<PAGE>

                                                                   Exhibit 10.18
CHICAGO TITLE
SS COMM. #767376.8
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
c/o Graham & James
One Maritime Plaza, Suite 300
San Francisco, CA  94111-3492
Attn:  Bruce W. Hyman, Esq.

            DEED OF TRUST, FINANCING STATEMENT, SECURITY AGREEMENT
           AND FIXTURE FILING (WITH ASSIGNMENT OF RENTS AND LEASES)
           --------------------------------------------------------

                                      BY

                               IPAC PROPERTIES,
                           a California corporation
                                  as Trustor,

                                      TO

                     CHICAGO TITLE COMPANY, a corporation
                                  as Trustee,

                              for the benefit of

                 SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.),
                            a Delaware corporation,
                                as Beneficiary

                                March 24, 1997
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            DEED OF TRUST, FINANCING STATEMENT, SECURITY AGREEMENT
           AND FIXTURE FILING (WITH ASSIGNMENT OF RENTS AND LEASES)
           --------------------------------------------------------

        THIS DEED OF TRUST, FINANCING STATEMENT, SECURITY AGREEMENT AND FIXTURE
FILING (WITH ASSIGNMENT OF RENTS AND LEASES) (this "Deed of Trust") is made as
of the 24th day of March, 1997 by IPAC PROPERTIES, a California corporation
("Trustor"), having an office at 2221 Old Oakland Road, San Jose, California
95131 ("Trustor") in favor of CHICAGO TITLE COMPANY, a corporation ("Trustee")
for the benefit of SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.), a Delaware
corporation ("Beneficiary") having an office at One Sun Life Executive Park,
Wellesley Hills, MA 02181.

                             W I T N E S S E T H :

        WHEREAS, Trustor has executed and delivered to Beneficiary that certain
Promissory Note (the "Note") dated the date hereof made by Trustor and payable
to Beneficiary in the original principal amount of Six Million Seven Hundred
Thousand and  NO/100 Dollars ($6,700,000.00) lawful money of the United States,
which Note is secured by this Deed of Trust and the terms, covenants and
conditions of which Note are hereby incorporated herein and made a part hereof
(the "Loan");

        NOW, THEREFORE, in consideration of the sum of One Dollar ($1.00) this
day paid and other good and lawful consideration, the receipt and sufficiency of
which is hereby acknowledged, Trustor does hereby irrevocably bargain, sell,
transfer, grant, convey, assign and warrant to Trustee, the property described
in the Granting Clauses below in order to secure the following obligations
(collectively, the "Obligations"): the full and prompt payment and performance
of all of the indebtedness, obligations, covenants, agreements and liabilities
of Trustor to Beneficiary, together with all interest and other charges thereon,
whether direct or indirect, existing, future, contingent or otherwise, due or to
become due, under or arising out of or in connection with the Note, this Deed of
Trust, the Absolute Assignment of Leases, Rents, Income and Cash Collateral
dated the date hereof from Trustor as assignor, to Beneficiary, as assignee,
(the "Assignment"), the Environmental Agreement and Indemnity (the "Indemnity"),
and any other instrument now or hereafter given to evidence or secure or
guaranty Trustor's obligations hereunder (the Note, this Deed of Trust, the
Assignment, the Indemnity and such other instruments are herein collectively
called the "Loan Documents"); any and all modifications, extensions and renewals
of any of the foregoing; and any and all expenses and costs of collection or
enforcement, including, without limitation, attorneys' fees incurred by
Beneficiary in the collection or enforcement of any of the foregoing, or in the
exercise of any of the rights or remedies under the Loan Documents or applicable
law.

                              GRANTING CLAUSE ONE

        All that tract or parcel of land more particularly described in
Schedule A hereto and made a part hereof (the "Land").
----------

                              GRANTING CLAUSE TWO

        TOGETHER WITH, any and all buildings and real property improvements now
or hereafter located or erected on the Land, including, without limitation, any
and all machinery, apparatus, equipment and fixtures now or hereafter used or
procured for use in connection with the operation of building utilities and/or
maintenance of, any building, structure or other real property improvement
(including, without limitation, all shades, awnings, venetian blinds, screens,
screen doors, storm doors and windows, curtain fixtures, attached floor
coverings, or
<PAGE>

articles used to supply sprinkler protection and office area heating,
ventilation and cooling equipment, but excluding trade fixtures and personal
property of tenants under Leases (as hereinafter defined) which do not become
the property of Trustor upon expiration or termination of the term of such
Leases), and all renewals and replacements thereof and articles in substitution
therefor used or procured for use in the operation of any and all such
buildings, structures and improvements, provided, in all cases, that, whether or
                                        --------
not any of the foregoing are attached to said buildings, structures or other
improvements in any manner, all such items shall be deemed to be fixtures, part
of the real estate and security for the Obligations (collectively, the
"Improvements", and the Land and Improvements are herein collectively called the
"Premises"). To the extent any of the Improvements are not deemed real estate
under the laws of the State of California they shall be deemed personal property
("Personal Property") and this Deed of Trust is and shall be deemed to be a
Security Agreement for the purposes of creating hereby a security interest under
the California Commercial Code in Beneficiary as Secured Party in the Personal
Property as hereinafter provided. Notwithstanding anything to the contrary
herein or in any other Loan Document the term "Improvements" shall not include
and in no event shall Beneficiary have any lien, interest or other right
whatsoever in any item of process heating, ventilating, cooling, plumbing, or
electrical equipment, communications equipment, production machinery or
equipment, moveable partitions, or any other equipment, machinery, inventory,
furniture or fixtures located within the building improvements which may be
removed from the Premises without any material permanent damage to the Premises
or the building systems thereof. Upon request Beneficiary shall executed such
documents as Trustor shall reasonably request to evidence the foregoing to any
prospective purchaser or lender of Trustor of such property.

                             GRANTING CLAUSE THREE

        TOGETHER WITH, all easements, rights-of-way, strips and gores of land,
streets, ways, alleys, passages, sewer rights, waters, water courses, water
rights and powers, and all estates, rights, titles, interests, privileges,
liberties, tenements, hereditaments, air rights, development rights and credits
and appurtenances of any nature whatsoever, in any way belonging, relating or
pertaining to, or above or below the Premises.

                             GRANTING CLAUSE FOUR

        TOGETHER WITH, all right, title and interest of Trustor, now owned or
hereafter acquired, in and to any land lying within the right-of-way of any
street, opened or proposed, adjoining the Premises, and any and all sidewalks,
alleys and strips and gores of land adjacent to or used in connection with the
Premises.

                             GRANTING CLAUSE FIVE

        TOGETHER WITH, all right, title and interest of Trustor in and to all
options to purchase or lease the Premises or any portion thereof or interest
therein, and any greater estate in the Premises owned or hereafter acquired by
Trustor.

                              GRANTING CLAUSE SIX

        TOGETHER WITH, all accounts receivable, contract rights, interests,
estates and other claims, both in law and in equity, which Trustor now has or
may hereafter acquire in the Premises.

                                       2
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                             GRANTING CLAUSE SEVEN

        TOGETHER WITH, all the estate, interest, right, title and other claim or
demand which Trustor now has or may hereafter acquire in any and all awards or
payments made for the taking by eminent domain, or by any proceeding or purchase
in lieu thereof, of the whole or any part of the Premises, including, without
limitation, any awards resulting from a change or grade of streets and awards
for severance damages together, in all cases, with any interest thereon.

                             GRANTING CLAUSE EIGHT

        TOGETHER WITH, all proceeds of and any unearned premiums on any
insurance policies covering the Premises, including, without limitation, the
right to receive and apply the proceeds of any insurance or judgments, or
settlements made in lieu thereof, for damage to the Premises.

                             GRANTING CLAUSE NINE

        TOGETHER WITH, all the estate, interest, right, title and other claim or
demand which Trustor now has or may hereafter acquire against anyone with
respect to any damage to all or any part of the Premises, including, without
limitation, damage arising or resulting from any defect in or with respect to
the design or construction of all or any part of the Improvements.

                              GRANTING CLAUSE TEN

        TOGETHER WITH, all deposits or other security or advance payments,
including rental payments, made by or on behalf of Trustor to others in
connection with the ownership or operation of all or any part of the Premises
including, without limitation, any such deposits or payments made with respect
to (i) insurance policies for loss or damage to the Premises or rentals
therefrom, (ii) utility service, (iii) maintenance, repair or similar services
supplied for the Premises, (iv) refuse removal or sewer service, and (v) parking
or similar services or rights appurtenant to the use of the Premises.

                            GRANTING CLAUSE ELEVEN

        TOGETHER WITH, all remainders, reversions, leasehold estate, other
estate, right, title, interest and other claim or demand of Trustor in and to
all leases or subleases covering the Premises or any portion thereof now or
hereafter existing or entered into, and all right, title and interest of Trustor
thereunder, including, without limitation, all cash or security deposits,
advance rentals and deposits or payments of similar nature (including, without
limitation, termination payments, damages or other payments in lieu thereof).

                            GRANTING CLAUSE TWELVE

        TOGETHER WITH, absolutely and presently, all rents, issues, profits,
cash collateral, royalties, income and other benefits, including, without
limitation, benefits accruing from all present and future oil, gas and mineral
leases and agreements derived from the Premises (collectively, the "Rents"),
subject to the right, power and authority given in the Assignment of Leases and
hereinafter given to Trustor as a licensee to collect and apply such Rents prior
to the occurrence of an Event of Default under the Loan Documents. The foregoing
Premises, Personal Property and the real property and personal property rights
set forth in Granting Clause Three

                                       3
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through Granting Clause Twelve, inclusive, hereinabove described or mentioned
are hereinafter collectively referred to as the "Secured Property".

          TO HAVE AND TO HOLD the Secured Property unto Trustee, its successors
and assigns, in trust, for the benefit of Beneficiary, its successors and
assigns, subject, however, to the terms, covenants and conditions contained
herein.

          PROVIDED, HOWEVER, if Trustor shall pay or cause to be paid to
Beneficiary in full the Obligations, at the times and in the manner stipulated
in the Loan Documents, and shall keep, perform and observe all and singular the
covenants and promises of Trustor in the Loan Documents, then this Deed of Trust
and all the properties, interests and rights hereby granted, encumbered,
transferred or assigned shall be released by Trustee and/or Beneficiary in
accordance with the laws of the State of California.

                                   ARTICLE I
                            COVENANTS AND AGREEMENTS
                            ------------------------

          Trustor hereby covenants and agrees for the benefit of Beneficiary and
Trustee as follows:

          1.1  Performance by Trustor.
               ----------------------
  Trustor shall pay the Obligations evidenced by the Note to Beneficiary and
shall keep and perform each and every other Obligation.

          1.2  Payment of Taxes, Assessments, Etc.
               -----------------------------------

               A.   Impositions. Trustor shall pay when due and payable, before
                    -----------
any fine, penalty, interest or cost for the non-payment thereof may be added
thereto, all taxes, assessments, water and sewer rents, rates and charges,
transit taxes, county taxes, charges for public utilities, excises, levies,
vault and all other license and permit fees and other governmental charges,
general and special, ordinary and extraordinary, unforeseen and foreseen, of any
kind and nature whatsoever which at any time prior to or during the term of this
Deed of Trust may be assessed, levied, confirmed, imposed upon or become due and
payable out of or in respect to, or become a lien on, the Secured Property or
any part thereof or any appurtenance thereto, prior to or on a parity with the
Obligations or the lien of this Deed of Trust, as the case may be (all such
taxes, assessments, water and sewer rents, rates and charges, transit taxes,
county taxes, charges for public utilities, excises, levies, vault and all other
license and permit fees and other governmental charges including all interest,
penalties, costs and charges accrued or accumulated thereon, are herein
collectively called "Impositions", and individually, an "Imposition").

               B.   Installments. Notwithstanding anything to the contrary
                    ------------

contained in subsection A of this Section 1.2, if by law any Impositions may at
             ------------         -----------
the option of the taxpayer be paid in installments (whether or not interest
shall accrue on the unpaid balance of such Impositions), Trustor may exercise
the option to pay the same (and any accrued interest on the unpaid balance of
such Impositions) in installments and, in such event, shall pay such
installments as the same respectively become due and before any fine, penalty,
further interest or cost may be added thereto.

               C.   Receipts. Trustor, upon request of Beneficiary, will furnish
                    --------
to Beneficiary within five (5) days after the date when any Imposition would
become delinquent, official

                                       4
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receipts of the appropriate taxing authority, or other evidence reasonably
satisfactory to Beneficiary evidencing the payment thereof.

               D.   Evidence of Payment. The certificate, advice or bill
                    -------------------
issued by the appropriate official (designated by law either to make or issue
the same or to receive payment of any Imposition) of non-payment of an
Imposition shall be prima facie evidence that such Imposition is due and unpaid
at the time of the making or issuance of such certificate, advice or bill.
Trustor agrees to pay Beneficiary, on demand, all charges, costs and expenses of
every kind incurred by Beneficiary in connection with obtaining evidence
satisfactory to Beneficiary that the payment of all Impositions is current and
that there is no Imposition due and owing or which has become or given rise to a
lien on the Secured Property or any part thereof or any appurtenance thereto.

               E.   Payment by Beneficiary. Subject to subsection G of this
                    ----------------------             ------------
Section 1.2, if Trustor shall fail to pay any Imposition in accordance with the
------------
provisions of this Section 1.2, Beneficiary may, at its option (but shall be
under no obligation to do so), pay such Imposition and Trustor will repay to
Beneficiary on demand any amount so paid by Beneficiary, with interest thereon
at the rate of four percent (4%) per annum greater than the interest rate set
forth in the Note (the "Increased Rate") to the date of repayment and all such
amounts shall be secured by this Deed of Trust. In no event shall the Increased
Rate be greater than the highest applicable interest rate permissible by law, if
any.

               F.   Change in Law. In the event of the passage after the date of
                    -------------
this Deed of Trust of any law of the State of California deducting the
Obligations from the value of the Secured Property or any part thereof for the
purpose of taxation or resulting in any lien thereon, or changing in any way the
laws now in force for the taxation of this Deed of Trust or the Obligations for
state or local purposes, or the manner of the operation of any such taxes so as
to affect the interest of Beneficiary, then, and in such event, Trustor shall
bear and pay the full amount of such taxes, provided that if for any reason
payment by Trustor of any such new or additional taxes would be unlawful or if
the payment thereof would constitute usury or render the loan or Obligations
wholly or partially usurious under any of the terms or provisions of the Note,
this Deed of Trust or otherwise, Beneficiary may, at its option, declare the
whole sum secured by this Deed of Trust with interest thereon to be immediately
due and payable, or Beneficiary may, at its option, pay that amount or portion
of such taxes as renders the loan or Obligations unlawful or usurious, in which
event Trustor shall concurrently therewith pay the remaining lawful and non-
usurious portion or balance of said taxes. Notwithstanding the foregoing, in no
event shall Trustor be liable for any tax imposed on the net income of
Beneficiary from all sources, or any business license or franchise taxes
generally imposed on the conduct of Beneficiary's business.

               G.   Permitted Contest. Provided that there is no existing Event
                    -----------------
of Default under any of the Loan Documents, Trustor shall have the right to
contest the amount or the validity, in whole or in part, of any Imposition by
appropriate proceedings diligently conducted in good faith. Notwithstanding the
provisions of this Section 1.2, but subject to the provisions of subsection
                   -----------                                   ----------
1.2H, Trustor may postpone or defer payment of such Imposition if Trustor, on or
----
before the due date thereof, shall (1) deposit or cause to be deposited with
Beneficiary a surety bond issued by a surety company of recognized
responsibility acceptable to Beneficiary conditioned upon and securing the
payment in full of such Imposition, pending the determination of such contest,
or (2) deposit or cause to be deposited with Beneficiary an amount equal to one
hundred (100%) percent of such Imposition or any balance thereof remaining
unpaid, and from

                                       5
<PAGE>

time to time, but not more frequently than quarterly, deposit amounts in order
to keep in deposit at all such times an amount equal to one hundred (100%)
percent of the Imposition remaining unpaid, or (3) furnish or cause to be
furnished to Beneficiary other security reasonably satisfactory to Beneficiary.
If such deposit is made or such security furnished and Trustor continues in good
faith to contest the validity of such Imposition by appropriate legal
proceedings which shall operate to prevent the collection of such Imposition so
contested and the sale of the Secured Property or any part thereof to satisfy
such Imposition, Trustor shall be under no obligation to pay such Imposition
until such time as it has been finally determined to be a valid lien on the
Secured Property. Upon termination of any such proceedings, Trustor shall pay in
full the amount of such Imposition or part thereof as shall have been finally
determined in such proceedings together with any liabilities in connection
therewith. Beneficiary shall have the full power and authority to apply or
require the application of any amounts that may have been deposited pursuant to
this subsection 1.2G to payment of any unpaid Imposition without liability,
     ---------------
however, for any failure to apply any amount so deposited unless Trustor or the
person making such deposit had requested in writing the application of such
amount to the payment of the particular Imposition with respect to which it was
deposited in which event Beneficiary shall apply such amounts in accordance with
such request. Any surplus remaining in the hand of the Beneficiary after the
Imposition for which the deposit was made has been paid in full shall be repaid
to Trustor or the person making such deposit unless Trustor shall be in default
under any of the Loan Documents, and in case of such default such surplus shall
be applied to cure such default, and the remainder of such surplus, if any,
shall be repaid to Trustor.

