Document:

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                                                                    Exhibit 10.3
                                                                  EXECUTION COPY
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                                 UNIT AGREEMENT

                                      Among

                           O'SULLIVAN INDUSTRIES, INC.

                      O'SULLIVAN INDUSTRIES HOLDINGS, INC.

                     O'SULLIVAN INDUSTRIES - VIRGINIA, INC.

                                       and

                  NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
                                  as Unit Agent

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

                                November 30, 1999

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

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                  UNIT AGREEMENT, dated as of November 30, 1999, among
O'Sullivan Industries, Inc. (the "Company"), O'Sullivan Industries Holdings,
Inc., a Delaware corporation ("HOLDINGS" and, together with the Company, the
"ISSUERS"), O'Sullivan Industries - Virginia, Inc., a Virginia corporation (the
"GUARANTOR"), and Norwest Bank Minnesota, National Association, as Unit Agent,
Warrant Agent and Trustee.

                  WHEREAS, the Company proposes to issue $100,000,000 aggregate
principal amount of its 13 3/8% Senior Subordinated Notes due 2009 (the "NOTES")
pursuant to an Indenture, dated as of November 30, 1999 (the "INDENTURE"), among
the Company, the Guarantor and Norwest Bank Minnesota, National Association, as
Trustee (the "TRUSTEE"), and Holdings proposes to issue 100,000 warrants (the
"COMMON WARRANTS"), each Common Warrant entitling the holder thereof to purchase
initially 0.9327 shares of Holdings' common stock, par value $0.01 per share
(the "COMMON STOCK") at a purchase price of $0.01 per share, and 100,000
warrants (the "PREFERRED WARRANTS" and, together with the Common Warrants, the
"WARRANTS"), each Preferred Warrant entitling the holder thereof to purchase
initially 0.3927 shares of Holdings' series B junior preferred stock, par value
$0.01 per share (the "PREFERRED STOCK") at a purchase price of $0.01 per share.
The Notes and the Warrants will initially be represented by units (the "UNITS"),
with each Unit consisting of $1,000 principal amount of Notes and one Common
Warrant and one Preferred Warrant. Norwest Bank Minnesota, National Association
has agreed with Holdings to act as warrant agent for the Warrants (the "WARRANT
AGENT").

                  WHEREAS, the Issuers, the Guarantor, the Trustee and the
Warrant Agent desire to appoint Norwest Bank Minnesota, National Association to
act as their agent for the purpose of issuing certificates ("UNIT CERTIFICATES")
representing the Units and for the registration of transfers and exchanges
thereof. Norwest Bank Minnesota, National Association, in such capacity, is
referred to herein as the "UNIT AGENT."

                  WHEREAS, the Units will be exchangeable for the Notes and the
Warrants represented thereby upon the earliest to occur of: (i) 180 days after
the closing of the offering of the Units, (ii) the date on which an exchange
offer registration statement for the Notes is declared effective under the
Securities Act, (iii) the date on which a shelf registration statement for the
Notes is declared effective under the Securities Act, (iv) such date as Lehman
Brothers Inc., in its sole discretion, shall determine or (v) in the event the
Company is required to make an offer to purchase Notes pursuant to the terms of
the Indenture, the date the Company mails notice of the offer to the holders of
the Notes. The earliest date on which an event listed in the preceding sentence
occurs is referred to as the "SEPARATION DATE."

                  NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto agree as follows (all
capitalized terms not defined herein are as defined in the Indenture):

                  Section 1. APPOINTMENT OF UNIT AGENT.

                  (a) The Issuers and the Guarantor hereby appoint the Unit
Agent to act as agent for the Issuers and the Guarantor in accordance with and
subject to the terms and conditions set forth in this Agreement, and the Unit
Agent hereby accepts such appointment.

                  (b) The Trustee, the Company and the Guarantor hereby appoint
the Unit Agent as Authenticating Agent and Registrar (as such terms are defined
in the Indenture) for the Notes for so long as the Notes are represented by the
Units. In its capacity as Authenticating Agent and Registrar, the Unit Agent
shall have the rights and obligations provided for such capacities in the
Indenture.

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                  (c) The Warrant Agent and Holdings hereby appoint the Unit
Agent as Authenticating Agent and Warrant Registrar (as such terms are defined
in the Warrant Agreements) for the Warrants for so long as the Warrants are
represented by the Units. In its capacity as Warrant Authenticating Agent and
Warrant Registrar, the Unit Agent shall have the rights and obligations provided
for such capacities in the Warrant Agreements.

                  Section 2. DEFINITIONS.

                  "144A GLOBAL UNIT" means a global unit in the form of Exhibit
A1 hereto bearing the Global Unit Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
number of the Units sold in reliance on Rule 144A.

                  "AFFILIATE" of any specified Person means (A) any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person and (B) any director, officer or
employee of such specified person. For purposes of this definition "CONTROL"
(including, with correlative meanings, the terms "CONTROLLING," "CONTROLLED BY"
and "UNDER COMMON CONTROL WITH") as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.

                  "APPLICABLE PROCEDURES" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Unit, the rules and
procedures of the Depositary, Euroclear and Cedelbank that apply to such
transfer or exchange.

                  "CEDELBANK" means Cedelbank, a limited liability company (a
societe anonyme) organized under Luxembourg law.

                  "DEFINITIVE UNIT" means a certificated Unit registered in the
name of the Holder thereof and issued in accordance with Section 3.6 hereof, in
the form of Exhibit A1 hereto except that such Unit shall not bear the Global
Unit Legend and shall not have the "Schedule of Exchanges of Interests in the
Global Unit" attached thereto.

                  "DEPOSITARY" means, with respect to the Units issuable or
issued in whole or in part in global form, the Person specified in Section 3.3
hereof as the Depositary with respect to the Units, and any and all successors
thereto appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Unit Agreement.

                  "EUROCLEAR" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.

                  "GLOBAL UNITS" means, individually and collectively, each of
the Restricted Global Units, in the form of Exhibits A1 and A2 hereto issued in
accordance with Section 3.1 hereof.

                  "GLOBAL UNIT LEGEND" means the legend set forth in Section
3.6(f)(ii), which is required to be placed on all Global Units issued under this
Unit Agreement.

                  "HOLDER" means a Person in whose name a Unit is registered.

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                  "INDIRECT PARTICIPANT" means a Person who holds a beneficial
interest in a Global Unit through a Participant.

                  "INSTITUTIONAL ACCREDITED INVESTOR" means an institution that
is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act, who are not also QIBs.

                  "NON-U.S. PERSON" means a Person who is not a U.S. Person.

                  "OFFICER" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller, the Secretary or any Vice-President of such Person.

                  "OFFICERS' CERTIFICATE" means a certificate signed on behalf
of an Issuer and the Guarantor by two Officers of such Issuer and the Guarantor
one of whom must be the principal executive officer, the principal financial
officer, the treasurer or the principal accounting officer of such Issuer and
the Guarantor, that meets the requirements of Section 13.04 and Section 13.05 of
the Indenture.

                  "OPINION OF COUNSEL" means an opinion from legal counsel who
is reasonably acceptable to the Unit Agent, that meets the requirements of
Section 13.04 and Section 13.05 of the Indenture. The counsel may be an employee
of or counsel to the Issuers and the Guarantor, any Subsidiary of the Issuers
and the Guarantor or the Unit Agent.

                  "PARTICIPANT" means, with respect to the Depositary, Euroclear
or Cedelbank, a Person who has an account with the Depositary, Euroclear or
Cedelbank, respectively (and, with respect to The Depository Trust Company,
shall include Euroclear and Cedelbank).

                  "PRIVATE PLACEMENT LEGEND" means the legend set forth in
Section 3.6(f)(i) to be placed on all Units issued under this Unit Agreement
except where otherwise permitted by the provisions of this Unit Agreement.

                  "QIB" means a "qualified institutional buyer" as defined in
Rule 144A.

                  "REGULATION S" means Regulation S promulgated under the
Securities Act.

                  "REGULATION S GLOBAL UNIT" means a Regulation S Temporary
Global Unit or Regulation S Permanent Global Unit, as appropriate.

                  "REGULATION S PERMANENT GLOBAL UNIT" means a permanent global
unit in the form of Exhibit A1 hereto bearing the Global Unit Legend and the
Private Placement Legend and deposited with or on behalf of and registered in
the name of the Depositary or its nominee, issued in a denomination equal to the
number of the Regulation S Temporary Global Units upon expiration of the
Restricted Period.

                  "REGULATION S TEMPORARY GLOBAL UNIT" means a temporary global
unit in the form of Exhibit A2 hereto bearing the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee, issued in a denomination equal to the outstanding number of Units
initially sold in reliance on Rule 903 of Regulation S.

                  "RESTRICTED DEFINITIVE UNIT" means a Definitive Unit bearing
the Private Placement Legend.

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                  "RESTRICTED GLOBAL UNIT" means a Global Unit bearing the
Private Placement Legend.

                  "RESTRICTED PERIOD" means the one year distribution compliance
period as defined in Regulation S.

                  "RULE 144" means Rule 144 promulgated under the Securities
Act.

                  "RULE 144A" means Rule 144A promulgated under the Securities
Act.

                  "RULE 903" means Rule 903 promulgated under the Securities
Act.

                  "RULE 904" means Rule 904 promulgated under the Securities
Act.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended.

                  "UNIT AGENT" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this Unit
Agreement and thereafter means the successor serving hereunder.

                  "UNIT CUSTODIAN" means the Unit Agent, as custodian with
respect to the Units in global form, or any successor entity thereto.

                  "U.S. PERSON" means a U.S. person as defined in Rule 902(o)
under the Securities Act.

                  Section 3. UNITS.

                  Section 3.1. FORM AND DATING.

                  (a) GENERAL. The Units and the Unit Agent's certificate of
authentication shall be substantially in the form of Exhibits A1 and A2 hereto.
The Units may have notations, legends or endorsements required by law, stock
exchange rule or usage.

                  The terms and provisions contained in the Units shall
constitute, and are hereby expressly made, a part of this Unit Agreement, and
the Issuers, the Guarantor and the Unit Agent, by their execution and delivery
of this Unit Agreement, expressly agree to such terms and provisions and to be
bound thereby. However, to the extent any provision of any Unit conflicts with
the express provisions of this Unit Agreement, the provisions of this Unit
Agreement shall govern and be controlling.

                  (b) GLOBAL UNITS. Units issued in global form shall be
substantially in the form of Exhibits A1 or A2 attached hereto (including the
Global Units Legend thereon and the "Schedule of Exchanges of Interests in the
Global Unit" attached thereto). Units issued in definitive form shall be
substantially in the form of Exhibit A1 attached hereto (but without the Global
Unit Legend thereon and without the "Schedule of Exchanges of Interests in the
Global Unit" attached thereto). Each Global Unit shall represent such of the
outstanding Units as shall be specified therein and each shall provide that it
shall represent the outstanding Units from time to time endorsed thereon and
that the outstanding Units represented thereby may from time to time be reduced
or increased, as appropriate, to reflect exchanges and redemptions. Any
endorsement of a Global Unit to reflect the amount of any increase or decrease
in the aggregate amount of outstanding Units represented thereby shall be made
by the Unit Agent or the Unit Custodian, at the direction of the Unit Agent, in
accordance with instructions given by the Holder thereof as required by Section
3.6 hereof.

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                  (c) TEMPORARY GLOBAL UNITS. Units offered and sold in reliance
on Regulation S shall be issued initially in the form of the Regulation S
Temporary Global Unit, which shall be deposited on behalf of the purchasers of
the Units represented thereby with the Unit Agent, as custodian for the
Depositary, and registered in the name of the Depositary or the nominee of the
Depositary for the accounts of designated agents holding on behalf of Euroclear
or Cedelbank, duly executed by the Issuers and authenticated by the Unit Agent
as hereinafter provided. The Restricted Period shall be terminated upon the
receipt by the Unit Agent of (i) a written certificate from the Depositary,
together with copies of certificates from Euroclear and Cedelbank certifying
that they have received certification of non-U.S. beneficial ownership of 100%
of the Regulation S Temporary Global Unit (except to the extent of any
beneficial owners thereof who acquired an interest therein during the Restricted
Period pursuant to another exemption from registration under the Securities Act
and who will take delivery of a beneficial ownership interest in a 144A Global
Unit bearing a Private Placement Legend, all as contemplated by Section
3.6(b)(iii) hereof), and (ii) an Officers' Certificate from the Issuers.
Following the termination of the Restricted Period, beneficial interests in the
Regulation S Temporary Global Unit shall be exchanged for beneficial interests
in Regulation S Permanent Global Units pursuant to the Applicable Procedures.
Simultaneously with the authentication of Regulation S Permanent Global Units,
the Unit Agent shall cancel the Regulation S Temporary Global Unit. The
aggregate number of the Regulation S Temporary Global Unit and the Regulation S
Permanent Global Units may from time to time be increased or decreased by
adjustments made on the records of the Unit Agent and the Depositary or its
nominee, as the case may be, in connection with transfers of interest as
hereinafter provided.

                  (d) EUROCLEAR AND CEDELBANK PROCEDURES APPLICABLE. The
provisions of the "Operating Procedures of the Euroclear System" and "Terms and
Conditions Governing Use of Euroclear" and the "General Terms and Conditions of
Cedelbank" and "Customer Handbook" of Cedelbank shall be applicable to transfers
of beneficial interests in the Regulation S Temporary Global Unit and the
Regulation S Permanent Global Units that are held by Participants through
Euroclear or Cedelbank.

                  Section 3.2. EXECUTION AND AUTHENTICATION. An Officer shall
sign the Units for each of the Issuers by manual or facsimile signature.

                  If the Officer whose signature is on a Unit no longer holds
that office at the time a Unit is authenticated, the Unit shall nevertheless be
valid.

                  A Unit shall not be valid until authenticated by the manual
signature of the Unit Agent and such signature shall be conclusive evidence that
the Unit has been authenticated under this Unit Agreement.

                  The Unit Agent shall, upon a written order of each of the
Issuers signed by an Officer (a "UNIT AUTHENTICATION ORDER"), authenticate Units
for original issue up to the number stated in the Units. The aggregate number of
Units outstanding at any time may not exceed such amount except as provided in
Section 3.7 hereof.

                  The Unit Agent may appoint an authenticating agent acceptable
to the Issuers to authenticate Units. An authenticating agent may authenticate
Units whenever the Unit Agent may do so. Each reference in this Unit Agreement
to authentication by the Unit Agent includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Issuers.

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                  Section 3.3. UNIT REGISTRAR AND UNIT PAYING AGENT. The Issuers
shall maintain an office or agency where Units may be presented for registration
of transfer or for exchange (the "UNIT REGISTRAR") and an office or agency where
Units may be presented for payment (the "UNIT PAYING AGENT"). The Unit Registrar
shall keep a register of the Units and of their transfer and exchange. The
Issuers may appoint one or more co-registrars and one or more additional paying
agents. The term "UNIT REGISTRAR" includes any co-registrar and the term "UNIT
PAYING AGENT" includes any additional paying agent. The Issuers may change any
Unit Paying Agent or Unit Registrar without notice to any Holder. The Issuers
shall notify the Unit Agent in writing of the name and address of any Agent not
a party to this Unit Agreement. If the Issuers fail to appoint or maintain
another entity as Unit Registrar or Unit Paying Agent, the Unit Agent shall act
as such. Each of the Issuers or any of their Subsidiaries may act as Unit Paying
Agent or Unit Registrar. The Issuers initially appoint The Depository Trust
Company ("DTC") to act as Depositary with respect to the Global Units.

                  The Issuers initially appoint the Unit Agent to act as the
Unit Registrar and Unit Paying Agent and to act as Unit Custodian with respect
to the Global Units.

                  Section 3.4. UNIT PAYING AGENT TO HOLD MONEY IN TRUST. The
Issuers shall require each Unit Paying Agent other than the Unit Agent to agree
in writing that the Unit Paying Agent will hold in trust for the benefit of
Holders or the Unit Agent all money held by the Unit Paying Agent for the
payment of principal, premium or Liquidated Damages, if any, or interest on the
Notes, or on the Warrants, and will notify the Unit Agent of any default by the
Issuers in making any such payment. While any such default continues, the Unit
Agent may require a Unit Paying Agent to pay all money held by it to the Unit
Agent. The Issuers at any time may require a Unit Paying Agent to pay all money
held by it to the Unit Agent. Upon payment over to the Unit Agent, the Unit
Paying Agent (if other than the Issuers or a Subsidiary) shall have no further
liability for the money. If the Issuers or a Subsidiary acts as Unit Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Holders all money held by it as Unit Paying Agent. Upon any bankruptcy or
reorganization proceedings relating to the Issuers, the Unit Agent shall serve
as Unit Paying Agent for the Units.

