property to the extent  applicable  to the UCC  Property.  The
         covenants  and  warranties  of Trustor  and the rights and  remedies of
         Beneficiary  contained  in this Section 3.2 are in addition to, and not
         in limitation of, those  contained in the other  provisions of the Deed
         of Trust.

                           (f) This Deed of Trust  shall be  deemed a  financing
         statement filed as a fixture  filing;  provided the filing of any other
         financing statement relating to the UCC Property shall not be construed
         to diminish any of Beneficiary's rights or priorities hereunder.

                                       28
<PAGE>   35
                  3.3 Servicing Agent.  Beneficiary may, at its option,  require
that so long as Beneficiary  is entitled to collect such payments,  all payments
on the Leases be  collected  by a servicing  agent  according  to the terms of a
servicing agreement in form and substance  satisfactory to Beneficiary.  Trustor
shall promptly pay all costs in connection therewith.

                  3.4 Power of Attorney.  Upon and during the  continuance of an
Event of Default,  Beneficiary shall have the right, but not the obligation: (a)
to demand and  receive  payment  and  performance  and to enforce any and all of
Trustor's  rights with respect to the Leases and the personal  property  covered
hereby; (b) to exercise any right and to perform any obligation of Trustor under
or in connection with the Project Documents, the Leases and any other instrument
covered hereby, at Trustor's expense;  (c) with respect to rights to payment and
performance  assigned  hereunder,  while  an Event of  Default  exists,  to make
extension  agreements,  release persons liable thereon or securities for payment
or other  performance,  and settle and  compromise  disputes in connection  with
those rights; (d) while an Event of Default exists, to modify, cancel, or accept
the surrender of the terms of any Lease; (e) to take any action  Beneficiary may
deem necessary or desirable to perfect the assignments and the security interest
made and granted to Beneficiary hereunder;  and (f) to perform all these acts in
the name of Trustor or in the name of Beneficiary with the same force and effect
as if performed by Beneficiary in the absence of this provision.  For all of the
foregoing purposes, Trustor irrevocably appoints Beneficiary,  until Performance
of the  Obligations,  as its  attorney-in-fact.  All such  actions  may be taken
without  notice to Trustor  and  without  being  called to account  therefor  by
Trustor.

                  3.5   Relationship.   Nothing  in  this  instrument  shall  be
construed to obligate  Beneficiary to discharge or perform the duties of Trustor
under the Project Documents, the Leases or any other instrument or of a landlord
to a tenant or to impose any  liability as a result of the exercise of the right
to collect rents or proceeds under a Lease; nor shall Beneficiary be responsible
or liable in any manner with respect to the Trust Property or the use, occupancy
or enjoyment of all or any part  thereof.  Nothing  herein shall be construed as
establishing a partnership or joint venture between Trustor and Beneficiary.

                                   ARTICLE IV
                              DEFAULTS AND REMEDIES

                  4.1 Events of Default and Remedies.  The following  events and
occurrences shall constitute an event of default ("Event of Default") under this
Deed of Trust:

                           (a) other than a default  or  violation  referred  to
         elsewhere  in this Section 4.1, an "Event of Default" as defined in the
         Loan  Agreement  occurs,  or an act or  event  occurs  under  the  Loan
         Agreement,  whether or not denominated as an "Event of Default",  which
         expressly entitles Beneficiary to accelerate  Performance of any of the
         Obligations and/or exercise its remedies;

                                       29
<PAGE>   36
                           (b) there is a default in the  Performance  of any of
         the terms of Section 2.3 or Section 2.5(a) hereof or Trustor  knowingly
         violates or suffers or permits the  violation of any of the  warranties
         or conditions of the policies of insurance required under Section 2.3;

                           (c) any party holding a mortgagee's or  beneficiary's
         interest  under a  mortgage  or  deed of  trust  or any  other  lien or
         security  interest  on  any  part  of  the  Trust  Property   commences
         foreclosure or sale thereof; or

                           (d) Trustor vacates or abandons the Trust Property.

                  4.2  Remedies.  At any time  after an  Event  of  Default  has
occurred, to the extent not prohibited by the applicable law:

                           (a) Beneficiary  may without further demand,  protest
         or notice of any kind to  Trustor,  declare  all  indebtedness  secured
         hereby to be due and payable immediately, and upon such declaration the
         same shall be  immediately  due and payable,  together with  applicable
         premiums, and collectible by an action at law; and/or

                           (b)  Beneficiary  may  commence  proceedings  for the
         complete or partial  foreclosure of this Deed of Trust by commencing an
         action to  foreclose  this Deed of Trust as a mortgage  and/or  deed of
         trust  and/or  cause  Trustee  to  exercise  the  power of sale  herein
         granted; and/or

                           (c) Trustee and/or  Beneficiary may without regard to
         the adequacy of any security for the  Performance  of the  Obligations,
         personally,  or by any of its and/or their agents or employees, or by a
         receiver appointed by a court of competent jurisdiction, enter into and
         upon all or any part of the Trust Property and may exclude Trustor, its
         agents and servants therefrom;  and having and holding the same, may in
         its and/or their own name(s) or the name of Trustor,  as it/they  deems
         best, control,  lease,  manage and operate the Trust Property,  conduct
         the  business  thereof,  and  exercise all rights and powers of Trustor
         with respect thereto, including, without limitation, the Leases, either
         personally  or by its agents,  employees or  receivers;  and upon every
         such entry, Trustee and/or Beneficiary at the expense of Trustor,  from
         time to time, either by purchase, repair or construction, may maintain,
         restore and insure the Trust Property; and likewise, from time to time,
         at the  expense of Trustor,  Trustee  and/or  Beneficiary  may make all
         necessary or proper repairs,  renewals and replacements and such useful
         alterations,   additions,  betterments  and  improvements  thereto  and
         thereon as to it may seem  advisable;  and Trustee  and/or  Beneficiary
         shall be entitled to collect and receive all Rents and to apply them in
         the manner  Beneficiary  is entitled to apply them  pursuant to Section
         3.1 hereof; and/or

                                       30
<PAGE>   37
                           (d)  Beneficiary  shall be  entitled,  as a matter of
         right,  to the  appointment of a receiver of the Trust Property and the
         court may appoint a receiver, either before or after judgment,  without
         notice and without  regard to the solvency or  insolvency of Trustor or
         any  Guarantor  (as defined in the Loan  Agreement)  at the time of the
         application  for such receiver and without  regard to the then value of
         the Trust  Property or any other  security held for  Performance of the
         Obligations;  and such receiver  shall have full power and authority to
         collect the Rents and all other powers  necessary or incidental for the
         protection,  possession, control, management and operation of the Trust
         Property,  at the  expense of the Trust  Property  and of  Trustor,  to
         maintain,  restore and insure the Trust Property, and to pay all taxes,
         assessments and other charges arising in connection therewith; and/or

                           (e) Trustee and/or Beneficiary may take such steps to
         protect and enforce its rights whether by action, suit or proceeding in
         equity  or at  law  for  the  specific  performance  of  any  covenant,
         condition  or  agreement in this Deed of Trust or any of the other Loan
         Documents,  or in aid of the execution of any power herein expressly or
         impliedly  granted,  or  for  any  foreclosure  hereunder  or  for  the
         enforcement  of any other  appropriate  legal or equitable  remedy,  or
         otherwise as Beneficiary shall elect; and/or

                           (f) Trustee and/or Beneficiary may take possession of
         the personal  property covered hereby and may enter and remain upon the
         Trust  Property  to protect the  personal  property;  and upon  written
         notice from Trustee  and/or  Beneficiary,  Trustor  shall  assemble the
         personal  property and make it available  to  Beneficiary  at the Trust
         Property or at any other place designated in the notice, which shall be
         reasonably convenient to both parties; and/or

                           (g)  all of  the  Trust  Property  (both  realty  and
         personalty) is encumbered as one unit, and all the Trust  Property,  at
         Beneficiary's  option, may be foreclosed or sold in the same proceeding
         or in separate proceedings;  and all of the Trust Property (both realty
         and personalty)  may, at Beneficiary's  option,  be sold as such in one
         unit as a going business; and/or

                           (h)  Beneficiary  may  exercise  the   "declarant's,"
         "developer's"  and  "owner's"  rights under the Project  Documents  (it
         being agreed and understood  that such right is reserved to the Trustor
         other than upon the  occurrence  of and during  the  continuance  of an
         Event of Default); and/or

                           (i) Trustee and/or  Beneficiary may assert such other
         rights  and  remedies  as they may have  hereunder  or under any of the
         other Loan Documents, at law, in equity or by statute,  including those
         of a secured party and of a mortgagee and/or trust deed beneficiary.

                                       31
<PAGE>   38
                  4.3 Power of Sale.  Should  Beneficiary  elect to foreclose by
exercise of the power of sale herein  granted,  Beneficiary  will  deposit  with
Trustee such items as Trustee may require.  After such  notice(s) of default and
sale and other  notices have been given as then required by law, and after lapse
of such time as may then be required by law after such events, Trustee,  without
demand on Trustor,  shall sell the Trust  Property at the time and place of sale
fixed by it in such notice of sale,  either as a whole or in  separate  parcels,
and in such order as it may  determine,  at public auction to the highest bidder
for cash in lawful money of the United States payable at the time of sale, or to
the extent not  prohibited  by law upon such other terms and  conditions  as are
acceptable to Trustee and  Beneficiary.  Trustee may postpone sale of all or any
portion of the Trust Property by public  announcement  at such time and place of
sale,  and  from  time to time  thereafter  may  postpone  such  sale by  public
announcement  at the time  fixed by the  preceding  postponement.  If Trustee is
directed by Beneficiary to foreclose pursuant to a nonjudicial foreclosure sale,
Trustee shall sell the Trust Property,  or any part thereof,  after having first
given notice of the time, place and terms of sale as required by Section 89-1-55
of the Mississippi  Code of 1972, as amended.  If the Trust Property is situated
in two or more  counties  or in two  judicial  districts  of the same  county or
different  counties,  Trustee shall have full power to select in which county or
judicial  district  the sale of all of any part of the Trust  Property  shall be
made. Trustee shall have authority to fix the day, hour, terms and place of sale
and may conduct any sale personally or through an agent whose  appointment  need
not be recorded.  Trustor waives any provision of law which  restricts or limits
the right of Trustee to offer more than 160 acres at one time, regardless of the
manner in which the Trust Property may be described. In the event any portion of
the Trust Property is subject to the provisions of the Uniform  Commercial Code,
Trustee shall have the same  authority,  rights and  obligation  with respect to
such  property  as to all other  Trust  Property,  or  Beneficiary  may  proceed
directly  with respect to the Trust  Property  subject to the  provisions of the
Uniform  Commercial Code. In the event Beneficiary  directs Trustee to sell that
portion of the Trust Property which is subject to the Uniform  Commercial  Code,
Trustee may elect to sell such property  separately subject to the provisions of
the Uniform  Commercial Code, or Trustee may sell all Trust Property pursuant to
the  provisions  relating to sales of real  property.  Trustee may sell real and
personal property  separately or coordinate sales in any manner deemed advisable
by Beneficiary. The recitals in any deed executed pursuant to this power of sale
of any matters or facts shall be conclusive proof of the  truthfulness  thereof.
From  time  to  time  before  Trustee's  sale  pursuant  to  this  Section  4.3,
Beneficiary may rescind any notice of breach or default and of election to cause
the Trust  Property to be sold by executing and  delivering to Trustee a written
notice of such rescission, which notice, shall also constitute a cancellation of
any  prior  declaration  of  default  and  demand  for  sale.  The  exercise  by
Beneficiary  of such right of  rescission  shall not  constitute a waiver of any
breach or default then existing or subsequently  occurring;  impair the right of
Beneficiary  to  execute  and  deliver  to  Trustee,  as above  provided,  other
declarations  of default and demands for sale, and notices of breach or default,
and of  election  to  cause  the  Trust  Property  to be  sold  to  satisfy  the
Obligations;  or otherwise  affect any  provision,  covenant or condition of the
Note and/or of this Deed of Trust 

                                       32
<PAGE>   39

and/or of any of the other Documents or any of the rights, obligations or 
remedies of the parties thereunder or hereunder.