               H.   No Lease Default. If contesting the validity or amount of
                    ----------------
any Imposition shall cause a breach of any of the terms, conditions or covenants
required to be performed by Trustor as lessor under any Lease (as hereinafter
defined), then Trustor shall not have the right to contest the same as provided
in subsection 1.2G, and payment of such Imposition shall be made pursuant to
   ---------------
subsection 1.2A of this Section 1.2.
---------------         -----------

               I.   Joint Assessment. Trustor covenants and agrees not to
                    ----------------
suffer, permit or initiate the joint assessment of the Premises and Personal
Property, or any other procedure whereby the lien of the personal property taxes
shall be assessed or levied or charged to the Secured Property together with
real property taxes.

          1.3  Insurance.
               ---------

               A.   Extended Coverage. Trustor, at its sole cost and expense,
                    -----------------
shall keep the Personal Property and the Improvements insured during the term of
this Deed of Trust against loss or damage by fire and against loss or damage by
other risks now embraced by "Extended Coverage," so called, in amounts, forms
and substance satisfactory to Beneficiary, but in no event shall the amounts be
less than the greater of (1) 100% of the full replacement cost of the Personal
Property and the Improvements, including work performed for tenants, without
deduction for depreciation; (2) the amounts required to prevent any insured from
becoming a co-insurer; or (3) the amounts required under any Lease.

               B.   Additional Coverage. Trustor, at its sole cost and expense,
                    -------------------
shall also maintain:

                    (1)     Personal injury and property damage liability
insurance against claims for bodily injury, death or property damage, occurring
on, in or about the Secured

                                       6
<PAGE>

Property or in or about the adjoining streets, sidewalks and passageways; such
insurance to afford protection, during the term of this Deed of Trust, as is
commonly insured against and generally available in the case of premises
similarly situated and otherwise in amounts and in form and substance reasonably
satisfactory to Beneficiary;

                        (2)     If there are any Leases, rent or business
interruption insurance in an amount equal to one year's aggregate rentals
(including, without limitation, minimum rentals, escalation charges, percentage
rents, based on sales projections acceptable to Beneficiary, and other
additional rentals, and any other amounts payable by tenants or other occupants
under Leases or otherwise) payable by all tenants and other occupants at the
Premises, which amount shall be increased from time to time upon the leasing of
space at the Premises or upon the increase in aggregate rentals (including the
other items referred to above);

                        (3)     War risk insurance upon the building and other
Improvements as and when such insurance is obtainable at reasonable rates from
the United States of America or any agency or instrumentality thereof for the
maximum amount of insurance obtainable;

                        (4)     Such other insurance, including, without
limitation, all risk in such amounts and in form and substance as may from time
to time be reasonably required by Beneficiary against other insurable hazards,
including, but not limited to, malicious mischief, vandalism, windstorm, nuclear
reaction or radioactive contamination (excluding earthquake), which at the time
are commonly insured against and generally available in the case of premises
similarly situated, due regard being or to be given to the height and type of
Improvement, its location, construction, use and occupancy;

                        (5)     If the Improvements are located in a flood
hazard area, flood insurance on the Improvements in an amount equal to the
lesser of "full replacement cost" thereof or the maximum amount of insurance
obtainable; and

                        (6)     Insurance against loss or damage from (a)
leakage of sprinkler systems and (b) explosion of steam boilers, air
conditioning equipment, pressure vessels or similar apparatus now or hereafter
installed in or on the Premises in such amounts as Beneficiary shall from time
to time reasonably require.

                        (7)     Trustor shall pay all premiums and other charges
required to maintain or replace Beneficiary's title insurance policy insuring
the lien of this Deed of Trust in an amount equal to the Obligations.

                    C.   Separate Insurance.  Trustor shall not carry separate
                         ------------------
insurance, concurrent in kind or form, and contributing, in the event of loss,
with any insurance required hereunder. Trustor may, however, effect for its own
account any insurance not required under the provisions of this Deed of Trust
but any such insurance effected by Trustor on the Secured Property whether or
not required under this Section 1.3 shall be for the mutual benefit of Trustor
                        -----------
and Beneficiary, as their respective interests may appear, and shall be subject
to all other provisions of this Section 1.3.
                                -----------

                    D.   Insurers; Policies. All insurance provided for in this
                         ------------------
Section 1.3 shall be effected under valid and enforceable policies issued by
-----------
financially responsible insurers authorized to do business in the State of
California, which are approved in writing by

                                       7
<PAGE>

Beneficiary. All such policies shall be deposited with and held by Beneficiary.
All casualty insurance policies and rent insurance policies shall be payable to
Beneficiary pursuant to a standard non-contributory mortgage endorsement in
favor of Beneficiary, and such policies shall contain a waiver of subrogation
endorsement, all in form and content satisfactory to Beneficiary. All original
policies shall contain a provision that such policies will not be canceled or
materially amended, which term shall include any reduction in the scope or
limits of coverage, without at least thirty (30) days' prior written notice to
Beneficiary. Not less than fifteen (15) days prior to the expiration dates of
the policies theretofore furnished pursuant to this Deed of Trust, originals of
the policies bearing notations evidencing the payment of premiums or accompanied
by other evidence satisfactory to Beneficiary of such payment, shall be
delivered by Trustor to Beneficiary. In the event of a change in ownership of
the Secured Property immediate notice thereof shall be delivered to all insurers
by Trustor.

               E.   Beneficiary's Right to Provide Coverage. In the event
                    ---------------------------------------
Trustor fails to provide, maintain, keep in force or deliver and furnish to
Beneficiary the original policies of insurance required by this Section 1.3,
                                                                 -----------
Beneficiary may, at its sole option, procure such insurance and Trustor will pay
all premiums thereon promptly upon demand by Beneficiary with interest thereon
at the Increased Rate to the date of repayment and all such amounts shall be
secured by this Deed of Trust.

               F.   Damage or Destruction. After the happening of any casualty
                    ---------------------
to the Secured Property or any part thereof, Trustor shall give prompt written
notice thereof to Beneficiary and the following shall apply:

                        (1)   In the event of any damage or destruction of all
or any part of the Secured Property, all proceeds of insurance shall be payable
to Beneficiary, so long as Beneficiary is Sun Life Assurance Company of Canada
(U.S.) or a financial institution of comparable credit or, alternatively to an
escrow account at a national bank of sound financial reputation, and Trustor
hereby authorizes and directs any affected insurance company to make payment of
such proceeds directly to Beneficiary. Insurance proceeds held by Beneficiary
may be commingled with other funds in Beneficiary's possession, shall constitute
additional security for the Obligations and Trustor shall not be entitled to the
payment of interest thereon. So long as no Event of Default exists, Trustor is
hereby authorized and empowered by Beneficiary, subject to the approval of
Beneficiary, to settle, adjust or compromise any claims for loss, damage or
destruction under any policy or policies of insurance; provided, however, that
Trustor shall give notice to and consult with Beneficiary prior to any such
action.

                        (2)   In the event of any such damage or
destruction,subject to subsection 1.3G Beneficiary shall have the option in its
                       ---------------
sole and absolute discretion and without regard to the adequacy of its security
hereunder, of applying all or part of the insurance proceeds (a) to the
Obligations, whether or not then due, in the inverse order of maturity, or (b)
to the repair or restoration of the Secured Property, or (c) to cure any then
current default under any of the Loan Documents, or (d) to reimburse the
Beneficiary for its costs and expenses in connection with the recovery of such
insurance proceeds, or (e) any combination of the foregoing. Provided, however,
that if the Obligations are paid in full by such application then no prepayment
premium shall be due or payable.

                        (3)   Nothing herein contained shall be deemed to excuse
Trustor from repairing or maintaining the Secured Property as provided in
Section 1.5 hereof or restoring all
-----------
                                       8
<PAGE>

damage or destruction to the Secured Property, regardless of whether there are
insurance proceeds available or whether such proceeds are sufficient in amount,
and the application or release by Beneficiary of any insurance proceeds shall
not cure or waive any Event of Default (as hereinafter defined) or notice of
default under this Deed of Trust or invalidate any act done pursuant to such
notice.

               G.   Trustor's Use of Proceeds.
                    -------------------------

                    (1)    Notwithstanding the provisions of Section 1.3(F)(2)
                                                             -----------------
above (except for any destruction which occurs during the last six (6) months of
the loan term), upon full satisfaction of all of the conditions set forth below,
the insurance proceeds shall be made available to Trustor for repair and
restoration after deducting and payment to Beneficiary of Beneficiary's costs of
collection and disbursement of such proceeds (which costs shall not include
Beneficiary's overhead or the compensation of Beneficiary's employees),
provided:

                              (a) The proceeds are deposited in accordance with
               Section 1.3 (F)(1);

                              (b) No default shall have occurred and be
               continuing under the terms of any of the Loan Documents;

                              (c) The insurance carrier does not deny liability
               to Trustor and Beneficiary;

                              (d) If Beneficiary so requests, Beneficiary is
               furnished with an estimate of the cost of restoration accompanied
               by a certificate of an architect or registered engineer approved
               by Beneficiary, which approval shall not be unreasonably withheld
               ("Beneficiary's Architect") as to such costs;

                              (e) The value of the Secured Property so
               restored or rebuilt shall be at least equal to what was
               originally erected;

                              (f) Trustor furnishes Beneficiary with evidence
               reasonably satisfactory to Beneficiary that all Improvements to
               be restored and/or reconstructed and their use shall fully comply
               with all (i) applicable easements, covenants, conditions,
               restrictions or other private agreements affecting the Premises,
               (ii) zoning and building laws, ordinances and regulations and
               (iii) all other applicable federal, state and municipal laws,
               regulations and requirements;

                              (g) If the estimated cost of reconstruction
               exceeds the proceeds available, at Beneficiary's option, Trustor
               shall (i) furnish a bond of completion or provide such other
               evidence reasonably satisfactory to Beneficiary of Trustor's
               ability to meet such excess costs or (ii) deposit with
               Beneficiary additional funds equal to such excess;

                              (h) If such damage is in excess of
               $100,000.00, Beneficiary shall have received notice of
               destruction caused by such fire or other hazard from the Trustor
               within thirty (30) days from the date thereof,

                                       9
<PAGE>

               which notice shall state the date of such fire or other hazard
               and a request to Beneficiary to make the insurance proceeds
               available to Trustor;

                                (i) The aggregate monthly net income under all
               Leases remaining in full force and effect with respect to the
               Secured Property after restoration shall be in an amount
               sufficient to pay the monthly installments of principal and
               interest required to be paid upon the Obligations as well as all
               escrows for taxes and insurance as estimated by Beneficiary
               hereunder;

                                (j) Beneficiary shall have reasonably determined
                that such damage or destruction is fully reparable prior to the
                Maturity Date (as defined in the Note).

                (2)     Disbursement of the proceeds during the course of
reconstruction shall be conditioned upon the certification of Beneficiary's
Architect as to the cost of the work done and the conformity of the work to
plans and specifications approved by Beneficiary, which approval shall not be
unreasonably withheld and evidence supplied by a title insurance company
acceptable to Beneficiary that there are no asserted liens arising out of the
reconstruction or otherwise. Notwithstanding the above, a portion of the
proceeds may be released prior to the commencement of reconstruction to pay for
items approved by Beneficiary in its sole discretion. Disbursements shall be
made within ten (10) business days after a request by Trustor. No payment made
prior to the final completion of work shall exceed ninety percent (90%) of the
value of the work performed from time to time, and at all times the undisbursed
balance of said proceeds remaining with the Beneficiary must be at least
sufficient to pay for the cost of completion of the work free and clear of
liens. Final payment shall be upon a certification of Beneficiary's Architect as
to completion in accordance with plans and specifications approved by
Beneficiary.

                (3)     At such time as Beneficiary's Architect shall certify to
Beneficiary that the damaged or destroyed portion of the Secured Property has
been put in a state of repair equivalent to or better than that existing prior
to the date of such fire or other casualty, the work shall be deemed completed.
With Beneficiary's prior written consent, which may be granted or withheld in
Beneficiary's sole discretion, any certification required to be made by an
architect or registered engineer may be made by a reputable contractor approved
by Beneficiary. The balance of the insurance proceeds so deposited with
Beneficiary after full disbursement in accordance with subsection 1.3G, at the
                                                       ---------------
sole option of Beneficiary, shall be either (a) returned to Trustor, it being
understood that such obligation or reimbursement shall not exceed the amount of
insurance proceeds for such restoration and/or repair, or (b) applied to the
payment of installments of the Obligations in inverse order of maturity whether
or not such installments shall be due and payable, without imposition of a
prepayment charge or premium.

                (4)     In all cases where any destruction to the Secured
Property by fire or other casualty occurs during the last six (6) months of the
loan term, or in Beneficiary's reasonable judgment, Trustor is not proceeding
with the repair or restoration in a manner that would entitle Trustor to have
the proceeds disbursed to it, or for any other reason Beneficiary determines in
its reasonable judgment that Trustor shall not be entitled to such proceeds
pursuant to the terms of this Deed of Trust, Beneficiary shall have the options
set forth in subsection F(2) above.
             ---------------
                                      10
<PAGE>

                    (5)     Under no circumstances shall Beneficiary become
personally liable for the fulfillment of the terms, covenants and conditions
contained in any of the Leases or obligated to take any action to restore the
Secured Property.

               H.   Transfer of Interest in Policies. In the event of
                    --------------------------------
foreclosure of this Deed of Trust or other transfer of title or assignment of
the Secured Property in extinguishment, in whole or in part, of the Obligations,
all right, title and interest of Trustor in and to all policies of insurance
required by this Section 1.3 shall inure to the benefit of and pass to the
                 -----------
successor in interest to Trustor or the purchaser or grantee of the Secured
Property. If any claim under any insurance policy shall be paid after the
extinguishment of the Obligations, and if such foreclosure of this Deed of
Trust, or other transfer of title to or assignment of the Secured Property,
shall have resulted in extinguishing the Obligations for an amount less than the
total of the amount of the unpaid Obligations, with interest thereon at the
Increased Rate, plus counsel fees, costs and other disbursements incurred by
Beneficiary at the time of the extinguishment of the Obligations, then the
portion of the payment in satisfaction of the claim which is equal to the
difference between the total amount above referred to and the amount theretofore
paid to Beneficiary shall belong to and be the property of Beneficiary and shall
be paid to said Beneficiary, and Trustor hereby assigns, transfers and sets over
to Beneficiary all of Trustor's right, title and interest in and to said sum.
The balance, if any, shall be paid to Trustor. Notwithstanding the above,
Trustor shall retain an interest in the insurance policies above-described
during any redemption period.

          1.4  Escrow Deposits. To further secure the payment of the Impositions
               ---------------
and the premiums for the insurance required by this Deed of Trust, Trustor will
deposit with Beneficiary, so long as Beneficiary is Sun Life Assurance Company
of Canada (U.S.) or a financial institution of comparable credit or,
alternatively to an escrow account at a national bank of sound financial
reputation, on the due date of each monthly installment of principal and
interest under the Note, a sum which shall be equal to one-twelfth (1/12) of the
annual total of the Impositions and such insurance premiums required to pay the
next installment of Impositions or insurance premiums, as estimated by
Beneficiary, one month prior to the date when such Impositions and insurance
premiums shall become due and payable. Beneficiary agrees that the holder of the
Escrow Deposits may pay all interest accrued on such Escrow Deposits semi-
annually to Trustor. Such deposits shall be held by Beneficiary, or its
designee, free of any liens or claims on the part of creditors of Trustor and as
a part of the security of Beneficiary, and shall be used by Beneficiary, or its
designee, to pay current Impositions and insurance premiums as the same shall
become payable. Said deposits shall not be, nor be deemed to be, trust funds but
may, be commingled with general funds of Beneficiary, or its designee. If at any
time and for any reason Beneficiary determines that said deposits are
insufficient to pay the Impositions and insurance premiums in full as they
become payable, Trustor will deposit with Beneficiary, or its designee, within
ten (10) days after demand therefor, such additional sum or sums as may be
required in order for Beneficiary, or its designee, to pay such Impositions and
insurance premiums in full. It shall be the responsibility of Trustor to furnish
bills to Beneficiary in sufficient time for Beneficiary to pay the Impositions
and insurance premiums before any penalty attaches and before the policies
lapse. Transfer of legal title to the Secured Property shall automatically
transfer to the new owner of the beneficial interest in all sums deposited under
the provisions of this Section 1.4.
                       -----------

          This Section 1.4 is intended to provide additional security for the
               -----------
payment of all amounts now and in the future payable for the items set forth
above.  To that end, Trustor hereby grants, pledges, transfers and assigns to
Beneficiary a continuing security interest in and right of set-off

                                      11
<PAGE>

against the following, whether now existing or hereafter acquired or arising:
all right, title and interest, in, to and under (i) all instruments, securities,
documents, accounts, general intangibles, money, and other property and contents
therein and thereof, and all rights relating thereto and proceeds therefrom and
thereof, including, without limitation, the deposits made into any account from
time to time at any time or from time to time in the possession or control of
the agent of Beneficiary, (ii) all books and records relating to the types and
items of property described in the foregoing clause (i), and (iii) all proceeds
(whether cash or non-cash, and including, without limitation, insurance
proceeds) and products of the property described in the foregoing clause (i),
and all replacements and substitutions therefor and all additions and accessions
thereto.