                  Section 3.5. HOLDER LISTS. The Unit Agent shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of all Holders and shall otherwise comply with TIA
Section 312(a). If the Unit Agent is not the Registrar, the Issuers shall
furnish to the Unit Agent at least seven Business Days before each interest
payment date and at such other times as the Unit Agent may request in writing, a
list in such form and as of such date as the Unit Agent may reasonably require
of the names and addresses of the Holders of Units and the Issuers shall
otherwise comply with TIA Section 312(a).

                  Section 3.6. TRANSFER AND EXCHANGE.

                  (a) TRANSFER AND EXCHANGE OF GLOBAL UNITS. A Global Unit may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global Units
will be exchanged by the Issuers for Definitive Units if (i) the Issuers deliver
to the Unit Agent notice from the Depositary that it is unwilling or unable to
continue to act as Depositary or that it is no longer a clearing agency
registered under the Exchange Act and, in either case, a successor Depositary is
not appointed by the Issuers within 120 days after the date of such notice from
the Depositary or (ii) the Issuers in their sole discretion determines that the
Global Units (in whole but not in part) should be exchanged for Definitive Units
and delivers a written notice to such effect to the Unit Agent or (iii) the
Depositary in its sole

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discretion determines that the Global Notes (in whole but not in part) should be
exchanged for Definitive Notes following an Event of Default and delivers a
written notice to such effect to the Unit Agent; provided that in no event shall
the Regulation S Temporary Global Unit be exchanged by the Issuers for
Definitive Units prior to (x) the expiration of the Restricted Period and (y)
the receipt by the Registrar of any certificates required pursuant to Rule
903(c)(3)(ii)(B) under the Securities Act. Upon the occurrence of any of the
preceding events in (i), (ii) or (iii) above, Definitive Units shall be issued
in such names as the Depositary shall instruct the Unit Agent. Global Units also
may be exchanged or replaced, in whole or in part, as provided in Sections 3.7
and 3.10 hereof. Every Unit authenticated and delivered in exchange for, or in
lieu of, a Global Unit or any portion thereof, pursuant to this Section 3.6 or
Section 3.7 or 3.10 hereof, shall be authenticated and delivered in the form of,
and shall be, a Global Unit. A Global Unit may not be exchanged for another Unit
other than as provided in this Section 3.6(a), however, beneficial interests in
a Global Unit may be transferred and exchanged as provided in Section 3.6(b) or
(c) hereof.

                  (b) TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN THE
GLOBAL UNITS. The transfer and exchange of beneficial interests in the Global
Units shall be effected through the Depositary, in accordance with the
provisions of this Unit Agreement and the Applicable Procedures. Beneficial
interests in the Restricted Global Units shall be subject to restrictions on
transfer comparable to those set forth herein to the extent required by the
Securities Act. Transfers of beneficial interests in the Global Units also shall
require compliance with either subparagraph (i) or (ii) below, as applicable, as
well as one or more of the other following subparagraphs, as applicable:

                        (i) TRANSFER OF BENEFICIAL INTERESTS IN THE SAME GLOBAL
         UNIT. Beneficial interests in any Restricted Global Unit may be
         transferred to Persons who take delivery thereof in the form of a
         beneficial interest in the same Restricted Global Unit in accordance
         with the transfer restrictions set forth in the Private Placement
         Legend; PROVIDED, HOWEVER, that prior to the expiration of the
         Restricted Period, transfers of beneficial interests in the Temporary
         Regulation S Global Unit may not be made to a U.S. Person or for the
         account or benefit of a U.S. Person (other than an Initial Purchaser).
         No written orders or instructions shall be required to be delivered to
         the Registrar to effect the transfers described in this Section
         3.6(b)(i).

                        (ii) ALL OTHER TRANSFERS AND EXCHANGES OF BENEFICIAL
         INTERESTS IN GLOBAL UNITS. In connection with all transfers and
         exchanges of beneficial interests that are not subject to Section
         3.6(b)(i) above, the transferor of such beneficial interest must
         deliver to the Registrar either (A) (1) a written order from a
         Participant or an Indirect Participant given to the Depositary in
         accordance with the Applicable Procedures directing the Depositary to
         credit or cause to be credited a beneficial interest in another Global
         Unit in an amount equal to the beneficial interest to be transferred or
         exchanged and (2) instructions given in accordance with the Applicable
         Procedures containing information regarding the Participant account to
         be credited with such increase or (B) (1) a written order from a
         Participant or an Indirect Participant given to the Depositary in
         accordance with the Applicable Procedures directing the Depositary to
         cause to be issued a Definitive Unit in an amount equal to the
         beneficial interest to be transferred or exchanged and (2) instructions
         given by the Depositary to the Registrar containing information
         regarding the Person in whose name such Definitive Unit shall be
         registered to effect the transfer or exchange referred to in (1) above;
         provided that in no event shall Definitive Units be issued upon the
         transfer or exchange of beneficial interests in the Regulation S
         Temporary Global Unit prior to (x) the expiration of the Restricted
         Period and (y) the receipt by the Registrar of any certificates
         required pursuant to Rule 903 under the Securities Act. Upon
         consummation of an Exchange Offer by the Company in accordance with the
         Indenture, hereof, the requirements of

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         this Section 3.6(b)(ii) shall be deemed to have been satisfied upon
         receipt by the Registrar of the instructions contained in the Letter of
         Transmittal delivered by the Holder of such beneficial interests in the
         Restricted Global Units. Upon satisfaction of all of the requirements
         for transfer or exchange of beneficial interests in Global Units
         contained in this Unit Agreement and the Units and satisfaction of such
         other requirements as the Unit Agent may determine in good faith to be
         applicable, the Unit Agent shall adjust the number amount of the
         relevant Global Unit(s) pursuant to Section 3.6(g) hereof.

                        (iii) TRANSFER OF BENEFICIAL INTERESTS TO ANOTHER
         RESTRICTED GLOBAL UNIT. A beneficial interest in any Restricted Global
         Unit may be transferred to a Person who takes delivery thereof in the
         form of a beneficial interest in another Restricted Global Unit if the
         transfer complies with the requirements of Section 3.6(b)(ii) above and
         the Registrar receives the following:

                               (A) if the transferee will take delivery in the
                  form of a beneficial interest in the 144A Global Unit, then
                  the transferor must deliver a certificate in the form of
                  Exhibit B hereto, including the certifications in item (1)
                  thereof; and

                               (B) if the transferee will take delivery in the
                  form of a beneficial interest in the Regulation S Temporary
                  Global Unit or the Regulation S Global Unit, then the
                  transferor must deliver a certificate in the form of Exhibit B
                  hereto, including the certifications in item (2) thereof.

                  (c) TRANSFER OR EXCHANGE OF BENEFICIAL INTERESTS IN RESTRICTED
GLOBAL UNITS TO RESTRICTED DEFINITIVE UNITS. If any holder of a beneficial
interest in a Restricted Global Unit proposes to exchange such beneficial
interest for a Restricted Definitive Unit or to transfer such beneficial
interest to a Person who takes delivery thereof in the form of a Restricted
Definitive Unit, then, upon receipt by the Registrar of the following
documentation:

                               (A) if the holder of such beneficial interest in
                  a Restricted Global Unit proposes to exchange such beneficial
                  interest for a Restricted Definitive Unit, a certificate from
                  such holder in the form of Exhibit C hereto, including the
                  certifications in item (1)(a) thereof;

                               (B) if such beneficial interest is being
                  transferred to a QIB in accordance with Rule 144A under the
                  Securities Act, a certificate to the effect set forth in
                  Exhibit B hereto, including the certifications in item (1)
                  thereof;

                               (C) if such beneficial interest is being
                  transferred to a Non-U.S. Person in an offshore transaction in
                  accordance with Rule 903 or Rule 904 under the Securities Act,
                  a certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (2) thereof;

                               (D) if such beneficial interest is being
                  transferred pursuant to an exemption from the registration
                  requirements of the Securities Act in accordance with Rule 144
                  under the Securities Act, a certificate to the effect set
                  forth in Exhibit B hereto, including the certifications in
                  item (3)(a) thereof;

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                               (E) if such beneficial interest is being
                  transferred to an Institutional Accredited Investor in
                  reliance on an exemption from the registration requirements of
                  the Securities Act other than those listed in subparagraphs
                  (B) through (D) above, a certificate to the effect set forth
                  in Exhibit B hereto, including the certifications,
                  certificates and Opinion of Counsel required by item (3)
                  thereof, if applicable;

                               (F) if such beneficial interest is being
                  transferred to the Issuers or any of their Subsidiaries, a
                  certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (3)(b) thereof; or

                               (G) if such beneficial interest is being
                  transferred pursuant to an effective registration statement
                  under the Securities Act, a certificate to the effect set
                  forth in Exhibit B hereto, including the certifications in
                  item (3)(c) thereof,

         the Unit Agent shall cause the aggregate number of the applicable
         Global Unit to be reduced accordingly pursuant to Section 3.6(g)
         hereof, and the Issuers shall execute and, upon receipt of a Unit
         Authentication Order, the Unit Agent shall authenticate and deliver to
         the Person designated in the instructions a Definitive Unit in the
         appropriate number. Any Definitive Unit issued in exchange for a
         beneficial interest in a Restricted Global Unit pursuant to this
         Section 3.6(c) shall be registered in such name or names and in such
         authorized denomination or denominations as the holder of such
         beneficial interest shall instruct the Unit Registrar through
         instructions from the Depositary and the Participant or Indirect
         Participant. The Unit Agent shall deliver such Definitive Units to the
         Persons in whose names such Units are so registered. Any Definitive
         Unit issued in exchange for a beneficial interest in a Restricted
         Global Unit pursuant to this Section 3.6(c) shall bear the Private
         Placement Legend and shall be subject to all restrictions on transfer
         contained therein.

                  Notwithstanding Sections 3.6(c)(A) and (C) hereof, a
beneficial interest in the Regulation S Temporary Global Unit may not be
exchanged for a Definitive Unit or transferred to a Person who takes delivery
thereof in the form of a Definitive Unit prior to (x) the expiration of the
Restricted Period and (y) the receipt by the Registrar of any certificates
required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act, except in
the case of a transfer pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 903 or Rule 904.

                  (d) TRANSFER AND EXCHANGE OF RESTRICTED DEFINITIVE UNITS TO
BENEFICIAL INTERESTS IN RESTRICTED GLOBAL Units. If any Holder of a Restricted
Definitive Unit proposes to exchange such Unit for a beneficial interest in a
Restricted Global Unit or to transfer such Restricted Definitive Units to a
Person who takes delivery thereof in the form of a beneficial interest in a
Restricted Global Unit, then, upon receipt by the Units Registrar of the
following documentation:

                               (A) if the Holder of such Restricted Definitive
                  Unit proposes to exchange such Unit for a beneficial interest
                  in a Restricted Global Unit, a certificate from such Holder in
                  the form of Exhibit C hereto, including the certifications in
                  item (1)(b) thereof;

                               (B) if such Restricted Definitive Unit is being
                  transferred to a QIB in accordance with Rule 144A under the
                  Securities Act, a certificate to the effect set forth in
                  Exhibit B hereto, including the certifications in item (1)
                  thereof;

                                       9
<PAGE>

                               (C) if such Restricted Definitive Unit is being
                  transferred to a Non-U.S. Person in an offshore transaction in
                  accordance with Rule 903 or Rule 904 under the Securities Act,
                  a certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (2) thereof;

                               (D) if such Restricted Definitive Unit is being
                  transferred pursuant to an exemption from the registration
                  requirements of the Securities Act in accordance with Rule 144
                  under the Securities Act, a certificate to the effect set
                  forth in Exhibit B hereto, including the certifications in
                  item (3)(a) thereof;

                               (E) if such Restricted Definitive Unit is being
                  transferred to an Institutional Accredited Investor in
                  reliance on an exemption from the registration requirements of
                  the Securities Act other than those listed in subparagraphs
                  (B) through (D) above, a certificate to the effect set forth
                  in Exhibit B hereto, including the certifications,
                  certificates and Opinion of Counsel required by item (3)
                  thereof, if applicable;

                               (F) if such Restricted Definitive Unit is being
                  transferred to the Issuers or any of their Subsidiaries, a
                  certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (3)(b) thereof; or

                               (G) if such Restricted Definitive Unit is being
                  transferred pursuant to an effective registration statement
                  under the Securities Act, a certificate to the effect set
                  forth in Exhibit B hereto, including the certifications in
                  item (3)(c) thereof,

         the Unit Agent shall cancel the Restricted Definitive Unit, increase or
         cause to be increased the number of, in the case of clause (A) above,
         the appropriate Restricted Global Unit, in the case of clause (B)
         above, the 144A Global Unit, in the case of clause (c) above, the
         Regulation S Global Unit.

                  (e) TRANSFER AND EXCHANGE OF RESTRICTED DEFINITIVE UNITS TO
RESTRICTED DEFINITIVE UNITS. Upon request by a Holder of Definitive Units and
such Holder's compliance with the provisions of this Section 3.6(e), the
Registrar shall register the transfer or exchange of Definitive Units. Prior to
such registration of transfer or exchange, the requesting Holder shall present
or surrender to the Unit Registrar the Definitive Units duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to the
Unit Registrar duly executed by such Holder or by his attorney, duly authorized
in writing. In addition, the requesting Holder shall provide any additional
certifications, documents and information, as applicable, required pursuant to
the following provisions of this Section 3.6(e).

                               Any Restricted Definitive Unit may be transferred
         to and registered in the name of Persons who take delivery thereof in
         the form of a Restricted Definitive Unit if the Unit Registrar receives
         the following:

                               (A) if the transfer will be made pursuant to Rule
                  144A under the Securities Act, then the transferor must
                  deliver a certificate in the form of Exhibit B hereto,
                  including the certifications in item (1) thereof;

                                       10
<PAGE>

                               (B) if the transfer will be made pursuant to Rule
                  903 or Rule 904, then the transferor must deliver a
                  certificate in the form of Exhibit B hereto, including the
                  certifications in item (2) thereof; and

                               (C) if the transfer will be made pursuant to any
                  other exemption from the registration requirements of the
                  Securities Act, then the transferor must deliver a certificate
                  in the form of Exhibit B hereto, including the certifications,
                  certificates and Opinion of Counsel required by item (3)
                  thereof, if applicable.

                  (f) LEGENDS. The following legends shall appear on the face of
all Global Units and Definitive Units issued under this Unit Agreement unless
specifically stated otherwise in the applicable provisions of this Unit
Agreement.

                        (i) PRIVATE PLACEMENT LEGEND. Each Global Unit and each
         Definitive Unit (and all Units issued in exchange therefor or
         substitution thereof) shall bear the legend in substantially the
         following form:

                  "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
                  ACT OF 1933 (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT
                  BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
                  PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN
                  ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION
                  REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF
                  SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE [INDENTURE] [WARRANT
                  AGREEMENT] PURSUANT TO WHICH THIS SECURITY IS ISSUED) AND IN
                  ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
                  THE UNITED STATES OR ANY OTHER JURISDICTION. EACH PURCHASER OF
                  THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
                  SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
                  SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
                  THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE
                  HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT
                  OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED
                  OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE
                  SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
                  (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
                  TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A
                  TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
                  SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN
                  PURCHASER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
                  904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER
                  EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
                  ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
                  REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE
                  REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH
                  ANY APPLICABLE SECURITIES

                                       11
<PAGE>

                  LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
                  JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
                  HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
                  SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH
                  IN (A) ABOVE."

                        (ii) GLOBAL UNIT LEGEND. Each Global Unit shall bear a
         legend in substantially the following form:

                           "THIS GLOBAL UNIT IS HELD BY THE DEPOSITARY (AS
                  DEFINED IN THE UNIT AGREEMENT GOVERNING THIS UNIT) OR ITS
                  NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS
                  HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
                  CIRCUMSTANCES EXCEPT THAT (I) THE UNIT AGENT MAY MAKE SUCH
                  NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 3.6 OF
                  THE UNIT AGREEMENT, (II) THIS GLOBAL UNIT MAY BE EXCHANGED IN
                  WHOLE BUT NOT IN PART PURSUANT TO SECTION 3.6(A) OF THE UNIT
                  AGREEMENT, (III) THIS GLOBAL UNIT MAY BE DELIVERED TO THE UNIT
                  AGENT FOR CANCELLATION PURSUANT TO SECTION 3.11 OF THE UNIT
                  AGREEMENT AND (IV) THIS GLOBAL UNIT MAY BE TRANSFERRED TO A
                  SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE
                  COMPANY."

                        (iii) REGULATION S TEMPORARY GLOBAL UNIT LEGEND. The
         Regulation S Temporary Global Unit shall bear a legend in substantially
         the following form:

                           "THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY
                  GLOBAL UNIT, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS
                  EXCHANGE FOR CERTIFICATED UNITS, ARE AS SPECIFIED IN THE UNIT
                  AGREEMENT. NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF
                  THIS REGULATION S TEMPORARY GLOBAL UNIT SHALL BE ENTITLED TO
                  RECEIVE PAYMENT OF INTEREST HEREON."

