<PAGE>

                                                                Exhibit 10.14
                                 Deed of Trust,
                         Security Agreement, Assignment
                            of Rents and Leases, and
                                 Fixture Filing

<PAGE>

                               TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                                     Page

<S>                                                                                                  <C>
ARTICLE I COVENANTS AND AGREEMENTS OF THE GRANTOR .................................................     6
     SECTION 1.1.  Payment of Secured Obligations and Other Obligations ...........................     6
     SECTION 1.2.  Title to Collateral, etc .......................................................     6
     SECTION 1.3.  Title Insurance. ...............................................................     7
     SECTION 1.4.  Recordation ....................................................................     8
     SECTION 1.5.  Payment of Impositions, etc ....................................................     8
     SECTION 1.6.  Insurance and Legal Requirements ...............................................     9
     SECTION 1.7.  Security Interests, etc ........................................................    10
     SECTION 1.8.  Permitted Contests .............................................................    10
     SECTION 1.9.  Leases .........................................................................    11
     SECTION 1.10. Compliance with Instruments ....................................................    11
     SECTION 1.11. Maintenance and Repair, etc ....................................................    11
     SECTION 1.12. Alterations, Additions, etc ....................................................    12
     SECTION 1.13. Acquired Property Subject to Lien ..............................................    12
     SECTION 1.14. Assignment of Leases, Rents, Proceeds, etc. ....................................    13
     SECTION 1.15. No Claims Against the Beneficiary ..............................................    15
     SECTION 1.16. Indemnification Against Obligations ............................................    16
     SECTION 1.17. No Credit for Payment of Taxes .................................................    17
     SECTION 1.18. Offering of the Notes ..........................................................    17
     SECTION 1.19. Hazardous Material and Wastes ..................................................    18
ARTICLE II INSURANCE; DAMAGE, DESTRUCTION OR TAKING, ETC. .........................................    18
     SECTION 2.1.  Insurance. .....................................................................    18
     SECTION 2.2.  Damage, Destruction or Taking; Grantor to Give Notice; Assignment of Awards ....    20
     SECTION 2.3.  Application of Proceeds and Awards .............................................    21
     SECTION 2.4.  Total Taking and Total Destruction .............................................    23
ARTICLE III EVENTS OF DEFAULT; REMEDIES, ETC. .....................................................    24
     SECTION 3.1.  Events of Default; Acceleration ................................................    24
     SECTION 3.2.  Legal Proceedings; Foreclosure .................................................    25
     SECTION 3.3.  Power of Sale ..................................................................    26
</TABLE>

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                               TABLE OF CONTENTS
                                  (continued)

<TABLE>
<CAPTION>
                                                                                        Page

<S>                                                                                     <C>
     SECTION 3.4.  Uniform Commercial Code Remedies ....................................  26
     SECTION 3.5.  Beneficiary Authorized to Execute Deeds, etc ........................  27
     SECTION 3.6.  Purchase of Collateral by Beneficiary ...............................  27
     SECTION 3.7.  Receipt a Sufficient Discharge to Purchaser .........................  27
     SECTION 3.8.  Waiver of Appraisement, Valuation, etc ..............................  28
     SECTION 3.9.  Sale a Bar Against Grantor ..........................................  28
     SECTION 3.10. Application of Proceeds of Sale and Other Moneys ....................  28
     SECTION 3.11. Appointment of Receiver .............................................  29
     SECTION 3.12. Possession, Management and Income ...................................  29
     SECTION 3.13. Right of Beneficiary to Perform Grantor's Covenants, etc ............  30
     SECTION 3.14. Subrogation .........................................................  30
     SECTION 3.15. Remedies, etc., Cumulative ..........................................  31
     SECTION 3.16. Provisions Subject to Applicable Law ................................  31
     SECTION 3.17. No Waiver, etc ......................................................  31
     SECTION 3.18. Compromise of Actions, etc ..........................................  31
ARTICLE IV DEFINITIONS .................................................................  32
     SECTION 4.1. Terms Defined in this Deed of Trust ..................................  32
     SECTION 4.2. Use of Defined Terms .................................................  34
     SECTION 4.3. Credit Agreement Definitions .........................................  34
ARTICLE V MISCELLANEOUS ................................................................  34
     SECTION 5.1. Further Assurances; Financing Statements. ............................  34
     SECTION 5.2. Additional Security ..................................................  35
     SECTION 5.3. Defeasance; Partial Release, etc. ....................................  36
     SECTION 5.4. Notices, etc .........................................................  36
     SECTION 5.5. Waivers, Amendments, etc .............................................  36
     SECTION 5.6. Cross-References .....................................................  36
     SECTION 5.7. Headings .............................................................  37
     SECTION 5.8. Governing Law ........................................................  37
</TABLE>

                                      -ii-

<PAGE>

                               TABLE OF CONTENTS
                                  (continued)

<TABLE>
                                                                                     Page
<S>                                                                                    <C>
SECTION 5.9.  Successors and Assigns, etc .............................................. 37
SECTION 5.10. Loan Document ...........................................................  37
SECTION 5.11. Severability ............................................................  37
SECTION 5.12. Accommodation Provisions ................................................  37
</TABLE>

ACKNOWLEDGEMENTS

Schedule 1 - Description of the Land
Schedule 2 - Permitted Encumbrances

                                      -iii-

<PAGE>

                                                       (For Recorder's Use Only)

Recording Requested By and
When Recorded, Mail To:

Boise A. Ding, Esq.
Mayer, Brown & Platt
350 South Grand Avenue, 25th Floor
Los Angeles, California  90071

--------------------------------------------------------------------------------
                   (Space above this line for recorder's use)

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

                           Dated as of August 21, 2001

     This Deed of Trust, Security Agreement, Assignment of Rents and Leases, and
Fixture Filing (this "Deed of Trust") has been executed by AMERICAN EDUCATIONAL
                      -------------
PRODUCTS, INC., a Colorado corporation, having an address at 401 Hickory Drive,
Fort Collins, CO 80524 (the "Grantor") in favor of THE PUBLIC TRUSTEE FOR THE
                             -------
COUNTY OF LARIMER, STATE OF COLORADO, as trustee ("Trustee"), for the benefit of
                                                   -------
BANK OF AMERICA, N.A.(successor in interest to Bank of America National Trust
and Savings Association and Continental Bank, N.A.), having an address at 231
South LaSalle Street, Chicago, Illinois 60697, Attention: Ms. Debra Basler, as
                                               ---------
agent for the various financial institutions (the "Lenders") which are, or may
                                                   -------
from time to time hereafter become, parties to the Credit Agreement, as
hereinafter defined (herein together with its successors and assigns acting as
agent at the time under such Credit Agreement, the "Beneficiary"),
                                                    -----------

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

     WHEREAS, the Grantor is on the date of delivery hereof the owner of fee
title to the parcel or parcels of land described in Schedule 1 hereto (the
                                                    ----------
"Land") and of the Improvements (such term and other capitalized terms used in
 ----
this Deed of Trust having the respective meanings specified or referred to in
Article 4);
---------

<PAGE>

     WHEREAS, pursuant to an Amended and Restated Credit Agreement (Five Year)
dated May 29, 2001 (the "Credit Agreement") among Nasco International, Inc.
                         ----------------
("Nasco"), certain lenders, Bank One, Wisconsin, as documentation agent and
  -----
Beneficiary, as administrative agent the lenders thereunder have extended
certain credit (herein referred to collectively as the "Loans"), which Loans are
                                                        -----
evidenced by Notes issued under the Credit Agreement (the indebtedness evidenced
by such Notes is sometimes hereinafter referred to as the "Secured
                                                           -------
Obligations")to Nasco, including for, among other things, financing the AMEP
-----------
Acquisition.

     WHEREAS, Grantor shall derive substantial benefit from the AMEP Acquisition
and whereas Beneficiary would not have entered into the Credit Agreement but for
Grantor's agreement to execute and deliver this Deed of Trust which serves as an
"AMEP Mortgage" as defined under the Credit Agreement;

     WHEREAS, as used in this Deed of Trust the term "Obligations" means and
                                                      -----------
includes all of the following:

          (a) the principal of and interest on the Secured Obligations;

          (b) all other indebtedness of any kind arising under, and all amounts
     of any kind which, at any time become due and owing to the Beneficiary
     under or with respect to the Credit Agreement, the Notes, this Deed of
     Trust, the Collateral Documents referred to in the Credit Agreement, and
     any other document, agreement or other instrument delivered pursuant to or
     in connection with the Credit Agreement or this Deed of Trust (herein
     collectively called the "Loan Documents");
                              --------------

          (c) all of the covenants, obligations and agreements and the truth and
     completeness of all representations and warranties, of Nasco and/or
     Grantor, in, under or pursuant to the Loan Documents;

          (d) any and all advances, costs and expenses including, without
     limitation, all costs of enforcement and collection, paid or incurred by
     the Beneficiary to protect any of the Collateral (as hereinafter defined),
     perform any obligation of Nasco, Grantor or any other Person under or with
     respect to the Loan Documents or collect any amount owing to the
     Beneficiary and the Lenders which is secured or evidenced hereby or by any
     other Loan Document; and

                                       -2-

<PAGE>

          (e) interest on all of the foregoing.

     NOW, THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, and in order to induce the Lenders to make Loans to Nasco
from time to time pursuant to the Credit Agreement, the Grantor hereby enters
into this Deed of Trust.

                                   G R A N T :
                                   ----------

     FOR and in consideration of the premises, and of the mutual covenants
herein contained, and in order to secure the full, timely and proper payment and
performance of and compliance with each and every one of the Obligations, the
Grantor hereby irrevocably grants, bargains, sells, mortgages, warrants, aliens,
demises, releases, hypothecates, pledges, assigns, transfers and conveys unto
Trustee IN TRUST, WITH POWER OF SALE, for the benefit and security of the
Beneficiary and its successors and assigns, forever, all of the following (the
"Collateral"):
 ----------

          (a) Real Estate. All of the Land and all additional lands and estates
              -----------
     therein now owned or hereafter acquired by the Grantor for use or
     development with the Land or any portion thereof and which is made subject
     to the lien hereof from time to time by supplemental deed of trust or
     otherwise, together with all and singular the tenements, rights, easements,
     hereditaments, rights of way, privileges, liberties, appendages and
     appurtenances now or hereafter belonging or in anywise pertaining to the
     Land and such additional lands and estates therein (including, without
     limitation, all rights relating to storm and sanitary sewer, water, gas,
     electric, railway and telephone services); all development rights, air
     rights, riparian rights, water, water rights, water stock, all rights in,
     to and with respect to any and all oil, gas, coal, minerals and other
     substances of any kind or character underlying or relating to the Land and
     such additional lands and estates therein and any interest therein; all
     estate, claim, demand, right, title or interest of the Grantor in and to
     any street, road, highway or alley, vacated or other, adjoining the Land or
     any part thereof and such additional lands and estates therein; all strips
     and gores belonging, adjacent or pertaining to the Land or such additional
     lands and estates; and any after-acquired title to any of the foregoing
     (herein collectively called the "Real Estate");
                                      -----------