          In addition to all rights and remedies given to Beneficiary by this
Deed of Trust, Beneficiary shall have the rights and remedies of a secured party
under the Uniform Commercial Code and any other applicable law.  Upon notice
from Beneficiary, Trustor will promptly execute such financing statements,
continuation statements and other documents as may be necessary or convenient to
perfect, continue or otherwise evidence said security interest and pay all
reasonable expenses and fees for the preparation and filing thereof.

          Upon occurrence of an Event of Default (as defined herein), all funds
held in any such account shall immediately be paid over to Beneficiary.
Beneficiary and Trustor agree that Beneficiary shall be entitled to apply such
funds to the balance of the Loan in its sole discretion, without payment of a
prepayment premium or charge.

          1.5  Care and Use of Premises.
               ------------------------

               A.   Maintenance and Repairs. Trustor, at its sole cost and
                    -----------------------
expense, will take good care of the Secured Property and the sidewalks and curbs
adjoining the Secured Property and will keep the same in good order and
condition, and make all necessary repairs thereto, interior and exterior,
structural and nonstructural, ordinary and extraordinary, unforeseen and
foreseen, and will not commit or suffer to be committed any waste of the Secured
Property and will not do or suffer to be done anything which will increase the
risk of fire or other hazard to the Secured Property or any part thereof.

               B.   Standard of Repairs. The necessity for and adequacy of
                    -------------------
repairs to the Improvements pursuant to subsection 1.5A shall be measured by the
                                        ---------------
standard which is appropriate for two (2) research and development/industrial
buildings containing 138,366 square feet and related facilities of similar
construction and class, provided that Trustor shall in any event make all
repairs necessary to avoid any structural damage to the Improvements and to keep
the Improvements in a proper condition for their intended use. When used in this
Section 1.5, the terms "repair" and "repairs" shall include all necessary
-----------
renewals and replacements. All repairs made by Trustor shall be made with first-
class materials and in a good, substantial and workmanlike manner and shall be
equal or better in quality and class to the original work.

               C.   Notice to Trustor. Trustor will notify Beneficiary promptly
                    -----------------
of any damage to the Secured Property in excess of $100,000.00.

               D.   Removal of Equipment. Trustor shall have the right, at any
                    --------------------
time and from time to time, to remove and dispose of equipment which is Secured
Property and which may have become obsolete or unfit for use or which is no
longer useful in the operation of the Secured Property. Trustor will promptly
replace any such equipment so disposed of or removed with

                                      12
<PAGE>

other equipment of a value and serviceability equal to or greater than the
original value and serviceability of the equipment so disposed of or removed,
free of superior title, liens and claims; except that, if by reasons of
technological or other developments in the operation and maintenance of
buildings of the general character of the Improvements, no replacement of the
building equipment so removed or disposed of is necessary or desirable in the
proper operation or maintenance of said Improvements, Trustor shall not be
required to replace same. All such replacements or additional equipment shall be
covered by the security interest herein granted.

               E.   Compliance With Laws and Insurance. Trustor shall promptly
                    ----------------------------------
comply, or cause another party to comply, with all present and future laws,
ordinances, orders, rules, regulations and requirements of all federal, state
and municipal governments, courts, departments, commissions, boards and
officers, any national or local Board of Fire Underwriters, including, without
limitation, all zoning, building code, environmental protection and equal
employment opportunity statutes, ordinances, regulations, orders and
restrictions, foreseen or unforeseen, ordinary as well as extraordinary, which
may be applicable to the Secured Property and the sidewalks and curbs adjoining
the Secured Property or to the use or manner of use of the Secured Property
(collectively, "Regulations") whether or not such Regulations shall necessitate
structural changes or improvements. Trustor shall not bring or keep any article
upon any of the Secured Property or cause or permit any condition to exist
thereon which would be prohibited by or could invalidate any insurance coverage
maintained, or required hereunder to be maintained, by Trustor on or with
respect to any part of the Secured Property, and further shall do all other acts
which from the character or use of the Secured Property may be necessary to
protect the security hereof, the specific enumerations herein not excluding the
general.

               F.   Permitted Contests. Trustor shall have the right, after
                    ------------------
prior notice to Beneficiary, to contest by appropriate legal proceedings
diligently conducted in good faith, without cost or expense to Beneficiary, the
validity or application of any Hazardous Materials Law (as defined in the
Indemnity) and any other Regulation, and which does not subject Beneficiary to
any civil or criminal liability, subject to the following:

                    (1)   If by the terms of any such Hazardous Materials Law
(as defined in the Indemnity) or any applicable Regulation, compliance therewith
pending the prosecution of any such proceeding may legally be delayed without
incurring any lien or charge of any kind against the Secured Property, Trustor
may delay compliance therewith until the final determination of such proceeding.

                    (2)   If any lien or charge against the Secured Property
would be incurred by reason of any such delay, Trustor, may contest as aforesaid
and delay as aforesaid, provided Trustor (a) furnishes to Beneficiary security,
reasonably satisfactory to Beneficiary, against any loss or injury by reason of
such contest or delay, and (b) prosecutes the contest with due diligence.
Anything in subsection 1.5E or this subsection 1.5F to the contrary
            ---------------         ---------------
notwithstanding, if the contesting of the validity or legality of any such
Hazardous Materials Law (as defined in the Indemnity) or any other Regulation
shall cause a breach of any of the terms, conditions or covenants of any Lease
on Trustor's part, as lessor therein, to be performed, then Trustor shall not
have the right to contest the same as herein provided but compliance therewith
must be made pursuant to subsection 1.5E hereof.
                         ---------------

               G.   Compliance With Instruments of Record. Trustor will promptly
                    -------------------------------------
perform and observe, or cause to be performed and observed, all of the terms,
covenants and conditions of

                                      13
<PAGE>

all instruments of record affecting the Secured Property, non-compliance with
which may affect the priority of the lien of this Deed of Trust, or which may
impose any duty or obligation upon Trustor or any lessee or other occupant of
the Secured Property or any part thereof, and Trustor shall do or cause to be
done all things necessary to preserve intact and unimpaired any and all
easements, appurtenances and other interests and rights in favor of or
constituting any portion of the Secured Property. The foregoing notwithstanding,
Trustor shall have the right to contest any such instruments affecting the
Secured Property, provided that Trustor incurs no lien or charge of any kind
against the Secured Property.

               H.   Alteration of Secured Property. Except as provided in
                    ------------------------------
Section 1.5, Trustor will not demolish, remove, construct, restore, add to or
alter any Improvement or any extension thereof, nor consent to or permit any
such demolition, removal, construction, restoration, addition or alteration
without Beneficiary's prior written consent, except for (1) non-structural
alterations or improvements which do not reduce the value of the Secured
Property and which are required for the conduct of Trustor's business; (2)
ordinary, non-structural maintenance work, and (3) structural repairs and
restorations having a cost of less than $100,000.00.

               I.   Parking. Trustor will grant no parking rights in the
                    -------
Secured Property other than those provided for in existing Leases except with
Beneficiary's prior written consent. The Secured Property shall contain at all
times not less than 490 on-site parking spaces for standard-size American
automobiles, said parking spaces to be located upon the Land. If any part of the
automobile parking areas included within said Secured Property is taken by
condemnation or said areas are otherwise reduced, Trustor will provide parking
facilities in kind, size and location to comply with all Leases, and before
making any contract therefor will furnish to Beneficiary satisfactory assurance
of completion thereof free of liens and in conformity with all governmental
zoning ordinances and regulations.

               J.   Entry on Secured Property. Beneficiary or its representative
                    -------------------------
is hereby authorized to enter upon and inspect the Secured Property at all
reasonable times.

               K.   No Consent to Alterations or Repairs.  Nothing contained
                    ------------------------------------
in this Deed of Trust shall be deemed or construed in any way as constituting
the consent or request of Beneficiary, express or implied by inference or
otherwise to any contractor, subcontractor, laborer or materialman for the
performance of any labor or the furnishing of any materials for any specific
improvement, alteration to or repair of the Secured Property or any part
thereof.

               L.   Mechanics Liens.  Trustor will discharge, pay, or bond, or
                    ---------------
cause to be discharged, paid or bonded, from time to time when the same shall
become due, all lawful claims and demands of mechanics, materialmen, laborers
and others which, if unpaid, might result in, or permit the creation of, a lien
on the Secured Property or any part thereof, or on the revenues, rents, issues,
income and profits arising therefrom, and Trustor will do or cause to be done
everything necessary so that the lien of this Deed of Trust shall be fully
preserved, at the cost of Trustor without expense to Beneficiary.

               M.   Use of Secured Property by Trustor.  Trustor will use, or
                    ----------------------------------
cause to be used, the Secured Property principally and continuously as and for
research and development/industrial buildings uses. Trustor shall not use, or
permit the use of the Secured Property or any part thereof for any other
principal use without the prior written consent of Beneficiary.

                                      14
<PAGE>

               N.   Use of Secured Property by Public.  Trustor shall not
                    ---------------------------------
suffer or permit the Secured Property, or any portion thereof, to be used by the
public as such, without restriction or in such manner as might impair Trustor's
title to the Secured Property or any portion thereof, or in such manner as might
make possible a claim or claims of adverse usage or adverse possession by the
public, or of implied dedication of the Secured Property or any portion thereof.

          1.6  Financial Information.
               ---------------------

                A.  Audit.  Trustor will keep and maintain complete and accurate
                    -----
books and records of the earnings and expenses of the Secured Property and,
without expense to Beneficiary, furnish to Beneficiary, within ninety (90) days
after the end of each fiscal year of Trustor, the following statements prepared
and certified by Trustor reasonably satisfactory to Beneficiary, and prepared by
the Chief Financial Officer of Integrated Packaging Assembly Corporation which
shall include, (as to the Secured Property only) with respect to the prior
fiscal year: (l) a statement of assets and liabilities of Trustor with respect
to the Secured Property only, (2) a statement of the source and application of
funds by Trustor with respect to the Secured Property, and  (3) a detailed
profit and loss statement relating to the ownership and operation of the Secured
Property, including, without limitation, all rents and other income derived
therefrom and all expenses paid or incurred in connection therewith.  The audit
shall also include annual sales figures for all tenants in the Secured Property
who are required by their respective lease to provide same to Trustor.  In
addition to and simultaneously with the financial statements Trustor shall
deliver to Beneficiary a statement reflecting the complete rental status of the
Secured Property showing the name of each tenant, the area in square feet
occupied, the remaining term of the lease and the rental being paid.

               B.   Right to Inspect Books and Records.  Beneficiary or its
                    ----------------------------------
representative shall have the right to examine and make copies of such books and
records and all supporting vouchers and data relating to the Premises, at the
Premises or at Trustor's principal place of business at Trustor's expense.

          1.7  Condemnation.
               ------------

               A.   Beneficiary's Right to Participate in Proceedings.  If the
                    -------------------------------------------------
Secured Property, or any part thereof, shall be taken in condemnation
proceedings or by exercise of any right of eminent domain (collectively,
"Condemnation Proceedings"), Beneficiary shall have the right to participate in
any such Condemnation Proceedings and the award or payment that may be made in
any such Condemnation Proceedings is hereby assigned to Beneficiary and shall be
deposited with Beneficiary, so long as Beneficiary is Sun Life Assurance Company
of Canada or a financial institution of comparable credit or, alternatively to
an escrow account at a national bank of sound financial reputation, and
disbursed in the manner set forth in this Section 1.7. Trustor will give
                                          -----------
Beneficiary immediate notice of the actual or threatened commencement of any
Condemnation Proceedings affecting all or any part of the Secured Property,
including severance and consequential damage and change in grade in streets, and
will deliver to Beneficiary copies of any and all papers served in connection
with any such proceedings.  Notwithstanding the foregoing, Beneficiary is hereby
authorized, at its option, to commence, appear in and prosecute in its own or
Trustor's name any action or proceeding relating to any such condemnation and to
settle or compromise any claim in connection therewith; provided however that
Beneficiary shall give notice to and consult with Trustor prior to any action.
No settlement for the damages sustained thereby shall be made by Trustor without
Beneficiary's prior written approval thereof

                                      15
<PAGE>

and, except during the existence of an Event of Default, Trustor's prior written
approval thereof. Trustor agrees to execute any and all further documents that
may be required in order to facilitate the collection of any award or awards and
the making of any such deposit.

               B.   Application of Condemnation Award.  If at any time title or
                    ---------------------------------
temporary title to the whole or any part of the Secured Property shall be taken
in Condemnation

                                      16
<PAGE>

Proceedings or pursuant to any agreement between Trustor, Beneficiary and those
authorized to exercise the right to condemnation, Beneficiary, at its option in
its sole and absolute discretion and without regard to the adequacy of its
security hereunder, shall have the right to apply such award or proceeds which
it receives to payment of the Obligations in inverse order of maturity without a
prepayment charge or premium.  In the event that all or substantially  all of
the Secured Property is taken and the amount of the award or proceeds received
by Beneficiary shall not be sufficient to pay the then unpaid balance of the
Obligations, then the balance of the Obligations shall, at the option of
Beneficiary, become immediately due and payable and Trustor shall, within ten
(10) days after the application of the award or proceeds as aforesaid, pay such
deficiency to Beneficiary. "Substantially all of the Secured Property" shall be
deemed to have been taken if the remainder of the Secured Property (1) in the
sole opinion of Beneficiary's Architect, cannot be capable of being restored to
a self-contained and architecturally complete unit or units or (2) in the sole
opinion of Beneficiary, the balance of the Secured Property as restored will not
be economically viable and capable of supporting all carrying charges and
operation and maintenance expenses.

               C.   Reimbursement of Costs.  In the case of any taking covered
                    ----------------------
by the provisions of this Section 1.7, Beneficiary (to the extent that
                          -----------
Beneficiary has not been reimbursed therefor by Trustor) shall be entitled, as a
first priority, to the reimbursement out of any award or awards for all
reasonable costs, fees, reimbursements to Beneficiary and expenses incurred in
the determination and collection of any such awards.

               D.   Existing Obligations.   Notwithstanding any taking by
                    --------------------
Condemnation Proceedings, Trustor shall continue to pay the monthly installments
due under the Note as well as all other sums secured by this Deed of Trust at
the rate provided therein until any such award or payment shall have been
actually received by Beneficiary and applied to the Obligations. Any reduction
in the Obligations resulting from Beneficiary's application of such award or
payment as hereinabove set forth shall be deemed to take effect only on the date
of receipt by Beneficiary. If prior to Beneficiary's receipt of such award or
payment the Secured Property shall have been sold on foreclosure of this Deed of
Trust, Beneficiary shall have the right to receive said award or payment to the
extent of any portion of the Obligations still unpaid after application of the
proceeds of the foreclosure sale, with interest thereon at the Increased Rate,
plus attorneys' fees and other costs and disbursements incurred by Beneficiary
in connection with the collection of such award or payment and in establishing
the deficiency. The application of condemnation proceeds to the obligations
secured by this Deed of Trust, whether or not then due or payable, shall not
postpone, abate or reduce any of the periodic installments of principal and/or
interest thereafter to become due under this Deed of Trust until the Obligations
are paid in full.

               E.   Application of Award. Notwithstanding the provisions of
                    --------------------
Section 1.7B above (except for a taking which occurs during the last six months
------------
of the loan term), upon full satisfaction of all of the following conditions,
Beneficiary shall, after deducting Beneficiary's costs in connection with the
disbursement of funds, apply the award or payment to the cost to restore, repair
or alter the remaining portion of the Secured Property, subject to the
provisions of subsection 1.3F (which shall apply in all respects except that any
              ---------------
reference therein to insurance proceeds shall be deemed to refer to the award or
payment in the taking), and Trustor will promptly restore, repair or alter the
remaining Secured Property. The provisions of this subsection 1.7E shall not
                                                   ---------------
apply unless (1) the balance of the Improvements shall, in the opinion of
Beneficiary's Architect, be capable of being restored to a self-contained and
architecturally complete unit or units, (2) the balance of the Improvements
after restoration to a self-contained

                                      17
<PAGE>

and architecturally complete unit or units shall, in the opinion of Beneficiary,
be economically viable and capable of supporting all carrying charges and
operating and maintenance expenses of the Secured Property, after reduction, if
any, of the Obligations in accordance with the following sentence, and (3)
Trustor shall furnish to Beneficiary evidence satisfactory to Beneficiary that
the Improvements so restored or reconstructed and their use would fully comply
with all zoning and building laws, ordinances and regulations, and with all
other applicable federal, state and municipal laws and requirements. The balance
of the condemnation award or payment so deposited with Beneficiary, after
disbursement in accordance with this subsection 1.7E, shall be applied to the
                                     ---------------
Obligations in inverse order of maturity, whether or not the same shall then be
due and payable without a prepayment charge or premium. All awards and payments
and other sums deposited with Beneficiary, until expended or applied as provided
in this subsection 1.7E, may be commingled with the general funds of
        ---------------
Beneficiary and shall constitute additional security for the Obligations and
shall not bear interest. In all cases where a taking occurs during the last six
months of the loan term, or in Beneficiary's sole judgment Trustor is not
proceeding with the repair or restoration in a manner that would entitle Trustor
to have the awards or payments disbursed to it or for any other reason
Beneficiary determines in its sole judgment that Trustor shall not be entitled
to such awards or payments pursuant to the terms of this Deed of Trust,
Beneficiary, at its option in its sole and absolute discretion and without
regard to the adequacy of its security hereunder, shall have the right to apply
such award or proceeds which it receives to payment of the Obligations in the
inverse order of maturity, whether or not the same shall then be due and
payable.

