Document:

STATE OF GEORGIA       )                                             Exhibit 4.3
                       )
COUNTY OF GWINNETT     )                                           [second lien]

================================================================================

                                                         Date: December 22, 1999

           FEE AND LEASEHOLD DEED TO SECURE DEBT, ASSIGNMENT OF LEASES
                        AND RENTS AND SECURITY AGREEMENT

                                  ("this Deed")

                                  BY AND AMONG

                               APPLE SUITES, INC.,
                      a Virginia corporation, as a grantor

                                  ("Fee Owner")

                                       AND

                         APPLE SUITES MANAGEMENT, INC.,
                      a Virginia corporation, as a grantor

                                   ("Lessee")

      Address of Fee Owner and Lessee:           306 East Main Street
                                                 Richmond, Virginia 23219
                                                 Attn: Mr. Glade M. Knight

                                       AND

                              PROMUS HOTELS, INC.,
                       a Delaware corporation, as grantee

                                  ("Mortgagee")

         Address of Mortgagee:          755 Crossover Lane
                                        Memphis, Tennessee 38117

THIS INSTRUMENT IS ALSO TO BE INDEXED IN THE INDEX OF FINANCING STATEMENTS.

THE NAMES OF THE DEBTOR AND SECURED PARTY FROM WHICH INFORMATION  CONCERNING THE
SECURITY  INTEREST  MAY BE  OBTAINED,  THE  MAILING  ADDRESS OF THE DEBTOR AND A
STATEMENT  INDICATING THE TYPES,  OR DESCRIBING THE ITEMS,  OF CHATTELS,  ARE AS
DESCRIBED  IN SECTION 3.05 HEREOF IN  COMPLIANCE  WITH THE  REQUIREMENTS  OF THE
OFFICIAL CODE OF GEORGIA ANNOTATED, SECTION 11-9-402.

THIS INSTRUMENT  CREATES A "PURCHASE MONEY SECURITY INTEREST" AS CONTEMPLATED BY
SECTION 11-9-107 OF THE OFFICIAL CODE OF GEORGIA ANNOTATED, PART OF THE PROCEEDS
OF WHICH ARE TO ENABLE A DEBTOR TO ACQUIRE RIGHTS IN AND TO COLLATERAL.

================================================================================

       This instrument prepared by, and after recording please return to:
                              Dewey Ballantine LLP
                           1301 Avenue of the Americas
                          New York, New York 10019-6092
                         Attention: Graham R. Hone, Esq.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                       Page
                                                                                                       ----
<S>                                                                                                     <C>
     RECITAL.............................................................................................1

     CERTAIN DEFINITIONS AND RULES OF CONSTRUCTION.......................................................1

     GRANTING CLAUSE.....................................................................................4

     ARTICLE I                 COVENANTS OF MORTGAGOR....................................................6
         Section 1.01.         (a)   Warranty of Title; Power and Authority..............................6
                               (b)   Hazardous Materials.................................................6
                               (c)   Flood Hazard Area...................................................7
         Section 1.02.         (a)   Further Assurances..................................................7
                               (b)   Information Reporting and Back-up Withholding.......................7
         Section 1.03.         (a)   Filing and Recording of Documents...................................7
                               (b)   Filing and Recording Fees and Other Charges.........................8
         Section 1.04.         Payment and Performance of Loan Documents.................................8
         Section 1.05.         Maintenance of Existence; Compliance with Laws............................8
         Section 1.06.         After-Acquired Property...................................................8
         Section 1.07.         (a)   Payment of Taxes and Other Charges..................................9
                               (b)   Payment of Mechanics and Materialmen................................9
                               (c)   Good Faith Contests.................................................9
         Section 1.08.         Taxes on Mortgagee.......................................................10
         Section 1.09.         Insurance................................................................10
         Section 1.10.         Protective Advances by Mortgagee.........................................13
         Section 1.11.         (a)   Visitation and Inspection..........................................14
                               (b)   Financial and Other Information....................................14
                               (c)   Estoppel Certificates..............................................14
         Section 1.12.         Maintenance of Premises and Improvements.................................14
         Section 1.13.         Condemnation.............................................................15
         Section 1.14.         Leases...................................................................15
         Section 1.15.         Premises Documents.......................................................16
         Section 1.16.         Trust Fund; Lien Laws....................................................16
         Section 1.17.         Assignment of Rents......................................................16
         Section 1.18.         Assignment of Leases.....................................................17
         Section 1.19.         New Leases...............................................................17