                                       -3-

<PAGE>

          (b) Improvements. All buildings, structures and other improvements and
              ------------
     any additions and alterations thereto or replacements thereof, now or
     hereafter built, constructed or located upon the Real Estate; and all
     furnishings, fixtures, fittings, appliances, apparatus, equipment,
     machinery, building and construction materials and other articles of every
     kind and nature whatsoever and all replacements thereof, now or hereafter
     affixed or attached to, placed upon or used in any way in connection with
     the complete and comfortable use, enjoyment, occupation, operation,
     development and maintenance of the Real Estate or such buildings,
     structures and other improvements now or hereafter owned by the Grantor,
     including, but not limited to, partitions, furnaces, boilers, oil burners,
     radiators and piping, plumbing and bathroom fixtures, refrigeration,
     heating, ventilating, air conditioning and sprinkler systems, other fire
     prevention and extinguishing apparatus and materials, vacuum cleaning
     systems, gas and electric fixtures, incinerators, compactors, elevators,
     engines, motors, generators and all other articles of property which are
     considered fixtures under applicable law (such buildings, structures and
     other improvements and such other property are herein collectively referred
     to as the "Improvements"; the Real Estate and the Improvements are
                ------------
     collectively referred to as the "Property");
                                      --------

          (c) Goods. All building materials, goods, construction materials,
              -----
     appliances (including, without limitation, stoves, ranges, ovens,
     disposals, refrigerators, water fountains and coolers, fans, heaters,
     dishwashers, clothes washers and dryers, water heaters, hood and fan
     combinations, kitchen equipment, laundry equipment, kitchen cabinets and
     other similar equipment), stocks, beds, mattresses, bedding and linens,
     supplies, blinds, window shades, drapes, carpets, floor coverings, office
     equipment, growing plants and shrubberies, control devices, equipment
     (including window cleaning, building cleaning, swimming pool, recreational,
     monitoring, garbage, pest control and other equipment), motor vehicles,
     tools, furnishings, furniture, lighting, non-structural additions to the
     Real Estate and Improvements and all other tangible property of any kind or
     character, together with all replacements thereof, now or hereafter owned
     by the Grantor and located on or in or used or useful in connection with
     the complete and comfortable use, enjoyment, occupation, operation,
     development and maintenance of the Property,


                                       -4-

<PAGE>

     regardless of whether or not located on or in the Property or located
     elsewhere for purposes of storage, fabrication or otherwise, exclusive of
     any of the foregoing items of property owned by tenants of portions of the
     Improvements (herein collectively referred to as the "Goods");
                                                           -----

          (d) Intangibles. All goodwill, trademarks, trade names, option rights,
              -----------
     purchase contracts, books and records and general intangibles of the
     Grantor relating to the Property and all accounts, contract rights,
     instruments, chattel paper and other rights of the Grantor for the payment
     of money for property sold or lent, for services rendered, for money lent,
     or for advances or deposits made, and any other intangible property of the
     Grantor relating to the Property, but specifically excluding rights of the
     Grantor in, to and under contracts with providers of goods or services in
     connection with the maintenance and operation of the Property (herein
     collectively referred to as the "Intangibles");
                                      -----------

          (e) Plans. All rights of the Grantor in and to all plans and
              -----
     specifications, designs, drawings and other information, materials and
     matters heretofore or hereafter prepared relating to the Improvements or
     any construction on the Real Estate (herein collectively referred to as the
     "Plans");
      -----

          (f) Permits. All rights of the Grantor in, to and under all permits,
              -------
     franchises, licenses, approvals and other authorizations respecting the
     use, occupation and operation of the Property and every part thereof and
     respecting any business or other activity conducted on or from the
     Property, and any product or proceed thereof or therefrom, including,
     without limitation, all building permits, certificates of occupancy and
     other licenses, permits and approvals issued by governmental authorities
     having jurisdiction (herein collectively called the "Permits");
                                                          -------

          (g) Leases of Furniture, Furnishings and Equipment. All right, title
              ----------------------------------------------
     and interest of the Grantor as lessee in, to and under any leases of
     furniture, furnishings and equipment now or hereafter installed in or at
     any time used in connection with the Property;

          (h) Proceeds. All proceeds of the conversion, voluntary or involuntary
              --------
     of any of the foregoing into cash or liquidated claims, including, without
     limitation,




                                       -5-

<PAGE>

     proceeds of insurance and condemnation awards (herein collectively referred
     to as "Proceeds"); and
            --------

          (i) Other Property. All other property and rights of the Grantor of
              --------------
     every kind and character relating to the Property, and all proceeds and
     products of any of the foregoing.

     AND, without limiting any of the other provisions of this Deed of Trust,
the Grantor expressly grants to the Beneficiary, as secured party, a security
interest in all of those portions of the Collateral which are or may be subject
to the State Uniform Commercial Code provisions applicable to secured
transactions and this Deed of Trust shall also constitute a security agreement
from the Grantor to the Beneficiary under the State Uniform Commercial Code and
IT IS INTENDED THAT THIS DEED OF TRUST SHALL BE EFFECTIVE AS A FINANCING
STATEMENT FILED AS A FIXTURE FILING UNDER THE STATE UNIFORM COMMERCIAL CODE;

     TO HAVE AND TO HOLD the Collateral unto the Trustee for the benefit of
Beneficiary and its successors and assigns, forever.

     FURTHER to secure the full, timely and proper payment and performance of
the Obligations, the Grantor hereby covenants and agrees with and warrants to
the Beneficiary as follows:

                                   ARTICLE I

                     COVENANTS AND AGREEMENTS OF THE GRANTOR
                     ---------------------------------------

     SECTION 1.1. Payment of Secured Obligations and Other Obligations. The
                  ----------------------------------------------------
Grantor agrees that it will cause Nasco to duly and punctually pay:

          (a) the principal of and interest on the Secured Obligations at the
     time outstanding in accordance with the terms thereof and hereof, and

          (b) when and as due and payable from time to time in accordance with
     the terms hereof or of any other applicable Loan Document, all other
     Obligations.

     SECTION 1.2. Title to Collateral, etc. The Grantor represents and warrants
                  ------------------------
to and covenants with the Beneficiary that:

          (a) as of the date hereof and at all times hereafter while this Deed
     of Trust is outstanding, the Grantor is the

                                       -6-

<PAGE>

     absolute owner of the legal and beneficial title to the Property and to all
     other property included in the Collateral, and has good and marketable
     title in fee simple absolute to the Property, subject in each case only to
     this Deed of Trust and the encumbrances set forth in Schedule 2 hereto (the
                                                          ----------
     "Permitted Encumbrances");
      ----------------------

          (b) the Grantor has good and lawful right, power and authority to
     execute this Deed of Trust and to convey, transfer, assign, mortgage and
     grant a security interest in the Collateral, all as provided herein;

          (c) this Deed of Trust has been duly executed, acknowledged and
     delivered on behalf of the Grantor, all consents and other actions required
     to be taken by the officers, directors, shareholders and partners, as the
     case may be, of the Grantor have been duly and fully given and performed
     and this Deed of Trust constitutes the legal, valid and binding obligation
     of the Grantor, enforceable against the Grantor in accordance with its
     terms;

          (d) the Grantor, at its expense, will warrant and defend to the
     Beneficiary and any purchaser under the power of sale herein or at any
     foreclosure sale such title to the Collateral and the first deed of trust
     lien and first priority perfected security interest of this Deed of Trust
     thereon and therein against all claims and demands and will maintain,
     preserve and protect such lien and security interest and will keep this
     Deed of Trust a valid, direct first deed of trust lien of record on and a
     first priority perfected security interest in the Collateral, subject only
     to the Permitted Encumbrances; and

          (e) the Grantor will maintain and preserve its corporate existence and
     good standing under the laws of the State.

     SECTION 1.3. Title Insurance.
                  ---------------

          SECTION 1.3.1. SECTION 1.3.1. Concurrently with the execution and
delivery of this Deed of Trust, the Grantor, at its expense, has obtained and
delivered to the Beneficiary a loan policy in the amount of $567,700, naming the
Beneficiary as the insured, insuring the title to and the first deed of trust
lien of this Deed of Trust on the Property. The Grantor has duly paid in full
all premiums and other charges due in connection with the issuance of such
policy of title insurance.

                                       -7-

<PAGE>

          SECTION 1.3.2. [INTENTIONALLY OMITTED]

          SECTION 1.3.3. [INTENTIONALLY OMITTED]

          SECTION 1.3.4. Title Insurance Proceeds. All proceeds received by and
                         ------------------------
payable to the Beneficiary for any loss under the loan policy or policies of
title insurance referenced in Section 1.3.1, or under any policy or policies of
                              -------------
title insurance delivered to the Beneficiary in substitution therefor or
replacement thereof, shall be the property of the Beneficiary and shall be
applied by the Beneficiary in accordance with the provisions of Section 2.3.
                                                                -----------

     SECTION 1.4. Recordation. The Grantor, at its expense, will at all times
                  -----------
cause this Deed of Trust and any instruments amendatory hereof or supplemental
hereto and any instruments of assignment hereof or thereof (and any appropriate
financing statements or other instruments and continuations thereof) and each
other instrument delivered in connection with any Loan Document and intended
thereunder to be recorded, registered and filed and to be kept recorded,
registered and filed, in such manner and in such places, and will pay all such
recording, registration, filing fees, taxes and other charges, and will comply
with all such statutes and regulations as may be required by law in order to
establish, preserve, perfect and protect the lien and security interest of this
Deed of Trust as a valid, direct first deed of trust lien and first priority
perfected security interest in the Collateral, subject only to Permitted
Encumbrances. The Grantor will pay or cause to be paid, and will indemnify the
Beneficiary in respect of, all taxes (including interest and penalties) at any
time payable in connection with the filing and recording of this Deed of Trust
and any and all supplements and amendments hereto.

     SECTION 1.5. Payment of Impositions, etc. Subject to Section 1.8 (relating
                  ---------------------------             -----------
to permitted contests), the Grantor will pay or cause to be paid within 30 days
after the same become a lien, but in any event before the same would become
delinquent and before any fine, penalty, interest or cost may be added for
non-payment, all taxes, assessments, water and sewer rates, charges, license
fees, inspection fees and other governmental levies or payments, of every kind
and nature whatsoever, general and special, ordinary and extraordinary,
unforeseen as well as foreseen, which at any time may be assessed, levied,
confirmed, imposed or which may become a lien upon the Collateral, or any
portion thereof, or which are payable with respect thereto, or upon the rents,
issues, income or profits thereof, or on the occupancy, operation, use,
possession or activities thereof,

                                       -8-

<PAGE>

whether any or all of the same be levied directly or indirectly or as excise
taxes or as income taxes, and all taxes, assessments or charges which may be
levied on the Secured Obligations, or the interest thereon (collectively, the
"Impositions"). The Grantor will deliver to the Beneficiary, upon request,
 -----------
copies of official receipts or other satisfactory proof evidencing such
payments. Notwithstanding the foregoing provisions of this Section 1.5, the
                                                           -----------
Beneficiary agrees that if the Grantor (through inadvertence), fails to make
payment of any Imposition which is in a de minimis amount (which shall be an
                                        -- -------
amount less than or equal to $5,000), then the Beneficiary shall not declare an
Event of Default as a result of such failure, provided (i) within five (5) days
after the Grantor receives notice of such unpaid Imposition, the Grantor makes
payment thereof and (ii) the Collateral is not, in the Beneficiary's judgment,
in any danger of being subjected to judicial proceedings, sold, lost, forfeited
or interfered with.