          1.8  Leases.
               ------

               A.   Performance of Lessor's Covenants. Trustor, as lessor, may,
                    ---------------------------------
in accordance with the Assignment of Lease enter into leases with space tenants,
as lessees, for parts or all of the Secured Property (all such leases for parts
or all of the Secured Property are hereinafter referred to individually as a
"Lease" and collectively as "Leases" and the lessees under such Leases are
hereinafter referred to individually as a "Lessee" and collectively as
"Lessees"). Trustor shall faithfully perform the lessor's covenants under any
subsisting and future Leases affecting the Secured Property or any part thereof,
and neither do, nor neglect to do, nor permit to be done (other than enforce the
terms of such Leases and exercise the lessor's remedies thereunder following a
default or event of default on the part of any Lessee in the performance of its
prescribed obligations), anything which may cause the modification or
termination of any of said Leases without the consent of Beneficiary, with
consent shall not be unreasonably withheld, or of the obligations of any Lessee
or any other person claiming through such Lessee, or which may diminish or
impair the value of any Lease or the rents provided for therein, or the interest
of the lessor or of Beneficiary therein or thereunder.

               B.   Notice of Default.  Trustor will give Beneficiary immediate
                    -----------------
notice, by certified mail, of any notice of default, event of default or
cancellation given to or received from any Lessee.

               C.   Representations Regarding Leases.  Except as described in
                    --------------------------------
writing to Beneficiary, trustor hereby represents and warrants that: (1) all
representations made by it in the Leases are true; (2) all Improvements and the
leased space demised and let pursuant to each Lease have been completed to the
satisfaction of Lessee; (3) each Lessee has accepted possession of its leased
space and has opened for business and commenced payment of rent under its Lease;
(4) each Lessee is in occupancy; (5) all rents and other charges due and payable
under the Leases

                                      18
<PAGE>

have been paid; (6) no rent has been prepaid, except as expressly described
under such Lease; (7) there is no existing default or breach of any covenant or
condition on the part of any Lessee or Lessor under any Lease; (8) there are no
options to purchase all or any portion of the Secured Property contained in any
Lease; (9) there are no options to renew by any Lessee except as stated in the
Leases; (10) there are no amendments of or modifications to any Leases except as
disclosed in writing to Beneficiary; and (11) all Leases are subject and
subordinate to this Deed of Trust.

               D.   Covenants Regarding Leases.  Except as otherwise required
                    --------------------------
under any such Lease, Trustor covenants it will not, without the prior written
consent of the Beneficiary, which shall not be unreasonably withheld obtained in
each instance:

                        (1) lease to any person, firm or corporation, except for
actual occupancy by such person, firm or corporation all or any part of the
space in any of the Improvements;

                        (2) cancel, terminate or accept a surrender or suffer or
permit any cancellation, termination or surrender of any Lease;

                        (3) modify any Lease so as to reduce the term thereof or
the rent payable thereunder, or to change any renewal provision contained
therein;

                        (4) commence any summary proceeding or other action to
recover possession of any space demised pursuant to any Lease, other than a
proceeding brought in good faith by reason of a default of any Lessee;

                        (5) receive or collect or permit the receipt or
collection of any rental payments of more than one monthly installment of rent
under any Lease in advance of the due dates of such rental payments;

                        (6) take any other action with respect to any Lease
which would tend to impair the security of the Beneficiary under this Deed of
Trust;

                        (7) extend any present Lease other than in the manner
presently provided for therein, or enter into any future Lease with any person,
firm or corporation, except on the best terms reasonably obtainable, under
Leases which shall in all respects be satisfactory to the Beneficiary as to the
form and substance thereof and the credit standing of the respective Lessee
thereunder;

                        (8) execute an Agreement or create or permit a lien
which may be or become superior to any existing Leases affecting the Secured
Property; or

                        (9) sell, assign, transfer, mortgage, pledge or
otherwise dispose of or encumber, whether by operation of law or otherwise, any
Lease or any rentals under any Lease or any rents, income, profits or cash
collateral issuing from the Secured Property, except in connection with a
transfer permitted by Section 1.11.

               E.   Application of Rents.  Trustor shall use and apply all rents
                    --------------------
income and profits from the Secured Property first to the payment of the
Obligations in accordance with the terms of the Loan Documents, and then to the
payment of all Impositions and costs and expenses

                                      19
<PAGE>

of management, operation, repair, maintenance, preservation, reconstruction and
restoration of the Secured Property in accordance with the requirements of this
Deed of Trust and the obligations of Trustor as the lessor under any Lease, and
shall not use such rents, income or profits for purposes unrelated to the
Secured Property unless and until all current payments on the Obligations,
Impositions, and such costs and expenses have been paid or provided for and
reasonably adequate cash reserves have been set aside to ensure the timely
payment of all future payments on such Obligations prior to the maturity
thereof, Impositions and such costs and expenses.

          1.9  Assignment of Leases, Rents, Income, and Cash Collateral.
               --------------------------------------------- ----------

               A.   Assignment; Discharge of Obligations.  Trustor does hereby
                    ------------------------------------
absolutely and presently bargain, sell, assign and set over unto Beneficiary,
all Leases, rents, income, profits cancellation fees, damages, or similar
payments in lieu of rents, and any and all cash collateral which, whether before
or after foreclosure or during the full period of redemption, shall be made upon
or accrue and be owing for the use or occupation of the Secured Property and of
the buildings and fixtures thereon, or any part thereof, subject to the license
granted to Trustor in the Assignment of Leases. For the aforesaid purpose,
Trustor does hereby constitute and appoint Beneficiary its attorney-in-fact,
irrevocably in its name, to receive, collect and receipt all sums due or owing
for such use and occupation, as the same accrue, and, out of the amount so
collected, Beneficiary, its successors and assigns, are hereby authorized (but
not obligated) to pay and discharge all obligations of Trustor hereunder,
including, but not being limited to, the obligation to pay the Obligations (and
including any accelerated Obligations) in such order as Beneficiary, its
successors or assigns, may determine and whether due or not, and to pay the
remainder, if any, to Trustor, but neither this assignment nor any such action
shall constitute Beneficiary as a "mortgagee in possession". The assignments of
Leases, rents, income, profits and any and all cash collateral of the Secured
Property in this Section 1.9 is intended to be an absolute and present
                 -----------
assignment from Trustor to Beneficiary and not merely the passing of a security
interest. Trustor shall, at any time or from time to time, upon request of
Beneficiary, execute and deliver any instrument as may be requested by
Beneficiary to further evidence the assignment and transfer to Beneficiary of
Trustor's interest in any Lease. Nothing herein shall in any way limit
Beneficiary's remedies or Trustor's obligations under the Assignment to
Beneficiary.

               B.   Entry Onto Secured Property; Lease of Secured Property.
                    ------------------------------------------------------
Upon the occurrence and during the continuance of an Event of Default (as
hereinafter defined); Beneficiary at its sole option shall have the right to
enter and take possession of the Secured Property and manage and lease the same
as further provided in subsection 4.1C, including, without limitation, the right
                       ---------------
to enter into Leases and new agreements extending said termination dates beyond
the maturity set forth in the Note and take any action which, in Beneficiary's
judgment, is necessary or proper to conserve the value of the Secured Property.
The expenses (including any receiver's fees, attorneys' fees, costs and agent's
compensation) incurred pursuant to the powers herein contained shall be secured
hereby.  Beneficiary shall not be liable to account to Trustor for any action
taken pursuant hereto other than to account for any rents actually received by
Beneficiary.  No right granted to Beneficiary, Trustee or any receiver pursuant
to the Loan Documents shall entitle any of them to seize, take possession of,
manage or operate any property of Trustor located within the Secured Property
nor to operate the business of Trustor conducted in the Secured Property.

                                      20
<PAGE>

               C.   Right to Manage Secured Property. Notwithstanding anything
                    --------------------------------
to the contrary contained in subsection A of this Section 1.9, as long as
                             ------------         -----------
Beneficiary has not taken possession of the Secured Property pursuant to Section
1.9(B), Trustor shall have the sole right to possession, to manage and operate
the Secured Property, including without limitation, the right to enter into
Leases, and collect, as they accrue, all such rents, income, profits and cash
collateral.

               D.   Delivery of Assignments.  Trustor will, as requested from
                    -----------------------
time to time by Beneficiary, execute such additional documents to evidence the
assignment to Beneficiary or its nominee of any Leases now or hereafter made
upon said Secured Property, such assignment documents to be in form and content
reasonably acceptable to Beneficiary. For the aforesaid purposes, Trustor agrees
to deliver to Beneficiary within thirty (30) days after Beneficiary's request, a
duplicate original of every Lease which is at the time of such request
outstanding upon the said Secured Property and in addition thereto shall supply
Beneficiary at its request a complete list of each and every Lease certified by
(1) an officer of Trustor, if Trustor is a corporation, or (2) a general partner
of Trustor (or an officer of any such general partner which is a corporation) if
Trustor is a partnership or (3) a trustee of Trustor (or an officer of any such
trustee which is a corporation) if Trustor is a trust, or (4) Trustor if Trustor
is an individual or individuals, showing unit number, type, name of each Lessee,
monthly rental, date to which rents have been paid, term of Lease, date of
occupancy, date of expiration and any and every special provision, concession or
inducement granted to Lessee.

               E.   Indemnity.  Notwithstanding anything to the contrary set
                    ---------
forth in this Section 1.9, except to the extent caused by (i) the gross
              -----------
negligence or willful misconduct of Beneficiary or its agents, contractors or
employees, or (ii) an occurrence on or about the Secured Property conclusively
determined by a court of last resort to have occurred following the sale or
transfer thereof as a result of foreclosure proceedings (or in lieu thereof),
Trustor agrees that in the exercise of the rights of Beneficiary contained in
this Section 1.9, no liability shall be asserted against Beneficiary, all such
     -----------
liability being expressly waived and released by Trustor. Trustor hereby holds
Beneficiary harmless from and against any and all claims, liabilities and
expenses of any kind or nature against or incurred by Beneficiary arising out of
such management, operation or maintenance of the Secured Property or the
collection and disposition of rents, income, profits or cash collateral
therefrom, except for any claim, liability or expense arising out of
Beneficiary's fraud, bad faith, willful misconduct or gross negligence.

          1.10 Further Assurances.
               ------------------

               A.   General; Appointment of Attorney-in-Fact.  At any time, and
                    ----------------------------------------
from time to time, upon request by Beneficiary, Trustor will make, execute, and
deliver or cause to be made, executed and delivered to Beneficiary, any and all
other instruments, certificates and other documents as may, in the opinion of
Beneficiary, be reasonably necessary or desirable in order to effectuate,
complete, perfect or continue and preserve the obligations of Trustor under the
Note and the Loan Documents. Upon any failure by Trustor to do so, Beneficiary
may make, execute and record any and all such instruments, certificates and
documents for and in the name of Trustor and Trustor hereby irrevocably appoints
Beneficiary the agent and attorney-in-fact of Trustor for such purposes. Trustor
will reimburse Beneficiary for any sums expended by Beneficiary in making,
executing and recording such instruments, certificates and documents and such
sums shall be secured by this Deed of Trust.

                                      21
<PAGE>

               B.   Statement Regarding Obligations. Trustor from time to time,
                    -------------------------------
within ten (10) days after request by Beneficiary, shall furnish Beneficiary
with a written statement, duly acknowledged, setting forth the unpaid principal
of, and interest on, the Obligations secured hereby and whether or not any set-
offs or defenses exist against such principal and interest, and, if so, the
particulars thereof.

               C.   Additional Security Instruments. Trustor shall from time to
                    -------------------------------
time, within fifteen (15) days after request by Beneficiary, execute,
acknowledge and deliver to Beneficiary such chattel mortgages, security
agreements or other similar security instruments, in form and substance
satisfactory to Beneficiary, covering the Secured Property. Trustor shall
further from time to time within fifteen (15) days after request by Beneficiary,
execute, acknowledge and deliver any financing statement, renewal, affidavit,
certificate, continuation statement or other document as Beneficiary may request
in order to perfect, preserve, continue, extend or maintain the security
interest under, and the priority of, this Deed of Trust or such chattel Deed of
Trust or other security instrument as a first lien. Trustor further agrees to
pay to Beneficiary on demand all costs and expenses reasonably incurred by
Beneficiary in connection with the preparation, execution, recording, filing and
refiling of any such instrument or document, including the charges for examining
title and the attorneys' fee for rendering an opinion as to the priority of this
Deed of Trust and of such chattel Deed of Trust or other security instrument as
a valid first and subsisting lien. However, neither a request so made by
Beneficiary nor the failure of Beneficiary to make such a request shall be
construed as a release of such property, or any part thereof, from the lien of
this Deed of Trust, it being understood and agreed that this covenant and any
such chattel Deed of Trust, security agreement or other similar security
instrument, delivered to Beneficiary, are cumulative and given as additional
security. Trustor shall also pay all premiums and related costs in connection
with any title insurance policy or policies in full or partial replacement of
the title policy now insuring or which will insure the lien of this Deed of
Trust.

               D.   Security Agreement.
                    ------------------

                    (1)  THIS DEED OF TRUST CREATES A LIEN ON THE SECURED
PROPERTY, AND TO THE EXTENT THE PROPERTY IS PERSONAL PROPERTY UNDER APPLICABLE
LAW, THIS DEED OF TRUST CONSTITUTES A SECURITY AGREEMENT UNDER THE CALIFORNIA
UNIFORM COMMERCIAL CODE (THE "U.C.C.") AND ANY OTHER APPLICABLE LAW AND IS FILED
AS A FIXTURE FILING. UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, BENEFICIARY
MAY, AT ITS OPTION, PURSUE ANY AND ALL RIGHTS AND REMEDIES AVAILABLE TO A
SECURED PARTY WITH RESPECT TO ANY PORTION OF THE SECURED PROPERTY, AND/OR
BENEFICIARY MAY, AT ITS OPTION, PROCEED AS TO ALL OR ANY PART OF THE SECURED
PROPERTY IN ACCORDANCE WITH BENEFICIARY'S RIGHTS AND REMEDIES WITH RESPECT TO
THE LIEN CREATED BY THIS DEED OF TRUST.

                    (2)  The grant of a security interest to Beneficiary in the
granting clauses of this Deed of Trust shall not be construed to derogate from
or impair the lien or provisions of or the rights of Beneficiary under this Deed
of Trust with respect to any property described therein which is real property
or which the parties have agreed to treat as real property. The hereby stated
intention of Trustor and Beneficiary is that all Secured Property is, and at all
times and for all purposes and in all proceedings, both legal and equitable,
shall be regarded as

                                      22
<PAGE>

real property, irrespective of whether or not the same is physically attached to
the Land and/or Improvements.

                (3)     If reasonably required by Beneficiary, at any time
during the term of this Deed of Trust, Trustor will execute and deliver to
Beneficiary, in form satisfactory to Beneficiary, additional security
agreements, financing statements and/or other instruments covering all Personal
Property included in the Secured Property.

                (4)     Trustor hereby irrevocably constitutes and appoints
Beneficiary as its attorney-in-fact and such appointment is coupled with an
interest, to execute, deliver and file with the appropriate filing officer or
office such security agreements, financing statements and/or other instruments
as Beneficiary may request or require in order to impose and perfect the lien
and security interest created hereby more specifically on the Personal Property
or any fixtures.

                (5)     If Trustor enters into a separate security agreement
with Beneficiary relating to any of the Personal Property or fixtures, the terms
of such security agreement shall govern the rights and remedies of Beneficiary
after an Event of Default thereunder.

                (6)     It is understood and agreed that, in order to protect
Beneficiary from the effect of U.C.C. Section 9313, as amended from time to
time, in the event that Trustor intends to purchase any goods which will become
part of the Secured Property, or any part thereof, and such goods will be
subject to a purchase money security interest held by a seller or any other
party:

                        (a)     Trustor shall, before executing any security
agreement or other document evidencing or perfecting such security interest,
obtain the prior written approval of Beneficiary, and all requests for such
written approval shall be in writing and contain the following information:

                                (i)     a description of the Secured Property to
     be replaced, added to, installed or substituted;

                                (ii)    the address at which the Secured
     Property will be replaced, added to, installed or substituted; and

                                (iii)   the name and address of the proposed
     holder and proposed amount of the security interest.

                        (b)     Trustor's execution of any such security
agreement or other document evidencing or perfecting such security interest
without Beneficiary's prior written approval shall constitute an Event of
Default. No consent by Beneficiary pursuant to this subparagraph shall be deemed
to constitute an agreement to subordinate any right of Beneficiary in fixtures
or other property covered by this Deed of Trust.

                (7)     If at any time Trustor fails to make any payment on an
obligation secured by a purchase money security interest in the Personal
Property Beneficiary, at its option, may at any time pay the amount secured by
such security interest. Any money paid by Beneficiary under this Subparagraph,
including any expenses, costs, charges and attorney's fees reasonably incurred
by Beneficiary, shall be reimbursed to Beneficiary in accordance with

                                      23
<PAGE>

Section 1.2E hereof. Beneficiary shall be subrogated to the rights of the holder
------------
of any such purchase money security interest in the Personal Property.

                (8)     Beneficiary shall have the right to acquire by
assignment from the holder of such security interest any and all contract
rights, accounts receivable, negotiable or non-negotiable instruments, or other
evidence of Trustor's indebtedness for such Personal Property and, upon
acquiring such interest by assignment, shall have the right to enforce the
security interest as assignee thereof, in accordance with the terms and
provisions of the U.C.C. and in accordance with any other provisions of law.