                  4.4      Rights, Powers and Remedies Cumulative; Waiver.

                           (a) Each and every  power and  remedy in this Deed of
         Trust  specifically  given to Beneficiary shall be cumulative and shall
         be in addition to every  other power and remedy  specifically  given in
         the Loan Documents or now or hereafter  existing at law, in equity,  or
         by statute.  Each and every such power and remedy may be exercised from
         time to time and as often and in such order as may be deemed  expedient
         by  Beneficiary;  and the exercise or the  beginning of the exercise of
         any power or remedy  shall not be construed to be a waiver of the right
         to exercise at the same time or  thereafter  any other power or remedy.
         No delay or omission  by  Beneficiary  in the  exercise of any right or
         power or in the pursuit of any remedy  accruing upon the  occurrence of
         any Event of Default shall impair any such right, power or remedy or be
         construed to be a waiver  thereof or of any such Event of Default or to
         be any acquiescence therein; nor shall the acceptance by Beneficiary of
         any  security  or any  payment  on or  performance  of any of the other
         Obligations, though made after default, be deemed a waiver of any right
         to take  advantage  of any future Event of Default or of any past Event
         of Default not completely cured thereby.

                           (b)  Whenever  by the  terms of this Deed of Trust or
         any other Document  Beneficiary is given any option, such option may be
         exercised when the right accrues or at any time  thereafter;  provided,
         however,  that  in the  event  such  option  is  exercisable  upon  the
         occurrence  of an Event of Default,  such option may be exercised  only
         during the continuance of such Event of Default.

                           (c) Any  failure by  Beneficiary  to insist  upon the
         strict performance by Trustor of any of the terms and provisions hereof
         shall not be  deemed to be a waiver of any of the terms and  provisions
         hereof, and Beneficiary,  notwithstanding any such failure,  shall have
         the right  thereafter to insist upon the strict  performance by Trustor
         of any and all of the terms and  provisions of this Deed of Trust to be
         performed  by  Trustor.  Neither  Trustor  nor any other  person now or
         hereafter obligated for the Performance of the whole or any part of the
         Obligations  shall be relieved of such  Obligation (i) by reason of the
         failure of Trustee or Beneficiary to comply with any request of Trustor
         or of any other person so  obligated  to take action to foreclose  this
         Deed of Trust or otherwise  enforce any of the  provisions of this Deed
         of Trust or any  other  Document  or any other  Obligation,  or (ii) by
         reason of the release, regardless of consideration, of the whole or any
         part of the security held for the Performance of the Obligations of any
         person  primarily  or  secondarily  liable for the  Performance  of the
         Obligations,  or (iii) by reason of the failure to join any person in a
         foreclosure proceeding,  or (iv) by reason of any transfer of the Trust
         Property or any part thereof by Trustor or any subsequent  owner of the
         Trust  Property,  or (v) by 

                                       33

<PAGE>   40
         reason of any agreements or stipulations  between any subsequent owner
         or owners of the Trust Property,  or any part thereof, and Beneficiary
         with reference to the Trust Property, this Deed of Trust or any of the
         other Loan Documents, including, without limitation, any agreements or
         stipulations  extending  the time of payment or modifying the terms of
         the  Obligations  or this Deed of Trust without first having  obtained
         the  consent of Trustor or such other  person;  and in the last event,
         Trustor  and all  such  other  persons  shall  continue  to be  liable
         hereunder  and  under  the  other  Loan  Documents  according  to such
         agreements or stipulations unless expressly released and discharged in
         writing  by  Beneficiary.  Any such  action may be taken  without  the
         consent of any junior  lienholder  and without  impairing or affecting
         the lien of this Deed of Trust or the  priority  of such lien over any
         subordinate  lien; and  Beneficiary  may resort for the Performance of
         the Obligations to its several  securities  therefor in such order and
         manner as Beneficiary may elect.

                  4.5  Power of  Attorney.  Beneficiary  is  hereby  irrevocably
appointed  the true and  lawful  attorney-in-fact  of  Trustor,  in its name and
stead, to make all necessary conveyances,  assignments, transfers and deliveries
of the Trust  Property  sold  pursuant to this Article IV; and for that purpose,
Beneficiary may execute all necessary instruments of conveyance,  assignment and
transfer, and may substitute one or more persons with like power, Trustor hereby
ratifying and confirming all that its attorney or such substitute or substitutes
shall  lawfully  do  by  virtue  hereof.   Nevertheless,   if  so  requested  by
Beneficiary,  Trustor  shall  ratify  and  confirm  any  such  sale or  sales by
executing and  delivering to Trustee or to such purchaser or purchasers all such
instruments  as may be  advisable,  in the  judgment  of  Beneficiary,  for that
purpose and are designated in such request. Any such sale or sales made under or
by virtue of this  Article  IV whether  made under the power of sale  granted in
this  Deed of Trust  or  under or by  virtue  of  judicial  proceedings  or of a
judgment  or decree of  foreclosure  and sale,  shall  operate to divest all the
estate, right, title, interest,  claim and demand whatsoever,  whether at law or
in equity, of Trustor in and to the Trust Property and rights so sold, and shall
be a perpetual bar both at law and in equity against Trustor and against any and
all  persons  claiming  or who may  claim the same,  or any part  thereof  from,
through or under Trustor.

                  4.6  Beneficiary's  Right to Bid and  Purchase.  Upon any sale
made under or by virtue of this Article IV, including,  without limitation, made
under  the  power of sale  herein  granted  or under or by  virtue  of  judicial
proceedings  or of a judgment  or decree of  foreclosure  and sale,  any person,
including, without limitation,  Beneficiary, its agents or employees may bid for
and acquire the Trust  Property or any part  thereof.  If  Beneficiary's  bid is
successful,  Beneficiary,  in lieu of paying cash for the Trust Property covered
thereby,  may make  settlement  for the  purchase  price by  crediting  upon the
indebtedness secured hereby, in such order as Beneficiary may determine, the net
sales price after deducting  therefrom the expenses of the sale and the costs of
the action and any other sums which  Beneficiary  is  authorized to deduct under
this Deed of Trust.

                                       34
<PAGE>   41

                  4.7  Application  of  Proceeds  of  Sale.  To the  extent  not
prohibited by the  applicable  law, the purchase money and other proceeds of any
sale made under or by virtue of this  Article IV,  together  with any other sums
which  then may be held by  Beneficiary  under this Deed of Trust as part of the
Trust  Property or the proceeds  thereof,  whether under the  provisions of this
Deed of Trust or otherwise, shall be applied as follows:

                           FIRST,  to the  payment of the costs and  expenses of
         such  sale,   including   reasonable   compensation   to  Trustee   and
         Beneficiary,  their  agents  and  attorneys,  and the  expenses  of any
         judicial  proceedings wherein the same may be made, and of all advances
         made  hereunder  or  under  any  other  Loan  Documents   securing  the
         Performance  of the  Obligations  (together  with  interest on all such
         advances at the Overdue Rate from the date of advance until received by
         Beneficiary or Trustee),  as the case may be, and to the payment of all
         taxes,  assessments  or liens  prior to the lien of this Deed of Trust,
         except any taxes, assessments, liens or other charges, subject to which
         the Trust Property shall have been sold;

                           SECOND,  to the payment of the whole amount then due,
         owing and unpaid upon the Note, including premium, if any;

                           THIRD,  to the payment of any other Obligations;  and

                           FOURTH,  to the  payment of the  surplus,  if any, to
         Trustor,  its  successors  or assigns,  or to whosoever may be lawfully
         entitled to receive the same upon its written request,  or as any court
         of competent jurisdiction may direct.

                  4.8 Right to Recover Judgment.  To the extent permitted by the
applicable law,  Beneficiary  shall be entitled to recover  judgment on the Note
either  before  or after or  during  the  pendency  of any  proceedings  for the
enforcement  of the  provisions  of  this  Deed  of  Trust;  and  the  right  of
Beneficiary  to recover such judgment shall not be affected by any entry or sale
hereunder,  or by the  exercise  of any other  right,  power or  remedy  for the
enforcement of the provisions of this Deed of Trust,  or the  foreclosure of the
lien hereof. In the event of a sale of the Trust Property and of the application
of the proceeds of sale, as herein provided,  to the payment of the Obligations,
Beneficiary  shall be entitled to enforce  payment of and to receive all amounts
then remaining due and unpaid upon the Note, and to enforce payment of all other
charges,  payments  and costs due  under  this Deed of Trust and the other  Loan
Documents;  and shall be  entitled  to recover  judgment  for any portion of the
Obligations remaining unpaid, with interest at the Overdue Rate from the date of
entry  of such  judgment  to the date  that  payment  is  actually  received  by
Beneficiary from Trustor.

                  4.9 Certain  Assurances.  Trustor shall not at any time insist
upon, or plead, or in any manner whatever claim or take any benefit or advantage
of any stay or extension or  moratorium  law, any homestead law or any exemption
from execution or sale of the Trust Property or any part thereof,  now or at any
time hereafter in force, which may 

                                       35
<PAGE>   42

affect the covenants and terms of  performance  of this Deed of Trust or Trustor
shall not claim,  take or insist upon any benefit or advantage of any law now or
hereafter  in force  providing  for the  valuation  or  appraisal  of the  Trust
Property,  or any part thereof,  prior to any sale or sales thereof which may be
made pursuant to any provision  herein,  or pursuant to the decree,  judgment or
order of any court of competent jurisdiction;  or, after any such sale or sales,
claim or exercise any right under any statute heretofore or hereafter enacted to
redeem the property so sold or any part thereof. Trustor hereby expressly waives
to the extent not  prohibited by law all benefit or advantage of any such law or
laws,  and covenants  not to hinder,  delay or impede the execution of any power
herein  granted or delegated to Trustee  and/or  Beneficiary,  but to suffer and
permit the  execution of every power as though no such law or laws had been made
or enacted.  Trustor,  for itself and all who may claim under it, waives, to the
extent that they lawfully may, all right to have the Trust  Property  marshalled
upon any foreclosure hereof.

                  4.10  Expenses.  Trustor  shall  pay all  costs,  charges  and
expenses,  including  attorneys'  fees and court  costs,  which  Trustee  and/or
Beneficiary  may incur in collecting any sum secured hereby or in exercising any
of the remedies  hereunder;  and all such costs and expenses shall be secured by
this Deed of Trust  and,  without  notice or  demand,  be  payable by Trustor to
Beneficiary, as the case may be, with interest at the Overdue Rate from the date
of advance until received by Beneficiary from Trustor.