     SECTION 1.6. Insurance and Legal Requirements. Subject to Section 1.8
                  --------------------------------             -----------
(relating to permitted contests), the Grantor, at its expense, will comply, or
cause compliance with

          (a) all provisions of any insurance policy covering or applicable to
     the Collateral or any part thereof, all requirements of the issuer of any
     such policy, and all orders, rules, regulations and other requirements of
     the National Board of Fire Underwriters (or any other body exercising
     similar functions) applicable to or affecting the Collateral or any part
     thereof or any use or condition of the Collateral or any part thereof
     (collectively, the "Insurance Requirements"); and
                         ----------------------

          (b) all laws, including Environmental Laws, statutes, codes, acts,
     ordinances, orders, judgments, decrees, injunctions, rules, regulations,
     permits, licenses, authorizations, directions and requirements of all
     governments, departments, commissions, boards, property owners
     associations, courts, authorities, agencies, officials and officers,
     foreseen or unforeseen, ordinary or extraordinary, which now or at any time
     hereafter may be applicable to the Collateral or any part thereof, or any
     of the adjoining sidewalks, curbs, vaults and vault space, if any, streets
     or ways, or any use or condition of the Collateral or any part thereof
     (collectively, the "Legal Requirements");
                         ------------------

                                       -9-

<PAGE>

whether or not compliance therewith shall require structural changes in or
interference with the use and enjoyment of the Collateral or any part thereof.

     SECTION 1.7. Security Interests, etc. The Grantor will not directly or
                  -----------------------
indirectly create or permit or suffer to be created or to remain, and will
promptly discharge or cause to be discharged, any deed of trust, mortgage,
encumbrance or charge on, pledge of, security interest in or conditional sale or
other title retention agreement with respect to or any other lien on or in the
Collateral or any part thereof or the interest of the Grantor, the Beneficiary
therein or any Proceeds thereof or Rents (as hereinafter defined) or other sums
arising therefrom, other than (a) Permitted Encumbrances and (b) liens of
mechanics, materialmen, suppliers or vendors or rights thereto incurred in the
ordinary course of the business of the Grantor for sums not yet due or any such
liens or rights thereto which are at the time being contested as permitted by
Section 1.8. The Grantor will not postpone the payment of any sums for which
-----------
liens of mechanics, materialmen, suppliers or vendors or rights thereto have
been incurred (unless such liens or rights thereto are at the time being
contested as permitted by Section 1.8), or enter into any contract under which
                          -----------
payment of such sums is postponable (unless such contract expressly provides for
the legal, binding and effective waiver of any such liens or rights thereto), in
either case, for more than 60 days after the completion of the action giving
rise to such liens or rights thereto.

     SECTION 1.8. Permitted Contests. After prior written notice to the
                  ------------------
Beneficiary, the Grantor at its expense may contest, or cause to be contested,
by appropriate action conducted in good faith, the amount or validity or
application, in whole or in part, of any Imposition, Legal Requirement or
Insurance Requirement or lien of a mechanic, materialman, supplier or vendor
(including, without limitation, any lien of any mechanic, materialman, supplier
or vendor arising from alterations or additions performed by the Grantor
pursuant to the provisions of Section 1.12), provided that, (a) in the case of
                              ------------   -------- ----
an unpaid Imposition, lien, encumbrance or charge, such proceedings shall
suspend the collection thereof from the Grantor, the Beneficiary, and the
Collateral (including any rent or other income therefrom) and shall not
interfere with the payment of any such rent or income, (b) neither the
Collateral nor any rent or other income therefrom nor any part thereof or
interest therein would be in any danger of being sold, forfeited, lost or
interfered with, (c) in the case of a Legal

                                      -10-

<PAGE>

Requirement, neither the Grantor nor the Beneficiary would be in danger of any
civil or criminal liability for failure to comply therewith, (d) the Grantor
shall have furnished such security, if any, as may be required in the
proceedings or as may be requested by the Beneficiary, (e) the non-payment of
the whole or any part of any Imposition will not result in the delivery of a tax
deed to the Collateral or any part thereof because of such non-payment, (f) the
payment of any sums required to be paid with respect to the Secured Obligations
or under this Deed of Trust (other than any unpaid Imposition, lien, encumbrance
or charge at the time being contested in accordance with this Section 1.8) shall
                                                              -----------
not be interfered with or otherwise affected, and (g) in the case of any
Insurance Requirement, the failure of the Grantor to comply therewith shall not
affect the validity of any insurance required to be maintained by the Grantor
under Section 2.1.
      -----------

     SECTION 1.9. Leases. The Grantor represents and warrants to the Beneficiary
                  ------
that, as of the date hereof, there are no Leases (as hereinafter defined) with
respect to all or any portion of the Property. The Grantor covenants and agrees
with the Beneficiary that, after the date hereof, the Grantor will not enter
into any Lease of all or any portion of the Property without first obtaining the
written consent of the Beneficiary.

     SECTION 1.10. Compliance with Instruments. The Grantor at its expense will
                   ---------------------------
promptly comply with all rights of way or use, privileges, franchises,
servitudes, licenses, easements, tenements, hereditaments and appurtenances
forming a part of the Property and all instruments creating or evidencing the
same, in each case, to the extent compliance therewith is required of the
Grantor under the terms thereof. The Grantor will not take any action which may
result in a forfeiture or termination of the rights afforded to the Grantor
under any such instruments and will not, without the prior written consent of
the Beneficiary, amend in any material respect any of such instruments.

     SECTION 1.11. Maintenance and Repair, etc. Subject to the provisions of
                   ---------------------------
Section 1.12, the Grantor will keep or cause to be kept all presently and
------------
subsequently erected or acquired Improvements and the sidewalks, curbs, vaults
and vault space, if any, located on or adjoining the same, and the streets and
the ways adjoining the same, in good order and repair and in such a fashion that
the value and utility of the Collateral will not be diminished, and, at its sole
cost and expense, will promptly make or cause to be made all necessary and
appropriate repairs, replacements and renewals thereof, whether interior or
exterior, structural or nonstructural, ordinary or

                                      -11-

<PAGE>

extraordinary, foreseen or unforeseen. All repairs, replacements and renewals
shall be substantially equal in quality to the original Improvements. The
Grantor at its expense will do or cause to be done all shoring of foundations
and walls of any building or other Improvements on the Property and (to the
extent permitted by law) of the ground adjacent thereto, and every other act
necessary or appropriate for the preservation and safety of the Property by
reason of or in connection with any excavation or other building operation upon
the Property and upon any adjoining property, whether or not the Grantor shall,
by any Legal Requirement, be required to take such action or be liable for
failure to do so.

     SECTION 1.12. Alterations, Additions, etc. So long as no Event of Default
                   ---------------------------
shall have occurred and be continuing, the Grantor shall have the right at any
time and from time to time to make or cause to be made reasonable alterations of
and additions to the Property or any part thereof, provided that any alteration
                                                   -------- ----
or addition: (a) shall not change the general character of the Property or
reduce the fair market value thereof below its value immediately before such
alteration or addition, or impair the usefulness of the Property; (b) is
effected with due diligence, in a good and workmanlike manner and in compliance
with all Legal Requirements and Insurance Requirements; and (c) is promptly and
fully paid for, or caused to be paid for, by the Grantor.

     SECTION 1.13. Acquired Property Subject to Lien. All property at any time
                   ---------------------------------
acquired by the Grantor and provided or required by this Deed of Trust to be or
become subject to the lien and security interest hereof, whether such property
is acquired by exchange, purchase, construction or otherwise, shall forthwith
become subject to the lien and security interest of this Deed of Trust without
further action on the part of the Grantor or the Beneficiary. The Grantor, at
its expense, will execute and deliver to (and will record and file as provided
in Section 1.4) an instrument supplemental to this Deed of Trust satisfactory in
   -----------
substance and form to the Beneficiary, whenever such an instrument is necessary
under applicable law to subject to the lien and security interest of this Deed
of Trust all right, title and interest of the Grantor in and to all property
provided or required by this Deed of Trust to be subject to the lien and
security interest hereof and acquired by the Grantor since the date of this Deed
of Trust or the date of the most recent supplemental instrument so subjecting
property to the lien and security interest hereof, whichever is later.

                                      -12-

<PAGE>

     SECTION 1.14. Assignment of Leases, Rents, Proceeds, etc.
                   -------------------------------------------

          (a)  As part of the consideration for the Secured Obligations, and not
     as additional security therefor, Grantor hereby absolutely assigns and
     transfers to Beneficiary all the right, title and interest of Grantor in
     and to (i) all leases, licenses, occupancy agreements, concessions and
     other arrangements, oral or written, now existing or hereafter entered
     into, whereby any Person agrees to pay money or any other consideration for
     the use, possession or occupancy of, or any estate in, the Property or any
     portion thereof or interest therein, and all proceeds thereof (herein
     collectively referred to as the "Leases"), (ii) all rents, issues, profits,
                                      ------
     royalties, avails, income and other benefits derived or owned, directly or
     indirectly, by the Grantor from the Property, including, without
     limitation, all rents and other consideration payable by tenants, claims
     against guarantors, and any cash or other securities deposited to secure
     performance by tenants, under the Leases, and all proceeds thereof (herein
     collectively referred to as "Rents") and (iii) all Proceeds. In addition,
                                  -----
     Grantor hereby gives to and confers upon Beneficiary the right, power and
     authority to exercise all of Grantor's options, rights and remedies under
     the Leases and collect the Rents and Proceeds. Grantor hereby irrevocably
     appoints Beneficiary its true and lawful attorney-in-fact, coupled with an
     interest, at the option of Beneficiary, at any time and from time to time,
     to demand, receive and enforce payment, to give receipts, releases and
     satisfactions, to exercise all of Grantor's options, rights and remedies
     under the Leases and to sue, in the name of Grantor or Beneficiary, for all
     Rents and Proceeds, and apply the same to the Obligations secured hereby;
     provided, however, that Grantor shall have a license to collect such Rents
     and Proceeds as provided in Section 1.14(c) below. The assignment of the
                                 ---------------
     Leases, Rents and Proceeds contained herein is intended to be an absolute
     assignment from Grantor to Beneficiary and not merely the passing of a
     security interest and shall be effective immediately upon the recording of
     this Deed of Trust. Grantor hereby waives any requirement that a receiver
     be appointed for the Collateral or that Beneficiary take possession of the
     Collateral in order for such assignment of the Leases, Rents and Proceeds
     to become effective. Nothing herein shall be construed as obligating
     Beneficiary to perform any

                                       -13-

<PAGE>

     of Grantor's obligations under any of the Leases or other agreements
     relating to the Collateral.

          (b) Grantor acknowledges and agrees that the acceptance by Beneficiary
     of the assignments of the Leases, Rents and Proceeds with all of the
     rights, powers, privileges and authority so created, shall not, prior to
     entry upon and taking of possession of the Property by Beneficiary, be
     deemed or construed to constitute a mortgagee in possession nor thereafter
     or at any time or in any event obligate Beneficiary to appear in or defend
     any action or proceeding relating to the Leases or to the Property, or to
     take any action hereunder, or to expend any money or incur any expenses or
     perform or discharge any obligation, duty or liability under the Leases or
     other agreements relating to the Collateral, or to assume any obligation or
     responsibility for any security deposits or other deposits delivered to
     Grantor by lessees thereunder and not assigned and delivered to
     Beneficiary, nor shall Beneficiary be liable in any way for any injury or
     damage to person or property sustained by any person or persons, firm or
     corporation, in or about the Property.