                (9)     Whether or not Beneficiary has paid the indebtedness
secured by, or taken an assignment of, such security interest, Trustor covenants
to pay all sums and perform all obligations secured thereby, and if Trustor at
any time shall be in default under such security agreement (after the giving of
any notice and the lapse of any grace period therefor), it shall constitute an
Event of Default.

                (10)    The provisions of this Section 1.10D shall not apply if
                                               -------------
the goods which may become fixtures are of at least equivalent value and quality
as any property being replaced and if the rights of the party holding such
security interest have been expressly subordinated, at no cost to Beneficiary,
to the lien and security interest of this Deed of Trust in a manner satisfactory
to Beneficiary, including without limitation, at the option of Beneficiary,
providing to Beneficiary a satisfactory opinion of counsel to the effect that
this Deed of Trust constitutes a valid and subsisting first lien on such
fixtures which is not subordinate to the lien of such security interest under
any applicable law, including without limitation, the provisions of Section 9313
of the U.C.C.

                (11)    Trustor hereby warrants, represents and covenants as
follows:

                        (a)     To the best of Trustor's knowledge, Trustor is
the sole owner of the Personal Property free from any lien, security interest,
encumbrance or adverse claim thereon of any kind whatsoever. Trustor will notify
Beneficiary of, and will protect, defend and indemnify Beneficiary against, all
claims and demands of all persons at any time claiming any rights or interest
therein.

                        (b)     The Personal Property is not used or bought and
shall not be used or bought for personal, family, or household purposes, but
shall be bought and used solely for the purpose of the Secured Property.

                        (c)     To the best of Trustor's knowledge, the Personal
Property is located on the Land and/or Improvements and will be kept on or at
the Land or the Improvements and Trustor will not remove the Personal Property
therefrom without the prior written consent of Beneficiary, except such portions
or items of Personal Property which are consumed or worn out in ordinary usage,
all of which shall be promptly replaced by Trustor with other Personal Property
of value equal to or greater than the value of the replaced Personal Property
when new, and except such portions or items of Personal Property temporarily
stored elsewhere to facilitate refurbishing or repair thereof or of the
Improvements.

                        (d)     Trustor maintains a place of business in the
State and Trustor will immediately notify Beneficiary in writing of any change
in its principal place of business as set forth in the beginning of this Deed of
Trust.

                                      24
<PAGE>

               E.   Preservation of Trustor's Existence.  If Trustor is a
                    -----------------------------------
partnership or a corporation, subject to Section 1.11 it shall do all things
necessary to preserve and keep in full force and effect its existence,
franchise, rights and privileges under the laws of the state of its formation or
incorporation and the state in which the Secured Property is located, if
required by the laws of such state, and shall comply with all regulations,
rules, ordinances, statutes, orders and decrees of any governmental or quasi-
governmental authority or court applicable to it.

               F.   Further Indemnities.  In addition to any other indemnities
                    -------------------
to Beneficiary specifically provided for in this Deed of Trust, except to the
extent caused by (i) the gross negligence or willful misconduct of Beneficiary
or its agents, contractors or employees, or (ii) an occurrence on or about the
Secured Property conclusively determined by a court of last resort to have
occurred following the sale or transfer thereof as a result of foreclosure
proceedings (or deed in lieu thereof), Trustor hereby indemnifies and saves
Beneficiary harmless from and against any and all losses, liabilities, suits,
obligations, fines, damages, penalties, claims, costs, charges, and expenses,
including, without limitation, reasonable architects', engineers' and attorneys'
fees and all disbursements which may be imposed upon, incurred or asserted
against Beneficiary by reason of: (l) the construction of the Improvements, (2)
any capital improvements, other work or things, done in, on or about the Secured
Property or any part thereof, (3) any use, non-use, misuse, possession,
occupation, alteration, repair, condition, operation, maintenance or management
of the Secured Property or any part thereof or any street, drive, sidewalk,
curb, passageway or space comprising a part thereof or adjacent thereto, (4) any
negligence or wilful act or omission on the part of Trustor, any Lessee under a
Lease or their agents, contractors, servants, employees, licensees or invitees,
(5) any accident, injury (including death) or damage to any person or property
occurring in, on or about the Secured Property or any part thereof or in, on or
about any street, drive, sidewalk, curb, passageway or space adjacent thereto,
(6) any default or Event of Default (as herein defined), (7) any lien or claim
which may be alleged to have arisen on or against the Secured Property or any
part thereof under the laws of the local or state government or any other
governmental or quasi-governmental authority or any liability asserted against
Beneficiary with respect thereto, (8) any tax attributable to the execution,
delivery, filing or recording of this Deed of Trust, the Note, any Lease, or any
other Loan Documents, or (9) any contest permitted pursuant to the provisions of
this Deed of Trust.

               G.   Absence of Insurance. The obligations of Trustor under this
                    --------------------
this Section 1.10 shall not in any way be affected by the absence in any case
     ------------
of covering insurance, by the amount of the insurance or by the failure or
refusal of any insurance carrier to perform any obligation on its part under
insurance policies affecting the Secured Property. If any claim, action or
proceeding is made or brought against Beneficiary by reason of any event as to
which Trustor is obligated to indemnify Beneficiary, then, upon demand by
Beneficiary, Trustor, at its sole cost and expense, shall resist or defend such
claim, action or proceeding in Beneficiary's name, if necessary, by the
attorneys for Trustor's insurance carrier, if such claim, action or proceeding
is covered by insurance, otherwise by such attorneys as Beneficiary shall
reasonably approve. Notwithstanding the foregoing, Beneficiary may engage its
own attorneys in its reasonable discretion to defend it or to assist in its
defense and Trustor shall pay the reasonable fees and disbursements of such
attorneys and such amounts shall bear interest at the Increased Rate and shall
be secured by this Deed of Trust.

                                      25
<PAGE>

          1.11 Further Sales or Encumbrances.
               -----------------------------

               A.   Continuing Ownership and Management. Trustor acknowledges
                    -----------------------------------
that the continuous ownership of the Secured Property and the continuous
management and/or control of the operation of same by Trustor is of a material
nature to the transaction and the making of the loan evidenced by the Note and
secured by this Deed of Trust.

               B.   Transfer or Encumbrance of Secured Property. Trustor shall
                    -------------------------------------------
not, without the prior written consent of Beneficiary being first had and
obtained (which consent may be granted or denied in Beneficiary's sole
discretion), voluntarily or involuntarily, by operation of law or otherwise,
transfer or dispose of, or suffer any third party to transfer or dispose of, all
or any portion of the Secured Property or any interest therein or the management
and/or operation by Trustor of the Secured Property. For purposes of this
Section 1.11, a transfer or disposition of the Secured Property or
------------
any part thereof or interest therein shall include, without limitation, the sale
of the Secured Property or any portion thereof to a residential cooperative
corporation, conversion of all or any part of the Secured Property to a
condominium form of ownership, execution of a contract to sell or option to
purchase all or any portion of the Secured Property or any interest therein, any
transfer of or agreement to transfer air rights, any lease for space in any
Improvements on the Secured Property for purposes other than occupancy by the
tenant, any lease for space in Improvements containing an option to purchase, or
any direct or indirect sale, assignment, conveyance, transfer (excluding a
transfer as a result of or in lieu of condemnation), or other alienation of all
or any portion of the Secured Property or any interest therein, including, but
not limited to, the creation of a lien or other encumbrance on the Secured
Property or any part thereof or interest therein, and further including any
assignment, pledge, grant of security interest in, conditional sale, or the
execution of a title retention agreement with regard to any personalty included
in the Secured Property. Any such action described in this subsection 1.11B is
                                                           ----------------
herein called a "Transfer." A Transfer shall also include, without limitation,
any of the following events, whether made directly or through an intermediary,
and whether made in one transaction or effected in more than one transaction:

                    (1)  If Trustor is or becomes a corporation, a transfer or
disposition of more than 50% of the outstanding voting stock of such corporation
or 100% of any other corporation directly or indirectly owning or controlling
50% or more of the voting stock of Trustor;

                    (2)  If Trustor is or becomes a partnership, a transfer or
disposition of any interest of any general partner in Trustor; or

                    (3)  If Trustor is a trust or other entity, a transfer or
disposition of more than 50% of the beneficial interests in Trustor.

For purposes of the foregoing, a "transfer or disposition" of such stock or
interests shall include, without limitation, any direct or indirect sale
thereof, any execution of a contract or other agreement to sell or option to
purchase such stock or interests, or any assignment of such stock or interests,
including any assignment for security purposes.

In no event shall the following be deemed a Transfer or disposition of the
Secured Property in violation of this Section 1.11(B):
                                      ---------------

                                      26
<PAGE>

                    (1) The transfer of the Secured Property to any corporation
which controls, is controlled by or is under common control with Trustor, so
long as Trustor continues to be liable for performance of the Obligations after
the transfer;

                    (2) The merger or consolidation of Trustor with any other
company, so long as the net worth of the combined company after consummation of
the transaction is not less than the net worth of Trustor immediately prior to
the merger or consolidation; or

                    (3) The issuance or trading of the stock or debt securities
of Trustor or any parent of Trustor through any public exchange, in one
transaction or a series of transactions.

               C.   Acceleration of Obligations. In the event of a Transfer
                    ---------------------------
without the prior written consent of Beneficiary, Beneficiary may, without
limiting any other right or remedy available to Beneficiary at law, in equity or
by agreement with Trustor, and in Beneficiary's absolute discretion and without
regard to the adequacy of its security, accelerate the maturity of the Note and
require the payment of the then existing outstanding principal balance and all
other sums due under the Note and under this Deed of Trust, including, but not
limited to, the prepayment charge provided in Section 4.6 herein. The giving of
                                              -----------
consent by Beneficiary to a Transfer in any one or more instances
shall not limit or waive the need for such consent in any other or subsequent
instances.

               D.   Wrap-Around Financing. Should the Secured Property at any
                    ---------------------
time be or become subject to the lien of any agreement, deed of trust or
mortgage or similar instrument in connection with which payments on account of
the Obligations secured hereby are to be made directly or indirectly by or
through a mortgagee, grantee or beneficiary thereunder, regardless of whether or
not payment of the Obligations secured hereby is assumed by such mortgagee,
grantee or beneficiary, the whole of the principal sum and interest and other
sums hereby secured, at the option of Beneficiary, shall immediately become due
and payable.

          1.12 Expenses. Trustor will pay or reimburse Beneficiary for all
               --------
reasonable attorneys' fees, costs and expenses incurred by Beneficiary in any
proceedings affecting the Obligations or the Secured Property, (A) involving the
estate of a decedent or an insolvent, or (B) except to the extent caused by (i)
the gross negligence or willful misconduct of Beneficiary or its agents,
contractors or employees, or (ii) an occurrence on or about the Secured Property
following the sale or transfer thereof as a result of foreclosure proceedings
(or in lieu thereof), in any action, legal proceeding or dispute of any kind in
which Beneficiary is made a party, or appears as party plaintiff or defendant,
including, but not limited to, any exercise of the power of sale or judicial
foreclosure as set forth in this Deed of Trust, any condemnation action
involving the Secured Property or any action to protect the security hereof or
upon the reasonable concern of Beneficiary with the condition of the Secured
Property, and any such amounts paid by Beneficiary shall be added to the
Obligations and secured by this Deed of Trust. If the Obligations are referred
to attorneys for collection, foreclosure or for any cause set forth in Article
III hereof, Trustor shall pay all expenses incurred by Beneficiary, including
reasonable attorneys' fees, all costs of collection, litigation costs, and costs
(which may be estimated as to items to be expended after entry of the decree) of
procuring title insurance policies, whether or not obtained, Torrens
certificates, and similar assurances with respect to title and value as
Beneficiary may deem reasonably necessary together with all statutory costs,
with or without the institution of an action or proceeding. All such costs and
expenses with interest thereon at the Increased Rate shall be deemed to be
secured by this Deed of Trust.

                                      27
<PAGE>

                                   ARTICLE II
                         WARRANTIES AND REPRESENTATIONS
                         ------------------------------
          Trustor makes the following warranties and representations:

          2.1  Warranty of Title. Trustor (A) is lawfully seized and possessed
               -----------------
of the Secured Property, in fee simple, subject to no mortgage, lien, charge or
encumbrance, except as specifically set forth in the title insurance policy
issued to Beneficiary upon recordation of this Deed of Trust, (B) has full power
and lawful authority to grant, bargain, sell, convey, assign, transfer and
mortgage the Secured Property in the manner and form hereby mortgaged and
conveyed, (C) is the fee owner of the Improvements, (D) is the owner of the
Personal Property, and (E) does warrant and will defend the title to the Secured
Property against all claims and demands whatsoever.

          2.2  Ownership Of Improvements And Personal Property. All Improvements
               -----------------------------------------------
and Personal Property now or hereafter affixed, placed or used by Trustor are
and will hereafter be owned by Trustor free from any prior liens or
encumbrances, provided, however, that if any of the foregoing Improvements or
Personal Property shall be subject to a conditional bill of sale, chattel
mortgage or other agreement creating a security interest, then all of the right,
title and interest of Trustor in and to such Improvements and Personal Property
together with the benefits of any deposits or payments now or hereafter made
thereon shall be covered by and subject to this Deed of Trust.

          2.3  No Pending Material Litigation or Proceeding; No Hazardous
Materials.

               A.   Proceedings Affecting Trustor. Except as disclosed in
                    -----------------------------
writing to Beneficiary, to the best knowledge and belief of Trustor, there are
no actions, suits or proceedings pending, and, there are no actions, suits,
investigations or proceedings threatened, against or affecting Trustor, or the
business, operations, properties or assets of Trustor, or before or by any
governmental department, commission, board, regulatory authority, bureau, agency
or instrumentality, domestic, foreign, federal, state or municipal
(collectively, "Governmental Agency"), or any court, arbitrator or grand jury,
which may result in any material adverse change in the business, operations,
properties or assets or in the condition, financial or otherwise, of Trustor, or
in the ability of Trustor to perform its obligations under the Note or this Deed
of Trust. To the best knowledge and belief of Trustor, Trustor is not in
default, and there is no other default, with respect to any judgment, order,
writ, injunction, decree, demand, rule or regulation of any court, arbitrator,
grand jury or of any Governmental Agency, default under which might have
consequences which would materially and adversely affect the business,
operations, properties or assets or the condition, financial or otherwise, of
Trustor or the ability of Trustor to perform its obligations under the Note or
this Deed of Trust.

               B.   Proceedings Affecting Secured Property. To the best of
                    --------------------------------------
Trustor's knowledge, there are no proceedings of any kind pending, or,
threatened against or affecting Trustor, the Secured Property (including any
attempt or threat by any Governmental Agency to condemn or rezone all or any
portion of the Secured Property), any party constituting Trustor in any such
party, or involving the validity, enforceability or priority of this Deed of
Trust, the Note or any of the other Loan Documents or enjoining or preventing or
threatening to enjoin or prevent the use and occupancy of the Secured Property
or the performance by Beneficiary of its obligations hereunder, and there are no
rent controls covering use of the Land, governmental

                                      28
<PAGE>

moratoria or environmental controls covering the use of the Land (other than
those generally imposed by local, federal or state law upon property in the
State of California) presently in existence, or to the best knowledge of
Trustor, threatened, affecting use of the Secured Property, except as identified
in writing to, and approved by, Beneficiary.

               C.   No Litigation Regarding Hazardous Materials. No litigation,
                    -------------------------------------------
administrative enforcement actions or proceedings have been brought, and to the
current and actual knowledge of Trustor threatened, nor have any settlements
been reached by or with any party or parties, public or private, in disputes in
which the presence, disposal, release or threatened release of any Hazardous
Material (as defined in the Indemnity) on, from, or under any of the Secured
Property had been alleged.

          2.4  Valid Organization, Good Standing and Qualification of Trustor.
               --------------------------------------------------------------
Trustor is a duly and validly organized and existing Corporation under the
laws of the State of California and is entitled to own its properties and
assets, and to carry on its business, all as, and in the places where, such
properties and assets are now owned or operated or such business is now
conducted or proposed to be conducted.

          2.5  Authorization; No Legal Restrictions on Performance. The
               ---------------------------------------------------
execution and delivery by Trustor of this Deed of Trust and the other Loan
Documents and its compliance with the terms and conditions hereof and thereof
have been duly and validly authorized by all necessary partnership action,
including, without limitation, all necessary corporate action of all of
Trustor's corporate general partners, if any. The Loan Documents are valid and
enforceable obligations of Trustor in accordance with the terms hereof and
thereof. Neither the execution and delivery by Trustor of this Deed of Trust or
any of the other Loan Documents nor the consummation of the transactions
contemplated herein or therein, nor compliance with the terms and conditions
hereof and thereof will, to Trustor's current and actual knowledge, (A) conflict
with or result in a material breach of, or constitute a material default under,
any of the terms, obligations, covenants, conditions or provisions of (1)
Trustor's articles of incorporation, bylaws, or any indenture, mortgage, deed of
trust, pledge, bank loan or credit agreement, agreement creating, evidencing or
securing any indebtedness of Trustor or by which its properties may be bound or
affected, or any other agreement or instrument to which Trustor is now a party,
or (2) any judgment, order, writ, injunction, decree or demand of any court,
arbitrator, grand jury or Governmental Agency, or (B) result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
property or asset of Trustor under the terms or provisions of any of the
foregoing. Trustor is not in default in the performance, observance or
fulfillment of any of the terms, obligations, covenants, conditions or
provisions contained in any indenture or other agreement creating, evidencing or
securing indebtedness of Trustor or pursuant to which Trustor is a party or by
which Trustor or its properties may be bound or affected, which may result in
any material adverse change in the business, operations, properties, or assets
or in the condition, financial or otherwise, of Trustor, or in the ability of
Trustor to perform its obligations under the Note or this Deed of Trust.