                  4.11 Trustor  Tenant at Will After Sale.  Trustor  agrees that
after  any sale  hereunder,  Trustor  and/or  all  parties  occupying  the Trust
Property, or any part thereof,  shall, at the option of the purchaser(s) at such
sale,  be mere tenants at the will and  sufferance of the  purchaser(s)  at such
sale or  sales,  and that  such  purchaser(s)  shall be  entitled  to  immediate
possession  thereof,  and that if Trustor or any such tenant or tenants  fail to
vacate the Trust Property,  or any part thereof  immediately at such purchaser's
request,  such  purchaser(s) may, and shall have the right to, file or institute
an action in forcible  entry and  detainer or  institute  or maintain  any other
action or suit or exercise any other rights or remedies  given  landlords  under
any statute or law.  Notwithstanding  the above,  however,  at the option of any
purchaser at such sale,  any tenant  leases  covering the Trust  Property or any
part  thereof in effect at the time of such sale shall  remain in full force and
effect  and  such  purchaser(s)  shall   automatically   become  the  "landlord"
thereunder with all rights and obligations accruing to the landlord thereunder.

                                    ARTICLE V
                                  MISCELLANEOUS

                  5.1  Beneficiary's  Account.  All moneys payable  hereunder or
under the other Loan Documents shall be paid to Beneficiary in Phoenix, Arizona,
at its address first above mentioned, unless otherwise designated by Beneficiary
by notice.

                                       36
<PAGE>   43

                  5.2  Modification.  This Deed of Trust, the Loan Agreement and
the Loan Documents  exclusively  and completely  state the rights of Beneficiary
and Trustor  with respect to the Trust  Property.  No  modification,  variation,
termination,  discharge  or  abandonment  hereof  and  no  waiver  of any of the
provisions or  conditions  hereof shall be valid unless in writing and signed by
duly  authorized  representatives  of Beneficiary and Trustor or the successors,
transferees or assigns of either, subject, however, to the limitations herein on
Trustor with respect to assignment, merger and consolidation. This Deed of Trust
supersedes any and all prior  representations,  warranties  and/or  inducements,
written or oral,  heretofore  made by Beneficiary  (other than in the other Loan
Documents) concerning this transaction,  which are null and void and of no force
or effect whatsoever.

                  5.3 Powers  Coupled  With an  Interest.  The powers and agency
hereby granted by Trustor are coupled with an interest and are irrevocable until
Performance of the  Obligations  and are granted as cumulative to  Beneficiary's
other remedies for the enforcement of Performance of the Obligations.

                  5.4   Counterparts.   This  Deed  of  Trust  may  be  executed
simultaneously  in any number of  identical  copies,  any number of which having
been  executed by all  parties  hereto  shall  constitute  an  original  for all
purposes.

                  5.5  Notice.  Any notice  required  or  permitted  to be given
hereunder  shall be  given  in the  manner  set  forth  in the  Loan  Agreement.
Notwithstanding  anything herein to the contrary, if any notice given to Trustor
by Trustee or  Beneficiary  is given in the manner  permitted  or  required by a
statute of the State where the Premises are located, such notice shall be deemed
to have been  effectively  given  regardless of whether notice has been given in
the manner required by the Loan Agreement.

                  5.6  Binding  Effect.  This Deed of Trust  shall  inure to the
benefit of and be binding  upon  Beneficiary  and Trustor,  and,  subject to the
provisions  of  Section  2.5,   their  heirs,   legatees,   devisees,   personal
representatives,  administrators,  executors,  successors and assigns.  The term
"Trustor"  shall mean both the  original  Trustor  and any  subsequent  owner or
owners of any of the Trust Property. The term "Beneficiary" shall mean the owner
and holder, including pledgees, of the Note, whether or not named as Beneficiary
herein.  Whenever in this Deed of Trust reference is made to "Trustee", it shall
be  construed  to mean the  trustee  or  trustees  for the time  being,  whether
original or  successors or successor in the trust;  and that all title,  estate,
rights,  powers,  trusts  and  duties  hereunder  given  or  appertaining  to or
devolving  upon the trustee if more than one,  shall be in each  Trustee so that
any action hereunder or purporting to be hereunder of any one of the original or
any successor trustee shall for all purposes be considered to be as effective as
the action of every trustee.

                  5.7  Severability.  If any  one  or  more  of  the  provisions
contained in this Deed of Trust shall be held invalid,  illegal or unenforceable
in any respect,  the  validity, 

                                       37
<PAGE>   44

legality and enforceability of the remaining  provisions  contained herein shall
not in any  way be  affected  or  impaired  thereby;  provided  that  where  the
provisions  of any  invalidating  law may be waived,  they are hereby  waived by
Trustor to the fullest extent possible.

                  5.8 Interpretation.  All headings are inserted for convenience
only and shall not affect any  construction  or  interpretation  of this Deed of
Trust. The provisions of this Deed of Trust shall apply to the parties according
to the context  hereof and  without  regard to the number or gender of words and
expressions used herein.  Unless otherwise  indicated,  all references herein to
clauses and other subdivisions refer to the corresponding sections,  paragraphs,
clauses  and  other  subdivisions  of this Deed of  Trust;  the words  "herein",
"hereof",  "hereto",  "hereunder" and words of similar import refer to this Deed
of Trust as a whole  and not to any  particular  section,  paragraph,  clause or
other subdivision hereof; and reference to a numbered or lettered subdivision of
an Article,  section or  paragraph  shall  include  relevant  matter  within the
Article,  section  or  paragraph  which is  applicable  to but not  within  such
numbered or lettered subdivision.

                  5.9 CHOICE OF LAW.  THIS DEED OF TRUST HAS BEEN  DELIVERED  IN
PHOENIX,  ARIZONA.  THE  PROVISIONS  OF THIS  DEED OF TRUST AND ALL  RIGHTS  AND
OBLIGATIONS  OF THE PARTIES  HEREUNDER  SHALL BE GOVERNED  BY AND  CONSTRUED  IN
ACCORDANCE  WITH THE  INTERNAL  LAWS OF THE STATE OF ARIZONA  AND, TO THE EXTENT
THEY PREEMPT SUCH LAWS,  THE LAWS OF THE UNITED  STATES.  HOWEVER,  THE INTERNAL
LAWS OF THE STATE WHERE THE PREMISES ARE LOCATED SHALL APPLY TO THE  APPOINTMENT
OF TRUSTEES, TO THE CREATION OF LIENS AND TO ANY FORECLOSURE,  FORECLOSURE SALE,
APPOINTMENT  OF A RECEIVER OR OTHER  REMEDY WITH  RESPECT TO THAT PORTION OF THE
TRUST PROPERTY CONSISTING OF REAL PROPERTY.

                  5.10 JURISDICTION AND VENUE.  TRUSTOR AND TRUSTEE HEREBY AGREE
THAT ALL ACTIONS OR  PROCEEDINGS  INITIATED  BY TRUSTOR AND ARISING  DIRECTLY OR
INDIRECTLY OUT OF THE LOAN DOCUMENTS SHALL BE LITIGATED IN THE SUPERIOR COURT OF
ARIZONA,  MARICOPA COUNTY DIVISION,  OR THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF ARIZONA OR, IF BENEFICIARY INITIATES SUCH ACTION, IN ADDITION TO THE
FOREGOING COURTS ANY COURT IN WHICH  BENEFICIARY  SHALL INITIATE SUCH ACTION, TO
THE EXTENT SUCH COURT HAS  JURISDICTION.  TRUSTOR AND TRUSTEE  HEREBY  EXPRESSLY
SUBMIT AND CONSENT IN ADVANCE TO SUCH  JURISDICTION  IN ANY ACTION OR PROCEEDING
COMMENCED BY TRUSTOR OR BENEFICIARY  IN ANY OF SUCH COURTS.  TRUSTOR AND TRUSTEE
WAIVE  ANY  CLAIM  THAT  PHOENIX,  ARIZONA  OR THE  DISTRICT  OF  ARIZONA  IS AN
INCONVENIENT   FORUM  OR  AN  IMPROPER  FORUM  BASED  ON  LACK  OF  VENUE.   THE

                                       38
<PAGE>   45

EXCLUSIVE  CHOICE  OF  FORUM  FOR TRUSTOR SET FORTH IN THIS SECTION SHALL NOT BE
DEEMED TO PRECLUDE THE  ENFORCEMENT BY  BENEFICIARY OF ANY JUDGMENT  OBTAINED IN
ANY OTHER FORUM OR THE TAKING, BY BENEFICIARY, OF ANY ACTION TO ENFORCE THE SAME
IN ANY OTHER  APPROPRIATE  JURISDICTION,  AND TRUSTOR HEREBY WAIVES THE RIGHT TO
COLLATERALLY ATTACK ANY SUCH JUDGMENT OR ACTION.

                  5.11  WAIVER OF RIGHT TO JURY TRIAL.  BENEFICIARY  AND TRUSTOR
ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER ANY OF THE LOAN
DOCUMENTS OR WITH RESPECT TO THE TRANSACTION CONTEMPLATED THEREBY WOULD BE BASED
UPON  DIFFICULT AND COMPLEX  ISSUES AND,  THEREFORE,  THE PARTIES AGREE THAT ANY
LAWSUIT  ARISING  OUT OF ANY  SUCH  CONTROVERSY  SHALL  BE  TRIED  IN A COURT OF
COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

                                                               Initials   ______

                  5.12  Acceptance by Trustee.  Trustee  accepts this trust when
this Deed of Trust, duly executed and acknowledged, is made a public record.

                  5.13 Protection of Trustee. At any time, or from time to time,
without  liability  therefor  and  without  notice,   upon  written  request  of
Beneficiary  and without  affecting  the  personal  liability  of any person for
payment of the  indebtedness  secured hereby or the effect of this Deed of Trust
upon the remainder of the Trust Property,  Trustee and Beneficiary may: reconvey
any part of the Trust  Property;  consent in writing to the making of any map or
plat thereof;  join in granting any easement  thereon;  or join in any extension
agreement or any  agreement  subordinating  the lien or charge  hereof.  Trustee
shall  be  protected  in  acting  upon any  notice,  request,  consent,  demand,
statement,  note or other paper or document  believed by it to be genuine and to
have been signed by the party  purporting to sign such  document.  Trustee shall
not be liable for any error of  judgment,  nor for any act done or step taken or
omitted, nor for any mistake of law or fact, nor for anything which it may do or
refrain from doing in good faith.  Trustee  shall have no  accountability  under
this  Deed of Trust  except  for its own  individual  willful  default  or gross
negligence.  Any necessity of Trustee  herein named,  or any successor in trust,
making oath or giving bond, is expressly waived.

                  5.14 Substitution of Trustee. Beneficiary shall be entitled to
remove,  substitute,  or add a Trustee or Trustees,  at its sole option, with or
without cause or notice, by instrument duly executed,  acknowledged and recorded
among  the  land  records  in the  jurisdictions  where  this  Deed of  Trust is
recorded,  subject to the laws of the  applicable  jurisdiction.  Thereupon such
additional   or   successor   Trustee   or   Trustees,   without   further  act,

                                       39
<PAGE>   46

deed or  conveyance,  shall  become  vested with all  estates,  property,  title
rights, powers, privileges,  discretions,  trusts, duties and obligations of his
or their co-trustee,  or predecessors in the trust hereunder with like effect as
if originally named as Trustee or Trustees  hereunder.  Exercise of the power to
substitute Trustees, no matter how often, shall not be an exhaustion thereof.