          (c) Notwithstanding the absolute, present and irrevocable assignment,
     grant and conveyance by Grantor to Beneficiary of the Leases, Rents and
     Proceeds contained in this Deed of Trust, except as is otherwise provided
     in this Deed of Trust, a license and permission is hereby given to the
     Grantor, so long as no Event of Default has occurred and is continuing
     hereunder, to collect, receive and apply such Rents, Proceeds and other
     rents, income, proceeds and benefits as they become due and payable, but
     not in advance thereof, and in accordance with all of the other terms,
     conditions and provisions hereof and of the Leases, contracts, agreements
     and other instruments with respect to which such payments are made or such
     other benefits are conferred. Upon the occurrence of an Event of
     Default,(i) such license and permission shall terminate immediately and
     automatically, without notice to the Grantor or any other Person, and shall
     not be reinstated upon a cure of such Event of Default without the express
     written consent of the Beneficiary and (ii) Beneficiary shall immediately
     be entitled to exercise all rights under the Leases and to the possession
     of all Rents and Proceeds, and to collect, receive and apply all Rents,
     Proceeds and all other rents, income, proceeds and benefits from the
     Collateral, including all right, title and interest of the Grantor in

                                      -14-

<PAGE>

     any escrowed sums or deposits or any portion thereof or interest therein,
     whether or not the Beneficiary takes possession of the Collateral or any
     part thereof. Furthermore, at the Beneficiary's option, upon the occurrence
     of an Event of Default hereunder, Beneficiary may:

               (i)   enter upon and take possession of the Property for the
          purpose of collecting Rents, Proceeds and said rents, income, proceeds
          and other benefits;

               (ii)  dispossess by the customary summary proceedings any tenant,
          purchaser or other Person defaulting in the payment of any amount when
          and as due and payable, or in the performance of any other obligation,
          under the Lease, contract or other instrument to which said Rents,
          Proceeds or other rents, income, proceeds or benefits relate;

               (iii) let or convey the Collateral or any portion thereof or any
          interest therein; and

               (iv)  apply Rents, Proceeds and such rents, income, proceeds and
          other benefits, after the payment of all necessary fees, charges and
          expenses, on account of the Obligations in accordance with Section
                                                                     -------
          3.10.
          ----

          (d)  Grantor hereby agrees to indemnify and hold Beneficiary harmless
     of and from any and all liability, loss, damage or expense that it may or
     might incur under or by reason of the assignments contained herein, or for
     any action taken by Beneficiary hereunder, or by reason or in defense of
     any and all claims and demands whatsoever that may be asserted against
     Beneficiary arising out of the Leases, including without limitation any
     claim by any lessees of credit for rental paid to and received by Grantor,
     but not delivered to Beneficiary, for any period under the Leases more than
     one (1) month in advance of the due date thereof. Should Beneficiary incur
     any such liability, loss, damage or expense, the amount thereof (including
     reasonable attorneys' fees) with interest thereon at the Default Rate shall
     be payable by Grantor immediately without demand, shall be secured by this
     Deed of Trust, and shall be part of the Obligations.

     SECTION 1.15. No Claims Against the Beneficiary. Nothing contained in this
                   ---------------------------------
Deed of Trust shall constitute any consent or

                                      -15-

<PAGE>

request by the Beneficiary, express or implied, for the performance of any labor
or the furnishing of any materials or other property in respect of the Property
or any part thereof, or be construed to permit the making of any claim against
the Beneficiary in respect of labor or services or the furnishing of any
materials or other property or any claim that any lien based on the performance
of such labor or the furnishing of any such materials or other property is prior
to the lien and security interest of this Deed of Trust. All contractors,
                                                         ----------------
subcontractors, vendors and other persons dealing with the Property, or with any
--------------------------------------------------------------------------------
persons interested therein, are hereby required to take notice of the provisions
--------------------------------------------------------------------------------
of this Section. If any mechanics' lien is recorded against the Property,
---------------
Grantor shall post bond, as provided by the law of the State, or cause the
discharge of such lien within thirty (30) days after such lien is recorded.

     SECTION 1.16. Indemnification Against Obligations. The Grantor will
                   -----------------------------------
protect, indemnify, save harmless and defend the Beneficiary, each commercial
banking institution (a "Participant") which pursuant to a participation
                        -----------
agreement has purchased a participation in any portion of the Loans or the
Commitment, or both, and each Lender (collectively, the "Indemnified Parties"
                                                         -------------------
and individually, an Indemnified Party") from and against any and all
                     -----------------
liabilities, obligations, claims, damages, penalties, causes of action, costs
and expenses (including, without limitation, attorneys' fees and expenses)
imposed upon or incurred by or asserted against any Indemnified Party by reason
of (a) ownership of an interest in this Deed of Trust, the Notes or the
Property, (b) any accident, injury to or death of persons or loss of or damage
to or loss of the use of property occurring on or about the Property or any part
thereof or the adjoining sidewalks, curbs, vaults and vault spaces, if any,
streets, alleys or ways, (c) any use, non-use or condition of the Property or
any part thereof or the adjoining sidewalks, curbs, vaults and vault spaces, if
any, streets, alleys or ways, (d) any failure on the part of the Grantor to
perform or comply with any of the terms of this Deed of Trust, (e) performance
of any labor or services or the furnishing of any materials or other property in
respect of the Collateral or any part thereof made or suffered to be made by or
on behalf of the Grantor, (f) any negligence or tortious act on the part of the
Grantor or any of its agents, contractors, lessees, licensees or invitees, (g)
any work in connection with any alterations, changes, new construction or
demolition of or additions to the Property, or (h) (i) any Hazardous Material
on, in, under or affecting all or any portion of the Property, the groundwater,
or any surrounding

                                      -16-

<PAGE>

areas, (ii) any misrepresentation, inaccuracy or breach of any warranty,
covenant or agreement contained or referred to in Section 1.19, (iii) any
                                                  ------------
violation or claim of violation by the Grantor of any Environmental Laws, or
(iv) the imposition of any lien for damages caused by or the recovery of any
costs for the cleanup, release or threatened release of Hazardous Material. If
any action or proceeding be commenced, to which action or proceeding any
Indemnified Party is made a party by reason of the execution of this Deed of
Trust or the Notes, or in which it becomes necessary to defend or uphold the
lien of this Deed of Trust, all sums paid by the Indemnified Parties, for the
expense of any litigation to prosecute or defend the rights and lien created
hereby, shall be paid by the Grantor to such Indemnified Parties, as the case
may be, as hereinafter provided. The Grantor will pay and save the Indemnified
Parties harmless against any and all liability with respect to any intangible
personal property tax or similar imposition of the State or any subdivision or
authority thereof now or hereafter in effect, to the extent that the same may be
payable by the Indemnified Parties in respect of this Deed of Trust or any
Secured Obligation. All amounts payable to the Indemnified Parties under this
Section 1.16 shall be deemed indebtedness secured by this Deed of Trust and any
------------
such amounts which are not paid within 10 days after written demand therefor by
any Indemnified Party shall bear interest at the Default Rate from the date of
such demand. In case any action, suit or proceeding is brought against any
Indemnified Party by reason of any such occurrence, the Grantor, upon request of
such Indemnified Party, will, at the Grantor's expense, resist and defend such
action, suit or proceeding or cause the same to be resisted or defended by
counsel designated by the Grantor and approved by such Indemnified Party. The
obligations of the Grantor under this Section 1.16 shall survive any discharge
                                      ------------
or reconveyance of this Deed of Trust or payment in full of the Secured
Obligations.

     SECTION 1.17. No Credit for Payment of Taxes. The Grantor shall not be
                   ------------------------------
entitled to any credit against the Obligations by reason of the payment of any
tax on the Property or any part thereof or by reason of the payment of any other
Imposition, and shall not apply for or claim any deduction from the taxable
value of the Property or any part thereof by reason of this Deed of Trust.

     SECTION 1.18. Offering of the Notes. Neither the Grantor nor any Person
                   ---------------------
acting on behalf of the Grantor has directly or indirectly offered the Notes or
any portion thereof or any similar security to, or solicited any offer to buy
any of the

                                      -17-

<PAGE>

same from, any Person other than the Beneficiary. Neither the Grantor nor any
Person acting on behalf of the Grantor has taken or will take any action which
would subject the issuance of the Notes to the provisions of section 5 of the
Securities Act of 1933, as amended.

     SECTION 1.19. Hazardous Material and Wastes. Neither the Grantor nor, to
                   -----------------------------
the best knowledge of Grantor, any other Person has ever caused or permitted any
Hazardous Material to be held or disposed of on or at the Property or at any
other property legally or beneficially owned by the Grantor. The Grantor further
represents and warrants to the Beneficiary the same representations and
warranties made by Nasco as set forth in Section 6.12 of the Credit Agreement
and agrees to perform the obligations of Nasco as they relate to the Collateral
set forth in Section 7.1.6 of the Credit Agreement.

                                   ARTICLE II

                 INSURANCE; DAMAGE, DESTRUCTION OR TAKING, ETC.
                 ----------------------------------------------

     SECTION 2.1. Insurance.
                  ---------

          SECTION 2.1.1. Risks to be Insured. The Grantor will, at its expense,
                         -------------------
maintain or cause to be maintained with insurance carriers approved by the
Beneficiary (a) insurance with respect to the Improvements against loss or
damage by fire, lightning and such other risks as are included in standard
"all-risk" policies, in amounts sufficient to prevent the Grantor and the
Beneficiary from becoming a co-insurer of any partial loss under the applicable
policies, but in any event in amounts not less than the then full insurable
value (actual replacement value) of the Improvements, as determined by the
Grantor in accordance with generally accepted insurance practice and approved by
the Beneficiary or, upon the request of the Beneficiary as determined at the
Grantor's expense by the insurer or insurers or by an expert approved by the
Beneficiary, (b) commercial general liability, including bodily injury and
property damage, insurance, with personal injury endorsement, applicable to the
Property in such amounts as are usually carried by Persons operating similar
properties in the same general locality, but in any event with a limit of not
less than $3,000,000 per person for bodily injury liability, a limit of not less
than $5,000,000 per occurrence for bodily injury liability and $500,000 for all
claims for property damage liability with respect to any one occurrence, (c)
explosion insurance in respect of any steam and pressure boilers and similar
apparatus located in the Property in such amounts as are

                                       -18-

<PAGE>

usually carried by persons operating similar properties in the same general
locality, but in any event in an amount not less than $500,000, (d) worker's
compensation insurance to the full extent required by applicable law for all
employees of the Grantor engaged in any work on or about the Property and
employer's liability insurance with a limit of not less than $3,000,000 for
each occurrence, (e) all-risk, builders' risk insurance with respect to the
Property during any period during which there is any construction work being
performed, against loss or damage by fire or other risks, including vandalism,
malicious mischief and sprinkler leakage, as are included in so-called "extended
coverage" clauses at the time available, (f) business interruption insurance in
an amount reasonably satisfactory to the Beneficiary, and (g) such other
insurance with respect to the Property in such amounts and against such
insurable hazards as the Beneficiary from time to time may reasonably require by
written notice to the Grantor.