          2.6  Compliance With Laws. Trustor has complied, and at all future
               --------------------
times shall comply, with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof, in respect of the conduct of its business and ownership of its
properties (including, without limitation, applicable statutes, rules,
regulations, orders and restrictions relating to equal employment opportunities
or environmental standards or controls) which would materially and adversely
effect the financial condition of

                                      29
<PAGE>

Trustor or the ability of Trustor to perform under the Loan Documents.  No
governmental orders, permissions, consents, approvals or authorizations are
required to be obtained and no registrations or declarations are required to be
filed in connection with the execution and delivery or performance of this Deed
of Trust or any of the other Loan Documents, except as anticipated by the Loan
Documents.

          2.7  Tax Status. Trustor has filed all United States income tax
               ----------
returns and all state and municipal tax returns which are required to be filed,
and has paid, or made provision for the payment of, all taxes which have become
due pursuant to said returns or pursuant to any assessment received by Trustor,
except such filings and taxes, if any, as are being contested in good faith and
as to which adequate reserves have been provided.

          2.8  Absence of Foreign or Enemy Status. Trustor is not a "national"
               ----------------------------------
of a "designated foreign country" (or a person defined as a "designated foreign
country") within the definitions in the Foreign or Cuban Assets Control
Regulations of the United States Treasury Department, 31 CFR, Subtitle B,
Chapter V, as amended, or any regulation or ruling issued thereunder.

          2.9  Federal Reserve Board Regulations. Trustor does not own any
               ---------------------------------
"margin security" as such term is defined in Regulation G of the Board of
Governors of the Federal Reserve System (12 CFR Part 207), as amended, except
margin securities owned or which may be acquired by Trustor which do not and
would not in the aggregate constitute a substantial part of the assets of
Trustor within the meaning of Section 207.2(i) of the aforesaid Regulation G,
and Trustor will not use any part of the proceeds from the loans to be made
under this Agreement (A) directly or indirectly, to purchase or carry any such
security or to reduce or retire any indebtedness originally incurred to purchase
any such security within the meaning of such Regulation, (B) so as to involve
Trustor in a violation of Regulation T, U or X of such Board (12 CFR Parts 220,
221 and 224), or (C) for any other purpose not permitted by Section 7 of the
Securities Exchange Act of 1934, as amended, or any of the rules and regulations
respecting the extension of credit promulgated thereunder.

          2.10 Investment Company Act and Public Utility Holding Company Act.
               -------------------------------------------------------------
Trustor is not an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended, and Trustor is not a "holding company" or a "subsidiary company" of
a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended.

          2.11 Exempt Status of Transactions Under Securities Act and
               ------------------------------------------------------
Representations Relating Thereto. Trustor has not, either directly or through
--------------------------------
any agent, offered all or any part of the loan made or to be made by Beneficiary
and secured by this Deed of Trust to, or solicited any offers to make all or any
part of such loan from, or otherwise approached or negotiated or communicated in
respect of all or any part of such loan with anyone other than Beneficiary so as
thereby to bring the obtaining of such loan by Trustor and the delivery of the
Note within the registration provisions of the Securities Act of 1933, as
amended. Neither Trustor nor any agent on its behalf will offer to obtain all or
any part of such loan from, or solicit any offers to make all or any part of
such loan from, or otherwise approach or negotiate or communicate in respect of
all or any part of such loan with, any person or persons so as thereby to bring
the obtaining of such loan by Trustor and the delivery of the Note within the
registration provisions of the Securities Act of 1933, as amended.

                                      30
<PAGE>

          2.12 Employee Benefit Plans.
               ----------------------

               A.         None of the employee benefit plans maintained at any
time by Trustor (herein called "Employee Benefit Plans") or the trusts created
thereunder has engaged in a prohibited transaction which could subject any such
Employee Benefit Plan or trust to a tax or penalty on prohibited transactions
imposed under Internal Revenue Code Section 4975 or the Employee Retirement
Income Security Act of 1974 and the regulations thereunder (herein called
"ERISA"), which would materially and adversely effect the financial condition of
Trustor or the ability of Trustor to perform under the Loan Documents.

                B.        None of the Employee Benefit Plans which are employee
pension benefit plans or the trusts created thereunder has been terminated; nor
has any such Employee Benefit Plan incurred any liability to the Pension Benefit
Guaranty Corporation established pursuant to ERISA which would be material to
Trustor, other than for required insurance premiums which have been paid when
due, or incurred any accumulated funding deficiency which would be material to
Trustor, whether or not waived; nor has there been any reportable event, or
other event or condition, which presents a risk of termination of any such
Employee Benefit Plan by such Pension Benefit Guaranty Corporation which
termination would be material to Trustor.

                C.        The present value of all benefits vested under the
Employee Benefit Plans which are employee pension benefit plans did not, as of
the most recent valuation date, exceed the then current value of the assets of
such Employee Benefit Plans allocable to such vested benefits by an amount that
would materially affect the financial condition of Trustor or the ability of
Trustor to perform under the Loan Documents.

                D.        The consummation of the loan from Beneficiary referred
to in this Deed of Trust, and the execution and delivery of the Note hereunder
and the performance by Trustor of its obligations under the Loan Documents, will
not involve any prohibited transaction.

                E.        As used in this Section 2.12, the terms "employee
                                          ------------
benefit plans," "employee pension benefit plans," "accumulated funding
deficiency," "reportable event," "accrued benefits," "separate account" and
"multiemployer plan" shall have the respective meanings assigned to them in
ERISA, and the term "prohibited transaction" shall have the meaning assigned to
it in Internal Revenue Code Section 4975 and ERISA.

                                  ARTICLE III
                                    DEFAULTS
                                    --------

          3.1  Events of Default. Any of the following events shall be deemed an
               -----------------
Event of Default or a default hereunder:

                A.        if default shall be made in the payment of any
installment of the principal of, or interest on the Obligations or any other sum
which is payable hereunder as and when the same shall become due and payable as
in the Note or herein provided; or

                B.        if Trustor fails to perform or observe any material
term, provision, covenant or agreement in the Note, this Deed of Trust or in any
other Loan Documents; provided, however in the event of any default other than a
default which can be cured by the payment of money (a "non-monetary default"),
the Beneficiary shall be entitled to enforce the

                                      31
<PAGE>

remedies therefor provided herein only after giving notice thereof to Trustor
and such default shall have continued uncorrected for thirty (30) days, unless
such non-monetary default is of such a character as to require more than thirty
(30) days to cure and the Trustor shall, prior to the expiration of said thirty
(30) days, promptly commence and diligently and continuously proceed with due
diligence to cure such default, in which event such period shall be extended for
a reasonable time necessary to cure such default, but in no event more than one
hundred eighty (180) days after such default; provided, however, that the
foregoing opportunity to cure shall not apply to (a) any default under any
letter of credit agreement made by the Beneficiary and the Trustor, if any, or
the Beneficiary's rights under the letter(s) of credit delivered to the
Beneficiary in connection therewith; (b) any sale, assignment, transfer,
encumbrance, or lien in violation of this Note or the Deed of Trust; or (c) the
Beneficiary's right to (i) charge interest at the Default Rate as provided
herein, (ii) impose a late charge as provided herein, or (iii) make payments and
cure defaults of the Trustor under the Note as provided therein, all of which
amounts shall be immediately due and payable without any obligation on the part
of the Beneficiary to notify any party and whether or not such default is cured;
or

                C.        if any warranty, representation, certification,
financial statement or other information made or furnished at any time pursuant
to the terms of this Deed of Trust or otherwise, by Trustor, or by any person or
entity liable for the Obligations in connection with the loan transaction, shall
prove to be materially false and to have been made or furnished with knowledge
of the false nature thereof; or

                D.        if Trustor shall:

                          (1) apply for, consent to or acquiesce in the
appointment of a receiver, trustee or liquidator of it or of all or a
substantial part of its assets, or the Secured Property or any interest in any
part thereof (the term "acquiesce" includes, but is not limited to, the failure
to file a petition or motion to vacate or discharge any order, judgment or
decree providing for such appointment within ten (10) days after the
appointment); or

                          (2) commence a voluntary case or other proceeding in
bankruptcy, or admit in writing its inability to pay its debts as they come due;
or

                          (3) make a general assignment for the benefit of
creditors; or

                          (4) file a petition or an answer seeking
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief for itself under the present or any future
federal bankruptcy act or any other statute or law relative to bankruptcy,
insolvency, or other relief for debtors; or

                          (5) file an answer admitting the material allegations
of, or consent to, or default in answering, a petition filed against it in any
bankruptcy, reorganization or insolvency case or proceeding; or

                E.        if an order for relief shall be entered against
Trustor by a court of competent jurisdiction under any present or future
bankruptcy law, which order shall continue unstayed and in effect for any period
of forty-five (45) consecutive days; or

                F.        if an order, judgment or decree shall be entered by
any court of competent jurisdiction, adjudicating Trustor insolvent, approving a
petition seeking reorganization or

                                      32
<PAGE>

arrangement of Trustor or appointing a receiver, trustee or liquidator of it or
of all or a substantial part of its assets, and such order, judgment or decree
shall continue unstayed and in effect for any period of forty-five (45)
consecutive days; or

                G.        if Trustor has assigned or purports to assign the
whole or any part of the rents, income or profits arising from the Secured
Property, without the prior written consent of Beneficiary; or

                H.        if a Transfer not consented to by Beneficiary shall
have occurred in violation of Section 1.11; or
                              ------------

                I.        if Trustor shall enter into a mortgage or other
security instrument with respect to the Secured Property which does not comply
with the requirements of Section 1.11; or
                         ------------

                J.        if Trustor shall be in default beyond any applicable
grace period under any other mortgage or security instrument affecting all or
any part of the Secured Property; or

                K.        if any mechanic's, laborer's or materialman's lien,
federal tax lien, broker's lien or other lien not permitted hereunder and
affecting the Secured Property or any part thereof is not discharged, by
payment, bonding, order of a court of competent jurisdiction or otherwise,
within twenty (20) days after Trustor receives notice thereof from the lienor or
from Beneficiary.

                                   ARTICLE IV
                                    REMEDIES
                                    --------

          4.1  Remedies. Upon the occurrence of any one or more Events of
               --------
Default, Trustee and/or Beneficiary may (but shall not be obligated), in
addition to any rights or remedies available to them hereunder or under the
other Loan Documents, take such action personally or by their agents or
attorneys, with or without entry, and without notice, demand, presentment or
protest (each and all of which are hereby waived to the extent permitted by law)
as they deem necessary or advisable to protect and enforce Beneficiary's rights
and remedies against Trustor and Secured Property, including the following
actions, each of which may be pursued concurrently or otherwise, at such time
and in such order as Trustee and/or Beneficiary may determine, in their sole
discretion, without impairing or otherwise affecting its or their other rights
or remedies:

                          (a) declare the entire balance of the Obligations
(including the entire principal balance thereof, all accrued and unpaid interest
and any premium thereon and all other such sums secured hereby) to be
immediately due and payable and upon any such declaration the entire unpaid
balance of the Obligations shall become and be immediately due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by Trustor anything in the Loan Documents to the
contrary notwithstanding; or

                          (b) institute a proceeding or proceedings, judicial or
otherwise, for the complete foreclosure of this Deed of Trust under any
applicable provision of law; or

                          (c) institute a proceeding or proceedings for the
partial foreclosure of this Deed of Trust under any applicable provision of law
for the portion of the Obligations then

                                      33
<PAGE>

due and payable, subject to the lien of this Deed of Trust continuing unimpaired
and without loss of priority so as to secure the balance of the Obligations not
then due and payable; or

                (d)     cause any or all of the Secured Property to be sold
under the power of sale granted by this Deed of Trust or any of the other Loan
Documents in any manner permitted by applicable law. For any sale under the
power of sale granted by this Deed of Trust, Trustee or Beneficiary must record
and give all notices required by law and then, upon the expiration of such time
as is required by law, may sell the Secured Property, and all estate, right,
title, interest, claim and demand of Trustor therein, and all rights of
redemption thereof, at one or more sales, as an entirety or in parcels, with
such elements of real and/or personal property (and, to the extent permitted by
applicable law, may elect to deem all of the Secured Property to be real
property for purposes thereof), and at such time or place and upon such terms as
Trustee and Beneficiary may determine and shall execute and deliver to the
purchaser or purchasers thereof a deed or deeds conveying the property sold, but
without any covenant or warranty, express or implied, and the recitals in the
deed or deeds of any facts affecting the regularity or validity of the sale will
be conclusive against all persons. In the event of a sale, by foreclosure or
otherwise, of less than all of the Secured Property, this Deed of Trust shall
continue as a lien and security interest on the remaining portion of the Secured
Property; or

                (e)     institute an action, suit or proceeding in equity for
the specific performance of any of the provisions contained in the Loan
Documents; or

                (f)     apply for the appointment of a receiver, custodian,
trustee, liquidator or conservator of the Secured Property, to be vested with
the fullest powers permitted under applicable law, as a matter of right and
without regard to or the necessity to disprove the adequacy of the security for
the Obligations or the solvency of Trustor or any other person liable for the
payment of the Obligations, and Trustor and each other person so liable waives
or shall be deemed to have waived such necessity and consents or shall be deemed
to have consented to such appointment; or

                (g)     subject to the provisions and restrictions of any
applicable law, enter upon the Premises, and exclude Trustor and its agents and
servants wholly therefrom, without liability for trespass, damages or otherwise,
and take possession of all books, records and accounts relating thereto and all
other Secured Property, and Trustor agrees to surrender possession of the
Secured Property and of such books, records and accounts to Trustor or
Beneficiary on demand after the happening of any Event of Default; and having
and holding the same may use, operate, manage, preserve, control and otherwise
deal therewith and either personally or by its superintendents, managers,
agents, servants, attorneys or receivers, without interference from Trustor; and
upon each such entry and from time to time thereafter may, at the expense of
Trustor and the Secured Property, without interference by Trustor and as
Beneficiary may deem advisable, (i) either by purchase, repair or construction,
maintain and restore the Premises, (ii) insure or reinsure the same, (iii) make
all necessary or proper repairs, renewals, replacements, alterations, additions,
betterments and improvements thereto and thereon, (iv) complete the construction
of the Improvements and, in the course of such completion, may make such changes
in the contemplated or completed Improvements as it may deem advisable, (v) in
every such case in connection with the foregoing have the right to exercise all
rights and powers of Trustee with respect to the Secured Property, either in
Trustor's name or otherwise, including the right to make, terminate, cancel,
enforce or modify Leases, obtain and evict Lessees and sublessees on such terms
as Beneficiary shall deem advisable and to take any actions described in
subsection (i) of this Section 4.1; or
-------------           ----------
                                      34
<PAGE>

                (h)     subject to the provisions and restrictions of any
applicable law, may, with or without the entrance upon the Premises, collect,
receive, sue for and recover in its own name all Rents and cash collateral
derived from the leasing of the Premises, and after deducting therefrom all
costs, expenses and liabilities of every character incurred by Trustee and/or
Beneficiary, in collecting the same and in using, operating, managing,
preserving and controlling the Premises, and otherwise in exercising Trustee's
and/or Beneficiary's rights under subsection (g) of this Section 4.1, including
                                  --------------         -----------
all amounts necessary to pay Impositions, insurance premiums and other charges
in connection with the Premises, as well as compensation for the services of
Trustee and Beneficiary and their respective attorneys, agents and employees, to
apply the remainder as provided in Section 4.4; or
                                   -----------

                (i)     release any portion of the Secured Property for such
consideration as Beneficiary may require without, as to the remainder of the
Secured Property, in any way impairing or affecting the lien or priority of this
Deed of Trust, or improving the position of any subordinate lienholder with
respect thereto, except to the extent that the Obligations shall have been
reduced by the actual monetary consideration, if any, received by Trustee and/or
Beneficiary for such release, and may accept by assignment, pledge or otherwise
any other property in place thereof as Trustee and/or Beneficiary may require
without being accountable for so doing to any other lienholder; or

                (j)     may take all actions permitted under the Uniform
Commercial Code of the State of California; or

                (k)     may take any other action, or pursue any other right or
remedy, as Trustee and/or Beneficiary may have under applicable law, and Trustor
does hereby grant the same to Trustee and Beneficiary.