                  (g) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL UNITS. At such
time as all beneficial interests in a particular Global Unit have been exchanged
for Definitive Units or a particular Global Unit has been redeemed, repurchased
or canceled in whole and not in part, each such Global Unit shall be returned to
or retained and canceled by the Unit Agent in accordance with Section 3.11
hereof. At any time prior to such cancellation, if any beneficial interest in a
Global Unit is exchanged for or transferred to a Person who will take delivery
thereof in the form of a beneficial interest in another Global Unit or for
Definitive Units, the aggregate number of Units represented by such Global Unit
shall be reduced accordingly and an endorsement shall be made on such Global
Unit by the Unit Agent or by the Depositary at the direction of the Unit Agent
to reflect such reduction; and if the beneficial interest is being exchanged for
or transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Unit, such other Global Unit shall be
increased accordingly and an endorsement shall be made on such Global Unit by
the Unit Agent or by the Depositary at the direction of the Unit Agent to
reflect such increase.

                                       12
<PAGE>

                  (h) GENERAL PROVISIONS RELATING TO TRANSFERS AND EXCHANGES.

                        (i) To permit registrations of transfers and exchanges,
         the Issuers shall execute and the Unit Agent shall authenticate Global
         Units and/or Definitive Units upon the Issuers' order or at the Unit
         Registrar's request.

                        (ii) No service charge shall be made to a holder of a
         beneficial interest in a Global Unit or to a Holder of a Definitive
         Unit for any registration of transfer or exchange, but the Issuers may
         require payment of a sum sufficient to cover any transfer tax or
         similar governmental charge payable in connection therewith (other than
         any such transfer taxes or similar governmental charge payable upon
         exchange or transfer pursuant to Section 3.10 hereof).

                        (iii) The Unit Registrar shall not be required to
         register the transfer of or exchange any Unit selected for redemption
         in whole or in part, except the unredeemed portion of any Unit being
         redeemed in part.

                        (iv) All Global Units and/or Definitive Units issued
         upon any registration of transfer or exchange of Global Units or
         Definitive Units shall be the valid obligations of the Issuers,
         evidencing the same right or debt and entitled to the same benefits
         under this Unit Agreement, as the Global Units or Definitive Units
         surrendered upon such registration of transfer or exchange.

                        (v) Prior to due presentment for the registration of a
         transfer of any Unit, the Unit Agent, any Agent and the Issuers may
         deem and treat the Person in whose name any Unit is registered as the
         absolute owner of such Unit for the purpose of receiving payment of
         principal of and interest and Liquidated Damages, if any, on such Units
         and for all other purposes, and none of the Unit Agent, any Agent or
         the Issuers shall be affected by notice to the contrary.

                        (vi) The Unit Agent shall countersign Global Units
         and/or Definitive Units in accordance with the provisions of Section
         3.2 hereof.

                        (vii) All certifications, certificates and Opinions of
         Counsel required to be submitted to the Registrar pursuant to this
         Section 3.6 to effect a registration of transfer or exchange may be
         submitted by facsimile.

                  Section 3.7. REPLACEMENT UNITS. If any mutilated Unit is
surrendered to the Unit Agent or the Issuers and the Unit Agent and the Issuers
receives evidence to their satisfaction of the destruction, loss or theft of any
Unit and the Issuers shall issue and the Unit Agent, upon receipt of an order to
authenticate the Units, shall authenticate a replacement Unit if the Unit
Agent's requirements are met. If required by the Unit Agent or the Issuers, an
indemnity bond must be supplied by the Holder that is sufficient in the judgment
of the Unit Agent and the Issuers to protect the Issuers, the Unit Agent, any
Agent and any authenticating agent from any loss that any of them may suffer if
a Unit is replaced. The Issuers may charge for their expenses in replacing a
Unit.

                  Every replacement Unit is an additional obligation of the
Issuers and the Guarantor and shall be entitled to all of the benefits of this
Unit Agreement equally and proportionately with all other Units duly issued
hereunder.

                                       13
<PAGE>

                  Section 3.8. OUTSTANDING UNITS. The Units outstanding at any
time are all the Units authenticated by the Unit Agent except for those canceled
by it, those delivered to it for cancellation, those reductions in the interest
in a Global Unit effected by the Unit Agent in accordance with the provisions
hereof, and those described in this Section as not outstanding. Except as set
forth in Section 3.9 hereof, a Unit does not cease to be outstanding because the
Issuers or an Affiliate of the Issuers holds the Unit.

                  If a Unit is replaced pursuant to Section 3.7 hereof, it
ceases to be outstanding unless the Unit Agent receives proof satisfactory to it
that the replaced Unit is held by a bona fide purchaser.

                  If the principal amount of any Note is considered paid under
Section 4.01 of the Indenture, it ceases to be outstanding and interest on it
ceases to accrue.

                  If the Paying Agent (other than the Issuers, a Subsidiary or
an Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.

                  Section 3.9. TREASURY UNITS. In determining whether the
Holders of the required amount of Units have concurred in any direction,
waiver or consent, Units owned by the Issuers, or by any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Issuers, shall be considered as though not outstanding,
except that for the purposes of determining whether the Unit Agent shall be
protected in relying on any such direction, waiver or consent, only Units
that the Unit Agent knows are so owned shall be so disregarded.

                  Section 3.10. TEMPORARY UNITS. Until certificates representing
Units are ready for delivery, the Issuers may prepare and the Unit Agent, upon
receipt of a Unit Authentication Order, shall authenticate temporary Units.
Temporary Units shall be substantially in the form of certificated Units but may
have variations that the Issuers consider appropriate for temporary Units and as
shall be reasonably acceptable to the Unit Agent. Without unreasonable delay,
the Issuers shall prepare and, upon receipt of a Unit Authentication Order, the
Unit Agent shall authenticate Definitive Units in exchange for temporary Units.

                  Holders of temporary Units shall be entitled to all of the
benefits of this Unit Agreement.

                  Section 3.11. CANCELLATION. The Issuers at any time may
deliver Units to the Unit Agent for cancellation. The Registrar and Paying Agent
shall forward to the Unit Agent any Units surrendered to them for registration
of transfer, exchange or payment. The Unit Agent and no one else shall cancel
all Units surrendered for registration of transfer, exchange, payment,
replacement or cancellation and shall destroy canceled Units (subject to the
record retention requirement of the Exchange Act). Certification of the
destruction of all canceled Units shall be delivered to the Issuers. The Issuers
may not issue new Units to replace Units that it has paid or that have been
delivered to the Unit Agent for cancellation.

                  Section 4. RIGHTS OF UNIT HOLDERS. The registered owner of a
Unit Certificate shall have all the rights and privileges of a registered owner
of the aggregate principal amount of Notes represented thereby and the number of
Warrants represented thereby and shall be treated as the registered owner
thereof for all purposes.

                                       14
<PAGE>

                  Section 5. UNIT AGENT. The Unit Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by which the Issuers and the holders of Units, by their acceptance
thereof, shall be bound:

                  (a) The statements contained herein and in the Unit
Certificates shall be taken as statements of the Issuers, and the Unit Agent
assumes no responsibility for the correctness of any of the same except such as
expressly describe the Unit Agent. The Unit Agent assumes no responsibility with
respect to the distribution of the Unit Certificates except as herein otherwise
specifically provided.

                  (b) The Unit Agent shall not be responsible for any failure of
the Issuers to comply with any of the covenants in this Unit Agreement, the Unit
Certificates, the Warrant Agreements or the Indenture. The Unit Agent shall not
be required to ascertain in any manner whether the Applicable Procedures or
securities laws are being complied with.

                  (c) The Unit Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Issuers and the Guarantor) and
the Unit Agent shall incur no liability or responsibility to the Issuers or to
any holder of any Unit in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with the opinion or the advice of such
counsel.

                  (d) The Unit Agent shall incur no liability or responsibility
to the Issuers or to any holder of any Unit Certificate for any action taken in
reliance on any Unit Certificate, certificate of shares, notice, resolution,
waiver, consent, order, certificate, or other paper, document or instrument
believed by the Unit Agent to be genuine and to have been signed, sent or
presented by the proper party or parties.

                  (e) The Issuers agree to pay to the Unit Agent compensation
for all services rendered by the Unit Agent in connection with the execution and
performance of this Unit Agreement at such rates as have been separately agreed
to by the Issuers and the Unit Agent and to reimburse the Unit Agent for all
expenses, taxes and governmental charges and other charges of any kind and
nature incurred by the Unit Agent in the execution and performance of this Unit
Agreement. The Issuers shall indemnify the Unit Agent and its agents and save
each of them harmless against any and all losses, liabilities and expenses,
including judgments, costs and reasonable counsel fees and the costs and
reasonable expenses of investigating or defending any claim of such liability,
for any action taken or omitted by the Unit Agent or its agents in the execution
of and performance of its obligations under this Unit Agreement except as a
result of its negligence, willful misconduct or bad faith. The Unit Agent shall
notify the Issuers promptly of any claim for which it may seek indemnity;
PROVIDED that failure by the Unit Agent to so notify the Issuers shall not
relieve its obligations hereunder, except to the extent the Issuers are
materially prejudiced as a result of such failure. The Issuers shall defend the
claim and the Unit Agent shall cooperate in the defense at the Issuers' expense;
PROVIDED that the Issuers must consult with the Unit Agent with respect to the
conduct of such defense. The Unit Agent may have separate counsel reasonably
acceptable to the Issuers, and the Issuers shall pay the reasonable fees and
expenses of such counsel. The Issuers need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.

                  (f) The Unit Agent shall be under no obligation to consider
instituting any action, suit or legal proceeding or taking any other action
likely to involve expense unless the Issuers or one or more registered holders
of Unit Certificates shall furnish the Unit Agent with security and indemnity
reasonably satisfactory to it for any costs and expenses which may be incurred,
but this provision shall not affect the power of the Unit Agent to take such
action as it may consider proper, whether with or

                                       15
<PAGE>

without any such security or indemnity. All rights of action under this Unit
Agreement or under any of the Units may be enforced by the Unit Agent without
the possession of any of the Unit Certificates or the production thereof at any
trial or other proceeding relative thereto, and any such action, suit or
proceeding instituted by the Unit Agent shall be brought in its name as Unit
Agent and any recovery of judgment shall be for the ratable benefit of the
registered holders of the Units, as their respective rights or interests may
appear.

                  (g) The Unit Agent, and any stockholder, director, officer or
employee of it, may buy, sell or deal in any of the Units or other securities of
the Issuers or become pecuniarily interested in any transaction in which the
Issuers may be interested, or contract with or lend money to the Issuers or
otherwise act as fully and freely as though it were not the Unit Agent under
this Unit Agreement. Nothing herein shall preclude the Unit Agent from acting in
any other capacity for the Issuers or for any other legal entity.

                  (h) The Unit Agent shall act hereunder solely as agent for the
Issuers, its duties shall be determined solely by the provisions hereof and no
implied covenants or obligations shall be read into this Unit Agreement against
the Unit Agent. The Unit Agent shall not be liable for anything which it may do
or refrain from doing in connection with this Unit Agreement except for its own
negligence, willful misconduct or bad faith.

                  Section 6. CHANGE OF UNIT AGENT. The Unit Agent may resign at
any time by so notifying the Issuers. If the Unit Agent shall resign or become
incapable of acting as Unit Agent, the Issuers shall appoint a successor to such
Unit Agent. If the Issuers shall fail to make such appointment within a period
of 30 days after they have been notified in writing of such incapacity or
resignation by the Unit Agent or by the registered holder of a Unit Certificate,
then the registered holder of any Unit Certificate or the Unit Agent may apply
to any court of competent jurisdiction for the appointment of a successor to the
Unit Agent. Pending appointment of a successor to such Unit Agent, either by the
Issuers or by such a court, the duties of the Unit Agent shall be carried out by
the Issuers. After appointment, the successor to the Unit Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Unit Agent without further act or deed; but the former Unit
Agent, after the payment of all outstanding amounts owed to it hereunder, shall
deliver and transfer to the successor to the Unit Agent any property at the time
held by it hereunder and execute and deliver any further assurance, conveyance,
act or deed necessary for such purpose. Failure to give any notice provided for
in this Section 6, however, or any defect therein, shall not affect the legality
or validity of the appointment of a successor to the Unit Agent. The provisions
of Section 5 with respect to any Unit Agent shall survive such Unit Agents
resignation or removal and the termination of this Agreement.

                  Section 7. SUCCESSOR UNIT AGENT BY MERGER, ETC. If the Unit
Agent consolidates with, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
resulting, surviving or transferee corporation without any further act shall, if
such resulting, surviving or transferee corporation is otherwise eligible
hereunder, be the successor Unit Agent.

                  Section 8. NOTICES TO THE ISSUERS AND UNIT AGENT, TRUSTEE,
WARRANT AGENT AND TRANSFER AGENT. Any notice or demand authorized by this
Agreement to be given or made to or on the Issuers shall be sufficiently given
or made when and if telecopied to the number indicated below or deposited in the
mail, first class or registered, postage paid, addressed (until another telecopy
number or address is filed in writing by the Issuers with the Unit Agent, the
Trustee and the Warrant Agent), as follows:

                                       16
<PAGE>

                  O'Sullivan Industries, Inc.
                  O'Sullivan Industries Holdings, Inc.
                  1900 Gulf Street
                  Lamar, Missouri 64759
                  Telecopier No.: (417) 682-8113
                  Attention:  Rowland H. Geddie, III, Esq.

         With a copy to:

                  Kirkland & Ellis
                  International Financial Centre
                  Old Broad Street
                  London EC2N 1HQ, UK
                  Telecopier No.:  44 171 816-8800
                  Attention:  M. Gilbey Strub, Esq.

                  In case the Issuers shall fail to maintain such office or
shall fail to give such notice of any change in the location thereof,
presentations may be made and notices and demands may be served at the principal
office of the Unit Agent.

                  Any notice pursuant to this Unit Agreement to be given by the
Issuers or by registered holder(s) of any Unit Certificate to the Unit Agent,
the Trustee or the Warrant Agent shall be sufficiently given when and if
telecopied to the number indicated below or deposited in the mail, first class
or registered, postage prepaid, addressed (until another telecopy number or
address is filed in writing by the Unit Agent, the Trustee and the Warrant Agent
with the Issuers), as follows:

                  Norwest Bank Minnesota, National Association
                  N9303-120
                  Sixth and Marquette
                  Minneapolis, MN  55479
                  Facsimile No.: (612) 667-9825
                  Attention:  Corporate Trust Services

                  Any notice to be mailed to a registered holder of Units shall
be mailed to each holder at its address as it appears on the register of Units
maintained by the Unit Agent. Copies of any such communication shall also be
mailed to the Unit Agent, the Trustee and the Warrant Agent. The Unit Agent
shall furnish the Issuers, the Trustee or the Warrant Agent promptly when
requested with a list of registered holders of Units for the purpose of mailing
any notice or communication to the registered holders of the Units, the Notes or
the Warrants and at such other times as may be reasonably requested.

                  Section 9. SUPPLEMENTS AND AMENDMENTS. The Issuers and the
Unit Agent may from time to time supplement or amend this Unit Agreement without
the approval of any registered holders of Units in order to cure any ambiguity
or to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provision herein, or to make any other
provisions in regard to matters or questions arising hereunder which the
Issuers, the Trustee, the Warrant Agent and the Unit Agent may deem necessary or
desirable and which shall not, as evidenced by an opinion of counsel delivered
to the Unit Agent, the Trustee and the Warrant Agent, in any way adversely
affect the interests of the registered holders of Units. Any amendment or
supplement to this Unit Agreement that has a material adverse effect on the
interests of Unit holders shall require the written consent of the registered

                                       17
<PAGE>

holders of not less than a majority of the outstanding Units. Each of the Unit
Agent, the Trustee and the Warrant Agent shall be entitled to receive and,
subject to Section 5, shall be fully protected in relying upon an officers'
certificate and opinion of counsel as conclusive evidence that any such
amendment or supplement is authorized or permitted hereunder, that it is not
inconsistent herewith, and that it will be valid and binding upon the Issuers in
accordance with its terms. The Issuers may not sign any amendment or supplement
until the Issuers' board of directors approves it.

                  Section 10. SUCCESSORS. All the covenants and provisions of
this Unit Agreement by or for the benefit of the Issuers, the Trustee, the
Warrant Agent or the Unit Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.

                  Section 11. GOVERNING LAW. THIS UNIT AGREEMENT AND EACH UNIT
CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.

                  Section 12. BENEFITS OF THIS UNIT AGREEMENT. Nothing in this
Unit Agreement shall be construed to give to any person or corporation other
than the Issuers, the Trustee, the Warrant Agent, the Unit Agent and the
registered holders of the Units any legal or equitable right, remedy or claim
under this Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Issuers, the Trustee, the Warrant Agent, the Unit Agent and the
registered holders of the Unit Certificates.