     SECTION 2.1.2. Policy Provisions. All insurance maintained by the Grantor
                    -----------------
pursuant to Section 2.1.1 shall (a) (except for worker's compensation insurance)
            -------------
name the Grantor as the named insured and the Beneficiary as an additional
insured and loss payee, (b) (except for worker's compensation and commercial
general liability insurance) provide that the proceeds for any losses shall be
adjusted by the Grantor subject to the approval of the Beneficiary in the event
the proceeds shall exceed $100,000, and shall be payable to the Beneficiary, to
be held and applied as provided in Section 2.3, (c) include effective waivers by
                                   -----------
the insurer of all rights of subrogation against the Beneficiary, the
indebtedness secured by this Deed of Trust and the Property and all claims for
insurance premiums against the Beneficiary, (d) provide that any losses shall be
payable notwithstanding (i) any act, failure to act or negligence of or
violation of warranties, declarations or conditions contained in such policy by
any named insured, (ii) the occupation or use of the Property for purposes more
hazardous than permitted by the terms thereof, (iii) any foreclosure or other
action or proceeding taken by the Beneficiary pursuant to any provision of this
Deed of Trust, or (iv) any change in title or ownership of the Property, (e)
provide that no cancellation, reduction in amount or material change in coverage
thereof or any portion thereof shall be effective until at least 30 days after
receipt by the Beneficiary of written notice thereof, and (f) be satisfactory in
all other respects to the Beneficiary. Any insurance maintained pursuant to this
Section 2.1 may be evidenced by blanket insurance policies covering the Property
-----------
and other

                                       -19-

<PAGE>

properties or assets of the Grantor, provided that any such policy shall specify
                                     -------- ----
the portion, if less than all, of the total coverage of such policy that is
allocated to the Property and shall in all other respects comply with the
requirements of this Section 2.1.
                     -----------

     SECTION 2.1.3. Delivery of Policies, etc. The Grantor will deliver to the
                    -------------------------
Beneficiary, promptly upon request, (a) the originals (or, at the Beneficiary's
option, certificates) of all policies evidencing all insurance required to be
maintained under Section 2.1.1 (or, in the case of blanket policies,
                 -------------
certificates thereof by the insurers together with a counterpart of each blanket
policy), and (b) evidence as to the payment of all premiums due thereon (with
respect to commercial general liability insurance policies, all installments for
the current year due thereon to such date), provided that the Beneficiary shall
                                            -------- ----
not be deemed by reason of its custody of such policies to have knowledge of the
contents thereof. The Grantor will also deliver to the Beneficiary not later
than 30 days prior to the expiration of any policy a binder or certificate of
the insurer evidencing the replacement thereof and not later than 15 days prior
to the expiration of such policy an original copy of the new policy (or, in the
case of a replacement blanket policy, a certificate thereof of the insurer
together with a counterpart of the blanket policy). In the event the Grantor
shall fail to effect or maintain any insurance required to be effected or
maintained pursuant to the provisions of this Section 2.1, the Grantor will
                                              -----------
indemnify the Beneficiary against damage, loss or liability resulting from all
risks for which such insurance should have been effected or maintained.

          SECTION 2.1.4. Separate Insurance. The Grantor will not take out
                         ------------------
separate insurance concurrent in form or contributing in the event of loss with
that required to be maintained pursuant to this Section 2.1.
                                                -----------

     SECTION 2.2. Damage, Destruction or Taking; Grantor to Give Notice;
                  ------------------------------------------------------
Assignment of Awards. In case of
--------------------

          (a) any damage to or destruction of the Collateral or any part
     thereof, or

          (b) any taking, whether for permanent or temporary use, of all or any
     part of the Collateral or any interest therein or right accruing thereto,
     as the result of or in anticipation of the exercise of the right of
     condemnation or eminent domain, or a change of grade affecting the
     Collateral or any portion thereof (a "Taking"), or the
                                           ------

                                       -20-

<PAGE>

     commencement of any proceedings or negotiations which may result in a
     Taking,

the Grantor will promptly give written notice thereof to the Beneficiary,
generally describing the nature and extent of such damage or destruction and the
Grantor's best estimate of the cost of restoring the Collateral, or the nature
of such proceedings or negotiations and the nature and extent of the Taking
which might result therefrom, as the case may be. The Beneficiary shall be
entitled to all insurance proceeds payable on account of such damage or
destruction and to all awards or payments allocable to the Collateral on account
of such Taking, and the Grantor hereby irrevocably assigns, transfers and sets
over to the Beneficiary all rights of the Grantor to any such proceeds, awards
or payments and irrevocably authorizes and empowers the Beneficiary, at its
option, in the name of the Grantor or otherwise, to file and prosecute what
would otherwise be the Grantor's claim for any such proceeds, award or payment
and to collect, receipt for and retain the same for disposition in accordance
with Section 2.3. The Grantor will pay all reasonable costs and expenses
     -----------
incurred by the Beneficiary in connection with any such damage, destruction or
Taking and seeking and obtaining any insurance proceeds, awards or payments in
respect thereof.

     SECTION 2.3. Application of Proceeds and Awards. The Beneficiary may, at
                  ----------------------------------
its option, apply all amounts recovered under any insurance policy required to
be maintained by the Grantor hereunder and all awards received by it on account
of any Taking in any one or more of the following ways:

          (a) to the payment of the reasonable costs and expenses incurred by
     the Beneficiary in obtaining any such insurance proceeds or awards,
     including the fees and expenses of attorneys and insurance and other
     experts and consultants, the costs of litigation, arbitration, mediation,
     investigations and other judicial, administrative or other proceedings and
     all other out-of-pocket expenses;

          (b) Ratably, to the payment of any Obligation secured by this Deed of
     Trust other than indebtedness with respect to the Secured Obligations;

          (c) Ratably, to the payment of the principal of the Secured
     Obligations and any interest (including post-petition interest payable in
     any proceedings for bankruptcy under applicable law ("Post-Petition
                                                           -------------
     Interest") to the
     --------

                                       -21-

<PAGE>

     extent such interest is an Obligation) accrued and unpaid thereon, without
     regard to whether any portion or all of such amounts shall be matured or
     unmatured, together with interest at the Default Rate on any overdue
     principal and (to the extent permitted by applicable law) interest; and, in
     case such amount shall be insufficient to pay in full all such amounts,
     then such amount shall be applied, first, to the payment of all amounts of
                                        -----
     interest (including Post-Petition Interest to the extent such interest is
     an Obligation) accrued on the Secured Obligations and unpaid, second, to
                                                                   ------
     the payment of all amounts of principal at the time outstanding;

          (d) to fulfill any of the other covenants contained herein as the
     Beneficiary may determine;

          (e) to the Grantor for application to the cost of restoring the
     Collateral and the replacement of Goods destroyed, damaged or taken; or

          (f) to the Grantor.

     Notwithstanding the foregoing provisions of this Section 2.3 to the
                                                      -----------
contrary, and if each of the following conditions is satisfied, the Beneficiary,
upon request of the Grantor, shall apply insurance proceeds or condemnation
awards received by it to the restoration or replacement of the Collateral, to
the extent necessary for the restoration or replacement thereof:

               (i)   there shall then exist no uncured material Default;

               (ii)  the Grantor shall furnish to the Beneficiary a certificate
          of an architect or engineer reasonably acceptable to the Beneficiary
          stating (x) that the Collateral is capable of being restored, prior to
          the maturity of the Loans, to substantially the same condition as
          existed prior to the casualty or Taking, (y) the aggregate estimated
          direct and indirect costs of such restoration and (z) as to any
          Taking, that the property taken in such Taking, or sold under threat
          thereof, is not necessary to the Grantor's customary use or occupancy
          of the Property; and

               (iii) in the event that the estimated cost of restoration set
          forth in the certificate of such architect or engineer (and such
          revisions to such estimate as are from time to time made) exceeds the

                                       -22-

<PAGE>

          net insurance proceeds or condemnation awards actually received from
          time to time, the Grantor shall deposit the amount of such excess with
          the Beneficiary.

     In the event that such insurance proceeds or condemnation awards are to be
utilized in the restoration of the Collateral, the Beneficiary shall disburse
such Proceeds and the additional amounts deposited by the Grantor for such
restoration after receipt of a written request for disbursement, on not less
than five nor more than twelve Business Days' notice and, to the extent
applicable, in accordance with customary construction loan procedures and
conditions. In the event that such insurance or condemnation awards are to be
utilized to replace the Collateral so destroyed or taken, the Beneficiary shall
disburse such Proceeds after receipt of a written request for disbursement, on
not less than five nor more than twelve Business Days' notice simultaneously
with the acquisition of such replacement property by the Grantor. In the event
that, after the restoration or replacement of the Collateral, any insurance or
condemnation awards shall remain, such amount shall be paid to the Grantor.
Insurance proceeds and condemnation awards shall be invested in the manner
reasonably requested by the Grantor and approved by the Beneficiary, and all
interest earned thereon shall be applied as provided in this Section 2.3. If,
                                                             -----------
prior to the receipt by the Beneficiary of such insurance proceeds or
condemnation awards, the Collateral shall have been sold on foreclosure, the
Beneficiary shall have the right to receive said insurance proceeds or
condemnation awards to the extent of any deficiency found to be due upon such
sale, with legal interest thereon, whether or not a deficiency judgment shall
have been sought or recovered or denied, and the reasonable attorneys' fees,
costs and disbursements incurred by the Beneficiary in connection with the
collection of such award or payment.

     SECTION 2.4. Total Taking and Total Destruction. In the event of a Total
                  ----------------------------------
Destruction or a Total Taking, the Beneficiary shall apply all amounts recovered
under any insurance policy referred to in Section 2.1.1 and all awards received
                                          -------------
by it on account of any such Taking as follows:

          (a) first, to the payment of the reasonable costs and expenses
     incurred by the Beneficiary in obtaining any such insurance proceeds or
     awards, including the fees and expenses of attorneys and insurance and
     other experts and consultants, the costs of litigation, arbitration,
     mediation, investigations and other judicial,

                                       -23-

<PAGE>

     administrative or other proceedings and all other out-of-pocket expenses;

          (b) second, Ratably, to the payment of any Obligation secured by this
     Deed of Trust other than indebtedness with respect to the Secured
     Obligations;

          (c) third, Ratably, to the payment of the principal of the Secured
     Obligations and any interest (including Post-Petition Interest to the
     extent such interest is an Obligation) accrued and unpaid thereon, without
     regard to whether any portion or all of such amounts shall be matured or
     unmatured, together with interest at the Default Rate on any overdue
     principal and (to the extent permitted by applicable law) interest; and, in
     case such amount shall be insufficient to pay in full all such amounts,
     then such amount shall be applied, first, to the payment of all amounts of
                                        -----
     interest (including Post-Petition Interest to the extent such interest is
     an Obligation) accrued on the Secured Obligations and unpaid, and second,
                                                                       ------
     to the payment of all amounts of principal at the time outstanding;

          (d) fourth, to fulfill any of the other covenants contained herein as
     the Beneficiary may determine; and

          (e) fifth, the balance, if any, to the Grantor.

                                  ARTICLE III

                        EVENTS OF DEFAULT; REMEDIES, ETC.
                        ---------------------------------

     SECTION 3.1. Events of Default; Acceleration. If any one or more of the
                  -------------------------------
following events (herein called "Events of Default") shall occur:
                                 -----------------

          (a) if an "Event of Default" under and as defined in any of the Credit
     Agreement shall have occurred; or

          (b) if the Grantor shall default in the due and punctual performance
     or observance of any of its obligations under Section 1.4, 1.5, 1.7, 1.9,
                                                   -----------  ---  ---  ---
     or 2.1; or
        ---

          (c) if the Grantor shall fail to duly and punctually perform or comply
     with any provision of this Deed of Trust other than the provisions referred
     to in clause (a) or (b) of this Section 3.1 and such default shall continue
           ----------    ---         -----------
     unremedied for a period of 30 days after the date that

                                       -24-

<PAGE>

     notice of such nonperformance or noncompliance is delivered to the Grantor;
     or

          (d) if the Grantor shall, directly or indirectly, voluntarily or
     involuntarily, by operation of law or otherwise, sell, convey, transfer,
     assign, grant a security interest in or otherwise dispose of the Collateral
     or any portion thereof or estate or interest therein; or

          (e) if subsequent to the date of this Deed of Trust the law of the
     State shall be changed by statutory enactment, judicial decision,
     regulation or otherwise, so as (i) to deduct from the value of land for the
     purpose of taxation (for state, county, municipal or other purpose) any
     lien or charge thereon, or (ii) to change the taxation of deeds of trust,
     mortgages or debts secured by land or the manner of collecting any such
     taxation, so as to affect this Deed of Trust, and thereafter, within 30
     days following receipt of a written request from the Beneficiary, the
     Grantor shall have failed to enter into a lawful and binding agreement with
     the Beneficiary, satisfactory in substance and form to the Beneficiary,
     obligating the Grantor to reimburse the Beneficiary for any increase in
     taxation imposed on the Beneficiary by reason of any of the foregoing;

then and in any such event the Beneficiary may at any time thereafter exercise
any right or remedy granted to the Beneficiary under the Credit Agreement or the
other Loan Documents or available to the Beneficiary at law or in equity
including, without limitation, declare, by written notice to the Grantor, the
Secured Obligations and all other Obligations to be due and payable immediately
or on a date specified in such notice, and on such date the same shall be and
become due and payable, together with interest accrued thereon, without
presentment, demand, protest or notice, all of which the Grantor hereby waives.
The Grantor will pay on demand all costs and expenses, including, without
limitation, attorneys' fees and expenses, incurred by or on behalf of the
Beneficiary in enforcing this Deed of Trust or the Secured Obligations or any
other Loan Document, or occasioned by any default hereunder or thereunder.