                  5.15  Reconveyance  by Trustee.  Upon (a)  written  request of
Beneficiary  stating that all sums secured  hereby have been paid, (b) surrender
to Trustee of this Deed of Trust and the Note for cancellation and retention and
(c) payment of its fees,  Trustee shall reconvey,  without  warranty,  the Trust
Property then held hereunder.  The recitals in such  reconveyance of any matters
or facts shall be conclusive proof of the truthfulness  thereof.  The grantee in
such  reconveyance  may be described as "the person or persons legally  entitled
thereto."

                  5.16   Subrogation  of  Beneficiary.   Beneficiary   shall  be
subrogated for further security to the lien, although released of record, of any
and all  encumbrances  paid out of the proceeds of the loan secured by this Deed
of Trust.

                  5.17 Trustor's Certification. Trustor, upon written request of
Beneficiary  made in the manner provided herein for the giving of notices,  will
certify in writing to Beneficiary or to any proposed assignee of the Obligations
within seven (7) days after receiving such request, the amount then owing on the
Note, the amount of any other Obligations then owing to Trustor's knowledge, and
whether any off-sets or defenses  exist against the  Obligations or against this
Deed of Trust or any other Loan Documents.  In the event Trustor fails to return
such  certification  to Beneficiary  within the period  stated,  then the amount
owing  on the  Note  and the  amount  of any  other  Obligations  then  owing to
Beneficiary,  as stated in Beneficiary's  request,  shall be deemed accurate and
correct, and Trustor shall thereby have waived and released any rights of offset
or other defenses which might exist against the Obligations or against this Deed
of Trust or any other Loan Documents.

                  5.18  Limitation in Interest.  It is the intent of Trustor and
Beneficiary  to comply  with the usury law  ("Applicable  Usury  Law")  which is
applicable pursuant to the terms of Section 5.9 hereof or which is applicable if
the  law  chosen  by  the  parties  is  not.  Accordingly,  it  is  agreed  that
notwithstanding  any  provisions to the contrary in this Deed of Trust or in any
of the other Loan  Documents,  in no event shall this Deed of Trust or the other
Loan  Documents  require  the  payment or permit the  collection  of interest in
excess of the maximum  contract rate permitted by the  Applicable  Usury Law. If
(a) any such excess of interest  otherwise would be contracted  for,  charged or
received from Trustor or otherwise in connection with the  Obligations,  (b) the
maturity of the  Obligations  is  accelerated in whole or in part, or (c) all or
part of the principal or interest of the Obligations  shall be prepaid,  so that
under any of such  circumstances the amount of interest  contracted for, charged
or received in connection with the Obligations would exceed the maximum contract
rate  

                                       40
<PAGE>   47

permitted by the Applicable Usury Law, then in any such event (1) the provisions
of this Section 5.18 shall govern and control, (2) neither Trustor nor any other
person  or  entity  now or  hereafter  liable  for the  payment  hereof  will be
obligated to pay the amount of such  interest to the extent that it is in excess
of the maximum contract rate permitted by the Applicable Usury Law, (3) any such
excess which may have been collected shall be either applied as a credit against
the then unpaid  principal  amount of the  Obligations to Trustor or refunded to
Trustor, at Beneficiary's option, and (4) the effective rate of interest will be
automatically  reduced to the maximum  contract rate permitted by the Applicable
Usury  Law.  It is  further  agreed,  without  limiting  the  generality  of the
foregoing,  that to the extent  permitted by the  Applicable  Usury Law: (x) all
calculations  of the  rate  of  interest  which  are  made  for the  purpose  of
determining  whether such rate would exceed the maximum  contract rate permitted
by the Applicable Usury Law shall be made by amortizing,  prorating,  allocating
and spreading during the period of the full stated term of the Obligations,  all
interest  at any time  contracted  for,  charged  or  received  from  Trustor or
otherwise  in  connection  with the  Obligations;  and (y) in the event that the
effective  rate of  interest  on the  Obligations  should at any time exceed the
maximum  contract  rate  permitted  by the  Applicable  Usury Law,  such  excess
interest  that would  otherwise  have been  collected  had there been no ceiling
imposed by the Applicable  Usury Law shall be paid to  Beneficiary  from time to
time, if and when the effective interest rate on the Obligations otherwise falls
below the maximum  contract rate permitted by the  Applicable  Usury Law, to the
extent that interest paid to the date of calculation does not exceed the maximum
contract rate permitted by the Applicable  Usury Law, until the entire amount of
interest  which would have  otherwise been collected to such date of calculation
had there been no ceiling  imposed by the Applicable  Usury Law has been paid in
full.  Trustor further agrees that should the maximum contract rate permitted by
the Applicable Usury Law be increased at any time hereafter  because of a change
in the law, then to the extent not prohibited by the Applicable  Usury Law, such
increases shall apply to all Obligations regardless of when incurred; but, again
to the  extent not  prohibited  by  Applicable  Usury  Law,  should the  maximum
contract rate  permitted by the Applicable  Usury Law be decreased  because of a
change in the law, such decreases shall not apply to the Obligations  regardless
if  arising  from an  advance  of the  Loan  after  the  effective  date of such
decrease.

                  5.19  Time  of  Essence.   Time  is  of  the  essence  in  the
Performance of the Obligations by Trustor.

                  5.20  Address.  Trustor  requests that a copy of any Notice of
Default and a copy of any Notice of Sale  hereunder  be mailed to Trustor at its
mailing address set forth in the introductory paragraph to this Deed of Trust.

                  5.21  Beneficiary's  Discretion.  Unless  otherwise  specified
herein,  whenever  Beneficiary  must  exercise  its  discretion  under  the Loan
Documents  or give or  withhold  its  consent  under  the Loan  Documents,  such
discretion or consent may be exercised,  given or withheld in Beneficiary's sole
and absolute  discretion  except as otherwise set forth in the Loan Documents to
the contrary.

                                       41
<PAGE>   48


                                   ARTICLE VI
                               SPECIAL PROVISIONS

                  6.1 Variable  Rate.  The Note contains the following  language
with respect to fluctuations in the rate of interest payable thereunder:

                           Interest shall accrue initially at an annual interest
         rate ("Initial Interest Rate") equal to Prime (as hereinafter  defined)
         in effect on the date of the initial  advance of the loan  evidenced by
         this  Note  ("Initial  Prime")  plus  2.250%  per  annum,   subject  to
         adjustment on each Interest Rate Change Date (as hereinafter  defined),
         but in no event to exceed the maximum contract rate permitted under the
         Applicable Usury Law (as hereinafter defined).  The interest rate shall
         change on each  Interest  Rate Change Date by adding to or  subtracting
         from the Initial Interest Rate, as the case may be, the change, if any,
         between  Initial Prime and Prime in effect on the  applicable  Interest
         Rate Change Date. As used in this Note, the following capitalized terms
         have the meaning set forth opposite them below:

                           "Prime"  shall  mean  the rate of  interest  publicly
         announced,  from time to time, by Citibank,  N.A.,  New York,  New York
         ("Citibank"),  as the  corporate  base  rate  of  interest  charged  by
         Citibank to its most creditworthy commercial borrowers  notwithstanding
         the fact that some  borrowers of Citibank  may borrow from  Citibank at
         rates of less than such announced Prime rate; and

                           "Interest  Rate  Change  Date"  means  (a) the  first
         business day of Citibank  during the calendar month  following the date
         of the initial  advance of the loan evidenced by this Note, and (b) the
         first business day of Citibank during each successive month thereafter.



                            [SIGNATURE PAGE FOLLOWS]

                                       42

<PAGE>   49



                  IN WITNESS WHEREOF,  this Deed of Trust is duly executed as of
the day and year first above written.

                                        PREFERRED EQUITIES CORPORATION, 
                                        a Nevada corporation

                                                                      "Trustor"


Witness:                                 By:  _________________________________
_______________________________           Name:  ______________________________
Print Name: _____________________         Title: ______________________________
 
                                         _____  Check   here   to  confirm  that
                                         Section 5.11 has been initialed.


STATE OF                       )
                               ) ss.
County of                      )

                  Personally  came  and  appeared  before  me,  the  undersigned
authority  in and for the above  mentioned  county and state,  the within  named
___________________,   who  acknowledged  that  he/she  is   _______________  of
Preferred  Equities  Corporation and that he/she signed,  executed and delivered
the above and foregoing Deed of Trust on the day and year therein  given,  after
being duly authorized to execute the same by Preferred Equities  Corporation and
as and for the act and deed of Preferred Equities Corporation.

                  GIVEN Under My Hand And Official Seal Of Office, this the ____
day of March, 1998.


                                  -----------------------------------
                                  NOTARY PUBLIC

My Commission Expires:


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

                                       43

<PAGE>   50





                                    EXHIBIT A

                                Legal Description

                                (to be attached)


                                       44

<PAGE>   51





                                    EXHIBIT B

                              Permitted Exceptions

Item 1.           A  ten  foot  water and sewer easement along the North side of
                  Highway 90 as granted  to City of Biloxi by  instrument  dated
                  April 7, 1972, recorded February 1, 1973 in Book 35, Page 129;
                  and in instrument dated April 11, 1972,  recorded February 22,
                  1973 in Book 35, Page 139;  and in  instrument  dated June 16,
                  1972, recorded February 2, 1973 in Book 35, Page 141.

Item 2.           A  ten  foot  water and sewer  easement  running East and West
                  through the Northerly  portion of subject  property as granted
                  to the  City of  Biloxi  by  instrument  dated  June 8,  1972,
                  recorded  February  2,  1973  in Book  35,  Page  171;  and in
                  instrument dated June 16, 1972,  recorded  February 2, 1973 in
                  Book 35, Page 173.

Item 3.           Encroachment  of  open  wood  carport  onto adjacent  property
                  along the East boundary  line of subject  property as shown by
                  survey  prepared  by Kenny L.  Alston,  R.L.S.,  dated May 26,
                  1994, revised and corrected January 14, 1997.

Item 4.           Encroachment  of  chain  link fence of approximately 2.38 feet
                  along the East boundary  line of subject  property as shown by
                  survey  prepared  by Kenny L.  Alston,  R.L.S.,  dated May 26,
                  1994, revised and corrected January 14, 1997.

Item 5.           Protective covenants contained in instrument filed  for record
                  record in the office of the  Chancery  Clerk and  recorded  in
                  said office in Book 284 at Page 408.


                                       45


<PAGE>   52


                ENVIRONMENTAL CERTIFICATE WITH REPRESENTATIONS,
                            COVENANTS AND WARRANTIES

                                [Biloxi Property]


                  The  undersigned,  PREFERRED  EQUITIES  CORPORATION,  a Nevada
corporation  ("Borrower"),  hereby executes this Environmental  Certificate with
Representations,  Covenants and Warranties (this "Environmental Certificate") as
of the 20th day of March,  1998,  for the  purpose of  inducing  FINOVA  CAPITAL
CORPORATION,  a Delaware corporation  ("Lender"),  to make a loan to Borrower in
the stated  principal sum of up to $1,173,750 (the "Loan"),  which Loan is to be
secured  by,  among  other  things,  a Deed of  Trust,  Assignment  of Rents and
Proceeds and Security Agreement [Biloxi Property] (the "Mortgage"),  dated as of
even date herewith, executed by Borrower, as Trustor, for the benefit of Lender,
as beneficiary,  and encumbering  certain real and personal  property as therein
described,  including the land more particularly described in Exhibit A attached
hereto and made a part hereof and all improvements  thereon  (collectively,  the
"Property").