                  Section 13. COUNTERPARTS. This Unit Agreement may be executed
in any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.

                  Section 14. HEADINGS. The headings in this Unit Agreement are
for convenience of reference only and shall not limit or otherwise affect the
meaning of any provision hereof.

                  Section 15. SEVERABILITY. The provisions of this Unit
Agreement are severable, and if any clause or provision shall be held invalid,
illegal or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall affect in that jurisdiction only such
clause or provision, or part thereof, and shall not in any manner affect such
clause or provision in any other jurisdiction or any other clause or provision
of this Unit Agreement in any jurisdiction.

                  Section 16. TERMINATION. This Unit Agreement shall terminate
and be of no further force and effect upon the 30th day following the Separation
Date, unless extended in writing by all the parties hereto.

                            [SIGNATURE PAGE FOLLOWS]

                                       18
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this Unit
Agreement to be duly executed, as of the day and year first above written.

                                      O'SULLIVAN INDUSTRIES, INC.

                                      By: /s/ Richard D. Davidson
                                         ------------------------------------
                                         Name:
                                         Title:

                                      O'SULLIVAN INDUSTRIES HOLDINGS, INC.

                                      By: /s/ Richard D. Davidson
                                         ------------------------------------
                                         Name:
                                         Title:

                                       NORWEST BANK MINNESOTA, NATIONAL
                                       ASSOCIATION
                                         as Unit Agent

                                      By: /s/ Timothy P. Mowdy
                                         ------------------------------------
                                          Name:
                                          Title:

                                       NORWEST BANK MINNESOTA, NATIONAL
                                       ASSOCIATION
                                         as Trustee

                                      By: /s/ Timothy P. Mowdy
                                         ------------------------------------
                                          Name:
                                          Title:

                                       NORWEST BANK MINNESOTA, NATIONAL
                                       ASSOCIATION
                                         as Warrant Agent

                                      By: /s/ Timothy P. Mowdy
                                         ------------------------------------
                                          Name:
                                          Title:

<PAGE>

                                       O'SULLIVAN INDUSTRIES - VIRGINIA, INC.

                                      By: /s/ Richard D. Davidson
                                         ------------------------------------
                                          Name:
                                          Title:<PAGE>
                                                                    EXHIBIT 10.5

Prepared by and after recording return to:

Latham & Watkins
885 Third Avenue
New York, New York 10022
Attn:  Wylie S. Allen, Esq.

                 DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
                      SECURITY AGREEMENT AND FIXTURE FILING

                                      from

                     O'SULLIVAN INDUSTRIES - VIRGINIA, INC.,
                                   as Trustor

                                       to

                           JAMES D. KEPLEY, JR., ESQ.,
                                   as Trustee

                               for the benefit of

                          LEHMAN COMMERCIAL PAPER INC.,
                    as Administrative Agent and Beneficiary,
                                 as Beneficiary

                         DATED AS OF November 30 , 1999

<PAGE>
                                                                        Virginia

                 DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
                      SECURITY AGREEMENT AND FIXTURE FILING

THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING, dated as of November 30, 1999, is made by
O'SULLIVAN INDUSTRIES -VIRGINIA, INC., a Virginia corporation ("TRUSTOR"), whose
address is 1900 Gulf Street, Lamar, Missouri 64759-1899, to James D. Kepley,
Jr., Esq. ("TRUSTEE"), whose address is 7201 Glen Forest Drive, Suite 102,
Richmond, VA 23226, for the benefit of LEHMAN COMMERCIAL PAPER INC., as
Administrative Agent for the Lenders referred to below and for the other Secured
Parties (in such capacity and herein, "BENEFICIARY"), having its address c/o 3
World Financial Center, New York, New York 10285, Attention: Michael O'Brien.
References to this "MORTGAGE" shall mean this instrument and any and all
renewals, modifications, amendments, supplements, extensions, consolidations,
substitutions, spreaders and replacements of this instrument.

                                   BACKGROUND

         A. Trustor has entered into the Credit Agreement dated as of the date
hereof (as the same may be amended, supplemented, replaced or otherwise modified
from time to time, the "CREDIT AGREEMENT") with the several banks and other
financial institutions and other entities from time to time parties thereto (the
"LENDERS"), Lehman Brothers Inc., as advisor, lead arranger and book manager,
and Lehman Commercial Paper Inc., as syndication agent and as administrative
agent. The terms of the Credit Agreement are incorporated by reference in this
Mortgage as if the terms thereof were fully set forth herein. In the event of
any conflict between the provisions of this Mortgage and the provisions of the
Credit Agreement, the applicable provisions of the Credit Agreement shall govern
and control, PROVIDED, that in the case of a provision in this Mortgage which is
more specific and detailed than the related provision in the Credit Agreement
(including by way of illustration, the sections of this Mortgage entitled
"LEASES" and "INSURANCE"), such Mortgage provision shall not be deemed to be in
conflict with the related provision in the Credit Agreement.

         Capitalized terms not otherwise defined herein shall have the meanings
ascribed thereto in the Credit Agreement. References in this Mortgage to the
"DEFAULT RATE" shall mean the interest rate provided in subsection 2.15(c) of
the Credit Agreement.

         B. Trustor is the owner of (i) the fee simple estate in the parcel(s)
of real property, described on "EXHIBIT A" attached hereto (the "LAND"; such
real property, together with all buildings, improvements, structures and
fixtures now or subsequently located thereon (the "IMPROVEMENTS"); the Land and
the Improvements being collectively referred to as the "REAL ESTATE").

         C. Pursuant to the terms and conditions of the Credit Agreement, INTER
ALIA: (1) the Term Loan Lenders have severally agreed to make certain Term Loans
to Trustor in an aggregate principal amount of up to $125,000,000 on the Closing
Date; (2) the Revolving Credit Lenders have severally agreed to make certain
Revolving Credit Loans to Trustor in an aggregate

<PAGE>

principal amount of up to $35,000,000; (3) the Issuing Lender has agreed to
issue, and the other Revolving Credit Lenders who are L/C Participants have
severally agreed to acquire participating interests in, certain Letters of
Credit for the account of Trustor, PROVIDED that the sum of (i) the aggregate
then undrawn and unexpired amount of the then outstanding Letters of Credit and
(ii) the aggregate amount of drawings under Letters of Credit which have not
then been reimbursed pursuant to Section 3.5 of the Credit Agreement shall not
exceed $20,000,000; and (4) the Swing Line Lender has agreed to make, and the
other Revolving Credit Lenders have severally agreed to acquire participating
interests in, Swing Line Loans to Trustor in an aggregate principal amount of up
to $10,000,000. The maximum aggregate principal amount of the Loans and the L/C
Obligations outstanding at any one time shall not exceed $160,000,000.

         D. The obligations of the Lenders to make the Loans and to issue and
participate in Letters of Credit and of the Secured Parties to enter into any
Specified Hedge Agreement are conditioned upon, among other things, the
execution and delivery by Trustor of this Mortgage.

                                GRANTING CLAUSES

         For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Trustor agrees that to secure:

         (a)      repayment of the principal of and payment of interest
                  (including, without limitation, interest accruing after the
                  maturity of the Loans and interest accruing at the then
                  applicable rate provided in the Credit Agreement after the
                  filing of any petition in bankruptcy, or the commencement of
                  any insolvency, reorganization or like proceeding, relating to
                  Trustor, whether or not a claim for post-filing or
                  post-petition interest is allowed in such proceeding) on the
                  Loans made by each Lender to, and the Notes, if any, held by
                  each Lender of, Trustor;

         (b)      payment of all Reimbursement Obligations (including, without
                  limitation, interest accruing after the maturity of the
                  Reimbursement Obligations and interest accruing at the then
                  applicable rate provided in the Credit Agreement after the
                  filing of any petition in bankruptcy, or the commencement of
                  any insolvency, reorganization or like proceeding, relating to
                  Trustor, whether or not a claim for post-filing or
                  post-petition interest is allowed in such proceeding) with
                  respect to drawings under the Letters of Credit;

         (c)      payment and performance by Trustor of all its obligations and
                  liabilities, whether direct or indirect, absolute or
                  contingent, due or to become due, or now existing or
                  hereinafter incurred, under, arising out of or otherwise in
                  connection with the Guarantee and Collateral Agreement;

         (d)      payment and performance of all obligations under any Specified
                  Hedge Agreement;

         (e)      payment of all other obligations and liabilities of Trustor to
                  Beneficiary and the Secured Parties, whether direct or
                  indirect, absolute or contingent, due or to become due, or now
                  existing or hereafter incurred, which may arise under, out of,
                  or in connection with, the Credit Agreement, the Notes, the
                  Letters of Credit, the

                                       2
<PAGE>

                  Guarantee and Collateral Agreement, any Specified Hedge
                  Agreement, this Mortgage, the other Loan Documents or any
                  other document made, delivered or given in connection herewith
                  or therewith, in each case whether on account of principal,
                  interest, reimbursement obligations, fees, indemnities, costs,
                  expenses or otherwise (including, without limitation, all
                  reasonable fees and disbursements of counsel to Beneficiary or
                  to the Secured Parties that are required to be paid by Trustor
                  pursuant to the terms of the Credit Agreement, this Mortgage,
                  any Specified Hedge Agreement, or any other Loan Documents)
                  (the items set forth in clauses (a) through (e) collectively
                  referred to herein as the "INDEBTEDNESS"); and

         (f)      the performance and observance of each obligation, term,
                  covenant and condition to be performed or observed by Trustor
                  (the "OBLIGATIONS") under, in connection with or pursuant to
                  the provisions of the Credit Agreement, the Notes, the Letters
                  of Credit, the Guarantee and Collateral Agreement, any
                  Specified Hedge Agreement, this Mortgage and any of the other
                  Security Documents or any of the other Loan Documents;

TRUSTOR HAS GRANTED, CONVEYED, BARGAINED, SOLD, ALIENED, ENFEOFFED, RELEASED,
CONFIRMED, MORTGAGED, ASSIGNED AND WARRANTED, AND HEREBY GRANTS, CONVEYS,
BARGAINS, SELLS, ALIENS, ENFEOFFS, RELEASES, CONFIRMS, MORTGAGES, ASSIGNS AND
WARRANTS IRREVOCABLY UNTO TRUSTEE, IN TRUST FOREVER FOR THE BENEFIT OF
BENEFICIARY WITH A POWER OF SALE AND A RIGHT OF ENTRY AS PROVIDED BY THIS
MORTGAGE, THE FOLLOWING PROPERTY OF TRUSTOR:

                  (A) the Real Estate;

                  (B) all the estate, right, title, claim or demand whatsoever
         of Trustor, in possession or expectancy, in and to the Real Estate or
         any part thereof;

                  (C) all right, title and interest of Trustor in, to and under
         all easements, rights of way, gores of land, streets, ways, alleys,
         passages, sewer rights, waters, water courses, water and riparian
         rights, development rights, air rights, mineral rights and all estates,
         rights, titles, interests, privileges, licenses, tenements,
         hereditaments and appurtenances belonging, relating or appertaining to
         the Real Estate, and any reversions, remainders, rents, issues, profits
         and revenue thereof and all land lying in the bed of any street, road
         or avenue, in front of or adjoining the Real Estate to the center line
         thereof;

                  (D) all of the fixtures, chattels, business machines,
         machinery, apparatus, equipment, furnishings, fittings and articles of
         personal property of every kind and nature whatsoever, and all
         appurtenances and additions thereto and substitutions or replacements
         thereof (together with, in each case, attachments, components, parts
         and accessories) currently owned or subsequently acquired by Trustor
         and now or subsequently attached to, or contained in or used or usable
         in any way in connection with any operation or letting of the Real
         Estate, including but without limiting the generality of the foregoing,
         all screens, awnings, shades, blinds, curtains, draperies, artwork,
         carpets, rugs, storm doors and windows, furniture and furnishings,
         heating, electrical, and mechanical

                                       3
<PAGE>

         equipment, lighting, switchboards, plumbing, ventilating, air
         conditioning and air-cooling apparatus, refrigerating, and incinerating
         equipment, escalators, elevators, loading and unloading equipment and
         systems, stoves, ranges, laundry equipment, cleaning systems (including
         window cleaning apparatus), telephones, communication systems
         (including satellite dishes and antennae), televisions, computers,
         sprinkler systems and other fire prevention and extinguishing apparatus
         and materials, security systems, motors, engines, machinery, pipes,
         pumps, tanks, conduits, appliances, fittings and fixtures of every kind
         and description (all of the foregoing in this paragraph(D),
         collectively referred to herein as the "EQUIPMENT");

                  (E) all right, title and interest of Trustor in and to all
         substitutes and replacements of, and all additions and improvements to,
         the Real Estate and the Equipment, subsequently acquired by or released
         to Trustor or constructed, assembled or placed by Trustor on the Real
         Estate, immediately upon such acquisition, release, construction,
         assembling or placement, including, without limitation, any and all
         building materials whether stored at the Real Estate or offsite, and,
         in each such case, without any further Mortgage, conveyance, assignment
         or other act by Trustor;

                  (F) all right, title and interest of Trustor in, to and under
         all leases, subleases, underlettings, concession agreements, management
         agreements, licenses and other agreements relating to the use or
         occupancy of the Real Estate or the Equipment or any part thereof, now
         existing or subsequently entered into by Trustor and whether written or
         oral and all guarantees of any of the foregoing (collectively, as any
         of the foregoing may be amended, restated, extended, renewed or
         modified from time to time, the "LEASES"), and all rights of Trustor in
         respect of cash and securities deposited thereunder and the right
         ------- to receive and collect the revenues, income, rents, issues and
         profits thereof, together with all other rents, royalties, issues,
         profits, revenue, income and other benefits arising from the use and
         enjoyment of the Mortgaged Property (as defined below) (collectively,
         the "RENTS"); -----

                  (G) all trade names, trade marks, logos, copyrights, other
         intellectual property, good will and books and records relating to or
         used in connection with the operation of the Real Estate or the
         Equipment or any part thereof; all general intangibles related to the
         operation of the Improvements now existing or hereafter arising;

                  (H) all unearned premiums under insurance policies now or
         subsequently obtained by Trustor relating to the Real Estate or
         Equipment and Trustor's interest in and to all proceeds of any such
         insurance policies (including title insurance policies) including the
         right to collect and receive such proceeds, subject to the provisions
         relating to insurance generally set forth below; and all awards and
         other compensation, including the interest payable thereon and the
         right to collect and receive the same, made to the present or any
         subsequent owner of the Real Estate or Equipment for the taking by
         eminent domain, condemnation or otherwise, of all or any part of the
         Real Estate or any easement or other right therein;

                  (I) all right, title and interest of Trustor in and to (i) all
         contracts from time to time executed by Trustor or any manager or agent
         on its behalf relating to the ownership,

                                       4
<PAGE>

         construction, maintenance, repair, operation, occupancy, sale or
         financing of the Real Estate or Equipment or any part thereof and all
         agreements relating to the purchase or lease of any portion of the Real
         Estate or any property which is adjacent or peripheral to the Real
         Estate, together with the right to exercise such options and all leases
         of Equipment (collectively, the "CONTRACTS"), (ii) all consents,
         licenses, building permits, certificates of occupancy and other
         governmental approvals relating to construction, completion, occupancy,
         use or operation of the Real Estate or any part thereof (collectively,
         the "PERMITS") and (iii) all drawings, plans, specifications and
         similar or related items relating to the Real Estate (collectively, the
         "PLANS");

                  (J) any and all monies now or subsequently on deposit for the
         payment of real estate taxes or special assessments against the Real
         Estate or for the payment of premiums on insurance policies covering
         the foregoing property or otherwise on deposit with or held by
         Beneficiary as provided in this Mortgage; and

                  (K) all proceeds, both cash and noncash, of the foregoing;

         (All of the foregoing property and rights and interests now owned or
held or subsequently acquired by Trustor and described in the foregoing clauses
(A) through (E) are collectively referred to as the "PREMISES", and those
described in the foregoing clauses (A) through (K) are collectively referred to
as the "MORTGAGED PROPERTY").

         TO HAVE AND TO HOLD the Mortgaged Property and the rights and
privileges hereby mortgaged unto Trustee forever, in trust for the benefit of
Beneficiary, its successors and assigns for the uses and purposes set forth,
until the Indebtedness is fully paid and all of the Obligations are fully
performed. PROVIDED ALWAYS, that if Trustor shall promptly and fully pay all of
the Indebtedness in immediately available funds and perform all of the
Obligations, then the estate hereby granted shall cease, terminate and become
void (and, upon Trustor's request and at Trustor's expense, Beneficiary shall
execute and acknowledge a recordable release or reconveyance of this Deed of
Trust); PROVIDED; HOWEVER, that Trustor's obligation to indemnify and hold
Beneficiary harmless pursuant to the provisions hereof with respect to matters
relating to any period of time during which the Deed of Trust was in effect
shall survive any such payment or release.