     SECTION 3.2. Legal Proceedings; Foreclosure. If an Event of Default shall
                  ------------------------------
have occurred and be continuing, the Beneficiary at any time may, at its
election, proceed at law or in equity or otherwise to enforce the payment of the
Secured Obligations in accordance with the terms hereof and thereof and

                                      -25-

<PAGE>

to foreclose the lien of this Deed of Trust as against all or any part of the
Collateral and to have the same sold under the judgment or decree of a court of
competent jurisdiction. The Beneficiary shall be entitled to recover in such
proceedings all costs incident thereto, including attorneys' fees and expenses
in such amounts as may be fixed by the court.

     SECTION 3.3. Power of Sale. If an Event of Default shall have occurred and
                  -------------
be continuing, the Beneficiary is authorized and empowered, without further
notice, to file with the Trustee, a notice of election and demand for sale, in
writing, as provided by the law of the State. After such filing, the Trustee may
lawfully foreclose and shall foreclose the lien of this Deed of Trust, and sell
and dispose of the Property en masse or in separate parcels (as the Beneficiary
may elect) and all the right, title, and interest of the Grantor therein, at a
public auction at any place then authorized by the law of the State as may be
specified in the notice of such sale, for the highest and best price (the
"Trustee's Sale"), four (4) weeks' public notice having previously been given of
the time and place of such sale by advertisement, weekly, in a newspaper of
general circulation at the time published in the County where the Property is
located, or upon such other notice as may then be required by the law of the
State. The Trustee shall issue, execute, and deliver a certificate of purchase,
a trustee's deed (which may be in the ordinary form of conveyance), or a
certificate of redemption in the manner provided by the law of the State to the
party entitled thereto. The Trustee shall apply the proceeds or avails of the
Trustee's Sale as required by the law of the State. The Beneficiary may purchase
all or any part of the Property at the Trustee's Sale. Any purchaser at the
Trustee's Sale shall not be responsible for the application of the purchase
money. In the event of any express conflict between the provisions of this Deed
of Trust and the provisions of Colorado Revised Statutes, the provisions of
Colorado Revised Statutes shall apply. If this Deed of Trust is foreclosed by
Trustee, Trustee shall allow a reasonable amount of attorneys; fees for services
rendered in the supervision of such foreclosure proceedings as a part of the
cost of the foreclosure.

     SECTION 3.4. Uniform Commercial Code Remedies. If an Event of Default shall
                  --------------------------------
have occurred and be continuing, the Beneficiary may exercise from time to time
and at any time any rights and remedies available to it under applicable law
upon default in the payment of indebtedness, including, without limitation, any
right or remedy available to it as a secured

                                      -26-

<PAGE>

party under the Uniform Commercial Code of the State. The Grantor shall,
promptly upon request by the Beneficiary, assemble the Collateral, or any
portion thereof generally described in such request, and make them available to
the Beneficiary at such place or places designated by the Beneficiary and
reasonably convenient to the Beneficiary and the Grantor. If the Beneficiary
elects to proceed under the Uniform Commercial Code of the State to dispose of
portions of the Collateral, the Beneficiary, at its option, may give the Grantor
notice of the time and place of any public sale of any such property, or of the
date after which any private sale or other disposition thereof is to be made, by
sending notice by registered or certified first class mail, postage prepaid, to
the Grantor at least ten days before the time of the sale or other disposition.
If any notice of any proposed sale, assignment or transfer by the Beneficiary of
any portion of the Collateral or any interest therein is required by law, the
Grantor conclusively agrees that ten days' notice to the Grantor of the date,
time and place (and, in the case of a private sale, the terms) thereof is
reasonable.

     SECTION 3.5. Beneficiary Authorized to Execute Deeds, etc. The Grantor
                  --------------------------------------------
irrevocably appoints the Beneficiary the true and lawful attorney of the
Grantor, in its name and stead and on its behalf, for the purpose of
effectuating, after the occurrence and during the continuation of an Event of
Default, any sale, assignment, transfer or delivery for the enforcement hereof,
whether pursuant to power of sale, foreclosure or otherwise, to execute and
deliver all such deeds, bills of sale, assignments, releases and other
instruments as may be designated in any such request.

     SECTION 3.6. Purchase of Collateral by Beneficiary. The Beneficiary may be
                  -------------------------------------
a purchaser of the Collateral or of any part thereof or of any interest therein
at any sale thereof, whether pursuant to power of sale, foreclosure or
otherwise, and the Beneficiary may apply upon the purchase price thereof the
indebtedness secured hereby. Such purchaser shall, upon any such purchase,
acquire good title to the properties so purchased, free of the security interest
and lien of this Deed of Trust and free of all rights of redemption in the
Grantor.

     SECTION 3.7. Receipt a Sufficient Discharge to Purchaser. Upon any sale of
                  -------------------------------------------
the Collateral or any part thereof or any interest therein, whether pursuant to
power of sale, foreclosure or otherwise, the receipt of the Beneficiary or the
officer making the sale under judicial proceedings shall be a sufficient
discharge to the purchaser for the purchase money, and such

                                      -27-

<PAGE>

purchaser shall not be obliged to see to the application thereof.

     SECTION 3.8.  Waiver of Appraisement, Valuation, etc. The Grantor hereby
                   --------------------------------------
waives, to the fullest extent it may lawfully do so, the benefit of all
appraisement, valuation, stay, extension and redemption laws now or hereafter in
force and all rights of marshaling in the event of any sale of the Collateral or
any part thereof or any interest therein.

     SECTION 3.9.  Sale a Bar Against Grantor. Any sale of the Collateral or any
                   --------------------------
part thereof or any interest therein under or by virtue of this Deed of Trust,
whether pursuant to power of sale, foreclosure or otherwise, shall forever be a
bar against the Grantor.

     SECTION 3.10. Application of Proceeds of Sale and Other Moneys. The
                   ------------------------------------------------
proceeds of any sale of the Collateral or any part thereof or any interest
therein under or by virtue of this Deed of Trust, whether pursuant to power of
sale, foreclosure or otherwise, and all other moneys at any time held by the
Beneficiary as part of the Collateral, unless otherwise required by the law of
the State, shall be applied as follows:

          First: to the payment of the reasonable costs and expenses of such
          -----
     sale (including, without limitation, the cost of evidence of title and the
     costs and expenses, if any, of taking possession of, retaining custody
     over, repairing, managing, operating, maintaining and preserving the
     Collateral or any part thereof prior to such sale), all reasonable costs
     and expenses incurred by the Beneficiary or any other Person in obtaining
     or collecting any insurance proceeds, condemnation awards or other amounts
     received by the Beneficiary, all reasonable costs and expenses of any
     receiver of the Collateral or any part thereof, and any Impositions or
     other charges or expenses prior to the security interest or lien of this
     Deed of Trust, which the Beneficiary may consider it necessary or desirable
     to pay;

          Second: Ratably, to the payment of any indebtedness secured by this
          ------
     Deed of Trust, other than indebtedness with respect to the Secured
     Obligations at the time outstanding, which the Beneficiary may consider it
     necessary or desirable to pay;

          Third: Ratably, to the payment of all amounts of principal of and
          -----
     interest (including Post-Petition Interest

                                      -28-

<PAGE>

     to the extent such interest is an Obligation) at the time due and payable
     on the Secured Obligations at the time outstanding (whether due by reason
     of maturity or by reason of any prepayment requirement or by declaration or
     acceleration or otherwise), including interest at the Default Rate on any
     overdue principal and (to the extent permitted under applicable law) on any
     overdue interest; and, in case such moneys shall be insufficient to pay in
     full the amounts so due and unpaid with respect to the Secured Obligations
     at the time outstanding, then, first, to the payment of all amounts of
                                    -----
     interest (including Post-Petition Interest to the extent such interest is
     an Obligation) at the time due and payable on the Secured Obligations and,
     second, to the payment of all amounts of principal at the time due and
     ------
     payable on the Secured Obligations; and

          Fourth: the balance, if any, held by the Beneficiary after payment in
          ------
     full of all amounts referred to in subdivisions First, Second and Third,
                                                            ------     -----
     above, shall, unless a court of competent jurisdiction may otherwise direct
     by final order not subject to appeal, be paid to or upon the direction of
     the Grantor.

     SECTION 3.11. Appointment of Receiver. If an Event of Default shall have
                   -----------------------
occurred and be continuing, the Beneficiary shall, as a matter of right and
without regard to the adequacy of any security for the indebtedness secured
hereby or the solvency of the Grantor and without notice to Grantor, be entitled
to the appointment of a receiver for all or any part of the Collateral, whether
such receivership be incidental to a proposed sale of the Collateral or
otherwise, and the Grantor hereby consents to the appointment of such a receiver
and will not oppose any such appointment and agrees that all expenses of such
receivership shall be borne by the Grantor and shall be an Obligation secured by
this Deed of Trust.

     SECTION 3.12. Possession, Management and Income. If an Event of Default
                   ---------------------------------
shall have occurred and be continuing, in addition to, not in limitation of, the
rights and remedies provided in Section 1.14, the Beneficiary, upon five days'
                                ------------
notice to the Grantor, may enter upon and take possession of the Collateral or
any part thereof by force, summary proceeding, ejectment or otherwise and may
remove the Grantor and all other Persons and any and all property therefrom and
may hold, operate, maintain, repair, preserve and manage the same and receive
all earnings, income, Rents, issues and Proceeds accruing with respect thereto
or any part thereof. The

                                      -29-

<PAGE>

Beneficiary shall be under no liability for or by reason of any such taking of
possession, entry, removal or holding, operation or management, except that any
amounts so received by the Beneficiary shall be applied to pay all costs and
expenses of so entering upon, taking possession of, holding, operating,
maintaining, repairing, preserving and managing the Collateral or any part
thereof, and any Impositions or other charges prior to the lien and security
interest of this Deed of Trust which the Beneficiary may consider it necessary
or desirable to pay, and any balance of such amounts shall be applied as
provided in Section 3.10.
            ------------

     SECTION 3.13. Right of Beneficiary to Perform Grantor's Covenants, etc. If
                   --------------------------------------------------------
the Grantor shall fail to make any payment or perform any act required to be
made or performed hereunder or under the Credit Agreement or the other Loan
Documents, the Beneficiary, without notice to or demand upon the Grantor and
without waiving or releasing any obligation or Default, may (but shall be under
no obligation to) at any time thereafter make such payment or perform such act
for the account and at the expense of the Grantor, and may enter upon the
Collateral for such purpose and take all such action thereon as, in the
Beneficiary's opinion, may be necessary or appropriate therefor, provided that
                                                                 -------- ----
the Beneficiary shall have no right to perform any covenant of the Grantor under
Section 1.19 (or Section 1.4 to the extent that it includes any of the matters
------------     -----------
more specifically described in Section 1.19) until the entire outstanding
                               ------------
principal amount of the Secured Obligations shall have become due and payable by
reason of the declaration of the Beneficiary or the Lenders or the maturity of
the Notes. No such entry and no such action shall be deemed an eviction of any
lessee of the Property or any part thereof. All sums so paid by the Beneficiary
and all costs and expenses (including, without limitation, attorneys' fees and
expenses) so incurred, together with interest thereon at the Default Rate from
the date of payment or incurring, shall constitute additional indebtedness
secured by this Deed of Trust and shall be paid by the Grantor to the
Beneficiary on demand.