     ARTICLE II                EVENTS OF DEFAULT AND REMEDIES...........................................18
         Section 2.01.         Events of Default and Certain Remedies...................................18
         Section 2.02.         Other Matters Concerning Sales...........................................23
         Section 2.03.         Payment of Amounts Due...................................................24
         Section 2.04.         Actions; Receivers.......................................................25
</TABLE>

                                       (i)

<PAGE>
<TABLE>
<S>                                                                                                 <C>
         Section 2.05.         Mortgagee's Right to Possession..........................................26
         Section 2.06.         Remedies Cumulative......................................................26
         Section 2.07.         Moratorium Laws; Right of Redemption.....................................26
         Section 2.08.         Intentionally Omitted....................................................26
         Section 2.09.         Mortgagee's Rights Concerning Application of Amounts Collected...........26

     ARTICLE III               SECURITY AGREEMENT.......................................................27
         Section 3.01.         Scope and Intent.........................................................27
         Section 3.02.         Security Agreement.......................................................27
         Section 3.03.         Warranties and Covenants.................................................27
         Section 3.04.         Nature of Interest.......................................................27
         Section 3.05.         Financing Statement......................................................28

     ARTICLE IV                MISCELLANEOUS............................................................28
         Section 4.01.         Intentionally Omitted....................................................28
         Section 4.02.         Intentionally Omitted....................................................28
         Section 4.03.         Application of Certain Payments..........................................28
         Section 4.04.         Severability.............................................................28
         Section 4.05.         Modifications and Waivers in Writing.....................................28
         Section 4.06.         Notices..................................................................29
         Section 4.07.         Successors and Assigns...................................................29
         Section 4.08.         Limitation on Interest...................................................29
         Section 4.09.         Counterparts.............................................................29
         Section 4.10.         Substitute Mortgages.....................................................29
         Section 4.11.         Cancellation.............................................................29
         Section 4.12.         Subrogation..............................................................29
         Section 4.13.         Georgia Code Title 44....................................................30
         Section 4.14.         Mortgagee's Sale of Interests in Loan....................................30
         Section 4.15.         No Merger of Interests...................................................30
         Section 4.16.         CERTAIN WAIVERS..........................................................30
         Section 4.17.         GOVERNING LAW............................................................30
</TABLE>

                                       (ii)

<PAGE>

                   THE AMOUNT OF THIS MORTGAGE IS $4,384,500.

                                     RECITAL

         Mortgagee,  Hampton  Inns,  Inc. and Promus  Hotels  Florida,  Inc., as
sellers,  and Fee Owner, as buyer, have heretofore  entered into an Agreement of
Sale dated as of November 22, 1999 (as amended, the "Agreement of Sale") for the
purchase by Fee Owner on the date hereof of certain premises  described  therein
(the "New  Premises").  Fee Owner has  acquired and is the owner of the premises
described in SCHEDULE A attached hereto and made a part hereof and Lessee is the
owner of a leasehold interest therein.  Lessee  acknowledges that it will derive
substantial  benefit from the making of the loan contemplated herein and further
acknowledges  that the  obligation of Mortgagee to make such loan is conditioned
upon, among other things, the execution and delivery by Lessee of this Mortgage.
In connection  with the purchase of the New Premises by Fee Owner from Mortgagee
(or its  affiliates)  pursuant to the  Agreement of Sale,  Fee Owner will borrow
$4,384,500  from Mortgagee and has executed and delivered to Mortgagee its note,
dated the date hereof, obligating it to pay the sum of $4,384,500, with interest
thereon as therein provided and with final payment being due on January 1, 2001,
which note is by this  reference  made a part hereof (said note, as the same may
hereafter be amended, modified,  extended,  severed, assigned, renewed, replaced
or restated,  hereinafter,  the  "Note").  In order to secure the payment of the
Note, Fee Owner and Lessee, as grantors,  have duly authorized the execution and
delivery of this Mortgage. For purposes of this Mortgage, "Mortgagor" shall mean
Fee Owner and Lessee but only to the extent of their respective interests in the
Mortgaged  Property (as herein defined) and their respective  obligations  under
the Note and Ground Lease.