                              TERMS AND CONDITIONS

         Trustor further represents, warrants, covenants and agrees with
Beneficiary as follows:

         1. WARRANTY OF TITLE. Trustor warrants that it has good and marketable
record title in fee simple to the Real Estate, and good title to the rest of the
Mortgaged Property, subject only to the matters that are set forth in Schedule B
of the title insurance policy or policies being issued to Beneficiary to insure
the lien of this Mortgage and any other lien as permitted by Section 7.3 of the
Credit Agreement (the "PERMITTED EXCEPTIONS"). Trustor shall warrant, defend and
preserve such title and the lien of this Mortgage against all claims of all
persons and entities. Trustor represents and warrants that it has the full
power, authority and legal right to mortgage, grant, bargain, sell, transfer and
convey the Mortgaged Property pursuant to the terms hereof.

                                       5
<PAGE>

         2. PAYMENT OF INDEBTEDNESS. Trustor shall pay the Indebtedness at the
times and places and in the manner specified in the Notes, the Credit Agreement,
the Guarantee and Collateral Agreement and in any Hedge Agreement, and shall
perform all the Obligations.

         3. REQUIREMENTS.

         (a) Trustor shall promptly comply with, or cause to be complied with,
and conform to all present and future laws, statutes, codes, ordinances, orders,
judgments, decrees, rules, regulations and requirements, and irrespective of the
nature of the work to be done, of each of the United States of America, any
State and any municipality, local government or other political subdivision
thereof and any agency, department, bureau, board, commission or other
instrumentality of any of them, now existing or subsequently created
(collectively, "GOVERNMENTAL AUTHORITY") which has jurisdiction over the
Mortgaged Property and all covenants, restrictions and conditions now or later
of record which may be applicable to any of the Mortgaged Property, or to the
use, manner of use, occupancy, possession, operation, maintenance, alteration,
repair or reconstruction of any of the Mortgaged Property, except to the extent
that failure to comply therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect. All present and future laws,
statutes, codes, ordinances, orders, judgments, decrees, rules, regulations and
requirements of every Governmental Authority applicable to Trustor or to any of
the Mortgaged Property and all covenants, restrictions, and conditions which now
or later may be applicable to any of the Mortgaged Property are collectively
referred to as the "LEGAL REQUIREMENTS".

         (b) From and after the date of this Mortgage, Trustor shall not by act
or omission permit any building or other improvement on any premises not subject
to the lien of this Mortgage to rely on the Premises or any part thereof or any
interest therein to fulfill any Legal Requirement, and Trustor hereby assigns to
Beneficiary any and all rights to give consent for all or any portion of the
Premises or any interest therein to be so used. Trustor shall not by act or
omission impair the integrity of any of the Real Estate as a single zoning lot
separate and apart from all other premises. Trustor represents that each parcel
of the Real Estate constitutes a legally subdivided lot, in compliance with all
subdivision laws and similar Legal Requirements. Any act or omission by Trustor
which would result in a violation of any of the provisions of this subsection
shall be void.

         (c) PAYMENT OF TAXES AND OTHER IMPOSITIONS. (a) Promptly when due, but
in any event before any delinquency occurs, Trustor shall pay and discharge all
taxes of every kind and nature (including, without limitation, all real and
personal property, income, franchise, withholding, transfer, gains, profits and
gross receipts taxes), all charges for any easement or agreement maintained for
the benefit of any of the Mortgaged Property, all general and special
assessments, levies, permits, inspection and license fees, all water and sewer
rents and charges, vault taxes, and all other public charges even if unforeseen
or extraordinary, imposed upon or assessed against or which may become a lien on
any of the Mortgaged Property, or arising in respect of the occupancy, use or
possession thereof, together with any penalties or interest on any of the
foregoing (all of the foregoing are collectively referred to as the
"IMPOSITIONS"). Upon request by Beneficiary, Trustor shall deliver to
Beneficiary (i) original or copies of receipted bills and cancelled checks
evidencing payment of such Imposition if it is a real estate tax or other public
charge and (ii) evidence acceptable to Beneficiary showing the payment of any
other such

                                       6
<PAGE>

Imposition. If by law any Imposition, at Trustor's option, may be paid in
installments (whether or not interest shall accrue on the unpaid balance of such
Imposition), Trustor may elect to pay such Imposition in such installments and
shall be responsible for the payment of such installments with interest, if any.

         (b) Nothing herein shall affect any right or remedy of Beneficiary
under this Mortgage or otherwise, without notice or demand to Trustor, to pay
any Imposition after the date such imposition shall have become due if (i) a
Default or Event of Default shall have occurred, or (ii) the failure to make
such payment could result in the imposition of a lien. Any sums paid by
Beneficiary in discharge of any Impositions shall be payable on demand by
Trustor to Beneficiary together with interest at the Default Rate.

         (c) Trustor shall have the right before any delinquency occurs to
contest or object in good faith to the amount or validity of any Imposition by
appropriate legal proceedings, but such right shall not be deemed or construed
in any way as relieving, modifying, or extending Trustor's covenant to pay any
such Imposition at the time and in the manner provided in this Section unless
(i) Trustor has given prior written notice to Beneficiary of Trustor's intent so
to contest or object to an Imposition, (ii) Trustor shall demonstrate to
Beneficiary's satisfaction that the legal proceedings shall operate conclusively
to prevent the sale of the Mortgaged Property, or any part thereof, to satisfy
such Imposition prior to final determination of such proceedings and (iii)
Trustor shall maintain adequate reserves with respect thereto on its books in
conformity with GAAP or shall furnish a good and sufficient bond or surety as
requested by and reasonably satisfactory to Beneficiary in the amount of the
Impositions which are being contested plus any interest and penalty which may be
imposed thereon and which could become a lien against the Real Estate or any
part of the Mortgaged Property.

         4. INSURANCE. (a) Trustor shall maintain or cause to be maintained on
all of the Premises, with financially sound and reputable insurance companies:

                  (i) property insurance against loss or damage by fire,
         lightning, windstorm, tornado, water damage, flood, earthquake,
         explosion, theft and by such other further risks and hazards as now are
         or subsequently may be covered by an "all risk" policy or a fire policy
         covering "special" causes of loss and the repair or replacement cost of
         all such property, the policy limits of which property insurance shall
         be automatically reinstated after each loss;

                  (ii) commercial general liability insurance under a policy
         including the "broad form CGL endorsement" (or which incorporates the
         language of such endorsement), covering all claims for personal injury,
         bodily injury or death, or property damage occurring on, in or about
         the Premises in an amount not less than $2,000,000 combined single
         limit with respect to injury and property damage relating to any one
         occurrence plus such excess limits as Beneficiary shall reasonably
         request from time to time;

                  (iii) insurance against rent loss, business interruption or
         extra expense (which shall include construction expenses and such other
         business interruption expenses

                                       7
<PAGE>

         as are otherwise generally available to similar businesses) in amounts
         satisfactory to Beneficiary, but not less than one year's gross rent or
         gross income;

                  (iv) if any portion of the Premises are located in an area
         identified as a special flood hazard area by the Federal Emergency
         Management Agency or other applicable agency, flood insurance in an
         amount reasonably satisfactory to Beneficiary, but in no event less
         than the maximum limit of coverage available under the National Flood
         Insurance Act of 1968, as amended; and

                  (v) such other insurance in such amounts as Beneficiary may
         reasonably request from time to time against loss or damage by any
         other risk commonly insured against by persons occupying or using like
         properties in the locality or localities in which the Real Estate is
         situated.

         (b) All such insurance with respect to Trustor shall be provided by
insurers or reinsurers which (x) in the case of United States insurers or
reinsurers, have an A.M. Best policyholders rating of not less than A- with
respect to primary insurance and B+ with respect to excess insurance and (y) in
the case of non-United States insurers or reinsurers, the providers of at least
80% of such insurance have either an ISI policyholders rating of not less than
A, an A.M. Best policyholders rating of not less than A- or a surplus of not
less than $500,000,000 with respect to primary insurance, and an ISI
policyholders rating of not less than BBB with respect to excess insurance, or,
if the relevant insurance is not available from such insurers, such other
insurers as Beneficiary may approve in writing.

         (c) Subject to and in accordance with the provisions of Section 2.12(b)
of the Credit Agreement, each insurance policy (other than flood insurance)
shall (x) provide that it shall not be cancelled, non-renewed or materially
amended without 30-days' prior written notice to Beneficiary, and (y) with
respect to all property insurance, provide for deductibles in an amount
reasonably satisfactory to Beneficiary and contain a "Replacement Cost
Endorsement" without any deduction made for depreciation and with no
co-insurance penalty (or attaching an agreed amount endorsement satisfactory to
Beneficiary), with loss payable solely to Beneficiary (modified, if necessary,
to provide that proceeds in the amount of replacement cost may be retained by
Beneficiary without the obligation to rebuild) as its interest may appear,
without contribution, under a "standard" or "New York" Beneficiary clause
acceptable to Beneficiary. Liability insurance policies shall name Beneficiary
as an additional insured and contain a waiver of subrogation against
Beneficiary. Each policy shall expressly provide that any proceeds which are
payable to Beneficiary shall be paid by check payable to the order of
Beneficiary only and requiring the endorsement of Beneficiary only, subject,
however, to the provisions of section 2.12(b) of the Credit Agreement.

         (d) Trustor shall deliver to Beneficiary on behalf of the Secured
Parties, (i) on the Closing Date, an original of each insurance policy required
to be maintained, or Acord - 27 certificate evidencing such policy and
acceptable to Beneficiary, together with a copy of the declaration page for each
such policy, showing the amount and type of insurance coverage as of such date,
(ii) upon request of any Secured Party from time to time, full information as to
the insurance carried, (iii) promptly following receipt of notice from any
insurer, a copy of notice of cancellation or material change in coverage from
that existing on the Closing Date, (iv)

                                       8
<PAGE>

forthwith, notice of any cancellation or nonrenewal of coverage by Trustor, and
(v) promptly after such information is available to Trustor, full information as
to any claim in excess of $1,000,000 with respect to any property and casualty
insurance policy maintained by Trustor. Each Secured Party shall be named as an
additional insured on all such liability policies of Trustor and Beneficiary
shall be named as loss payee on all property and casualty insurance policies of
Trustor (subject, however, to the provisions of section 2.12(b) of the Credit
Agreement) . Trustor shall (i) pay as they become due all premiums for such
insurance, and (ii) not later than 5 days prior to the expiration of each policy
to be furnished pursuant to the provisions of this Section, deliver evidence of
renewal of each policy reasonably satisfactory to Beneficiary.

         (e) If Trustor is in default of its obligations to insure or deliver
any such prepaid policy or policies, then Beneficiary, at its option and without
notice, may effect such insurance from year to year, and pay the premium or
premiums therefor, and Trustor shall pay to Beneficiary on demand such premium
or premiums so paid by Beneficiary with interest from the time of payment at the
Default Rate.

         (f) Trustor promptly shall comply with and conform to (i) all
provisions of each such insurance policy, and (ii) all requirements of the
insurers applicable to Trustor or to any of the Mortgaged Property or to the
use, manner of use, occupancy, possession, operation, maintenance, alteration or
repair of any of the Mortgaged Property. Trustor shall not use or permit the use
of the Mortgaged Property in any manner which would permit any insurer to cancel
any insurance policy or void coverage required to be maintained by this
Mortgage.

         (g) If the Mortgaged Property, or any part thereof, shall be destroyed
or damaged, Trustor shall give immediate notice thereof to Beneficiary. Subject
to and in accordance with the provisions of Section 2.12(b) of the Credit
Agreement, all insurance proceeds shall be paid to Beneficiary to be held by
Beneficiary as collateral to secure the payment and performance of the
Indebtedness and the Obligations.

         (h) In the event of foreclosure of this Mortgage or other transfer of
title to the Mortgaged Property, all right, title and interest of Trustor in and
to any insurance policies then in force shall pass to the purchaser or grantee.

         (i) Trustor may maintain insurance required under this Mortgage by
means of one or more blanket insurance policies maintained by Trustor; PROVIDED,
HOWEVER, that (A) any such policy shall specify, or Trustor shall furnish
promptly to Beneficiary a written statement from the insurer so specifying, the
maximum amount of the total insurance afforded by such blanket policy that is
allocated to the Premises and the other Mortgaged Property and any sublimits in
such blanket policy applicable to the Premises and the other Mortgaged Property,
(B) each such blanket policy shall include an endorsement providing that, in the
event of a loss resulting from an insured peril, insurance proceeds shall be
allocated to the Mortgaged Property in an amount equal to the coverages required
to be maintained by Trustor as provided above and (C) the protection afforded
under any such blanket policy shall be no less than that which would have been
afforded under a separate policy or policies relating only to the Mortgaged
Property.

                                       9
<PAGE>

         5. RESTRICTIONS ON LIENS AND ENCUMBRANCES. Except for the lien of this
Mortgage and the Permitted Exceptions, Trustor shall not further mortgage, nor
otherwise encumber the Mortgaged Property nor create or suffer to exist any
lien, charge or encumbrance on the Mortgaged Property, or any part thereof,
whether superior or subordinate to the lien of this Mortgage and whether
recourse or non-recourse.

         6. DUE ON SALE AND OTHER TRANSFER RESTRICTIONS. Except as expressly
permitted under the Credit Agreement, Trustor shall not sell, transfer, convey
or assign all or any portion of, or any interest in, the Mortgaged Property.

         7. MAINTENANCE; NO ALTERATION; INSPECTION; UTILITIES. (a) To the extent
required by and in accordance with the Credit Agreement, Trustor shall (i)
maintain or cause to be maintained all the Improvements in good working
condition and repair and shall not commit or suffer any waste of the
Improvements, ordinary wear and tear excepted, and (ii) repair, restore, replace
or rebuild promptly any part of the Premises which may be damaged or destroyed
by any casualty whatsoever. To the extent prohibited by and in accordance with
the Credit Agreement, the Improvements shall not be demolished or materially
altered, nor any material additions built, without the prior written consent of
Beneficiary, which consent shall not be unreasonably withheld or delayed.

         (b) Beneficiary and any persons authorized by Beneficiary shall have
the right, after reasonable notice to Trustor at any reasonable time and as
often as may reasonably be desired to enter and inspect the Premises and all
work done, labor performed and materials furnished in and about the Improvements
and to inspect and make copies of all books, contracts and records of Trustor
relating to the Mortgaged Property.

         (c) Trustor shall pay or cause to be paid when due all utility charges
which are incurred for gas, electricity, water or sewer services furnished to
the Premises and all other assessments or charges of a similar nature, whether
public or private, affecting the Premises or any portion thereof, whether or not
such assessments or charges are liens thereon.

         8. CONDEMNATION/EMINENT DOMAIN. Immediately upon obtaining knowledge of
the institution of any proceedings for the condemnation of the Mortgaged
Property, or any portion thereof, Trustor will notify Beneficiary in writing of
the pendency of such proceedings. To the extent required by and in accordance
with the Credit Agreement, Beneficiary is hereby authorized and empowered by
Trustor to settle or compromise any claim in connection with such condemnation
and to receive all awards and proceeds thereof to be held by Beneficiary as
collateral to secure the payment and performance of the Indebtedness and the
Obligations.

         9. RESTORATION. Except as set forth in subsection 2.12(b) of the Credit
Agreement, Trustor shall use all insurance proceeds and all condemnation
proceeds and awards to promptly restore the Mortgaged Property to its condition
prior to such casualty or condemnation, (giving effect to the remaining
configuration of the Premises after such condemnation) and in compliance with
all Legal Requirements.

         10. LEASES. (a) Trustor shall not (i) execute an assignment or pledge
of any Lease relating to all or any portion of the Mortgaged Property other than
in favor of Beneficiary, or (ii)

                                       10
<PAGE>

except as expressly permitted under the Credit Agreement, without the prior
written consent of Beneficiary, execute or permit to exist any Lease of any of
the Mortgaged Property.

         (b) Trustor shall deliver to Beneficiary, within 15 days after a
request by Beneficiary, a written statement, certified by Trustor as being true,
correct and complete, containing the names of all lessees and other occupants of
the Mortgaged Property, the terms of all Leases and the spaces occupied and
rentals payable thereunder, and a list of all Leases which are then in default,
including the nature and magnitude of the default; such statement shall be
accompanied by such credit information with respect to the lessees and such
other information as Beneficiary may reasonably request and as shall be in the
possession of or readily available to Trustor.

         11. FURTHER ASSURANCES. To further assure Beneficiary's rights under
this Mortgage, Trustor agrees upon demand of Beneficiary to do any act or
execute any additional documents (including, but not limited to, security
agreements on any personalty included or to be included in the Mortgaged
Property and a separate assignment of each Lease in recordable form) as may be
reasonably required by Beneficiary to confirm the lien of this Mortgage and all
other rights or benefits conferred on Beneficiary.