     SECTION 3.14. Subrogation. To the extent that the Beneficiary, on or after
                   -----------
the date hereof, pays any sum due under any provision of any Legal Requirement
or any instrument creating any lien prior or superior to the lien of this Deed
of Trust, or the Grantor or any other Person pays any such sum with the proceeds
of the Loans evidenced by the Notes, the Beneficiary shall have and be entitled
to a lien on the Collateral equal in priority to the lien discharged, and the

                                      -30-

<PAGE>

Beneficiary shall be subrogated to, and receive and enjoy all rights and liens
possessed, held or enjoyed by, the holder of such lien, which shall remain in
existence and benefit the Beneficiary in securing the Obligations.

     SECTION 3.15. Remedies, etc., Cumulative. Each right, power and remedy of
                   --------------------------
the Beneficiary provided for in this Deed of Trust or now or hereafter existing
at law or in equity or by statute or otherwise shall be cumulative and
concurrent and shall be in addition to every other right, power or remedy
provided for in this Deed of Trust or the other Loan Documents, or now or
hereafter existing at law or in equity or by statute or otherwise, and the
exercise or beginning of the exercise by the Beneficiary of any one or more of
the rights, powers or remedies provided for in this Deed of Trust, or now or
hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by the Beneficiary of any or all
such rights, powers or remedies.

     SECTION 3.16. Provisions Subject to Applicable Law. All rights, powers and
                   ------------------------------------
remedies provided in this Deed of Trust may be exercised only to the extent that
the exercise thereof does not violate any applicable provisions of law and are
intended to be limited to the extent necessary so that they will not render this
Deed of Trust invalid, unenforceable or not entitled to be recorded, registered
or filed under the provisions of any applicable law. If any term of this Deed of
Trust or any application thereof shall be invalid or unenforceable, the
remainder of this Deed of Trust and any other application of such term shall not
be affected thereby.

     SECTION 3.17. No Waiver, etc. No failure by the Beneficiary to insist upon
                   --------------
the strict performance of any term hereof or of any other Loan Document, or to
exercise any right, power or remedy consequent upon a breach hereof or thereof,
shall constitute a waiver of any such term or of any such breach. No waiver of
any breach shall affect or alter this Deed of Trust, which shall continue in
full force and effect with respect to any other then existing or subsequent
breach. By accepting payment or performance of any of the Obligations before or
after its due date, the Beneficiary shall not be deemed to have waived its right
either to require prompt payment or performance when due of all other
Obligations payable hereunder or to declare a default for failure to effect such
prompt payment or performance.

     SECTION 3.18. Compromise of Actions, etc. Any action, suit or proceeding
                   --------------------------
brought by the Beneficiary pursuant to any of

                                      -31-

<PAGE>

the terms of this Deed of Trust, the Credit Agreement, any other Loan Document,
or otherwise, and any claim made by the Beneficiary hereunder or thereunder, may
be compromised, withdrawn or otherwise dealt with by the Beneficiary without any
notice to or approval of the Grantor.

                                   ARTICLE IV

                                   DEFINITIONS
                                   -----------

     SECTION 4.1. Terms Defined in this Deed of Trust. When used herein the
                  -----------------------------------
following terms have the following meanings:

     "Beneficiary": see the preamble.
      -----------

     "Collateral": see the granting clause.
      ----------

     "Credit Agreement": see the second recital.
      ----------------           ------ -------

     "Deed of Trust": see the preamble.
      -------------

     "Default" means any Event of Default or any condition or event which, after
      -------
notice or lapse of time, or both, would constitute an Event of Default.

     "Default Rate" means the per annum rate of interest specified in Section
      ------------
3.2.2 of the Credit Agreement.

     "Event of Default": see Section 3.1.
      ----------------

     "Goods": see clause (c) of the granting clause.
      -----       ----------        -------- ------

     "Grantor": see the preamble.
      -------           --------

     "herein", "hereof", "hereto", and "hereunder" and similar terms refer to
      ------    ------    ------        ---------
this Deed of Trust and not to any particular Section, paragraph or provision of
this Deed of Trust.

     "Impositions": see Section 1.5.
      -----------       -----------

     "Improvements": see clause (b) of the granting clause.
      ------------       ----------        -------- ------

     "Indemnified Parties": see Section 1.16.
      -------------------       ------------

     "Insurance Requirements": see paragraph (a) of Section 1.6.
      ----------------------       -------------    -----------

     "Intangibles": see clause (d) of the granting clause.
      -----------       ----------        -------- ------

                                       -32-

<PAGE>

         "Land":  see the first recital.
          ----            ----- -------

         "Leases":  see paragraph (a) of Section 1.14.
          ------        -------------    ------------

         "Legal Requirements":  see paragraph (b) of Section 1.6.
          ------------------        -------------    -----------

         "Lenders":  see the preamble.
          -------            --------

         "Loans":  see the second recital.
          ----             ------ -------

         "Loan Document":  see clause (b) of the sixth recital.
          -------------        ----------        ----- -------

         "Notes": means the following Notes delivered to Beneficiary: (1) the
          -----
Note dated May 29, 2001, in the original principal amount of $27,168,210.00
executed by Nasco International, Inc., a Wisconsin corporation and made to the
order of Bank of America, N.A., and (2) the Note dated May 29, 2001 in the
original principal amount of $23,831,790.00 executed by Nasco International,
Inc., a Wisconsin corporation and made to the order of Bank One, Wisconsin.

         "Obligations":  see the sixth recital.
          -----------            ----- -------

         "Other Obligations":  See Section 5.12.
          -----------------        ------------

         "Other Parties":  See Section 5.12.
          -------------        ------------

         "Permits":  see clause (f) of the granting clause.
          -------        ----------        -------- ------

         "Permitted Encumbrances":  see Section 1.2.
          ----------------------        -----------

         "Person" means a corporation, an association, a partnership, an
          ------
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency or officer.

         "Plans":  see clause (e) of the granting clause.
          -----        ----------        -------- ------

         "Post-Petition Interest":  see Section 2.3.
          ----------------------        -----------

         "Proceeds":  see clause (h) of the granting clause.
          --------        ----------        -------- ------

         "Property":  see clause (b) of the granting clause.
          --------        ----------        -------- ------

         "Ratable" or "Ratably" means, in the context of a distribution of
          -------      -------
Collateral or Proceeds, an allocation of such Collateral or Proceeds among the
Lenders pro rata in accordance with their respective portion of the aggregate
        --- ----
dollar amount of the Obligations to which the distribution is being applied.

                                      -33-

<PAGE>

         "Real Estate":  see clause (a) of the granting clause.
          -----------        ----------        -------- ------

         "Rents":  see paragraph (a) of Section 1.14.
          -----        -------------    ------------

         "Secured Obligations":  see the second recital.
          -------------------            ------ -------

         "State": means the State of Colorado.
          -----

         "Taking":  see clause (b) of Section 2.2.
          ------        ----------    ------------

         "Total Destruction" means any damage to or destruction of the
          -----------------
Improvements or any part thereof which, in the reasonable estimation of the
Beneficiary shall require the expenditure of an amount in excess of $200,000 to
restore the Improvements to substantially the same condition of the Improvements
immediately prior to such damage or destruction.

         "Total Taking" means a Taking, whether permanent or for temporary use,
          ------------
which, in the reasonable judgment of the Beneficiary, shall substantially
interfere with the normal operation of the Property by the Grantor.

         "Trustee":  see the preamble.
          -------            --------

         "Trustee's Sale":  see Section 3.3.
          --------------

         SECTION 4.2.  Use of Defined Terms. Terms for which meanings are
                       --------------------
provided in this Deed of Trust shall, unless otherwise defined or the context
otherwise requires, have such meanings when used in any certificate and any
opinion, notice or other communication delivered from time to time in connection
with this Deed of Trust or pursuant hereto.

         SECTION 4.3.  Credit Agreement Definitions. Unless otherwise defined
                       ----------------------------
herein or the context otherwise requires, capitalized terms used in this Deed of
Trust, including its preamble and recitals, have the meanings provided in the
Credit Agreement.

                                   ARTICLE V

                                  MISCELLANEOUS
                                  -------------

    SECTION 5.1.   Further Assurances; Financing Statements.
                   ----------------------------------------

         SECTION 5.1.1.  Further Assurances. The Grantor, at its expense, will
                         ------------------
execute, acknowledge and deliver all such instruments and take all such other
action as the Beneficiary from time to time may reasonably request:


                                      -34-

<PAGE>

          (a) better to subject to the lien and security interest of this Deed
     of Trust all or any portion of the Collateral,

          (b) to perfect, publish notice or protect the validity of the lien and
     security interest of this Deed of Trust,

          (c) to preserve and defend the title to the Collateral and the rights
     of the Beneficiary therein against the claims of all Persons as long as
     this Deed of Trust shall remain undischarged,

          (d) better to subject to the lien and security interest of this Deed
     of Trust or to maintain or preserve the lien and security interest of this
     Deed of Trust with respect to any replacement or substitution for any
     Improvements or any other after-acquired property, or

          (e) in order further to effectuate the purposes of this Deed of Trust
     and to carry out the terms hereof and to better assure and confirm to the
     Beneficiary its rights, powers and remedies hereunder.

          SECTION 5.1.2. Financing Statements. Notwithstanding any other
                         --------------------
provision of this Deed of Trust, the Grantor hereby agrees that, without notice
to or the consent or signature of the Grantor, the Beneficiary may file with the
appropriate public officials such financing statements, continuation statements,
amendments and similar documents as are or may become necessary to perfect,
preserve or protect the security interest granted by this Deed of Trust.

          SECTION 5.2. Additional Security. Without notice to or consent of the
                       -------------------
Grantor, and without impairment of the security interest and lien and rights
created by this Deed of Trust, the Beneficiary may accept from the Grantor or
any other Person additional security for the Secured Obligations. Neither the
giving of this Deed of Trust nor the acceptance of any such additional security
shall prevent the Beneficiary from resorting, first, to such additional
security, or, first, to the security created by this Deed of Trust, or
concurrently to both, in any case without affecting the Beneficiary's lien and
rights under this Deed of Trust.

                                      -35-

<PAGE>

    SECTION 5.3.   Defeasance; Partial Release, etc.
                   --------------------------------

         SECTION 5.3.1. Defeasance. If the Grantor or Nasco shall pay, in full,
                        ----------
the principal of and premium, if any, and interest on the Secured Obligations in
accordance with the terms thereof and hereof and all other sums payable
hereunder by the Grantor and shall comply with all the terms, conditions and
requirements hereof and of the Secured Obligations, then on such date, this Deed
of Trust shall be (except as provided herein) null and void and of no further
force and effect and the Collateral shall thereupon be, and be deemed to have
been, reconveyed, released and discharged from this Deed of Trust without
further notice on the part of either the Grantor or the Beneficiary.