                  1.  Definitions.  For  those  terms not  specifically  defined
herein, meanings shall be those defined in the Loan Agreement. Capitalized terms
defined herein shall have the meanings given to them; in addition, the following
terms shall have the following meanings:

                  "Contaminant" means any pollutant, hazardous,  radioactive, or
toxic  substance,  hazardous  waste,  medical,  radioactive,  or special  waste,
petroleum or petroleum-derived substance or waste, asbestos-containing material,
polychlorinated  biphenyls (PCBs), or any hazardous or toxic constituent thereof
and includes, but is not limited to, any substance defined in or regulated under
any Environmental Requirement (defined herein).

                  "EHS  Permits"  means all  environmental,  health  and  safety
permits,  licenses,  consents, and authorizations  required by any Environmental
Requirement (defined herein).

                  "Environment"  shall have the same  meaning  as defined  under
Environmental Laws (defined herein).  If Environmental  Laws conflict,  the most
expansive definition is used.

                  "Environmental  Conditions" means the presence or release into
the Environment of Contaminants arising out of Operations (defined herein).

                  "Environmental  Costs"  means  any  and all  claims,  demands,
liabilities,  damages, losses, expenses,  fines, penalties,  judgments,  awards,
settlements  and  costs  (including,   without  limitation,  legal,  accounting,
consulting,   engineering,   construction   and  other  costs)  arising  out  of
Environmental Conditions.  Environmental Costs include, without 

                                       1
<PAGE>   53


limitation,  all past,  current  and future  expenses,  arising  out of: (a) any
pending,  threatened  or  completed  action by a  Governmental  Authority or any
person or entity for property damage,  bodily injury or personal injury; (b) any
inquiry,   investigation,   audit,  study,  assessment,   notice  of  violation,
administrative complaint, summons, citation directive or judicial complaint; (c)
any development of remedial or response  plans;  and (d) any conduct or activity
in any way associated therewith.

                  "Environmental  Laws" means any applicable  federal,  state or
local laws, statutes,  codes, ordinances,  rules or regulations,  court order or
decree, administrative order or governmental agency guidelines.

                  "Environmental Lien" means a lien in favor of any Governmental
Authority for any: (a) liability  under any  Environmental  Requirement;  or (b)
damages  arising  from,  or costs  incurred by such  Governmental  Authority  in
response to a Release (defined herein) of a Contaminant into the Environment.

                  "Environmental  Requirement"  means all Environmental  Laws or
EHS Permits relating to the Environment,  health or safety,  including,  without
limitation:  (a) the use,  handling,  treatment  storage,  or  Release  (defined
herein) of any  Contaminant;  and (b) workplace or worker safety and health,  as
authorized by any Governmental Authority (defined  herein).

                  "Governmental  Authority"  means any  federal,  state or local
agency,  department,  court or other  administrative,  legislative or regulatory
federal,  state or local  governmental body, or any private individual or entity
in place of such entities.

                  "Operations"  means the entire scope of activity  performed or
undertaken  at the  Property,  past and  present,  with  respect  to any and all
Contaminants.

                  "Release" means the actual,  partial,  or threatened  release,
spill,  emission,  escape,  leaking,  pumping,  injection,  deposit,  discharge,
dispersal,  dumping, disposal,  leaching,  placing, production or migrating into
the Environment of any Contaminant.

                  "Remedial  Action"  means  actions  required to: (a) clean up,
remove, treat or otherwise address Contaminants in the Environment;  (b) prevent
or minimize the Release of Contaminants  into the Environment;  or (c) determine
if a remedial  response or corrective  action is needed,  design an  appropriate
response,  compile  necessary data and reports,  conduct pre- and  post-remedial
investigation,  monitoring,  operation,  maintenance  and care.  Remedial Action
shall be undertaken  such that the Property is utilized to its maximum  economic
benefit.

                  2.  Representations,   Covenants  and  Warranties.  Except  as
disclosed  in  the  Disclosure  Schedule,  attached  hereto  as  Exhibit  B  and
incorporated herein by reference,  

                                       2
<PAGE>   54


Customer,  to the best of its  knowledge  after due inquiry  and  investigation,
hereby represents, covenants and warrants to FINOVA as follows:

                           (a)  Customer  certifies  that  it  investigated  the
         present  and  past  uses of the  Property,  and  employed  a  qualified
         environmental  consultant,  acceptable to Customer, to make due inquiry
         of all  Operations  and  the  potential  existence  and/or  Release  of
         Contaminants   at  the   Property.   Customer   certifies   that   such
         investigation  complied with FINOVA's  guidelines for  conducting  such
         investigation.

                           (b) The Property is not listed on any federal, state,
         or local list identifying properties with a known or suspected Release.
         Customer is unaware of any condition  that, if known to a  Governmental
         Authority,  would  require (i) the Property be listed or (ii)  Remedial
         Action.

                           (c) Operations  have never been, and will not be, for
         the purpose of the manufacture,  Remedial Action, generation,  Release,
         or refining of any Contaminant (whether legal or illegal, accidental or
         intentional).

                           (d) Customer  obtained,  and is and shall continue to
         be in compliance with, all EHS Permits  necessary for the Operations at
         the Property.

                           (e)  No  Environmental  Lien  has,  is,  or  will  be
         attached to the Property or any portion thereof.

                           (f) Customer is not, has not, and does not anticipate
         being, subject to any action by a Governmental Authority regarding: (i)
         the  violation  of any  Environmental  Requirement;  (ii) any  Remedial
         Action;  (iii) any liability  arising out of or related to the presence
         or Release  of any  Contaminant  resulting  from or  pertaining  to the
         Operations at the Property.

                           (g)  Customer  certifies  that  to  the  best  of its
         knowledge and after appropriate inquiry, except as set forth in Exhibit
         B, there has been no  unauthorized  release of any  contaminant at, on,
         from, or beneath the property.

                  The foregoing  representations,  covenants and  warranties are
continuing  and shall be true and correct from the date hereof through the final
payment of all indebtedness owed by Customer to FINOVA and the final performance
of all  obligations  owed to  FINOVA,  with the same force and effect as if made
each day throughout such period. All  representations,  covenants and warranties
survive payment and performance.

                  FINOVA  warrants  that it  shall  act,  in its  capacity  as a
lender,  in  compliance  with all  federal,  state,  and  local  laws  regarding
environmental lender liability,  including,  

                                       3
<PAGE>   55
without  limitation,  42  U.S.C. Section 9607  under  the  Comprehensive
Environmental Response, Compensation and Liability Act.

                  3.       Covenant to Clean Up and Notify.

                           (a)  Customer,  at its own cost,  shall  perform  all
         Remedial Action: (i) in accordance with all Environmental Requirements;
         (ii) to the reasonable  satisfaction of FINOVA; and (iii) in accordance
         with any  Governmental  Authority  orders,  directives,  and/or  terms,
         whether negotiated or imposed.

                           (b) Customer shall give notice to FINOVA immediately,
         via  certified   mail,   of  any  deviation   from  any  of  the  above
         representations,   covenants  and  warranties.   Such  notification  is
         triggered by, but not limited to Customer's: (i) receipt of notice from
         any Governmental Authority of any known, alleged or suspected violation
         of any Environmental Requirement; (ii) receipt, or anticipated receipt,
         of any  notice  from a  Governmental  Authority  of  the  Release  of a
         Contaminant, violation of an EHS Permit, and/or damages for personal or
         property  injury or natural  resources,  stemming  from a violation  or
         Release;  and (iii) knowledge of the presence of any Contaminant (other
         than those  described in Exhibit B) on the Property in a condition that
         may adversely  impact the  Environment.  Notification  shall include an
         explanation of the deviation from the representation and warranty and a
         description  of the  communication  to or  knowledge on the part of the
         Customer.  Customer,  at FINOVA's request,  shall provide all documents
         pertaining to any environmental  matters  (including but not limited to
         otherwise privileged or confidential materials).

                           (c) In the event of such  deviation,  Customer  must:
         (i) promptly comply with all Environmental Requirements,  including but
         not limited to those requiring Remedial Action and/or notification of a
         Release,  and  provide  FINOVA  with  satisfactory   evidence  of  such
         compliance; and (ii) provide FINOVA, within thirty (30) days, financial
         assurance  evidencing,   to  FINOVA's  reasonable  satisfaction,   that
         sufficient  funds are  available  to pay the cost of  Remedial  Action,
         compliance  with any  Environmental  Requirement,  and  discharging any
         Environmental Liens.

                  4.       Site Assessment.

                           (a) If FINOVA believes that Contaminants  (other than
         those described in Exhibit B) affect the Property, FINOVA, at any time,
         may contract for the services of persons ("Site  Assessors") to perform
         environmental  site  assessments  ("Site   Assessments")  to  determine
         whether any  environmental  condition  exists that could  result in the
         diminution of the value of the Property, and/or any liability, cost, or
         expense to the owner,  occupier,  or  operator  of the  Property.  Site
         Assessments may be performed at any time,  upon  reasonable  notice and
         with  minimal  interference  with  Customer's  affairs  to  the  extent
         practicable, as determined by FINOVA. Site  

                                       4
<PAGE>   56


         Assessments must be performed pursuant to FINOVA's guidelines. Customer
         shall  not impede  or  interfere  with the Site  Assessment,  and shall
         cooperate fully with the Site Assessors. The Site Assessors, which term
         includes their employees, agents,subcontractors, and assigns are hereby
         authorized to enter upon the Property for such purposes and are further
         authorized to perform  tests on the  Property  necessary to conduct the
         Site  Assessment. Customer shall supply Site  Assessors  historical and
         operational information  regarding the Property to facilitate  the Site
         Assessment. Customer shall make appropriate personnel, having knowledge
         of relevant matters, available for meetings with the Site Assessors. On
         request, FINOVA  shall  make  the  results  of  such  Site  Assessments
         available  to Customer.  The cost of  performing  the Site
         Assessments, including, without limitation, sampling and monitoring,
         the preparation of any reports or studies,and the cost of laboratory
         analysis, shall be paid by Customer upon demand.

                           (b) Prior  to  a breach,  default or Event of Default
        under or as defined in any Loan Document,  FINOVA may notify Customer of
        its intent to conduct a Site  Assessment  and allow Customer to initiate
        and pay for the Site Assessment  directly.  Unless  otherwise  agreed, a
        Site  Assessment  performed  pursuant  to this  paragraph  must be:  (i)
        initiated within seven (7) business days of the date upon which Customer
        is  contacted  by FINOVA;  and (ii)  completed  with a finalized  report
        delivered to FINOVA  within  thirty (30)  calendar days of the date upon
        which Customer is contacted.  The Site Assessors  hired by Customer must
        be  acceptable  to FINOVA.  FINOVA must be  consulted  by  Customer  and
        approve the scope of any proposed Site  Assessment.  Site Assessors must
        provide a draft and final report discussing their findings. FINOVA shall
        be given the  opportunity  to review and  comment on all draft  reports.
        FINOVA shall be provided copies of all draft and final reports.  Any and
        all  representations  and findings by Site Assessors shall expressly run
        to the benefit of FINOVA.

                  5.       Indemnify and Hold Harmless.

                           (a)  Customer  shall   indemnify,   defend  and  hold
        harmless FINOVA,  its employees, shareholders,  officers, directors, and
        agents from and against any and all Environmental Costs.