                  CERTAIN DEFINITIONS AND RULES OF CONSTRUCTION

         Mortgagor  and  Mortgagee  agree  that,  unless the  context  otherwise
specifies  or  requires,  the  following  terms shall have the  meanings  herein
specified.

         "Chattels"  means  all  fixtures,  furnishings,  fittings,  appliances,
apparatus, equipment, building materials and components,  machinery and articles
of personal  property,  of whatever kind or nature,  including any replacements,
proceeds or products  thereof and additions  thereto,  other than those owned by
lessees,  now or at any time  hereafter  intended to be or actually  affixed to,
attached to, placed upon, or used in any way in connection with the complete and
comfortable use, enjoyment, development, occupancy or operation of the Premises,
and  whether  located  on or off  the  Premises,  including,  but  not by way of
limitation,  all gas and  electric  fixtures,  radiators,  heaters,  engines and
machinery,  boilers, ranges, ovens, elevators and motors, bathtubs, sinks, water
closets, basins, pipes, faucets and other air-conditioning, plumbing and heating
fixtures,  mirrors,  mantles,  refrigerating  plant,  refrigerators,   iceboxes,
dishwashers,

<PAGE>

carpeting,  furniture,  laundry equipment,  cooking apparatus and appurtenances,
and all  building  material  and  equipment  now or  hereafter  delivered to the
Premises and intended to be installed therein,  fire extinguishers and any other
safety equipment required by governmental  regulations,  books and records; such
other goods, equipment,  chattels and personal property as are usually furnished
by landlords  in letting  premises of the  character  hereby  conveyed;  all the
right, title and interest of Mortgagor in any of the foregoing property which is
subject  to or  covered  by any  prior  security  agreement,  conditional  sales
contract,  chattel mortgage or similar lien or claim,  together with the benefit
of any  deposits or payments  now or  hereafter  made by  Mortgagee on behalf of
Mortgagor;  all trade  names,  trademarks,  service  marks,  logos and good will
related thereto which in any way now or hereafter belong, relate or appertain to
the  Premises  or any part  thereof;  all  renewals or  replacements  thereof or
articles  in  substitution  thereof  and all of the  estate,  right,  title  and
interest of Mortgagor in and to all  property of any nature  whatsoever,  now or
hereafter situated on the Premises or intended to be used in connection with the
operation  thereof;  and all  inventory,  accounts,  chattel  paper,  documents,
equipment,  fixtures,  farm products,  consumer goods,  general  intangibles and
personal  property  of every kind and nature  whatsoever  constituting  proceeds
acquired with cash proceeds of any of the property described hereinabove. All of
the estate,  right,  title and interest of Mortgagor in and to all the foregoing
property are hereby  declared and shall be deemed to be fixtures and  accessions
to the freehold and a part of the Premises as between  Mortgagor  and  Mortgagee
and all persons  claiming by, through or under them or either of them, and which
shall be deemed to be a portion  of the  security  for the  indebtedness  herein
described  and to be secured by this  Mortgage.  The location of the Chattels is
Cobb County, Georgia, which is also the location of the Premises.

         "Default Rate" means the rate (or, if more than one, the highest of the
rates) of  interest  per annum  provided in the Note plus 5%, but in no event to
exceed the maximum rate allowed by law.

         "Events of Default"  means the events and  circumstances  described  as
such in Section 2.01.

         "Ground  Lease"  means the Master  Hotel  Lease  Agreement  dated as of
September  20,  1999  between  Fee  Owner  and  Lessee  covering,   among  other
properties,  the  Premises  described in SCHEDULE A, as the same may be amended,
supplemented or modified from time to time.