         SECTION 5.3.2. Partial Release etc. The Beneficiary may, at any time
                        -------------------
and from time to time, without liability therefor, and without prior notice to
the Grantor, release, reconvey any part of the Collateral, consent to the making
of any map or plat of the Property, join in granting any easement thereon or
join in any extension agreement or agreement subordinating the lien of this Deed
of Trust or enter into any other agreement in connection with the Collateral.

         SECTION 5.4.   Notices, etc. All notices and other communications
                        ------------
provided to the Grantor or the Beneficiary under this Deed of Trust shall be
given in the manner and with the effect specified in the Credit Agreement. The
foregoing incorporation by reference of the Grantor's mailing address shall be
deemed to be a request by the Grantor that a copy of any notice of default and
of any notice of sale hereunder be mailed to the Grantor at such address as
provided by law.

         SECTION 5.5.   Waivers, Amendments, etc. The provisions of this Deed of
                        ------------------------
Trust may be amended, discharged or terminated and the observance or performance
of any provision of this Deed of Trust may be waived, either generally or in a
particular instance and either retroactively or prospectively, only by an
instrument in writing executed by the Grantor and the Beneficiary.

         SECTION 5.6.   Cross-References. References in this Deed of Trust and
                        ----------------
in each instrument executed pursuant hereto to any Section or Article are,
unless otherwise specified, to such Section or Article of this Deed of Trust or
such instrument, as the case may be, and references in any Section, Article or
definition to any clause are, unless otherwise specified, to such clause of such
Section, Article or definition.

                                      -36-

<PAGE>

     SECTION 5.7.  Headings. The various headings of this Deed of Trust and of
                   --------
each instrument executed pursuant hereto are inserted for convenience only and
shall not affect the meaning or interpretation of this Deed of Trust or such
instrument or any provisions hereof or thereof.

     SECTION 5.8.  Governing Law. This Deed of Trust shall be deemed to be a
                   -------------
contract made under and governed by the laws of the State.

     SECTION 5.9.  Successors and Assigns, etc. This Deed of Trust shall be
                   ---------------------------
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.

     SECTION 5.10. Loan Document. This Deed of Trust is a Loan Document executed
                   -------------
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions thereof, including Article X thereof.
                              ---------

     SECTION 5.11. Severability. Any provision of this Deed of Trust or any
                   ------------
other Loan Document which is prohibited or unenforceable in any jurisdiction
shall as to such provision and such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Deed of Trust or such Loan Document or affecting the validity
or unenforceability of such provision in any other jurisdiction.

     SECTION 5.12. Accommodation Provisions. Insofar as this Deed of Trust
                   ------------------------
secures obligations (the "Other Obligations") of other obligors other than
                          -----------------
Grantor (the "Other Parties") in favor of Beneficiary, Grantor has executed and
              -------------
delivered this Deed of Trust as an accommodation instrument with the intent of
subjecting its interests in the Collateral to the lien of this Deed of Trust as
security for the Other Obligations and in order to induce Beneficiary to enter
into the Loan Documents. Grantor hereby agrees, to the fullest extent permitted
by law, not to assert or take advantage of:

          (a) Any right to require Beneficiary to proceed against the Other
     Parties or any other person or to proceed against or exhaust any other
     security held by Beneficiary at any time or to pursue any other remedy in
     Beneficiary's power before exercising any right or remedy under this Deed
     of Trust.

          (b) Any defense that may arise by reason of:

                                      -37-

<PAGE>

               (i)   Beneficiary's failure to proceed against the Other Parties'
          property, or any other party against whom Beneficiary might assert a
          claim, before proceeding against Grantor under this Deed of Trust; or

               (ii)  The release, suspension, discharge or impairment of any of
          Beneficiary's rights against the Other Parties or any other party
          against whom Beneficiary might assert a claim, whether such release,
          suspension, discharge or impairment is explicit, tacit or inadvertent;
          or

               (iii) Beneficiary's failure to pursue any other remedies
          available to Beneficiary that would reduce the burden of the
          indebtedness secured hereby on Grantor's interests in the Collateral;
          or

               (iv)  Any extension of the time for the payment or performance of
          any of the Other Obligations or this Deed of Trust; or

               (v)   Any amendment of this Deed of Trust or the Other
          Obligations, whether or not such amendment materially affects the risk
          that Grantor has assumed by executing this Deed of Trust; or

               (vi)  The incapacity, lack of authority, death or disability of
          the Other Parties or any other person or persons; or

               (vii) The failure of Beneficiary to file or enforce a claim
          against the estate (in either administration, bankruptcy or any other
          proceedings) of the Other Parties or any other person or persons.

          (c) Demand, protest and notice of any kind, including, without
     limitation, the following notices:

               (i)   Notice of the evidence, creation or incurring of any new or
          additional indebtedness or obligation (provided that such indebtedness
          or obligation is not secured by this Deed of Trust); or

               (ii)  Notice of any action or non-action on the part of the Other
          Parties or Beneficiary in connection with any obligation or evidence
          of indebtedness held by Beneficiary as collateral; or

                                      -38-

<PAGE>

               (iii) Notice of payment or non-payment by the Other Parties of
          the indebtedness secured by this Deed of Trust.

          (d)  Any right to assert against the Beneficiary any defense arising
     by reason of any claim or defense based upon an election of remedies by the
     Beneficiary to foreclose, either by judicial foreclosure or by exercise of
     the power of sale, under any other deed of trust securing the Other
     Obligations, which in any manner impairs, reduces, releases, destroys or
     extinguishes Grantor's subrogation rights, rights to proceed against the
     Other Parties for reimbursement, or any other rights of Grantor to proceed
     against any other person or security. Grantor waives all rights and
     defenses to enforcement of all or any part of the indebtedness secured
     hereby which defenses are based on an election of remedies by Beneficiary,
     even though the election of remedies, such as nonjudicial foreclosure with
     respect to any such other deed of trust, may destroy Grantor's rights of
     subrogation and reimbursement against the Other Parties. This means, among
     other things:

               (i)   The Beneficiary may collect from the Grantor without first
          foreclosing on any real or personal property collateral pledged by the
          Other Parties.

               (ii)  If the Beneficiary forecloses on any real property
          collateral pledged by the Other Parties:

                         (1) The amount of the debt may be reduced only by the
price for which that collateral is sold at the foreclosure sale, even if the
collateral is worth more than the sale price.

                         (2) The Beneficiary may collect from the Grantor even
if the Beneficiary, by foreclosing on the other real property collateral, has
destroyed any right the Grantor may have to collect from the Other Parties.

          This is an unconditional and irrevocable waiver of any rights and
defenses the Grantor may have because the debtor's debt is secured by real
property.

          (e) Any rights arising because of Grantor's payment or satisfaction of
     the indebtedness secured hereby (i) against the Other Parties, by way of
     subrogation to the rights of Beneficiary or otherwise, or (ii) against any

                                       -39-

<PAGE>

     other guarantor or any Other Party obligated to pay any of the indebtedness
     secured hereby, by way of contribution or reimbursement or otherwise.

          (f) Any duty on the part of Beneficiary to disclose to Grantor any
     default under the Other Obligations.

          (g) Any duty on the part of Beneficiary to disclose to Grantor any
     facts Beneficiary may now know or may hereafter know about the Other
     Parties or any successors in interest (if any) regardless of whether
     Beneficiary (i) has reason to believe that any such facts materially
     increase the risk beyond the risk which Grantor intends to assume by
     executing this Deed of Trust, (ii) has reason to believe that these facts
     are unknown to Grantor, or (iii) has a reasonable opportunity to
     communicate such facts to Grantor, it being understood and agreed that
     Grantor is fully responsible for being and keeping informed of the
     financial condition of the Other Parties or any successor in interest of
     the Other Parties and of all circumstances bearing on the risk of
     nonpayment of any indebtedness of the Other Parties to Beneficiary that is
     secured hereby.

          (h) Any right to object to the release of any portions of the
     Collateral from the lien of this Deed of Trust notwithstanding the fact
     that such releases may be made without Beneficiary's having received any or
     adequate consideration therefor.

          Grantor further agrees that with respect to any Secured Obligation
secured hereby Beneficiary may, in such manner and upon such terms and at such
times as Beneficiary deems best and without demand or notice to or consent of
Grantor (i) release any party now or hereafter liable for the performance of any
such Secured Obligation, (ii) extend the time for the performance of any such
Secured Obligation, (iii) accept additional security therefor, and (iv) alter,
substitute or release any property securing such performance.

          Before executing this Deed of Trust, Grantor has made such independent
legal and factual inquiries and investigations as Grantor deemed necessary or
desirable with respect to the ability of the Other Parties to honor all of the
Other Parties' covenants and agreements with Beneficiary, and Grantor has relied
solely on said independent inquiries and investigations preparatory to entering
into this Deed of Trust.

                                      -40-

<PAGE>

     IN WITNESS WHEREOF, the Grantor has caused this Deed of Trust to be duly
executed as of the day and year first above written.


                                          Grantor:


                                          AMERICAN EDUCATIONAL PRODUCTS, INC.,
                                          a Colorado corporation


                                          By:__________________________________
                                             Name:
                                             Title:






<PAGE>


                                 ACKNOWLEDGMENT



STATE OF COLORADO            )
                             )   SS.:
COUNTY OF _________________  )



         The foregoing Deed of Trust was acknowledged before me this _____ day
of ____________, 2001, by _______________________, as _____________ of American
Educational Products, Inc., a Colorado corporation.

         Witness my hand and official seal.

         My commission expires ___________.

[SEAL]
                                           _____________________________
                                           Notary Public

<PAGE>

                                   SCHEDULE 1

                             DESCRIPTION OF THE LAND
                             -----------------------

A portion of Block 22 and the West 1/2 of the vacated street abutting Block 22
on the East of Riverside Park, a Subdivision in the City of Fort Collins,
Colorado, more particularly described as being contained within boundary lines
which considering the East line of the Southeast 1/4 of Section 2, Township 7
North, Range 69 West of the 6th P.M., as bearing due South and with all bearings
contained herein relative thereto; begin at a point which bears South 89 degrees
57' West 1950.00 feet and again South 38.42 feet from the East 1/4 corner of
said Section 2 and run thence West 193.60 feet, thence South 450.00 feet, thence
East 193.60 feet, thence North 450.00 feet to the Point of Beginning; and a
portion of Block 22, Riverside Park, a Subdivision in The City of Fort Collins,
Colorado, more particularly described as being contained in boundary lines which
considering the East line of the Southeast 1/4 of Section 2, Township 7 North,
Range 69 West of the 6th P.M., as bearing due South and with all bearings
contained herein relative thereto; begin at a point which bears South 89 degrees
57' West 1950.00 feet and again South 38.42 feet and again West 193.60 feet from
the East 1/4 corner of said Section 2, and run thence West 96.80 feet, thence
South 450.00 feet, thence East 96.80 feet, thence North 450.00 feet to The Point
of Beginning.

County of Larimer, State of Colorado.

Address:  401 Hickory, Fort Collins, Colorado

<PAGE>

                                   SCHEDULE 2

                             Permitted Encumbrances

1.   Right of way for the Greeley Salt Lake and Pacific Railroad Company as
     stated in Deed recorded September 15, 1882 in Book T at Page 362.

2.   Right of way for Town Ditch as stated in instrument recorded September 1,
     1901 in Book 137 at Page 168.

3.   Terms, conditions, provisions and obligations of Easement Dedication
     recorded April 21, 1993 as Reception No. 93024709.