                           (b)  Customer  agrees,  upon  request by  FINOVA,  to
        contest and  to defend  against  all  Environmental  Costs.  FINOVA may,
        without  being  obligated  to,  hire  counsel,  consultants,  and others
        necessary to defend against any Environmental Costs.

                           (c) Customer  agrees to reimburse  FINOVA upon demand
        for any expenses incurred in connection with  any  Environmental  Costs.
        The  provisions  of  this  Section  5  are  in  addition  to  any  other
        obligations and liabilities  Customer may 

                                       5
<PAGE>   57

        have to FINOVA at common law, in equity or under documentation  executed
        in connection with the Loan, and shall survive the closing,  funding and
        payment in full of the Loan, as well as any  foreclosure  of the Loan or
        granting of any deed in lieu of foreclosure  and the  recordation of any
        release of the lien of the Mortgage.

                  6.       FINOVA's Right to Remove Contaminants.

                           (a)  FINOVA  shall  have  the  right,   but  not  the
         obligation,  without limiting  FINOVA's other rights and remedies under
         the Mortgage or Loan Agreement and this Environmental  Certificate,  to
         enter  onto the  Property  or to take such  other  actions  as it deems
         necessary or advisable to  effectuate a Remedial  Action,  or to in any
         other way resolve or minimize  the impact of, or  otherwise  deal with,
         any  Contaminant on or affecting the Property in such a manner that may
         jeopardize  FINOVA's  security  interest.  Costs and  expenses  paid or
         incurred by FINOVA in the  exercise of any such rights shall be secured
         by the  Mortgage  and Loan  Agreement  and shall be payable by Customer
         upon demand.

                           (b)  Without  limiting   FINOVA's  other  rights  and
         remedies,  FINOVA  will notify  Customer  of its intent to  undertake a
         Remedial  Action  or any  other  action as  discussed  above.  Prior to
         FINOVA's  initiation of any such action,  unless otherwise agreed to by
         Customer and FINOVA, Customer shall have thirty (30) days from the date
         of  receiving  FINOVA's  notice to  complete  the  required  action and
         provide FINOVA with satisfactory completion documentation.

                  7. Reliance and Binding  Nature.  Customer  acknowledges  that
FINOVA   has  and  will  rely   upon  the   representations,   warranties,   and
indemnification  set forth  herein and that the  execution  and delivery of this
Environmental  Certificate is an essential  condition but for which FINOVA would
not close or fund the Loan. The representations, warranties and indemnifications
herein  shall be  binding  upon  Customer,  its  successors,  assigns  and legal
representatives  and shall  inure to the  Benefit  of  FINOVA,  its  successors,
assigns and legal representatives.

                  8.  Relation  to Other  Documents.  All terms  and  conditions
contained  in  the  Loan  Documents,   including,   without   limitation,   this
Environmental  Certificate,  shall be  interpreted to give such terms full force
and effect.  In the event terms or  conditions  contained in this  Environmental
Certificate  directly  conflict  with or are  contrary  to terms and  conditions
contained in the other Loan  Documents,  and the matter at issue  concerns or is
related to the Site Assessment or indemnity and hold harmless provisions of this
Environmental  Certificate,  this  Environmental  Certificate  shall  govern and
supersede any conflicting requirement.

                                       6
<PAGE>   58



                  IN WITNESS WHEREOF,  this  Environmental  Certificate has been
executed and delivered by an officer of Customer duly authorized thereunto as of
the date first above written.

                                       PREFERRED EQUITIES CORPORATION, 
                                        a Nevada corporation

                                       By:
                                       Name: Charles G. Baltuskonis
                                       Its: Vice President and
                                            Chief Accounting Officer





(Form A)
Rev. - 2/27/98
                                       7


<PAGE>   59





                                    EXHIBIT A

                             Description of Property

ALL that certain plot, piece or parcel of land, situate,  lying and being in the
County of Harrison  and State of  Mississippi,  more  particularly  described as
follows:

                                (to be attached)

                                       8

<PAGE>   60





                                    EXHIBIT B

                               Disclosure Schedule

                                     (None)


                                       9


<PAGE>   61



                              CONSENT OF GUARANTOR
                                (Biloxi Property)

                  The undersigned,  MEGO FINANCIAL CORP., a New York corporation
(formerly named Mego Corp.)  ("Guarantor"),  hereby  acknowledges that Guarantor
executed and  delivered to GREYHOUND  REAL ESTATE  FINANCE  COMPANY,  an Arizona
corporation ("GREFCO"),  (i) an Amended and Restated Guarantee and Subordination
Agreement  dated  as  of  May  10,  1989  (the  "PEC  Guaranty"),   guaranteeing
performance  of the  obligations  of PREFERRED  EQUITIES  CORPORATION,  a Nevada
corporation  ("Borrower"),  to Lender (as  hereinafter  defined)  under the Loan
Agreement,  the Note and other Documents (as the terms "Loan Agreement,"  "Note"
and  "Documents"  are defined in the PEC  Guarantee);  and (ii) a Guarantee  and
Subordination  Agreement dated as of March 30, 1989 (the "VSR  Guarantee",  and,
collectively with the PEC Guarantee, the "Guarantee"),  guaranteeing performance
of the  obligations  of Vacation  Spa Resorts,  Inc.,  a Tennessee  corporation,
predecessor-in-interest  to Borrower,  to Lender under the Loan  Agreement,  the
Note and other Documents (as the terms "Loan Agreement,"  "Note" and "Documents"
are defined in the VSR Guarantee).

                  GREFCO has assigned the  respective  Notes and all of GREFCO's
rights  and  obligations  under the  respective  Loan  Agreements  and the other
respective  Documents  to FINOVA  CAPITAL  CORPORATION,  a Delaware  corporation
(formerly known as Greyhound Financial  Corporation)  ("Lender"),  pursuant to a
plan of liquidation between GREFCO and Lender.

                  With Guarantor's ratification,  consent and approval, Borrower
and Lender amended and restated the respective  Loan Agreement  pursuant to that
certain  Second  Amended and Restated  Loan and  Consolidated  Loan and Security
Agreement dated May 15, 1997 (the "Amended and Restated Loan Agreement").

                  Guarantor hereby  acknowledges that,  pursuant to the terms of
the Amended and Restated Loan Agreement,  Lender proposes to advance to Borrower
an  additional  principal  sum of up to One Million One Hundred  Fifty  Thousand
United States Dollars (U.S.  $1,150,000) (the "Biloxi Loan").  Guarantor further
acknowledges  that the Biloxi Loan is  evidenced  by and subject to, among other
things,  that certain  Letter  Agreement,  dated March 20, 1998,  by and between
Borrower and Lender (the  "Biloxi  Letter  Agreement"),  as well as that certain
promissory  note in the original  principal  amount of  $1,150,000  (as amended,
extended or renewed from time to time, the "Biloxi Note") and secured,  in part,
by that  certain  Deed of Trust,  Assignment  of Rents and Proceeds and Security
Agreement of even date with the Biloxi Letter Agreement executed by Borrower, as
Trustor, for the benefit of Lender, as Beneficiary, and encumbering the real and
personal property  described therein (as from time to modified and amended,  the
"Biloxi Deed of Trust")

<PAGE>   62

and that certain  other  documents  are being  executed in  connection  with the
Biloxi  Loan (as from time to time  modified,  extended,  renewed,  replaced  or
restated the "Biloxi Ancillary Documents";  and, together with the Biloxi Letter
Agreement,  the  Biloxi  Note,  and  the  Biloxi  Deed  of  Trust,  the  "Biloxi
Documents"). 


                  Guarantor  consents  to the Biloxi  Documents  and agrees that
(i)the  Guarantee  shall  remain in full force and  effect  and shall  extend to
Borrower's  Obligations  arising  under  the  Biloxi  Documents,  (ii)  that the
obligations  of the  Guarantor  under the  Guarantee  are joint and several with
those of each other  Obligor (as that term is defined in the  Guarantee),  (iii)
Guarantor's  liability  under the Guarantee  shall continue  undiminished by the
Biloxi Documents and (iv) all terms,  conditions and provisions set forth in the
Biloxi  Documents  and  all  other  Documents  executed  therewith,  are  hereby
ratified,  approved and  confirmed. 


                  Guarantor  reaffirms  as  if  made  on  the  date  hereof  all
of Guarantor's representations and warranties  contained in the Guarantee except
as otherwise set forth in the Amended and Restated Loan  Agreement or on Exhibit
1 attached hereto. Guarantor acknowledges that as of the date hereof, it has (a)
no defense, counterclaim, offset, cross-complaint, claim or demand or any nature
whatsoever  which  can be  asserted  as a basis to seek  affirmative  relief  or
damages  from Lender or GREFCO or as a basis to reduce or  eliminate  all or any
part of its liability under the Guarantee, and (b) no other claim against Lender
or GREFCO  with  respect to any  portion  of the  transaction  described  in the
Documents.

                  IN WITNESS  WHEREOF,  Guarantor  has  hereunto  executed  this
instrument as of the 20th day of March, 1998.

                                              MEGO FINANCIAL CORP.,a New York
                                              corporation



                                              By:
                                              Name: Jon A. Joseph
                                              Its: Vice President

                                       2


<PAGE>   63





STATE OF _____________              )
                                            ) ss.
COUNTY OF ___________               )

                  BEFORE ME, the undersigned  authority,  a Notary Public in and
for the County  and State  aforesaid,  on this day  personally  appeared  Jon A.
Joseph,  known to me to be a Vice President of MEGO FINANCIAL  CORP., a New York
corporation,  who  acknowledged to me that the same was the free act and deed of
such  corporation and that s/he being  authorized by proper  authority to do so,
executed  the  same  on  behalf  of  such   corporation  for  the  purposes  and
consideration therein expressed, and in the capacity therein stated.

                  GIVEN  UNDER MY HAND  AND SEAL OF  OFFICE  this  _____  day of
March, 1998.



                                  ----------------------------------------------
                                  Notary Public
My Commission Expires:

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






                                       3

<PAGE>   64




                                  EXHIBIT 1 TO
                              CONSENT OF GUARANTOR

             Exceptions To Representations And Warranties Reaffirmed
                      By Guarantor Pursuant To This Consent

                            [If none, insert "none"]


                                       4

<PAGE>   65


                              OFFICER'S CERTIFICATE
                        OF PREFERRED EQUITIES CORPORATION


                  The  undersigned,  Jon A. Joseph,  the Corporate  Secretary of
Preferred  Equities  Corporation,  a Nevada  corporation (the  "Company"),  does
hereby certify that:

                  1.  I am the  duly  elected  and  presently  acting  Corporate
Secretary of the Company and as such have access to the corporate records of the
Company and am familiar with the matters therein contained and herein certified.

                  2.  Attached  hereto  as  Exhibit 1 is a  certificate  of good
standing  from  the  Nevada  Secretary  of  State  and,  since  the date of such
certificate, there has been no change in the status of the Company.

                  3. Attached  hereto as Exhibit 2 is a [certificate  of foreign
qualification]  from the  Mississippi  Secretary of State and, since the date of
such certificate, there has been no change in the status of the Company.

                  4. The  Articles of  Incorporation  of the Company are in full
force and effect and have not been  modified,  rescinded or amended since August
16, 1996.

                  5. The Bylaws of the  Company are in full force and effect and
have not been modified, rescinded or amended since August 16, 1996.