          In the event that Trustee and/or Beneficiary shall exercise any of the
rights or remedies set forth in subsections (g) and (h) of this Section 4.1,
                                -----------------------         -----------
neither Trustee nor Beneficiary shall be deemed to have entered upon or taken
possession of the Secured Property except upon the exercise of its option to do
so, evidenced by its demand and overt act for such purpose, nor shall it be
deemed a beneficiary or mortgagee in possession by reason of such entry or
taking possession, unless applicable law requires that it be deemed to be a
beneficiary or mortgagee in possession.  Neither Trustee nor Beneficiary shall
be liable to account for any action taken pursuant to any such exercise other
than for rents actually received by such party, nor liable for any loss
sustained by Trustor resulting from any failure to let the Premises, or from any
other act or omission of Trustee and/or Beneficiary, except to the extent caused
by (i) the gross negligence or willful misconduct of Beneficiary or its agents,
contractors or employees, or (ii) an occurrence on or about the Secured Property
following the sale or transfer thereof as a result of foreclosure proceedings
(or in lieu thereof), except to the extent such loss is caused by the willful
misconduct or bad faith of such party or such liability may not be waived under
applicable law.  Trustor hereby consents to, ratifies and confirms the exercise
by Trustee and/or Beneficiary of said rights and remedies, except to the extent
caused by (i) the gross negligence or willful misconduct of Beneficiary or its
agents, contractors or employees, or (ii) an occurrence on or about the Secured
Property following the sale or transfer thereof as a result of foreclosure
proceedings (or in lieu thereof).

          4.2  Expenses. If any action is commenced to foreclose this Deed of
               --------
Trust, or to enforce any other remedy of Trustee and/or Beneficiary under any of
the Loan Documents,

                                      35
<PAGE>

whether such action is judicial or pursuant to the power of sale contained
herein or otherwise, there shall be added to the Obligations secured by this
Deed of Trust all costs and expenses, including attorney's fees, plus interest
thereon at the Default Rate (as defined in the Note) until paid, in the
commencement and prosecution of such action, whether or not such action results
in a foreclosure sale, foreclosure or other judicial decree or judgment.

          4.3  Rights Pertaining to Sales.  Subject to the provisions or other
               --------------------------
requirements of law, the following provisions shall apply to any sale or sales
of the Secured Property under or by virtue of this Article IV, whether made
under the power of sale herein granted or by virtue of judicial proceedings or
of a judgment or decree of foreclosure and sale:

                (a)     Trustee, at the request of Beneficiary, may conduct any
number of sales from time to time. The power of sale set forth in Section 4.1(d)
                                                                  --------------
hereof shall not be exhausted by any one or more such sales as to any part of
the Secured Property which shall not have been sold, nor by any sale which is
not completed or is defective in Trustee's or Beneficiary's opinion, until the
Obligations shall have been paid in full.

                (b)     Any sale may be postponed or adjourned by public
announcement at the time and place appointed for such sale or for such postponed
or adjourned sale without further notice.

                (c)     After each sale, Trustee, or an officer of any court
empowered to do so, shall execute and deliver to the purchaser or purchasers at
such sale a good and sufficient instrument or instruments granting, conveying,
assigning and transferring all right, title and interest of Trustor in and to
the property and rights sold and shall receive the proceeds of said sale or
sales and apply the same as herein provided. Trustee is hereby appointed the
true and lawful attorney-in-fact of Trustor, which appointment is irrevocable
and shall be deemed to be coupled with an interest, in Trustor's name and stead,
to make all necessary conveyances, assignments, transfers and deliveries of the
property and rights so sold, and for that purpose Trustee may execute all
necessary instruments of conveyance, assignment, transfer and delivery, and may
substitute one or more persons with like power, Trustor hereby ratifying and
confirming all that said attorney or such substitute or substitutes shall
lawfully do by virtue thereof. Nevertheless, Trustor, if requested by Trustee or
Beneficiary, shall ratify and confirm any such sale or sales by executing and
delivering to Trustee or such purchaser or purchasers all such instruments as
may be advisable, in Trustee's or Beneficiary's judgment, for the purposes as
may be designated in such request.

                (d)     Any and all statements of fact or other recitals made in
any of the instruments referred to in subsection (c) of this Section 4.3 given
                                      --------------         -----------
by Trustee and/or Beneficiary as to nonpayment of the Obligations, or as to the
occurrence of any Event of Default, or as to Beneficiary having declared all or
any of the Obligations to be due and payable, or as to the request to sell, or
as to notice of time, place and terms of sale and of the property or rights to
be sold having been duly given, or as to the refusal, failure or inability to
act of Trustee, or as to the appointment of any substitute or successor Trustee,
or as to any other act or thing having been duly done by Trustor, Beneficiary,
or by such Trustee, shall be taken as conclusive and binding against all persons
as to evidence of the truth of the facts so stated and recited. Trustee and/or
Beneficiary may appoint or delegate any one or more persons as agent to perform
any act or acts necessary or incident to any sale so held, including the posting
of notices and the conduct of sale, but in the name and behalf of Trustee or
Beneficiary, as applicable.

                                      36
<PAGE>

                (e)     The receipt of Trustee for the purchase money paid at
any such sale, or the receipt of any other person authorized to receive the
same, shall be sufficient discharge therefor to any purchaser of any property or
rights sold as aforesaid, and no such purchaser, or its representatives,
grantees or assigns, after paying such purchase price and receiving such
receipt, shall be bound to see to the application of such purchase price of any
part thereof upon or for any trust or purpose of this Deed of Trust or, in any
manner whatsoever, be answerable for any loss, misapplication or non-application
of any such purchase money, or part thereof, or be bound to inquire as to the
authorization, necessity, expediency or regularity of any such sale.

                (f)     Any such sale or sales shall operate to divest all of
the estate, right, title, interest, claim and demand whatsoever, whether at law
or in equity, of Trustor in and to the properties and rights so sold, and shall
be a perpetual bar both at law and in equity against Trustor and any and all
persons claiming or who may claim the same, or any part thereof or any interest
therein, by, through or under Trustor to the fullest extent permitted by
applicable law.

                (g)     Upon any such sale or sales, Beneficiary may bid for and
acquire the Secured Property and, in lieu of paying cash therefor, may make
settlement for the purchase price by crediting against the Obligations the
amount of the bid made therefor, after deducting therefrom the expenses of the
sale, the cost of any enforcement proceeding hereunder and any other sums which
Trustee or Beneficiary is authorized to deduct under the terms hereof, to the
extent necessary to satisfy such bid.

                (h)     In the event that Trustor, or any person claiming by,
through or under Trustor, shall transfer or refuse or fail to surrender
possession of the Secured Property after any sale thereof, then Trustor, or such
person shall be deemed a tenant at sufferance of the purchaser at such sale,
subject to eviction by means of forcible entry and detainer proceedings in
accordance with applicable law, or subject to any other right or remedy
available hereunder or under applicable law.

                (i)     Upon any such sale, it shall not be necessary for
Trustee, Beneficiary or any public officer acting under execution or order of
court to have present or constructively in its possession any of the Secured
Property.

                (j)     In the event a foreclosure hereunder shall be commenced
by Trustee at the request of Beneficiary, Trustee or Beneficiary may at any time
before the sale of the Secured Property abandon the sale, and may institute suit
for the collection of the Obligations and for the foreclosure of this Deed of
Trust, or in the event that Trustee or Beneficiary should institute a suit for
collection of the Obligations, and for the foreclosure of this Deed of Trust,
Beneficiary may at any time before the entry of final judgment in said suit
dismiss the same and sell or require Trustee to sell the Secured Property in
accordance with the provisions of this Deed of Trust.

          4.4   Application of Proceeds.  The purchase money, proceeds or
                -----------------------
avails of any sale referred to in Section 4.3, together with any other sums
                                  -----------
which may be held by Trustee or Beneficiary hereunder, whether under the
provisions of this Article IV or otherwise, shall, except as herein expressly
provided to the contrary, be applied as follows:

                        First:  To the payment of the costs and expenses of any
                        -----
     such sale, including compensation to Trustee and/or Beneficiary, their
     agents and counsel, and of

                                      37
<PAGE>

     any judicial proceeding wherein the same may be made, and of all expenses,
     liabilities and advances made or incurred by Trustee and/or Beneficiary
     hereunder, together with interest thereon as provided herein, and all
     taxes, assessments and other charges, except any taxes, assessments or
     other charges subject to which the Secured Property shall have been sold.

               Second:  To the payment in full of the Obligations (including
               ------
     principal, interest, premium and fees) in such order as Beneficiary may
     elect.

               Third:  To the payment of any other sums secured hereunder or
               -----
     required to be paid by Trustor pursuant to any provision of the Loan
     Documents.

               Fourth:  To the payment of the surplus, if any, to whomsoever may
               ------
     be lawfully entitled to receive the same.

     4.5  Prepayment Charge.  Trustor hereby agrees to pay the charge provided
          -----------------
in the Note for prepayment of the Obligations, if for any reason any of said
Obligations shall be paid prior to the stated maturity date thereof, even if and
notwithstanding that an Event of Default shall have occurred and Beneficiary, by
reason thereof, shall have declared said Obligations due and payable, and
whether or not said payment is made prior to or at any sale held under or by
virtue of this Article IV. Trustor acknowledges that Beneficiary, in making the
loan evidenced by the Note and entering into this Deed of Trust, is relying on
Trustor's credit worthiness and its agreement to repay the Obligations in strict
accordance with the terms set forth in the Note. Trustor acknowledges that
Beneficiary would not make the loan without full and complete assurance by
Trustor of its agreement to make regular payments of principal and interest
under the Note and its further agreement not to prepay all or any part of the
principal of the Note prior to the final maturity date thereof, except on the
terms expressly set forth herein and in the Note. Therefore, any prepayment of
the Note, whether occurring as a voluntary prepayment by Trustor or occurring
upon an acceleration of the principal balance of the Note by Beneficiary on
account of any default by Trustor (including, but not limited to, the making or
suffering by Trustor, of any transfer or disposition of all or any portion of
the Secured Property or any interest therein as prohibited by Section 1.11 of
                                                              ------------
this Deed of Trust) will prejudice Beneficiary's ability to meet its obligations
and to earn the return on the funds advanced to Trustor, which Beneficiary
intended and expected to earn when it agreed to make the subject loan and will
also result in other loss and additional expenses to Beneficiary. Accordingly,
in recognition of the foregoing and in consideration of Beneficiary making the
loan secured by this Deed of Trust at the interest rate and for the term set
forth in the Note, Trustor hereby expressly (A) waives any and all rights it may
have under applicable law to prepay without charge or premium all or any part of
the Note, either voluntarily or upon an acceleration of the maturity date of the
Note on account of any default of Trustor (including, but not limited to, the
making or suffering by Trustor of any transfer or disposition prohibited by
Section 1.11 of this Deed of Trust) and (B) agrees that if, for any reason,
------------
whether due to the voluntary acceptance by Beneficiary of a prepayment tendered
by Trustor or the acceleration by Beneficiary of the maturity date of the Note,
as aforesaid, on account of any such default by Trustor, a prepayment of all or
any part of the principal of the Note is made by or on behalf of Trustor, or is
otherwise made or occurs in connection with any reinstatement of the Loan
Documents under any foreclosure proceedings, or any right of redemption
exercised by Trustor or any other party having the right to redeem or to prevent
any foreclosure of this Deed of Trust, or upon the consummation of any
foreclosure sale, then Trustor or any other party making any such prepayment
shall be obligated to pay, concurrently therewith,

                                      38
<PAGE>

the prepayment charge set forth in the Note, and the payment of such premium
shall be a condition to the making of such prepayment and shall be secured by
this Deed of Trust. Such prepayment charge shall be paid without prejudice to
the right of Beneficiary to collect any other amounts provided to be paid or to
declare a default hereunder. Nothing herein shall be construed as permitting any
partial prepayment except with Beneficiary's prior written consent thereto
obtained in each instance.

          4.6  Environmental Defaults and Remedies. In the event that any
               -----------------------------------
portion of the Secured Property is determined to be "environmentally impaired"
(as "environmentally impaired" is defined in California Code of Civil Procedure
Section 726.5(e)(3)) or to be an "affected parcel" (as "affected parcel" is
defined California Code of Civil Procedure Section 726.5(e)(1)), then, without
otherwise limiting or in any way affecting Beneficiary's or Trustee's rights and
remedies under this Deed of Trust, Beneficiary may elect to exercise its right
under California Code of Civil Procedure Section 726.5(a) to (1) waive its lien
on such environmentally impaired or affected parcel portion of the Secured
Property and (2) exercise (i) the rights and remedies of an unsecured creditor,
including reduction of its claim against Trustor to judgment, and (ii) any other
rights and remedies permitted by law. For purposes of determining Beneficiary's
right to proceed as an unsecured creditor under California Code of Civil
Procedure Section 726.5(a), Trustor shall be deemed to have willfully permitted
or acquiesced in a release or threatened release of hazardous materials, within
the meaning of California Code of Civil Procedure Section 726.5(d)(1), if the
release or threatened release of hazardous materials was knowingly or
negligently caused or contributed to by any lessee, occupant or user of any
portion of the Secured Property and Trustor knew or should have known of the
activity by such lessee, occupant or user which caused or contributed to the
release or threatened release. All costs and expenses, including, but not
limited to, reasonable attorneys' fees, incurred by Beneficiary in connection
with any action commenced under this Section 4.6, including any action required
                                     -----------
by California Code of Civil Procedure Section 726.5(b) to determine the degree
to which the Secured Property is environmentally impaired, plus interest thereon
at the Default Rate (as defined in the Note) until paid, shall be added to the
Obligations secured by this Deed of Trust and shall be due and payable to
Beneficiary upon its demand made at any time following the conclusion of such
action.

                                   ARTICLE V
                                 MISCELLANEOUS
                                 -------------

          5.1  Non-Waiver.  The failure of Beneficiary to insist upon strict
               ----------
performance of any term of this Deed of Trust shall not be deemed to be a waiver
of any term of this Deed of Trust. Trustor shall not be relieved of its
obligation to pay the Obligations at any time and in the manner provided for its
payment in the Note and this Deed of Trust by reason of (A) a failure by
Beneficiary to comply with any request of Trustor to take any action to
foreclose this Deed of Trust or otherwise enforce any of the provisions of this
Deed of Trust or of the Note or any other Loan Document, (B) the release,
regardless of consideration, of the whole or any part of the Secured Property or
any other security for the Obligations, or (C) any agreement or stipulation
between Beneficiary and any subsequent owner or owners of the Secured Property
or other person extending the time of payment or otherwise modifying or
supplementing the terms of the Note, this Deed of Trust or any Loan Document
securing or guaranteeing the Obligations or any portion thereof, without first
having obtained the consent of Trustor and, in the latter event, Trustor shall
continue to be obligated to pay the Obligations at the time and in the manner
provided in the Note and this Deed of Trust, as so extended, modified and
supplemented, unless

                                      39
<PAGE>

expressly released and discharged by Beneficiary. Regardless of consideration,
and without the necessity for any notice to or consent by the holder of any
subordinate lien, encumbrance, right, title or interest in or to the Secured
Property, Beneficiary may release any person at any time liable for the payment
of the Obligations or any portion thereof or any part of the security held for
the Obligations and may extend the time of payment or otherwise modify the terms
of any Loan Documents, including, without limitation, a modification of the
interest rate payable on the principal balance of the Note, without in any
manner impairing or affecting any of the Loan Documents or the lien thereof or
the priority of this Deed of Trust, as so extended and modified, as security for
the Obligations over any such subordinate lien, encumbrance, right, title or
interest. Beneficiary may resort for the payment of the Obligations to any other
security held by Beneficiary in such order and manner as Beneficiary, in its
discretion, may elect. Beneficiary may take action to recover the Obligations,
or any portion thereof, or to enforce any covenant of this Deed of Trust without
prejudice to the right of Beneficiary thereafter to foreclose this Deed of
Trust. Beneficiary shall not be limited exclusively to the rights and remedies
stated in this Deed of Trust but shall be entitled to every additional right and
remedy now or hereafter afforded by law. The rights of Beneficiary under this
Deed of Trust shall be separate, distinct and cumulative and none shall be given
effect to the exclusion of the others. No act of Beneficiary shall be construed
as an election to proceed under any one provision of this Deed of Trust to the
exclusion of any other provision.

          5.2  Sole Discretion of Beneficiary.  Wherever, pursuant to this Deed
               ------------------------------
of Trust, Beneficiary's consent or approval is required, the decision as to
whether or not to consent or approve shall be in the sole discretion of
Beneficiary and Beneficiary's decision shall be final and conclusive, except
where this Deed of Trust expressly provides to the contrary. If Trustor shall
seek the approval by or consent of Beneficiary under this Deed of Trust and
Beneficiary shall fail or refuse to give such consent or approval, Trustor shall
not be entitled to any damages for any withholding of such approval or consent
by Beneficiary, it being intended that Trustor's sole remedy shall be an action
for injunctive or declaratory relief, which remedy shall be available only in
those cases where Beneficiary has expressly agreed not to unreasonably withhold
its consent or approval.

          5.3  Recovery of Sums Required To Be Paid. Beneficiary shall have the
               ------------------------------------
right from time to time to take action to recover any sum or sums which
constitute a part of the Obligations as such sums shall become due, without
regard to whether or not the balance of the Obligations shall be due, and
without prejudice to the right of Beneficiary thereafter to bring an action of
foreclosure or any other action for a default or defaults by Trustor existing at
the time such earlier action was commenced.

          5.4  Legal Tender.  All payments of  principal, interest and any and
               ------------
all other payments required or provided herein shall be paid in lawful money of
the United States of America which shall be legal tender in payment of all debts
and dues, public and private, at the time of payment, at the office of
Beneficiary or at such other place either within or without the State of
California as Beneficiary may from time to time designate.