         12. BENEFICIARY'S RIGHT TO PERFORM. If Trustor fails to perform any of
the covenants or agreements of Trustor within the time period provided for such
performance or cure period provided with respect thereto, Beneficiary, without
waiving or releasing Trustor from any obligation or default under this Mortgage,
may, at any time (but shall be under no obligation to) pay or perform the same,
and the amount or cost thereof, with interest at the Default Rate, shall
immediately be due from Trustor to Beneficiary. To the extent that any such
amounts or costs paid by Beneficiary shall constitute payment of (i)
Impositions; (ii) premiums on insurance policies covering the Premises; (iii)
expenses incurred in upholding or enforcing the lien of this Mortgage,
including, but not limited to the expenses of any litigation to prosecute or
defend the rights and lien created by this Mortgage; (iv) costs of removal of or
otherwise related to hazardous materials or asbestos; or (v) any amount, costs
or charge to which Beneficiary becomes subrogated, upon payment, whether under
recognized principles of law or equity, or under express statutory authority;
then, and in each such event, such amounts or costs, together with interest
thereon at the Default Rate, shall be added to the Indebtedness and shall be
secured by this Mortgage and shall be a lien on the Mortgaged Property prior to
any right, title to, interest in, or claim upon the Mortgaged Property attaching
subsequent to the lien of this Mortgage. No payment or advance of money by
Beneficiary under this Section shall be deemed or construed to cure Trustor's
default or waive any right or remedy of Beneficiary.

         13. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an "EVENT OF DEFAULT" hereunder:

                  (a) an Event of Default (as defined in the Credit Agreement)
         shall occur under the Credit Agreement; or

                  (b) a failure (i) to keep in force the insurance required by
         this Mortgage, or (ii) to comply with any other material provisions of
         this Mortgage regarding insurance; or

                                       11
<PAGE>

                  (c) a failure of Trustor to duly perform and observe, or a
         violation or breach of, any other terms, covenants, provisions or
         conditions of Sections 6 or 7 of this Mortgage.

         14. REMEDIES. (a) Upon the occurrence of any Event of Default, in
addition to any other rights and remedies Beneficiary may have pursuant to the
Loan Documents, or as provided by law or otherwise, and without limitation, (x)
if such event is an Event of Default specified in clause (i) or (ii) of Section
8(f) of the Credit Agreement with respect to Trustor, automatically the
Commitments shall immediately terminate and the Loans (with accrued interest
thereon) and all other amounts owing under the Credit Agreement and the other
Loan Documents (including, without limitation, all amounts of L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit shall
have presented the documents required thereunder) shall immediately become due
and payable, and (y) if such event is any other Event of Default, either or both
of the following actions may be taken: (i) with the consent of the Majority
Revolving Credit Facility Lenders, Beneficiary may, or upon the request of the
Majority Revolving Credit Facility Lenders, Beneficiary shall, by notice to
Trustor declare the Revolving Credit Commitments to be terminated forthwith,
whereupon the Revolving Credit Commitments shall immediately terminate; and (ii)
with the consent of the Required Lenders, Beneficiary may, or upon the request
of the Required Lenders, Beneficiary shall, by notice to Trustor, declare the
Loans (with accrued interest thereon) and all other amounts owing under the
Credit Agreement and the other Loan Documents (including, without limitation,
all amounts of L/C obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) to be due and payable forthwith, whereupon the same shall
immediately become due and payable. Except as expressly provided above in this
Section, presentment, demand, protest and all other notices of any kind are
hereby expressly waived. In addition, upon the occurrence of any Event of
Default, Beneficiary may immediately take such action, without notice or demand,
as it deems advisable to protect and enforce its rights against Trustor and in
and to the Mortgaged Property, including, but not limited to, the following
actions, each of which may be pursued concurrently or otherwise, at such time
and in such manner as Beneficiary may determine, in its sole discretion, without
impairing or otherwise affecting the other rights and remedies of Beneficiary:

                  (i) RIGHT TO PERFORM TRUSTOR'S COVENANTS, ETC. The Beneficiary
         or, at the request of the Beneficiary, the Trustee, without waiving or
         releasing any obligation or Event of 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 Trustor, and may
         enter upon the Mortgaged Property or any part thereof for such purpose
         and take all such action thereon as, in the opinion of the Beneficiary
         or the Trustee, may be reasonably necessary or appropriate therefor.
         All sums so paid by the Beneficiary or the Trustee and all fees, costs
         and expenses (including, without limitation, reasonable attorneys' and
         consultants' fees and other charges) so incurred, together with
         interest thereon from the date of payment or incurrence at the Default
         Rate, shall constitute indebtedness secured by this Mortgage and shall
         be paid by the Trustor to the Beneficiary or the Trustee on demand.

                  (ii) POSSESSION UPON DEFAULT.

                                       12
<PAGE>

                  (A) SURRENDER OR TAKING OF POSSESSION. The Trustor, upon
demand of the Beneficiary, shall forthwith surrender to the Beneficiary or to
the Trustee the actual possession of the Mortgaged Property, and to the extent
permitted by law, the Beneficiary or the Trustee may enter and take possession
of the Mortgaged Property and may exclude the Trustor and the Trustor's agents,
invitees and employees wholly therefrom. In taking possession of the Mortgaged
Property, the Beneficiary or the Trustee may proceed without legal process, if
this can be done without breach of the peace. If the Trustor shall fail to
surrender to the Beneficiary or to the Trustee the actual possession of the
Mortgaged Property upon demand, then the Beneficiary or the Trustee, to the
extent permitted under applicable law, without further notice, may: (i) enter
upon and take possession of the Mortgaged Property or any part thereof by force,
summary proceedings, ejectment or otherwise; (ii) remove the Trustor and all
other persons; and (iii) remove from the Mortgaged Property any and all property
owned by other persons.

                  (B) ENTERING INTO POSSESSION. If an Event of Default shall
have occurred and the entire indebtedness shall have become immediately due and
payable in full, the Trustor, upon demand of the Beneficiary, shall forthwith
surrender to the Beneficiary or to the Trustee the actual possession of the
Mortgaged Property. Upon every such entering and taking of possession, the
Beneficiary or the Trustee may hold, store, use, operate, manage, control and
maintain the Mortgaged Property and conduct the business thereof, including,
without limitation: (i) make all necessary and proper repairs, renewals,
replacements, additions, betterments and improvements thereto and thereon and
purchase and otherwise acquire additional fixtures, personalty and other
property; (ii) insure or keep the Mortgaged Property insured; (iii) manage and
operate the Mortgaged Property and exercise all the rights and powers of the
Trustor, in its name or otherwise, with respect to the Mortgaged Property; and
(iv) enter into any agreements with respect to the exercise by others of any of
the powers herein granted to the Beneficiary or the Trustee, all as the
Beneficiary or the Trustee may from time to time determine, in their sole
discretion, to be necessary or desirable. The Beneficiary or the Trustee also
may collect and receive all of the earnings, income, rents, profits, issues and
revenues of the Mortgaged Property or any part thereof, including those past due
as well as those accruing thereafter and thereupon the Beneficiary may, to the
maximum extent permitted by law, apply the receipts from the Mortgaged Property
to Trustor's Obligations, after deducting therefrom all expenses (including
reasonable attorneys' fees and other charges incurred by the Beneficiary)
incurred in connection therewith and all amounts necessary to pay the taxes,
assessments, insurance and other charges in connection with the Mortgaged
Property, as well as just and reasonable compensation for the services of the
Beneficiary, its attorneys, agents and employees. The Beneficiary and the
Trustee shall not be liable for or by reason of any such entry, taking of
possession or removal, or holding, operation or management, except that any
amount so received by the Trustee shall be applied as provided in this SECTION
14. All sums expended by the Beneficiary or the Trustee pursuant to this SECTION
14(A)(II), including any such amount in excess of the principal amount of the
Note, shall be deemed to have been advanced to the Trustor by the Beneficiary,
shall bear interest until paid at the Default Rate and shall be secured by this
Mortgage.

                  (C) ATTORNEY-IN-FACT. For the purpose of carrying out the
provisions of this Section 14, the Trustor hereby constitutes the Beneficiary
and the Trustee or either of them, with full power of substitution, as the true
and lawful attorneys-in-fact of the Trustor to do and perform any and all
actions permitted by this SECTION 14(A)(II), including, without limitation: (i)
to use any funds of the Trustor for the purpose of paying, settling or
compromising all existing bills and claims which are or may be liens against the
Mortgaged Property, clearing title or paying for the account of the Trustor any
amounts payable by the Trustor under this Mortgage; (ii) to employ such agents,
architects, engineers and inspectors as shall be required to develop, maintain
or operate the Mortgaged Property; and (iii) to execute all applications and
certificates in the name of the Trustor which may be required by any of the Loan
Documents and to do any and every act which the Trustor might do in its own
behalf. Such appointment shall be deemed to be coupled with an interest which
cannot be revoked. The attorneys-in-fact also shall have power to prosecute and
defend all actions or proceedings in connection with the

                                       13
<PAGE>

Mortgaged Property. The Trustor hereby ratifies and confirms any and all actions
of said attorneys-in-fact with respect to the Mortgaged Property.

                  (D) SATISFACTION OF DEFAULT. Whenever all Events of Default
hereunder have been cured and satisfied, the Beneficiary shall surrender, upon
receipt of a written request therefor from the Trustor, possession or direct the
Trustee to promptly surrender possession of the Mortgaged Property to the
Trustor, provided that the right of the Beneficiary to take possession of the
Mortgaged Property from time to time pursuant to this SECTION 14(A)(II)(D) shall
exist if any subsequent Event of Default shall occur.

         (iii) FORECLOSURE. The Trustee may at any time, and at the direction of
the Beneficiary shall, proceed at law or in equity or otherwise to foreclose the
lien of this Mortgage as against all or any part of the Mortgaged Property,
either by strict foreclosure or foreclosure by sale, or in part by each such
method.

         (iv) APPOINTMENT OF RECEIVER. If an Event of Default shall have
occurred and after the indebtedness hereby secured shall have become immediately
due and payable, the Trustee shall, as a matter of right, to the extent
permitted under applicable law, be entitled to, and at the direction of the
Beneficiary shall, appoint a receiver for all or any part of the Mortgaged
Property, whether such receivership be incidental to a proposed sale of the
Mortgaged Property or otherwise. In addition to the foregoing, in the event of
any Event of Default by the Trustor under this Mortgage or under any other of
the Loan Documents, and after the indebtedness hereby secured shall have become
due and payable immediately, the Beneficiary shall be entitled as a matter of
right, to the extent permitted under applicable law, without regard to the value
of the Mortgaged Property as security for the amount due or the solvency of the
Trustor or any other person or persons liable for the payment of such amount,
and without notice to the Trustor or any other person or persons liable for the
payment of such amount (such notice being hereby waived), to the appointment of
a receiver with full and complete authority to enter upon the Mortgaged
Property, to continue any and all outstanding contracts, and to pay and
discharge all debts, obligations and liabilities and all mechanics',
materialmen's or other liens affecting the Mortgaged Property to the extent
permitted by applicable law. All disbursements made by the receiver under this
SECTION 14(A)(IV) and the expenses of receivership shall be secured by this
Mortgage.

         (v) POWER OF SALE. The Trustee may, and at the request of the
Beneficiary shall, sell (and, in case of default of any purchaser, resell),
assign, transfer and deliver, the whole or, from time to time, any part of the
Mortgaged Property, or any interest in any part thereof, at such time and place
in the city or county wherein the Mortgaged Property is located as the Trustee
shall deem advantageous and proper, for cash, on credit or for other property,
for immediate or future delivery, and for such price or prices and on such terms
as the Trustee shall deem advantageous and proper, and as required by the Code
of Virginia. Prior to the sale, the Trustee shall first advertise the time,
place and terms of sale at least once a week for two (2) consecutive weeks in
advance of the date of such sale, in a newspaper published or having general
circulation in the county or city in which the Mortgaged Property or some
portion thereof is located. Upon compliance with the terms of the sale, the
Trustee shall convey in fee simple to and at the cost of the purchaser the
Mortgaged Property so sold, free and discharged of and from all estate, right,
title or interest of the Trustor and the Trustor's successors or assigns at law
or in equity, such purchaser being hereby discharged from all liability to see
to the application of the purchase money; and the Trustee shall apply the
proceeds of sale in accordance with the provisions of SECTION 14(V)(F) hereof.
The Mortgaged Property shall be sold in one parcel or in such parcels, manner or
order as the Beneficiary, at its option, may elect.

         (A) Upon any sale hereunder, whether pursuant to foreclosure or power
of sale or otherwise, the Beneficiary may bid for and purchase the Mortgaged
Property or any part thereof without

                                       14
<PAGE>

forfeiting its rights to collect any deficiency from the Trustor. As part of its
bid the Beneficiary may use all or part of the indebtedness as a credit towards
the purchase price. In the event the trustees require a deposit as one of the
terms of sale, the deposit may be waived in the case of the Beneficiary.

         It is specifically understood and agreed that if the Mortgaged Property
         or any part thereof shall be advertised for sale under the provisions
         of this Mortgage and is not sold, the Trustor will pay all expenses of
         and attending such advertisement and intended sale, including
         attorneys' fees and other charges, expenses, and a reasonable Trustee's
         fee, and the payment of same is hereby secured in like manner as other
         charges and expenses attending the execution of and performance under
         this Mortgage.

                  (B) The Trustor irrevocably appoints the Trustee its true and
lawful attorneys-in-fact, with full power of substitution, in its name and stead
and on its behalf, for the purpose of effectuating any sale, assignment,
transfer or delivery for the enforcement of this Mortgage pursuant to
foreclosure or power of sale or otherwise, to execute and deliver all such
certificates, deeds, bills of sale, assignments and other instruments as the
Trustee may consider necessary or appropriate. The Trustor hereby ratifies and
confirms all that such attorneys-in-fact or any substitute therefor shall
lawfully do by virtue hereof. Nevertheless, if so requested by the Trustee or
any purchaser, the Trustor shall ratify and confirm any such sale, assignment,
transfer or delivery by executing and delivering to the Trustee or such
purchaser all proper certificates, deeds, bills of sale, assignments, releases
and other instruments as may be designated in any such request.

                 (C) The Beneficiary may be a purchaser of the Mortgaged
Property or of any part thereof or of any interest therein at any public sale
thereof, whether pursuant to foreclosure or power of sale or otherwise
hereunder, and may apply upon the purchase price the indebtedness secured hereby
owing to the Beneficiary. The Beneficiary shall, upon any such purchase, acquire
good title to the properties so purchased, free of the lien of this Mortgage,
free of all rights of redemption in the Trustor and free of all liens and
encumbrances subordinate to this Mortgage.

                 (D) Upon any sale of the Mortgaged Property or any part thereof
or any interest therein, whether pursuant to foreclosure or power of sale or
otherwise hereunder, the receipt of the officer making the sale under judicial
proceedings or of the Trustee shall be sufficient discharge to the purchaser for
the purchaser money, and such purchaser shall not be obligated to see to the
application thereof.

                 (E) Upon the occurrence of an Event of Default, should the
Beneficiary elect to cause any of the Mortgaged Property to be disposed of as
personal property because the same consists of a right of action or is property
that can be severed from the Land or the Improvements without causing structural
damage thereto, the Beneficiary may dispose of all or any part thereof in any
manner now or hereafter permitted under the Uniform Commercial Code or in
accordance with any other remedy provided by law. Any such disposition may be
conducted by an employee or agent of the Beneficiary or the Trustee. The
Beneficiary shall be eligible to purchase any part or all of such Mortgaged
Property at such disposition. Any such disposition may be by public or private
sale as the Beneficiary may so elect, subject to the provisions of the Uniform
Commercial Code. The Beneficiary shall have all the rights and remedies of a
secured party under the Uniform Commercial Code. Expenses of retaking, holding,
preparing for sale, selling or the like shall include the Beneficiary's and the
Trustee' reasonable attorneys' fees and disbursements, and upon the occurrence
of any Event of Default, the Trustor, upon demand of the Beneficiary, shall
assemble such personal property and make it available to the Beneficiary and the
Trustee at the Land, or at a place which is deemed to be reasonably convenient
to the Beneficiary and the Trustee and the Trustor; PROVIDED, HOWEVER, that with
respect to any of the Mortgaged Property that consists of tangible personal
property that is located on the Land, the Trustor may assemble Mortgaged
Property to the extent practicable at a location in the County of Barton,
Virginia. The Beneficiary or the

                                       15
<PAGE>

Trustee shall give the Trustor at least ten (10) days prior written notice (or
notice within such other period if then required in accordance with the laws of
the state or jurisdiction in which the personal property is located) of the time
and place of any public sale or other disposition of such property or of the
time at or after which any private sale or any other intended disposition is to
be made. If such notice is sent to the Trustor in the manner and at the address
specified in Section 6.01 hereof, it shall constitute reasonable notice to the
Trustor.