                  6. Attached  hereto as Exhibit 2 is a true and correct copy of
resolutions,  and the  preamble  thereto,  adopted  at a meeting of the Board of
Directors  of the  Company  held on March 13,  1998,  and such  resolutions  and
preamble  were duly adopted by said Board of Directors and are in full force and
effect on and as of the date hereof, not having been in any way amended, altered
or repealed.

                  7.  The  forms  of  Letter  Agreement,  Note and Deed of Trust
described  in such  resolutions  are  identical to the  corresponding  documents
executed and delivered by the Company to FINOVA Capital Corporation.

                  8.  There  are no dissolution  proceedings pending on the date
hereof with respect to the Company.

                  9. The following  persons are now, and at all times subsequent
to January 1, 1997 have been duly qualified and acting  officers of the Company,
duly elected to the offices set forth opposite their  respective  names, and the
signature  appearing  opposite  the name of each such  officer is his  authentic
signature:

                       [Signatures are on following page]

                                       1
<PAGE>   66



Name                           Office                        Signature
----------------------- ---------------------------  --------------------------

Charles G. Baltuskonis  Vice President and 
                        Chief Accounting Officer    __________________________



                  IN  WITNESS   WHEREOF,   the  undersigned  has  executed  this
Certificate as of March 20, 1998.



                                                   By:
                                                     Name: Jon A. Joseph
                                                     Title: Corporate Secretary


                                       2
<PAGE>   67

                              OFFICER'S CERTIFICATE

                             OF MEGO FINANCIAL CORP.


                  The undersigned,  Don A. Mayerson,  the Corporate Secretary of
Mego  Financial  Corp.,  a New York  corporation  (the  "Company"),  does hereby
certify that:

                  1.  I am the  duly  elected  and  presently  acting  Corporate
Secretary of the Company and as such have access to the corporate records of the
Company and am familiar with the matters therein contained and herein certified.

                  2.  Attached  hereto  as  Exhibit 1 is a  certificate  of good
standing  from  the New York  Secretary  of State  and,  since  the date of such
certificate, there has been no change in the status of the Company.

                  3. The  Articles of  Incorporation  of the Company are in full
force and effect and have not been  modified,  rescinded or amended since August
16, 1996.

                  4. The Bylaws of the  Company are in full force and effect and
have not been modified, rescinded or amended since August 16, 1996.

                  5. Attached  hereto as Exhibit 2 is a true and correct copy of
resolutions,  and the  preamble  thereto,  adopted  at a meeting of the Board of
Directors  of the  Company  held on March 13,  1998,  and such  resolutions  and
preamble  were duly adopted by said Board of Directors and are in full force and
effect on and as of the date hereof, not having been in any way amended, altered
or repealed.

                  6. There are no  dissolution  proceedings  pending on the date
hereof with respect to the Company.

                  7. The following  persons are now, and at all times subsequent
to January 1, 1997 have been duly qualified and acting  officers of the Company,
duly elected to the offices set forth opposite their  respective  names, and the
signature  appearing  opposite  the name of each such  officer is his  authentic
signature:



                      [Signatures appear on following page]



<PAGE>   68






Name                  Office                            Signature
-------------------  ------------------------ ---------------------------------

Jon A. Joseph        Vice President           ________________________________




                  IN  WITNESS  WHEREOF,   the  undersigned   has  executed  this
Certificate as of March 20, 1998.


                                             By:__________________________
                                                Name: Don A. Mayerson
                                                Title: Corporate Secretary


                                       2

<PAGE>   69


                REQUEST FOR ADVANCE AND DISBURSEMENT INSTRUCTIONS



                  The  undersigned,  as  Vice  President  and  Chief  Accounting
Officer  of  PREFERRED  EQUITIES  CORPORATION,  a   Nevada  corporation,  hereby
instructs  FINOVA  CAPITAL  CORPORATION  ("FINOVA")  to advance  ONE MILLION ONE
HUNDRED   SEVENTY-THREE   THOUSAND   SEVEN  HUNDRED  FIFTY  AND  NO/100  DOLLARS
($1,173,750.00)  in immediate  available funds, which funds shall be distributed
as follows:

    1.      Bank: Whitney National Bank of Mississippi            $ 1,150,000.00
            ABA Routing No.: 065501353
            For Credit to: The Trust Account 
                           of Virgil G. Gillespie
            Account Number: 8071500

    2.      FINOVA Capital Corporation                            $    23,750.00

            (Loan Fee - $23,750.00)

                              Total Funds Disbursed:              $ 1,173,750.00

                  The undersigned  acknowledges and agrees that, even though all
or a portion of the disbursements described above are to be directed to entities
other than the undersigned,  receipt of such  disbursements by such payees shall
constitute receipt of the proceeds by the undersigned.

Dated:  March 20, 1998.

                                       PREFERRED EQUITIES CORPORATION,
                                        a Nevada corporation



                                      By:  _____________________________________
                                         Name:  Charles G. Baltuskonis
                                         Title: Vice President and
                                                Chief Accounting Officer



<PAGE>   70


                                LETTER AGREEMENT
                                [BILOXI PROPERTY]

March 20, 1998

Preferred Equities Corporation
4310 Paradise Road
Las Vegas, Nevada 89109-6597

                  Re: 1816 Beach Boulevard, Biloxi, Mississippi

Ladies and Gentlemen:

                  Reference is made to that certain  Second Amended and Restated
and  Consolidated  Loan and  Security  Agreement  dated  as of May 15,  1997 (as
amended and supplemented to date, the "Loan  Agreement"),  by and between FINOVA
Capital Corporation,  a Delaware  corporation  ("Lender") and Preferred Equities
Corporation, a Nevada corporation ("Borrower"). Unless otherwise defined herein,
all  capitalized  terms used herein shall have the same meanings as set forth in
the Loan Agreement.

                  This Letter Agreement is being executed in connection with the
Biloxi Advance described below, to provide to Borrower acquisition financing for
certain  property  generally  described as  approximately  four and three-tenths
(4.3) acres of land located at 1816 Beach  Boulevard,  Biloxi,  Mississippi (the
"Biloxi  Property"),  as legally described in the Biloxi Deed of Trust described
in Section 1 below.

                  This Letter Agreement will confirm certain  agreements between
Borrower and Lender  concerning  the Biloxi  Advance,  and shall  constitute  an
amendment  and  supplement to the Loan  Agreement and to the other  Documents as
applicable.

                  1.  Biloxi  Advance.   Upon  the  terms  and  subject  to  the
conditions   set  forth  in  this  Letter   Agreement,   Lender   shall  make  a
single-Advance  Loan (the "Biloxi  Advance") to Borrower in the least amount of:
(a) One Million One Hundred and  Seventy-Three  Thousand Seven Hundred and Fifty
United States Dollars (U.S. $1,173,750);  (b) that amount by which the amount of
Six Million  Seven Hundred  Thousand  United  States  Dollars (U.S.  $6,700,000)
exceeds the unpaid and  outstanding  principal  balance of the Office Note as of
the date hereof;  and (c) that amount by which the Maximum  Loan Amount  exceeds
the unpaid and outstanding  principal balance of all Loans as of the date hereof
(prior to giving  effect to the Biloxi  Advance).  The Biloxi  Advance  shall be
evidenced by a promissory  note, in form and  substance  acceptable to Lender in
its sole discretion,  to be dated of even date herewith (the "Biloxi Note"). The
Biloxi Note shall be secured  pursuant to, among other things,  a Deed of Trust,
Assignment  of Rents and  Proceeds and  Security  Agreement  with respect to the
Biloxi  Property,  in priority,  form and substance  acceptable to Lender in its
sole 


<PAGE>   71

Preferred Equities Corporation
March 20, 1998
Page 2


discretion,  to be dated of even date herewith (the "Biloxi Deed of Trust"),  as
well as the  provisions  of the Loan  Agreement,  and as more fully set forth in
Section  3  below.  Borrower  shall  use  the  Biloxi  Advance  to  finance  the
acquisition  of the  Biloxi  Property  and to pay the  Biloxi  Advance  Loan Fee
described in Section 8 below, and to that end Lender shall have no obligation to
make the Biloxi  Advance  except in connection  with  Borrower's  closing of the
purchase contemplated by that certain Real Estate Purchase and Sale Agreement by
and  between  Borrower  and  Biloxi  Beach   Campground   Corp.,  a  Mississippi
corporation,  made and entered into as of December 23, 1996,  as amended to date
(the "Purchase Agreement").

                  2. Relationship to Office Note. Lender's consent to the making
of the Biloxi  Advance is relying  on part upon  excess  availability  under the
Office Note and cross-collateralization of the Biloxi Note with the Headquarters
Property and the FCFC Property.  Accordingly,  Borrower  acknowledges and agrees
that,  notwithstanding  the  provisions of paragraphs  3.10 and 3.11 of the Loan
Agreement,  and the applicable  provisions in each of the FCFC Deed of Trust and
the Headquarters Deed of Trust, it shall be an additional condition precedent to
the  release  of the lien of: (a) the lien of the FCFC Deed of Trust on the FCFC
Property and (b) the lien of the Headquarters  Deed of Trust on the Headquarters
Property, that in each case the Biloxi Note first shall have been paid in full.

                  3.  Security.  Without  limitation,  as provided in paragraphs
3.1(a) and (b) of the Loan Agreement and the Mortgages now existing or hereafter
arising,  the payment and  Performance  of  Borrower's  Obligations  under or as
evidenced  by this  Letter  Agreement  and the  Biloxi  Note  shall be and shall
continue  to be secured by the liens and  Security  Interests  granted to Lender
pursuant  to the Loan  Agreement,  as amended  and  supplemented  by this Letter
Agreement,  and  pursuant  to  such  Mortgages.  Furthermore,  as  security  for
Borrower's  payment and Performance of all Obligations  owed to Lender under the
Documents (as that term is amended by this Letter Agreement), and as further set
forth in the Biloxi Deed of Trust, Borrower hereby grants, transfers and assigns
to  Lender  a first  and  prior  lien  and  Security  Interest  in and to all of
Borrower's right, title and interest in and to all of the following:  the Biloxi
Property; all buildings and other improvements now or hereafter erected thereon;
all fixtures,  equipment and other personal property now or hereafter located on
or attached or affixed in any manner to the Biloxi Property; all leases, income,
rents, royalties,  revenues,  issues, accounts receivable,  accounts, profits or
proceeds from the Biloxi  Property;  and other items of collateral in connection
therewith,  all as more fully set forth in the Biloxi Deed of Trust.  The Biloxi
Deed of Trust shall include,  without limitation,  prohibitions  against further
encumbrances and against  subsequent  sales,  assignments,  conveyances or other
transfers of all or any part of the Trust Property therein described.

                  4.  Conditions  Precedent.  Lender's  obligation  to make  the
Biloxi Advance is subject to the following  conditions  precedent,  all of which
must be satisfied at or prior to 

<PAGE>   72

Preferred Equities Corporation
March 20, 1998
Page 3


the funding of the Biloxi  Advance,  which in all events must occur on or before
March 20, 1998,  and any of which may be waived in writing by Lender at any time
in its sole discretion.

                           4.1 Borrower  shall have  executed  and  delivered to
         Lender a fully-executed counterpart of this Letter Agreement.