          5.5  No Merger. If both the lessor's and lessee's estates under any
               ---------
lease or any portion thereof which constitutes a part of the Secured Property
shall at any time become vested in one owner, this Deed of Trust and the lien
created hereby shall not be destroyed or terminated by the application of the
doctrine of merger and in such event, Beneficiary shall continue to have and
enjoy all of the rights and privileges of Beneficiary as to the separate
estates. In addition, upon

                                      40
<PAGE>

the foreclosure of the lien created by this Deed of Trust on the Secured
Property pursuant to the provisions hereof, any leases or subleases then
existing and created by Trustor shall not be destroyed or terminated by
application of the law of merger or as a matter of law or as a result of such
foreclosure unless Beneficiary or any purchaser at any such foreclosure sale
shall so elect. No act by or on behalf of Beneficiary or any such purchaser
shall constitute a termination of any lease or sublease unless Beneficiary or
such purchaser shall give written notice thereof to such lessee or sublessee.

          5.6  Discontinuance of Actions. In case Beneficiary shall have
               -------------------------
proceeded to enforce any right under this Deed of Trust by foreclosure, sale or
entry or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely, then, in every
such case, Trustor and Beneficiary shall be restored to their former positions
and rights hereunder with respect to the Secured Property which shall remain
subject to the lien of this Deed of Trust.

          5.7  Headings. The headings of the sections, paragraphs and
               --------
subdivisions of this Deed of Trust are for the convenience of reference only,
are not to be considered a part hereof and shall not limit or otherwise affect
any of the terms hereof.

          5.8  Notice to Parties. All notices and demands hereunder shall be in
               -----------------
writing and shall be deemed to have been sufficiently given or served for all
purposes when presented personally or sent by certified or registered mail with
return receipt requested or generally recognized overnight delivery service,
addressed to the parties at the addresses stated below, or at such other address
as either party may hereafter notify the other in writing as aforesaid:

          Trustor:            IPAC Properties
                              2221 Old Oakland Road
                              San Jose, California
                              Attn:  Mr. Tony Lin

          with a copy to:     Wilson, Sonsini, Goodrich & Rosati
                              650 Page Mill Road
                              Palo Alto, CA  94304-1050
                              Attn:  Debra Summers, Esq.

          Beneficiary:        SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
                              One Sun Life Executive Park
                              Wellesley Hills, MA  02181
                              Attn:  Property Investments

          with a copy to:     Graham & James LLP
                              One Maritime Plaza, Suite 300
                              San Francisco, CA  94111-3492
                              Attn:  Bruce W. Hyman, Esq.

           Trustee:           Chicago Title Company
                              110 West Taylor Street
                              San Jose, CA  95110

                                      41
<PAGE>

Service of any such notice or demand so made shall be deemed effective on the
day of actual delivery as shown by the addressee's return receipt or the
expiration of forty-eight (48) hours after the date sent by generally recognized
overnight delivery service or mailed, whichever is the earlier in time, except
that service of any notice of default or notice of sale provided or required by
law shall, if mailed, be deemed effective on the date of mailing.

          5.9  Non-Recourse. If an Event of Default has occurred, Beneficiary
               ------------
shall have all rights reserved in the Note, this Deed of Trust and every other
Loan Document prior to "Lease Termination" as defined below and shall have full
recourse against Trustor. For purposes of this paragraph "Lease Termination"
shall occur upon the earlier of the effective date of a lease with Integrated
Packaging Assembly Corporation for all of the space in the Secured Property
(estimated to be August 15, 1999) or the date the Secured Property is fully
occupied by Integrated Packaging Assembly Corporation or its successors by
merger, consolidation, or sale of substantially all of its assets. In the event
of default after Lease Termination, Holder shall have full recourse to the
Secured Property and to the other collateral given by Trustor to secure the
Note, provided, however, that any judgment obtained by Beneficiary in any
proceeding to enforce such rights shall be enforced only against the Secured
Property and such other collateral. Notwithstanding the foregoing, Beneficiary
shall not in any way be prohibited from naming Trustor or any of its successors
or assigns or any person holding under or through them as parties to any
actions, suits or other proceedings initiated by Beneficiary to enforce such
rights or to foreclose its mortgage lien or otherwise realize upon any other
lien or security interest created in any other collateral given to secure the
payment of the Obligations. The foregoing restriction after Lease Termination
shall not apply to, and Trustor shall be personally liable for, any losses,
damages, costs and expenses incurred by Beneficiary as a result of (A) any
material misstatement of fact (1) made by Trustor or any person or entity
constituting Trustor to induce Beneficiary to advance the principal amount
evidenced hereby or (2) contained in any Loan Document, (B) fraud committed by
Trustor or any person or entity constituting Trustor, (C) misapplication of
rents, income, insurance proceeds, condemnation awards or trust funds, (D) any
loss, damage, expense or liability on the part of Beneficiary (including,
without limitation, attorneys fees and disbursements) for which Trustor is
liable and which is not reimbursable to Beneficiary pursuant to the Indemnity
executed on even date herewith including, but not limited to the diminution in
value of the Secured Property due to the existence of Hazardous Substances (as
defined in the Indemnity), or if required in the reasonable judgment of
Beneficiary, the preparation of an environmental audit on the Secured Property,
whether conducted or authorized by Trustor, Beneficiary or a third party or the
implementation of any environmental audit's recommendations, (E) all losses,
damages or liability suffered by Beneficiary arising from any acts of commission
or omission by Trustor that result in waste upon the Secured Property, (F)
failure to pay real property taxes when due, (G) taking of any rents prepaid for
more than one month in advance, (H) cost of any property repair as a result of a
casualty not reimbursed by insurance to the extent insurance is required
pursuant to this Deed of Trust, or (I) failure to fully comply with the
provisions of the Americans With Disabilities Act.

          5.10 Successors and Assigns Included In Parties. Subject to the
               ------------------------------------------
provisions of Section 1.11, whenever in this Deed of Trust one of the parties
              ------------
hereto is named or referred to, the heirs, legal representatives, successors and
assigns of such party shall be included and all covenants and agreements
contained in this Deed of Trust by or on behalf of Trustor or by or on behalf of
Beneficiary shall bind and inure to the benefit of their respective heirs, legal
representatives, successors and assigns, whether so expressed or not.

                                      42
<PAGE>

          5.11 Number and Gender. Whenever the singular or plural number,
               -----------------
masculine or feminine or neuter gender is used herein, it shall equally include
the other.

          5.12 Changes and Modifications. This Deed of Trust cannot be changed
               -------------------------
except by an agreement in writing, signed by the party against whom enforcement
of any change or modification is sought.

          5.13 Applicable Law. This Deed of Trust shall be construed and
               --------------
enforced according to the laws of the State of California.

          5.14 Invalid Provisions to Affect No Others. The unenforceability or
               --------------------------------------
invalidity of any provision or provisions of this Deed of Trust as to any
persons or circumstances shall not render that provision or those provisions
unenforceable or invalid as to any other persons or circumstances, and all
provisions hereof, in all other respects, shall remain valid and enforceable.

          5.15 Usury Savings Clause. It is the intention of Trustor and
               --------------------
          Beneficiary to conform strictly to the usury laws now or hereafter in
          force in the State of California and any interest payable under the
          Note, this Deed of Trust, or any of the other Loan Documents executed
          by Trustor, to the extent that any sums secured hereby or the
          advancing of such sums by Beneficiary shall not be exempt from such
          laws, shall be subject to reduction to the amount equal to the maximum
          non-usurious amount allowed under the usury laws of California as now
          or hereafter construed by the courts having jurisdiction over such
          matters. In the event the maturity of the Note is accelerated by
          reason of any provision of this Deed of Trust including, without
          limitation, an election by Beneficiary resulting from an Event of
          Default (or an event permitting acceleration) under this Deed of Trust
          or any other Loan Documents, voluntary prepayment of the Note, or
          otherwise, then earned interest may never include more than the
          maximum amount permitted by law, computed from the dates of each
          advance of the Obligations until payment, and any interest in excess
          of the maximum amount permitted by law shall be canceled automatically
          and, if theretofore paid, shall at the option of Beneficiary either be
          rebated to Trustor or credited on the principal amount of the Note or
          if all principal has been repaid, then the excess shall be rebated to
          Trustor. The aggregate of all interest (whether designated as
          interest, service charges, points or otherwise) contracted for,
          chargeable, or receivable under the Note, this Deed of Trust, or any
          other Loan Document shall under no circumstances exceed the maximum
          legal rates upon the unpaid principal balance of the Note remaining
          unpaid from time to time. In the event such interest does exceed the
          maximum legal rate, it shall be deemed a mistake and such excess shall
          be canceled automatically and if theretofore paid, rebated to Trustor
          or credited on the principal amount of the Note, or if the Note has
          been repaid, then such excess shall be rebated to Trustor.

                                      43
<PAGE>

          5.16   No Statute of Limitations. The pleadings of any statute of
                 -------------------------
limitations as a defense to any and all obligations secured by this Deed of
Trust are hereby waived to the full extent permissible by law .

          5.17   Late Charges. In the event that any installment of principal,
                 ------------
interest or escrow deposit shall become overdue, a "late charge" of four cents
($.04) for each dollar ($1.00), or part thereof so overdue, may be charged to
Trustor by Beneficiary for the purpose of defraying Beneficiary's expenses
incident to handling such delinquent payment. This charge shall be in addition
to, and not in lieu of, any other remedy Beneficiary may have and is in addition
to any reasonable fees and charges of any agents or attorneys which Beneficiary
is entitled to employ on any default hereunder whether authorized herein or by
law. Such "late charges", if not previously paid, shall, at the option of
Beneficiary, be added to and become part of the succeeding monthly payment to be
made under the Note and secured by this Deed of Trust.

          5.18   Continuing Effectiveness. This Deed of Trust shall cover any
                 ------------------------
and all advances made pursuant to the Loan Documents, rearrangements and
renewals of the Obligations and all extensions in the time of payment thereof,
whether such advances, extensions or renewals are evidenced by new promissory
notes or other instruments hereafter executed and irrespective of whether filed
or recorded. Likewise, the execution of this Deed of Trust shall not impair or
affect any other security which may be given to secure the payment of the
Obligations, and all such additional security shall be considered as cumulative.
The taking of additional security, execution of partial releases of the
security, or any extension of time of payment of the Obligations shall not
diminish the force, effect or lien of this Deed of Trust and shall not affect or
impair the liability of any maker, surety or endorser for the payment of the
Obligations.

          IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the
date and year first above written.

                            Trustor
                            IPAC PROPERTIES, a California corporation

                            By: /s/ Tony Lin
                               ____________________________________
                                 Its: Chief  Financial Officer
                                     ______________________________

                     [ALL SIGNATURES MUST BE ACKNOWLEDGED]

                                      44
<PAGE>

                                  SCHEDULE A

                              Description of Land

The land situated in the County of Santa Clara, State of California, and is
described as follows:

                               [to be attached]
<PAGE>

                               TABLE OF CONTENTS
                               -----------------
                                                                            Page
                                                                            ----


GRANTING CLAUSE ONE........................................................  1
GRANTING CLAUSE TWO........................................................  1
GRANTING CLAUSE THREE......................................................  2
GRANTING CLAUSE FOUR.......................................................  2
GRANTING CLAUSE FIVE.......................................................  2
GRANTING CLAUSE SIX........................................................  2
GRANTING CLAUSE SEVEN......................................................  3
GRANTING CLAUSE EIGHT......................................................  3
GRANTING CLAUSE NINE.......................................................  3
GRANTING CLAUSE TEN........................................................  3
GRANTING CLAUSE ELEVEN.....................................................  3
GRANTING CLAUSE TWELVE.....................................................  3
ARTICLE I COVENANTS AND AGREEMENTS.........................................  4
        1.1     Performance by Trustor.....................................  4
        1.2     Payment of Taxes, Assessments, Etc.........................  4
                A.     Impositions.........................................  4
                B.     Installments........................................  4
                C.     Receipts............................................  4
                D.     Evidence of Payment.................................  5
                E.     Payment by Beneficiary..............................  5
                F.     Change in Law.......................................  5
                G.     Permitted Contest...................................  5
                H.     No Lease Default....................................  6
                I.     Joint Assessment....................................  6
        1.3     Insurance..................................................  6
                A.     Extended Coverage...................................  6
                B.     Additional Coverage.................................  6
                C.     Separate Insurance..................................  7
                D.     Insurers; Policies..................................  7
                E.     Beneficiary's Right to Provide Coverage.............  8
                F.     Damage or Destruction...............................  8
                G.     Trustor's Use of Proceeds...........................  9
                H.     Transfer of Interest in Policies....................  11
        1.4     Escrow Deposits............................................  11
        1.5     Care and Use of Premises...................................  12
                A.     Maintenance and Repairs.............................  12
                B.     Standard of Repairs.................................  12
                C.     Notice to Trustor...................................  12
                D.     Removal of Equipment................................  12
                E.     Compliance With Laws and Insurance..................  13
                F.     Permitted Contests..................................  13
                G.     Compliance With Instruments of Record...............  13
                H.     Alteration of Secured Property......................  14
                I.     Parking.............................................  14
                J.     Entry on Secured Property...........................  14
                K.     No Consent to Alterations or Repairs................  14


                                       i
<PAGE>

                L.     Mechanics Liens.....................................  14
                M.     Use of Secured Property by Trustor..................  14
                N.     Use of Secured Property by Public...................  15
        1.6     Financial Information......................................  15
                A.     Audit...............................................  15
                B.     Right to Inspect Books and Records..................  15
        1.7     Condemnation...............................................  15
                A.     Beneficiary's Right to Participate in Proceedings...  15
                B.     Application of Condemnation Award...................  16
                C.     Reimbursement of Costs..............................  17
                D.     Existing Obligations................................  17
                E.     Application of Award................................  17
        1.8     Leases.....................................................  18
                A.     Performance of Lessor's Covenants...................  18
                B.     Notice of Default...................................  18
                C.     Representations Regarding Leases....................  18
                D.     Covenants Regarding Leases..........................  19
                E.     Application of Rents................................  19
        1.9     Assignment of Leases, Rents, Income, and Cash Collateral...  20
                A.     Assignment; Discharge of Obligations................  20
                B.     Entry Onto Secured Property; Lease of Secured
                        Property...........................................  20
                C.     Right to Manage Secured Property....................  21
                D.     Delivery of Assignments.............................  21
                E.     Indemnity...........................................  21
        1.10    Further Assurances.........................................  21
                A.     General; Appointment of Attorney-in-Fact............  21
                B.     Statement Regarding Obligations.....................  22
                C.     Additional Security Instruments.....................  22
                D.     Security Agreement..................................  22
                E.     Preservation of Trustor's Existence.................  25
                F.     Further Indemnities.................................  25
                G.     Absence of Insurance................................  25
        1.11    Further Sales or Encumbrances..............................  26
                A.     Continuing Ownership and Management.................  26
                B.     Transfer or Encumbrance of Secured Property.........  26
                C.     Acceleration of Obligations.........................  27
                D.     Wrap-Around Financing...............................  27
        1.12    Expenses...................................................  27
ARTICLE II WARRANTIES AND REPRESENTATIONS..................................  28
        2.1     Warranty of Title..........................................  28
        2.2     Ownership Of Improvements And Personal Property............  28
        2.3     No Pending Material Litigation or Proceeding;
                  No Hazardous Materials...................................  28
                A.      Proceedings Affecting Trustor......................  28
                B.      Proceedings Affecting Secured Property.............  28


                                      ii
<PAGE>

                C.      No Litigation Regarding Hazardous Materials........  29
        2.4     Valid Organization, Good Standing and Qualification
                  of Trustor...............................................  29
        2.5     Authorization; No Legal Restrictions on Performance........  29
        2.6     Compliance With Laws.......................................  29
        2.7     Tax Status.................................................  30
        2.8     Absence of Foreign or Enemy Status.........................  30
        2.9     Federal Reserve Board Regulations..........................  30
        2.10    Investment Company Act and Public Utility Holding
                  Company Act..............................................  30
        2.11    Exempt Status of Transactions Under Securities
                  Act and Representations Relating Thereto.................  30
        2.12    Employee Benefit Plans.....................................  31
ARTICLE III DEFAULTS.......................................................  31
        3.1     Events of Default..........................................  31
ARTICLE IV REMEDIES........................................................  33
        4.1     Remedies...................................................  33
        4.2     Expenses...................................................  35
        4.3     Rights Pertaining to Sales.................................  36
        4.4     Application of Proceeds....................................  37
        4.5     Prepayment Charge..........................................  38
        4.6     Environmental Defaults and Remedies........................  39
ARTICLE V MISCELLANEOUS....................................................  39
        5.1     Non-Waiver.................................................  39
        5.2     Sole Discretion of Beneficiary.............................  40
        5.3     Recovery of Sums Required To Be Paid.......................  40
        5.4     Legal Tender...............................................  40
        5.5     No Merger..................................................  40
        5.6     Discontinuance of Actions..................................  41
        5.7     Headings...................................................  41
        5.8     Notice to Parties..........................................  41
        5.9     Non-Recourse...............................................  42
        5.10    Successors and Assigns Included In Parties.................  42
        5.11    Number and Gender..........................................  43
        5.12    Changes and Modifications..................................  43
        5.13    Applicable Law.............................................  43
        5.14    Invalid Provisions to Affect No Others.....................  43
        5.15    Usury Savings Clause.......................................  43
        5.16    No Statute of Limitations..................................  43
        5.17    Late Charges...............................................  44
        5.18    Continuing Effectiveness...................................  44

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