                (F) The proceeds of any sale of the Mortgaged Property or any
part thereof or any interest therein, whether pursuant to foreclosure or power
of sale or otherwise hereunder, together with any other monies at any time held
by the Trustee pursuant to this Mortgage, shall be applied to pay:

                  FIRST: All costs and expenses of enforcing this Mortgage,
         including, without limitation, a reasonable Trustee' commission not
         less than the commission required by applicable law, all reasonable
         costs and expenses of the sale of the Mortgaged Property or any part
         thereof or any interest therein, and all costs and expenses of entering
         upon, taking possession of, removing, holding, constructing
         improvements on, and operating and managing the Mortgaged Property or
         any part thereof, and all costs and expenses of repairs, renewals,
         replacements, additions, betterments and improvements to the Mortgaged
         Property, and all attorneys' fees and other charges incurred in
         connection with any of the foregoing, as the case may be, together with
         compensation of the Trustee not to exceed one percent (1%);

                  SECOND: Any taxes, levies, assessments or other charges,
         together with costs and interest, which have, or in the opinion of the
         Trustee may have, priority over the lien of this Mortgage, including
         the pro rata portion thereof applicable to the taxable period during
         which any payment is made pursuant to this SECTION 14(V)(F);

                  THIRD: All amounts of principal and interest due and payable
         on the Note (whether at maturity, on a date fixed for any payment or
         prepayment thereof, upon acceleration, or otherwise), including any
         late charges accrued thereon (to the extent permitted under applicable
         law) and any other indebtedness secured by this Mortgage; and in case
         such proceeds shall be insufficient to pay in full the amount so due
         and unpaid upon the Note, then, FIRST, to the payment of all amounts of
         interest due and payable on the Note, without preference or priority of
         any installment of interest over any other installment of interest;
         SECOND, to the payment of any indebtedness (other than the principal
         due and payable on the Note) secured by this Mortgage which is due and
         payable; and THIRD, to the payment of all amounts of principal due and
         payable on the Note, in the inverse order of their maturity;

                  FOURTH: The amount of any liens of record inferior to this
         Mortgage, together with lawful interest, and enforceable claims of
         third parties against the proceeds of any sale; and

                  FIFTH: The amount of any surplus then remaining from such
         proceeds to the Trustor, unless otherwise required by law or directed
         by a court of competent jurisdiction.

In the event that the proceeds of any such sale or sales, together with all
other monies at the time held by the Trustee under this Mortgage, are
insufficient to pay the foregoing costs and expenses, the Beneficiary may, at
its sole option, advance such sums as the Beneficiary in its sole and absolute
discretion shall determine for the purpose of paying all or any part of such
costs and expenses, and all such sums so advanced shall be secured by this
Mortgage and payable on demand with interest at the Default Rate, from and
including the date each such advance is made.

                                       16
<PAGE>

                (G) During the continuation of any Event of Default, the
Beneficiary shall be entitled and empowered to institute such actions or
proceedings at law or in equity as it may consider advisable for the collection
of the entire unpaid balance of the indebtedness hereby secured, may prosecute
any such action or proceedings to judgment or final decree, and may enforce any
such judgment or final decree against the Trustor in any manner provided by law.
The Beneficiary shall be entitled to recover judgment as aforesaid either
before, after or during the pendency of any proceeding for the enforcement of
any remedies provided for in the Note or the Loan Documents and the right of the
Beneficiary to recover judgment as aforesaid shall not be affected by any sale
hereunder, by the passage or entry of a decree for the sale of the Mortgaged
Property or any part thereof, by the enforcement of the provisions of the Note
and the Loan Documents or the foreclosure of the lien hereof. In the event of a
sale of the Mortgaged Property, and of the application of the proceeds of sale,
as provided in this Mortgage, to the payment of the indebtedness hereby secured,
the Beneficiary shall be entitled to enforce payment of, and to receive all
amounts then remaining due and unpaid upon the indebtedness hereby secured and
shall be entitled to recover judgment for any portion of such indebtedness
remaining unpaid, with interest at the Default Rate.

                  No recovery of any judgment upon the Mortgaged Property or
upon any other property of the Trustor shall affect, in any manner or to any
extent, the lien of this Mortgage upon the Mortgaged Property or any part
thereof, or any liens, rights, powers or remedies of the Trustee or the
Beneficiary hereunder, but such liens, rights, powers and remedies of the
Trustee and the Beneficiary shall continue unimpaired as before.

                (H) The Trustor shall not be relieved of any obligation by
reason of the failure of the Beneficiary to comply with any request of the
Trustor or of any other person to take action to foreclose on this Mortgage or
otherwise to enforce any provisions of the Note or the Loan Documents, or by
reason of the release, regardless of consideration, of all or any part of the
Mortgaged Property.

         15. EXTENSION, RELEASE, ETC. (a) Without affecting the lien or charge
of this Mortgage upon any portion of the Mortgaged Property not then or
theretofore released as security for the full amount of the Indebtedness and the
Obligations, Beneficiary may, from time to time and without notice, (i) release
any person liable for the Indebtedness, (ii) agree with Trustor to extend the
maturity or alter any of the terms of the Indebtedness or the Obligations or any
guaranty thereof, (iii) grant other indulgences, (iv) release or reconvey, or
cause to be released or reconveyed at any time at Beneficiary's option any
parcel, portion or all of the Mortgaged Property, (v) agree with Trustor to take
or release any other or additional security for any obligation herein mentioned,
or (vi) make compositions or other arrangements with debtors in relation
thereto. If at any time this Mortgage shall on its face secure less than all of
the principal amount of the Indebtedness, it is expressly agreed that any
repayments of the principal amount of the Indebtedness shall not reduce the
amount of the lien of this Mortgage until the lien amount shall equal the
principal amount of the Indebtedness outstanding.

         (b) No recovery of any judgment by Beneficiary and no levy of an
execution under any judgment upon the Mortgaged Property or upon any other
property of Trustor shall affect the lien of this Mortgage or any liens, rights,
powers or remedies of Beneficiary hereunder, and such liens, rights, powers and
remedies shall continue unimpaired.

         (c) If Beneficiary shall have the right to foreclose under this
Mortgage, Trustor authorizes Beneficiary, and Trustee, at Beneficiary's
direction, at its option to foreclose the lien of this Mortgage subject to the
rights of any tenants of the Mortgaged Property. The

                                       17
<PAGE>

failure to make any such tenants parties defendant to any such foreclosure
proceeding and to foreclose their rights will not be asserted by Trustor as a
defense to any proceeding instituted by Beneficiary, and Trustee, at
Beneficiary's direction, to collect the Indebtedness or to foreclose under the
lien of this Mortgage.

         (d) Unless expressly provided otherwise, in the event that ownership of
this Mortgage and title to the Mortgaged Property or any estate therein shall
become vested in the same person or entity, this Mortgage shall not merge in
such title but shall continue as a valid lien on the Mortgaged Property for the
amount secured hereby.

         16. SECURITY AGREEMENT UNDER UNIFORM COMMERCIAL CODE. (a) It is the
intention of the parties hereto that this Mortgage shall constitute a "security
agreement" within the meaning of the Uniform Commercial Code in the state in
which the Premises are located, as in effect on the date hereof, and Trustor
hereby grants to Beneficiary a lien and security interest in the Mortgaged
Property that is subject to the Code. If an Event of Default shall occur under
this Mortgage, then in addition to having any other right or remedy available at
law or in equity, Beneficiary shall have the option of either (i) proceeding
under the Uniform Commercial Code as in effect from time to time in the state in
which the Premises are located (the "CODE") and exercising such rights and
remedies as may be provided to a secured party by the Code with respect to all
or any portion of the Mortgaged Property which is personal property (including,
without limitation, taking possession of and selling such property) or (ii) to
the extent permitted by applicable law, treating such property as real property
and proceeding with respect to both the real and personal property constituting
the Mortgaged Property in accordance with Beneficiary's rights, powers and
remedies with respect to the real property (in which event the default
provisions of the Code shall not apply). If Beneficiary shall elect to proceed
under the Code, then ten days' notice of sale of the personal property shall be
deemed reasonable notice and the reasonable expenses of retaking, holding,
preparing for sale, selling and the like incurred by Beneficiary shall include,
but not be limited to, attorneys' fees and legal expenses. At Beneficiary's
request, Trustor shall assemble the personal property and make it available to
Beneficiary at a place designated by Beneficiary which is reasonably convenient
to both parties.

         (b) Trustor and Beneficiary agree, to the extent permitted by law,
that: (i) all of the goods described within the definition of the word
"Equipment" are or are to become fixtures on the Real Estate; (ii) this Mortgage
upon recording or registration in the real estate records of the proper office
shall constitute a financing statement filed as a "fixture filing" within the
meaning of Sections 9-313 and 9-402 (as enumerated therein) of the Uniform
Commercial Code as in effect as of the date hereof in the state in which the
Premises are located; (iii) Trustor is the record owner of the Land; and (iv)
the addresses of Trustor and Beneficiary are as set forth on the first page of
this Mortgage.

         (c) Trustor, upon reasonable request by Beneficiary from time to time,
shall execute, acknowledge and deliver to Beneficiary one or more separate
security agreements, in form reasonably satisfactory to Beneficiary, covering
all or any part of the Mortgaged Property and will further execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered, any financing
statement, affidavit, continuation statement or certificate or other document as
Beneficiary may reasonably request in order to perfect, preserve, maintain,
continue or extend the security interest under and the priority of this Mortgage
and such security

                                       18
<PAGE>

instrument. Trustor further agrees to pay to Beneficiary on demand all
reasonable costs and expenses incurred by Beneficiary in connection with the
preparation, execution, recording, filing and re-filing of any such document and
all reasonable costs and expenses of any record searches for financing
statements Beneficiary shall reasonably require. If Trustor shall fail to
furnish any financing or continuation statement within 10 days after request by
Beneficiary, then pursuant to the provisions of the Code, Trustor hereby
authorizes Beneficiary, without the signature of Trustor, to execute and file
any such financing and continuation statements. The filing of any financing or
continuation statements in the records relating to personal property or chattels
shall not be construed as in any way impairing the right of Beneficiary to
proceed against any personal property encumbered by this Mortgage as real
property, as set forth above.

         17. ASSIGNMENT OF RENTS. Trustor hereby assigns to Beneficiary the
Leases and Rents as further security for the payment of the Indebtedness and
performance of the Obligations, and Trustor grants to Beneficiary the right to
enter the Mortgaged Property for the purpose of collecting the Rents and to let
the Mortgaged Property or any part thereof, and to apply the Rents on account of
the Indebtedness and the Obligations. The foregoing assignment and grant is
present and absolute and shall continue in effect until the Indebtedness is paid
in full in immediately available funds and the Obligations are performed in
full, but Beneficiary hereby waives the right to enter the Mortgaged Property
for the purpose of collecting the Rents and Trustor shall be entitled to
collect, receive, use and retain the Rents until the occurrence of an Event of
Default under this Mortgage; such right of Trustor to collect, receive, use and
retain the Rents may be revoked by Beneficiary upon the occurrence of any Event
of Default under this Mortgage by giving not less than 30 days' written notice
of such revocation to Trustor; in the event such notice is given, Trustor shall
pay over to Beneficiary, or to any receiver appointed to collect the Rents, any
lease security deposits, and shall pay monthly in advance to Beneficiary, or to
any such receiver, the fair and reasonable rental value as determined by
Beneficiary for the use and occupancy of the Mortgaged Property or of such part
thereof as may be in the possession of Trustor or any affiliate of Trustor, and
upon default in any such payment Trustor and any such affiliate will vacate and
surrender the possession of the Mortgaged Property to Beneficiary or to such
receiver, and in default thereof may be evicted by summary proceedings or
otherwise. Trustor shall not accept prepayments of installments of Rent to
become due for a period of more than one month in advance (except for security
deposits and estimated payments of percentage rent, if any).

         18. TRUST FUNDS. All lease security deposits of the Real Estate shall
be treated as trust funds not to be commingled with any other funds of Trustor.
Within 30 days after request by Beneficiary, or forthwith following the
occurrence of an Event of Default, Trustor shall furnish Beneficiary
satisfactory evidence of compliance with this Section, together with a statement
of all lease security deposits by lessees and copies of all Leases not
previously delivered to Beneficiary, which statement shall be certified by
Trustor.

         19. ADDITIONAL RIGHTS. Unless prohibited by applicable law, the holder
of any subordinate lien on the Mortgaged Property shall have no right to
terminate any Lease whether or not such Lease is subordinate to this Mortgage
nor shall any holder of any subordinate lien join any tenant under any Lease in
any action to foreclose the lien or modify, interfere with, disturb or terminate
the rights of any tenant under any Lease. By recordation of this Mortgage all
subordinate lienholders are subject to and notified of this provision, and any
action taken by

                                       19
<PAGE>

any such lienholder contrary to this provision shall be null and void. Upon the
occurrence of any Event of Default, Beneficiary may, in its sole discretion and
without regard to the adequacy of its security under this Mortgage, apply all or
any part of any amounts on deposit with Beneficiary under this Mortgage against
all or any part of the Indebtedness or the Obligations. Any such application
shall not be construed to cure or waive any Default or Event of Default or
invalidate any act taken by Beneficiary on account of such Default or Event of
Default.

         20. NOTICES. All notices, requests, demands and other communications
hereunder shall be given in accordance with the provisions of Section 10.2 of
the Credit Agreement to Trustor and to Beneficiary as specified therein.

         21. NO ORAL MODIFICATION. This Mortgage may not be amended,
supplemented or otherwise modified except in accordance with the provisions of
Section 10.1 of the Credit Agreement. Any agreement made by Trustor and
Beneficiary after the date of this Mortgage relating to this Mortgage shall be,
to the extent permitted by applicable law, superior to the rights of the holder
of any intervening or subordinate lien or encumbrance.

         22. PARTIAL INVALIDITY. In the event any one or more of the provisions
contained in this Mortgage shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, but each shall be construed as if
such invalid, illegal or unenforceable provision had never been included.
Notwithstanding to the contrary anything contained in this Mortgage or in any
provisions of the Indebtedness or Loan Documents, the obligations of Trustor and
of any other obligor under the Indebtedness or Loan Documents shall be subject
to the limitation that Beneficiary shall not charge, take or receive, nor shall
Trustor or any other obligor be obligated to pay to Beneficiary, any amounts
constituting interest in excess of the maximum rate permitted by law to be
charged by Beneficiary.

         23. TRUSTOR'S WAIVER OF RIGHTS. To the fullest extent permitted by law,
Trustor waives the benefit of all laws now existing or that may subsequently be
enacted providing for (i) any appraisement before sale of any portion of the
Mortgaged Property, (ii) any extension of the time for the enforcement of the
collection of the Indebtedness or the creation or extension of a period of
redemption from any sale made in collecting such Indebtedness and (iii)
exemption of the Mortgaged Property from attachment, levy or sale under
execution or exemption from civil process. To the full extent Trustor may do so,
Trustor agrees that Trustor will not at any time insist upon, plead, claim or
take the benefit or advantage of any law now or hereafter in force providing for
any appraisement, valuation, stay, exemption, extension or redemption, or
requiring foreclosure of this Mortgage before exercising any other remedy
granted hereunder and Trustor, for Trustor and its successors and assigns, and
for any and all persons ever claiming any interest in the Mortgaged Property, to
the extent permitted by law, hereby waives and releases all rights of
redemption, valuation, appraisement, stay of execution, notice of election to
mature or declare due the whole of the secured indebtedness and marshalling in
the event of foreclosure of the liens hereby created.

         24. REMEDIES NOT EXCLUSIVE. Beneficiary shall be entitled to enforce
payment of the Indebtedness and performance of the Obligations and to exercise
or cause Trustee to exercise all rights and powers under this Mortgage or under
any of the other Loan Documents or other

                                       20
<PAGE>

agreement or any laws now or hereafter in force, notwithstanding some or all of
the Indebtedness and Obligations may now or hereafter be otherwise secured,
whether by mortgage, security agreement, pledge, lien, assignment or otherwise.
Neither the acceptance of this Mortgage nor its enforcement, shall prejudice or
in any manner affect Beneficiary's or Trustee's right to realize upon or enforce
any other security now or hereafter held by or for the benefit of Beneficiary,
it being agreed that Beneficiary shall be entitled to enforce and to cause
Trustee to enforce this Mortgage and any other security now or hereafter held by
or for the benefit of Beneficiary in such order and manner as Beneficiary may
determine in its absolute discretion. No remedy herein conferred upon or
reserved to Beneficiary or Trustee is intended to be exclusive of any other
remedy herein or by law provided or permitted, but each shall be cumulative and
shall be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute. Every power or remedy given by any
of the Loan Documents to Beneficiary or Trustee or to which Beneficiary or
Trustee may otherwise be entitled, may be exercised, concurrently or
independently, from time to time and as often as may be deemed expedient by
Beneficiary. In no event shall Beneficiary, in the exercise of the remedies
provided in this Mortgage (including, without limitation, in connection with the
assignment of Rents to Beneficiary, or the appointment of a receiver and the
entry of such receiver on to all or any part of the Mortgaged Property), unless
otherwise provided by applicable law, be deemed a "mortgagee in possession," and
Beneficiary shall not in any way be made liable for any act, either of
commission or omission, in connection with the exercise of such remedies.