                           4.2 Borrower shall have  satisfied,  as determined by
         Lender in its sole discretion,  and at Borrower's sole expense,  all of
         the conditions precedent to an Advance under the Mortgage Loan Facility
         set forth in  Article V of the Loan  Agreement  (and to that end,  each
         reference  in such  exhibit to a "Project"  shall be deemed to refer to
         the Biloxi  Property,  each  reference to the  "Project  Note" shall be
         deemed to refer to the Biloxi Note, and each reference to "the Mortgage
         Loan Facility" shall be deemed to refer to the Biloxi Advance  pursuant
         to this Letter  Agreement);  provided,  that the Phase I  Environmental
         Assessment  shall be dated  not more than six (6)  months  prior to the
         funding of the Biloxi Advance.

                           4.3 Lender  shall have  received  from  Borrower  and
         approved a current  (dated  not more than six (6)  months  prior to the
         funding of the Biloxi Advance)  appraisal of the Headquarters  Building
         and  the  FCFC  Property,  performed  by a  state-certified  appraiser,
         including  without  limitation  comparable land sales data,  indicating
         that the FCFC  Property and the  Headquarters  Building have a combined
         appraised  value of not less than Six Million  Seven  Hundred  Thousand
         United  States  Dollars  (U.S.  $6,700,000):   (a)  conforming  to  MAI
         commercial  appraisal  standards,   or  (b)  in  a  "restricted"  form,
         provided,  that such appraisal  contains  supporting market information
         confirming  the appraised  value set forth  therein.  The appraisal and
         appraiser must otherwise be acceptable to Lender in all respects.

                           4.4 Borrower  shall have paid the Biloxi Advance Loan
         Fee.

                           4.5 Borrower and Guarantor  shall have provided,  and
         Lender shall have found  satisfactory,  updates (covering the period of
         time ending not more than ten (10) days prior to the Biloxi Advance) to
         the status of litigation matters reported in Exhibit "8.31" to the Loan
         Agreement,  as well as the status of any new litigation matters not set
         forth in such  exhibit  (or, in the absence of any such new  litigation
         matters not set forth in such exhibit, an affirmative statement to that
         effect).  The new  litigation  matters  shall  include but shall not be
         limited to that certain lawsuit seeking  class-action  status, filed in
         the U.S. Federal  District Court for the Northern  District of Georgia,
         purportedly  naming  Guarantor  among others as a  defendant;  for this
         lawsuit,  Lender shall have received a copy of the  Complaint,  any and
         all answers and the


<PAGE>   73


Preferred Equities Corporation
March 20, 1998
Page 4


docket to date. The status of litigation matters shall also disclose which cases
are covered by insurance.

                           4.6  Borrower  shall have closed the  purchase of the
         Biloxi Property as contemplated in the Purchase Agreement.

                  5.       Conditions Subsequent.

                           5.1 On or before Monday, May 4, 1998,  Borrower shall
         supply  documentation  to Lender,  to the attention of Karen Hrushka at
         FINOVA Risk  Management,  from the Mississippi  Power Company  ("MPC"),
         wherein MPC shall  confirm:  (a) ownership  responsibility  for the two
         pole-mounted  transformers  located  on the  Biloxi  Property,  and (b)
         liability  therefor should damage or leakage occur.  The contact person
         at Borrower with respect to compliance  with this  condition is Richard
         L. Rodriguez.

                           5.2 On or before  Monday,  April 20,  1998,  Borrower
         shall provide to Lender, in form and substance  acceptable to Lender in
         all respects:  (a) an ALTA Survey of the Biloxi Property  conforming to
         the provisions of paragraph 3 of Exhibit  "5.2.2" to the Loan Agreement
         and further  conforming to the 1997 ALTA/ACSM  Minimum  Standard Detail
         Requirements for an urban-class survey,  certified to Lender, including
         Table  "A"  items 1, 2, 3, 4,  7(a),  8, 10,  11,  13,  14,  15 and 16,
         together with (b) a revised  "survey  endorsement"  to the Title Policy
         required hereunder, with respect to such survey.

                           5.3  Without  limiting  any  other  provision  of any
         Document,  any  failure  by  Borrower  to  comply  with any  conditions
         subsequent  set  forth  in  Section  5.1 or  Section  5.2  above  shall
         constitute  an "Event of  Default"  under  and as  defined  in the Loan
         Agreement.

                  6.  Without  limiting  any other  provision  of any  Document,
Borrower hereby represents, warrants and covenants as follows:

                           6.1 The fence encroachment disclosed on the survey by
         Kenny L.  Alston,  R.L.S.,  dated May 26, 1994,  revised and  corrected
         January 14, 1997,  and listed as a "Permitted  Encumbrance"  on Exhibit
         "B" of the Biloxi Deed of Trust, will not materially  interfere with or
         impair in any way Borrower's planned development of the Biloxi Property
         for the purpose of selling Units.

<PAGE>   74


Preferred Equities Corporation
March 20, 1998
Page 5


                           6.2  The  protective  covenants  of  record  in  that
         certain instrument filed for record in the office of the Chancery Clerk
         in and for Harrison County,  Mississippi and recorded in said office in
         Book 284 at Page 408, will not  materially  interfere with or impair in
         any way Borrower's  planned  development of the Biloxi Property for the
         purpose of selling Units.

                           6.3 Neither  Borrower nor Guarantor is a defendant in
         that certain  lawsuit  filed on February 23, 1998, in the United States
         District Court for the Northern District of Georgia,  Atlanta Division,
         Civil Action No. 98-CV-0593,  captioned "Robert J. Feeney, individually
         and on behalf  of all  those  similarly  situated,  Plaintiff,  v. Mego
         Mortgage Corporation,  and Jeffrey S. Moore,  Defendants." Borrower has
         furnished to Lender a true, complete and correct copy of the Complaint.
         If at any time  during the Term either  Borrower  and/or  Guarantor  is
         named as a defendant in such lawsuit,  Borrower  shall notify Lender in
         writing  within three (3) business days after service of process naming
         Borrower and/or Guarantor,  as applicable,  as a defendant therein, and
         furnish Lender by overnight delivery with a true,  complete and correct
         copy of the Complaint and any other documents so served.

The  foregoing  representations,   warranties  and  covenants  shall  be  deemed
incorporated into Article VIII of the Loan Agreement for all purposes, and shall
be subject to the provisions of paragraph 8.1 of the Loan Agreement.

                  7.  Incorporation of Other  Provisions of Loan Agreement.  For
all  purposes  under  the  Loan  Agreement,  including  without  limitation  the
representations, covenants and warranties under Article VIII thereof, the Biloxi
Advance shall be deemed a  "transaction  made pursuant to this  Agreement."  The
Biloxi  Property  shall be deemed a "Project"  for the purposes of Article VI of
the Loan  Agreement.  Each and every right and remedy of Lender with  respect to
Advances,  Notes and Mortgages shall apply with full force and effect to each of
the  Biloxi  Advance  (which  is  hereby  deemed  an  "Advance"  under  the Loan
Agreement),  the Biloxi  Note  (which is hereby  deemed a "Note"  under the Loan
Agreement),  and the Biloxi Deed of Trust  (which is hereby  deemed a "Mortgage"
under the Loan Agreement).

                  8.  Biloxi  Advance  Loan Fee.  In  consideration  of Lender's
covenants,  agreements and promises under this Letter Agreement,  Borrower shall
pay to Lender at the time of the Biloxi  Advance the amount of two and  one-half
percent  (2.50%) of the amount of the Biloxi  Advance (the "Biloxi  Advance Loan
Fee"). The "good faith" deposit of $5,000  previously paid by Borrower to Lender
in connection with Borrower's application for the Loan contemplated herein shall
be credited toward the Biloxi Advance Loan Fee.

<PAGE>   75


Preferred Equities Corporation
March 20, 1998
Page 6


                  9. Lender's  Right of First  Refusal.  During the  Receivables
Borrowing Term, Lender shall have the right of first refusal with respect to all
construction  financing,  hypothecation  financing  and/or  purchase  agreements
secured by or in any way relating to the Biloxi Property or any portion thereof,
either solicited by or offered to Borrower.  If, while any portion of the Biloxi
Note remains  unpaid,  Borrower or an affiliate of Borrower  wishes to accept an
offer from a third party for such  financing or purchase,  the entity wishing to
accept the same must give Lender  written notice of its intent to do so together
with a copy of the written  proposal for the  financing  or  purchase,  from the
prospective  third party lender in  connection  with the  proposed  financing or
purchase.  Lender shall have ten (10)  business  days from receipt of the notice
and the items  required to be given to Lender to issue a  financing  proposal to
either  extend  such  financing  or enter into a purchase  agreement  upon terms
substantially equivalent or better than those contained in the proposal from the
prospective  third  party  lender and  failure to do so shall be deemed to be an
election  by Lender  not to  extend  such  financing  or enter  into a  purchase
agreement.  Lender  must then  issue a  commitment  within  thirty  (30) days of
receipt of the financing  proposal timely  accepted by Borrower.  The failure of
Lender to issue a commitment within this period of time shall be deemed to be an
election  by Lender  not to  extend  such  financing  or enter  into a  purchase
agreement.

                  10. Definition of "Documents".  The definition of "Documents",
as set forth in the Loan  Agreement,  shall be amended to  include  this  Letter
Agreement,  the Biloxi  Deed of Trust,  and each  other  document  executed  and
delivered to Lender in connection with this Letter Agreement.  Each reference in
the Loan  Agreement  to "this  Agreement"  shall be  deemed to refer to the Loan
Agreement as amended and  supplemented  hereby,  and each reference in any other
Document to "the Loan Agreement"  shall be deemed to refer to the Loan Agreement
as amended and supplemented hereby.

                  11. Entire  Agreement.  This Letter Agreement  constitutes the
entire  agreement and  understanding  of the parties with respect to the subject
matter hereof; and the Documents, as amended hereby, supersede all prior written
or oral understandings and agreements between the parties in connection with its
subject matter.

                  12. Counterparts. This Letter Agreement may be executed in one
or more counterparts,  and  any  number  of  which having been signed by all the
parties hereto shall be taken as one original.

                  13. No  Novation.   Except  as  expressly   provided   herein,
Borrower's and  Guarantor's  respective  obligations  under the Documents  shall
remain in full force and effect and shall not be waived, modified, superseded or
otherwise  affected by this Letter  Agreement.  This Letter  Agreement  is not a
novation, nor is it to be construed as a release,  

<PAGE>   76


Preferred Equities Corporation
March 20, 1998
Page 7


waiver  or  modification  of  any  of the  terms,  conditions,  representations,
warranties,  covenants, rights or remedies set forth in the Documents, except as
expressly  stated  herein.  To the extent  practicable,  any  provisions of this
Letter  Agreement  which conflict with any provisions of the Documents  shall be
construed to supplement such provisions of the Documents,  provided that, in the
event of  irreconcilable  conflict,  the  provisions  of this Letter  Agreement,
construed as narrowly as practicable, shall control.

                            [SIGNATURE PAGE FOLLOWS]







<PAGE>   77


Preferred Equities Corporation
March 20, 1998
Page 8


                  In the event the foregoing represents an accurate statement of
the agreements  that have been reached please sign and return this letter to the
undersigned.

                                            FINOVA CAPITAL CORPORATION, a 
                                            Delaware corporation


                                            By:  /s/  Jeffrey A. Owings
                                                 -------------------------------
                                               Name:  Jeffrey A. Owings
                                               Its: vice President




Accepted as of March 20, 1998:

PREFERRED EQUITIES CORPORATION,
a Nevada corporation


By: /s/ Charles G. Baltuskonis
   Name: Charles G. Baltuskonis
   Its: Vice President and Chief Accounting Officer