         25. MULTIPLE SECURITY. If (a) the Premises shall consist of one or more
parcels, whether or not contiguous and whether or not located in the same
county, or (b) in addition to this Mortgage, Beneficiary, Trustee or any other
trustee on behalf of Beneficiary, shall now or hereafter hold one or more
additional mortgages, liens, deeds of trust or other security (directly or
indirectly) for the Indebtedness upon other property in the State or
Commonwealth in which the Premises are located (whether or not such property is
owned by Trustor or by others) or (c) both the circumstances described in
clauses (a) and (b) shall be true, then to the fullest extent permitted by law,
Beneficiary may, at its election, or Trustee may, at Beneficiary's election,
commence or consolidate in a single foreclosure action all foreclosure
proceedings against all such collateral securing the Indebtedness and the
Obligations (including the Mortgaged Property), which action may be brought or
consolidated in the courts of any county in which any of such collateral is
located. Trustor acknowledges that the right to maintain a consolidated
foreclosure action is a specific inducement to Beneficiary to extend the
Indebtedness, and Trustor, to the extent permitted by applicable law, expressly
and irrevocably waives any objections to the commencement or consolidation of
the foreclosure proceedings in a single action and any objections to the laying
of venue or based on the grounds of FORUM NON CONVENIENS which it may now or
hereafter have. Trustor further agrees, to the extent permitted by applicable
law, that if Beneficiary or Trustee shall be prosecuting one or more foreclosure
or other proceedings against a portion of the Mortgaged Property or against any
collateral other than the Mortgaged Property, which collateral directly or
indirectly secures the Indebtedness or the Obligations, or if Beneficiary or
Trustee shall have obtained a judgment of foreclosure and sale or similar
judgment against such collateral, then, whether or not such proceedings are
being maintained or judgments were obtained in or outside the State or
Commonwealth in which the Premises are located, Beneficiary, or Trustee, at
Beneficiary's direction, may commence or continue foreclosure proceedings and
exercise the other remedies granted in this Mortgage against all or any part of
the Mortgaged Property and Trustor waives any objections to the

                                       21
<PAGE>

commencement or continuation of a foreclosure of this Mortgage or exercise of
any other remedies hereunder based on such other proceedings or judgments, and
waives any right to seek to dismiss, stay, remove, transfer or consolidate
either any action under this Mortgage or such other proceedings on such basis.
Neither the commencement nor continuation of proceedings to foreclose this
Mortgage nor the exercise of any other rights hereunder nor the recovery of any
judgment by Beneficiary in any such proceedings shall prejudice, limit or
preclude Beneficiary's right to commence or continue one or more foreclosure or
other proceedings or obtain a judgment against any other collateral (either in
or outside the State or Commonwealth in which the Premises are located) which
directly or indirectly secures the Indebtedness, and Trustor expressly waives,
to the extent permitted by applicable law, any objections to the commencement
of, continuation of, or entry of a judgment in such other proceedings or
exercise of any remedies in such proceedings based upon any action or judgment
connected to this Mortgage, and Trustor also waives, to the extent permitted by
applicable law, any right to seek to dismiss, stay, remove, transfer or
consolidate either such other proceedings or any action under this Mortgage on
such basis. It is expressly understood and agreed that to the fullest extent
permitted by law, Beneficiary may, at its election, cause the sale of all
collateral which is the subject of a single foreclosure action at either a
single sale or at multiple sales conducted simultaneously and take such other
measures as are appropriate in order to effect the agreement of the parties to
dispose of and administer all collateral securing the Indebtedness or the
Obligations (directly or indirectly) in the most economical and least
time-consuming manner.

         26. SUCCESSORS AND ASSIGNS. All covenants of Trustor contained in this
Mortgage are imposed solely and exclusively for the benefit of Beneficiary,
Trustee, the Secured Parties, and their successors and/or assigns, and no other
person or entity shall have standing to require compliance with such covenants
or be deemed, under any circumstances, to be a beneficiary of such covenants,
any or all of which may be freely waived in whole or in part by Beneficiary at
any time if in its sole discretion it deems such waiver advisable. All such
covenants of Trustor shall run with the land and bind Trustor, the successors
and assigns of Trustor (and each of them) and all subsequent owners,
encumbrancers and tenants of the Mortgaged Property, and shall inure to the
benefit of Beneficiary, Trustee, the Secured Parties, and their successors and
assigns. The word "Trustor" shall be construed as if it read "Trustors" whenever
the sense of this Mortgage so requires and if there shall be more than one
Trustor, the obligations of the Trustors shall be joint and several. Each
Trustor hereby waives any and all defenses applicable or available to guarantors
or sureties arising as a result of the joint and several nature of the
obligations of Trustors hereunder. Without limiting the generality of the
foregoing, the waivers of the Guarantors (as defined in the Guarantee and
Collateral Agreement) set forth in Section 2.5 of the Guarantee and Collateral
Agreement are hereby incorporated by this reference MUTATIS MUTANDIS and such
waivers shall be deemed to be made by Trustors hereunder as if such waivers had
been expressly set forth herein.

         27. NO WAIVERS, ETC. Any failure by Beneficiary or Trustee to insist
upon the strict performance by Trustor of any of the terms and provisions of
this Mortgage shall not be deemed to be a waiver of any of the terms and
provisions hereof, and Beneficiary and Trustee, notwithstanding any such
failure, shall have the right thereafter to insist upon the strict performance
by Trustor of any and all of the terms and provisions of this Mortgage to be
performed by Trustor. Beneficiary, and at Beneficiary's direction, Trustee, may
release, regardless of consideration and without the necessity for any notice to
or consent by the holder of

                                       22
<PAGE>

any subordinate lien on the Mortgaged Property, any part of the security held
for the obligations secured by this Mortgage without, as to the remainder of the
security, in any way impairing or affecting the lien of this Mortgage or the
priority of such lien over any subordinate lien.

         28. GOVERNING LAW, ETC. This Mortgage shall be governed by and
construed and interpreted in accordance with the laws of the state in which the
Mortgaged Property is located, except that Trustor expressly acknowledges that
by their respective terms the Credit Agreement and the Notes shall be governed
and construed in accordance with the laws of the State of New York, and for
purposes of consistency, Trustor agrees that in any IN PERSONAM proceeding
related to this Mortgage the rights of the parties to this Mortgage shall also
be governed by and construed in accordance with the laws of the State of New
York governing contracts made and to be performed in that State, without regard
to principles of conflict of law.

         29. CERTAIN DEFINITIONS. Unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, words used in
this Mortgage shall be used interchangeably in singular or plural form and the
word "Trustor" shall mean "each Trustor or any subsequent owner or owners of the
Mortgaged Property or any part thereof or interest therein," the word
"Beneficiary" shall mean "Beneficiary or any successor agent for the Lenders,"
the word "Trustee" shall mean "Trustee or any other trustee acting on behalf of
Beneficiary," the word "Notes" shall mean "the Notes, the Credit Agreement or
any other evidence of indebtedness secured by this Mortgage," the word "person"
shall include any individual, corporation, partnership, trust, unincorporated
association, government, governmental authority, or other entity, and the words
"Mortgaged Property" shall include any portion of the Mortgaged Property or
interest therein. Whenever the context may require, any pronouns used herein
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural and vice versa. The
captions in this Mortgage are for convenience or reference only and in no way
limit or amplify the provisions hereof.

         30. LAST DOLLARS SECURED; PRIORITY. This Mortgage secures only a
portion of the indebtedness and obligations owing or which may become owing by
the Trustor to the Secured Parties. The parties agree that any payments or
repayments of such indebtedness or obligations shall be and be deemed to be
applied first to the portion of the indebtedness or obligations that is not
secured hereby, it being the parties' intent that the portion of the
indebtedness and obligations last remaining unpaid shall be secured hereby.

         31. FUTURE ADVANCES. This Mortgage is executed and delivered to secure,
among other things, future advances and re-advances. It is understood and agreed
that this Mortgage secures present and future advances and re-advances made for
the benefit of Trustor and that the lien of such future advances and re-advances
shall relate back to the date this Mortgage, and Trustor and Beneficiary intend
that this Mortgage be a credit line deed of trust pursuant to Section 55-58.2 of
the Virginia Code, as amended.

         32. RECEIPT OF COPY. Trustor acknowledges that it has received a true
copy of this Mortgage.

                                       23
<PAGE>

         33. RELEASE. If Trustor shall and does pay the Indebtedness to
Beneficiary in immediately available funds and fully perform the Obligations,
all in the manner and at the times set forth herein or in the Guarantee and
Collateral Agreement and in the other Loan Documents, and if Trustor shall also
pay all satisfaction costs, including, but not limited to, reasonable attorneys'
fees and the cost of recording a satisfaction piece and, if appropriate, a
power-of-attorney to satisfy this Mortgage, then and from thenceforth this
Mortgage and the estate hereby created, granted, transferred and assigned shall
cease and become void; and, upon Trustor's request and at Trustor's expense,
Beneficiary shall execute and acknowledge a recordable release or reconveyance
of this Deed of Trust.

         34. DEED OF TRUST PROVISIONS.

         (a) If this Mortgage is recorded in the Commonwealth or State of
Arizona, California, Colorado, Idaho, Maryland, Missouri, Nebraska, Nevada, New
Mexico, North Carolina, Oregon, Tennessee, Texas, Utah, Virginia, Washington
State, West Virginia or in the District of Columbia, then this Mortgage is
intended to legally constitute a deed of trust, and all provisions of this
Section 34 shall apply to this Mortgage and to the Trustee hereunder. If this
Mortgage is recorded in any other state (except for Georgia or Louisiana), then
this Mortgage is intended to constitute a mortgage. In any state where this
instrument is a mortgage, Beneficiary shall hold and may exercise any and all
rights and remedies which are available to Beneficiary hereunder or Trustee
hereunder.

         (b) Trustee shall be under no duty to take any action hereunder except
as expressly required hereunder or by law, or to perform any act which would
involve Trustee in any expense or liability or to institute or defend any suit
in respect hereof, unless properly indemnified to Trustee's reasonable
satisfaction. Trustee, by acceptance of this Mortgage, covenants to perform and
fulfill the trusts herein created, being liable, however, only for gross
negligence or willful misconduct, and hereby waives any statutory fee and agrees
to accept reasonable compensation, in lieu thereof, for any services rendered by
Trustee in accordance with the terms hereof. Trustee may resign at any time upon
giving notice to Trustor and to Beneficiary. Beneficiary may remove Trustee at
any time or from time to time and select a successor trustee. In the event of
the death, removal, resignation, refusal to act, or inability to act of Trustee,
or in its sole discretion for any reason whatsoever Beneficiary may, without
notice and without specifying any reason therefor and without applying to any
court, select and appoint a successor trustee, by an instrument recorded
wherever this Mortgage is recorded and all powers, rights, duties and authority
of Trustee, as aforesaid, shall thereupon become vested in such successor. Such
substitute trustee shall not be required to give bond for the faithful
performance of the duties of Trustee hereunder unless required by Beneficiary.
The procedure provided for in this Section 34 for substitution of Trustee shall
be in addition to and not in exclusion of any other provisions for substitution,
by law or otherwise.

         (c) Trustor shall pay all reasonable costs, fees and expenses incurred
by Trustee and Trustee's agents and counsel in connection with the performance
by Trustee of Trustee's duties hereunder and all such costs, fees and expenses
shall be secured by this Mortgage.

                                       24
<PAGE>

         (d) With the approval of Beneficiary, Trustee shall have the right to
take any and all of the following actions: (i) to select, employ, and advise
with counsel (who may be, but need not be, counsel for Beneficiary) upon any
matters arising hereunder, including the preparation, execution, and
interpretation of the Credit Agreement, the Notes, this Mortgage or the other
Loan Documents, and shall be fully protected in relying as to legal matters on
the advice of counsel; (ii) to execute any of the trusts and powers hereof and
to perform any duty hereunder either directly or through his/her agents or
attorneys, and (iii) to select and employ, in and about the execution of his/her
duties hereunder, suitable accountants, engineers and other experts, agents and
attorneys in fact, either corporate or individual, not regularly in the employ
of Trustee, and Trustee shall not be answerable for any act, default,
negligence, or misconduct of any such accountant, engineer or other expert,
agent or attorney in fact, if selected with reasonable care, or for any error of
judgment or act done by Trustee in good faith, or be otherwise responsible or
accountable under any circumstances whatsoever, except for Trustee's gross
negligence or willful misconduct, and (iv) any and all other lawful action as
Beneficiary may instruct Trustee to take to protect or enforce Beneficiary's
rights hereunder. Trustee shall not be personally liable in case of entry by
Trustee, or anyone entering by virtue of the powers herein granted to Trustee,
upon the Mortgaged Property for debts contracted for or liability or damages
incurred in the management or operation of the Mortgaged Property. Trustee shall
have the right to rely on any instrument, document, or signature authorizing or
supporting an action taken or proposed to be taken by Trustee hereunder,
believed by Trustee in good faith to be genuine. Trustee shall be entitled to
reimbursement for actual expenses incurred by Trustee in the performance of
Trustee's duties hereunder and to reasonable compensation for such of Trustee's
services hereunder as shall be rendered.

         (e) All moneys received by Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received,
but need not be segregated in any manner from any other moneys (except to the
extent required by applicable law) and Trustee shall be under no liability for
interest on any moneys received by Trustee hereunder.

         (f) Should any deed, conveyance, or instrument of any nature be
required from Trustor by the Trustee or substitute trustee to more fully and
certainly vest in and confirm to the Trustee or substitute trustee such estates
rights, powers, and duties, then, upon request by the Trustee or substitute
trustee, any and all such deeds, conveyances and instruments shall be made,
executed, acknowledged, and delivered and shall be caused to be recorded and
filed by Trustor.

         (g) Any substitute trustee appointed pursuant to any of the provisions
hereof shall, without any further act, deed, or conveyance, become vested with
all the estates, properties, rights, powers, and trusts of its or his
predecessor in the rights hereunder with like effect as if originally named as
Trustee herein; but nevertheless, upon the written request of Beneficiary or of
the substitute trustee, the Trustee ceasing to act shall execute and deliver any
instrument transferring to such substitute trustee, upon the trusts herein
expressed, all the estates, properties, rights, powers, and trusts of the
Trustee so ceasing to act, and shall duly assign, transfer and deliver any of
the property and moneys held by such Trustee to the substitute trustee so
appointed in the Trustee's place. If one or more persons shall be appointed as
substitute

                                       25
<PAGE>

trustees, any one of such substitute trustees may exercise the powers granted to
the Trustee without the joinder of the other substitute trustees.

         35. STATE SPECIFIC PROVISIONS. Notwithstanding anything to the contrary
elsewhere in this Mortgage, as to any Mortgaged Property located in the
Commonwealth of Virginia:

         This Mortgage is made under and pursuant to the provisions of Sections
         55-59 to 55-60 and 26-49 of the Virginia Code, as amended, and shall be
         construed to impose and confer upon the parties hereto and Beneficiary
         all the rights. duties and obligations prescribed by such provisions,
         except as herein otherwise restricted, expanded, or changed, including
         without limitation the following rights, duties, and obligations
         described in short form:

                  (a) Exemptions waived.

                  (b) Subject to call on default.

                  (c) Renewal, extension or reinstatement permitted.

                  (d) Substitution of trustees collectively or of any reason
         whatsoever, and any number of times without exhaustion of the right to
         do so permitted.

                  (e) Any Trustee may act.

                                       26
<PAGE>

         IN WITNESS WHEREOF, this Mortgage has been duly executed by Trustor on
November 30, 1999, and is intended to be effective as of November 30, 1999.

                                    TRUSTOR:

                                    O'Sullivan Industries - Virginia, Inc., a
                                    Virginia corporation

                                    By: /s/ Richard D. Davidson
                                        ------------------------------------
                                        Name:
                                        Title:

                 The address of the within-named Beneficiary is:

                            3 World Financial Center
                            New York, New York 10285
                            Attention: Michael O'Brien

                                       27
<PAGE>

STATE OF NEW YORK,

COUNTY OF NEW YORK, to wit:

         I HEREBY CERTIFY, that on this ___ day of November, 1999, before me,
the undersigned notary, appeared, the of O'Sullivan Industries - Virginia,
Inc., acknowledged the foregoing instrument before me on behalf of Trustor.

                                            /s/ Diane C. Skudin           (SEAL)
                                            ------------------------------
                                                      Notary Public

My commission expires: April 30, 2001

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