         "Hazardous  Materials"  means  any  pollutant,   effluents,  emissions,
contaminants,  toxic or hazardous  wastes,  materials or  substances,  as any of
those terms are defined from time to time in or for the purposes of any relevant
environmental law, rule, regulation,  code, permit, order, notice, demand letter
or other binding  determination  (hereinafter,  "Environmental Laws") including,
without  limitation,  asbestos  fibers  and  friable  asbestos,  polychlorinated
biphenyls and any petroleum or  hydrocarbon-based  products or  derivatives,  in
each case in amounts in violation of applicable Environmental Laws.

         "Improvements"  means all  structures  or buildings,  and  replacements
thereof,  now or  hereafter  located  upon the  Premises,  including  all  plant
equipment, apparatus,

                                       2
<PAGE>

machinery and fixtures of every kind and nature whatsoever  forming part of said
structures or buildings.

         "lease" or "leases"  means any lease or leases of all or any portion of
the Premises, whether affecting the fee or leasehold portion thereof.

         "The lien  hereof",  "first  lien",  and "lien of this  Mortgage",  and
similar  phrases,  mean the  security  title to the  Mortgaged  Property  hereby
conveyed.

         "Loan" means the loan made by  Mortgagee to Fee Owner  evidenced by the
Note and secured hereby.

         "Mortgage"  or "this  Mortgage"  means this Fee and  Leasehold  Deed To
Secure Debt, Assignment of Leases and Rents And Security Agreement,  which shall
constitute  a security  agreement as defined by the Uniform  Commercial  Code as
enacted in the State of Georgia and which shall  operate and is to be  construed
as a deed passing legal title to the Mortgaged  Property and is made under those
provisions  of the  existing  laws of the State of Georgia  relating to deeds to
secure debt, and not as a mortgage.

         "Mortgage  Amount"  means and shall equal the sum of Four Million Three
Hundred Eighty-Four Thousand Five Hundred and 00/100 Dollars ($4,384,500).

         "Premises"  means the premises  described in SCHEDULE A,  including the
leasehold interest therein created by the Ground Lease, and including all of the
easements,  rights,  privileges and appurtenances  (including air or development
rights) thereunto belonging or in anywise  appertaining,  and all of the estate,
right, title,  interest,  claim or demand whatsoever of Mortgagor therein and in
the streets and ways adjacent thereto, either in law or in equity, in possession
or expectancy,  now or hereafter acquired,  and as used herein shall, unless the
context otherwise requires, be deemed to include the Improvements.

         "Premises   Documents"  means  all  reciprocal  easement  or  operating
agreements, declarations of covenants, conditions or restrictions,  declarations
of condominium, developer's or utility agreements with any village, town, county
or other governmental authority, and any similar such agreements or declarations
now or hereafter affecting the Premises or any part thereof.

         All terms of this  Mortgage  which are not defined above shall have the
meaning set forth elsewhere in this Mortgage.

         Except as expressly indicated otherwise, when used in this Mortgage (i)
"or" is not exclusive, (ii) "hereunder",  "herein",  "hereof" and the like refer
to this Mortgage as a whole, (iii) "Article",  "Section" and "Schedule" refer to
Articles,  Sections and  Schedules of this  Mortgage,  (iv) terms defined in the
singular have a correlative  meaning when used in the plural and vice versa, (v)
a reference to a law or statute  includes any amendment or  modification  to, or
replacement  of,  such law or  statute  and (vi) a  reference  to an  agreement,
instrument or document means such agreement,  instrument or document as the same
may be amended,  modified or  supplemented  from time to time in accordance

                                       3
<PAGE>

with its terms and as permitted  hereby and by the other  documents  executed or
delivered  to  Mortgagee  in  connection  with the Loan.  The cover page and all
Schedules  hereto are incorporated  herein and made a part hereof.  Any table of
contents and the headings and captions herein are for convenience only and shall
not affect the interpretation or construction hereof.

                                 GRANTING CLAUSE

         NOW,  THEREFORE,  Mortgagor,  in  consideration  of the premises and in
order to secure the payment of both the  principal  of, and the interest and any
other sums payable under,  the Note or this Mortgage  (together with any and all
other  purchase  money  indebtedness  now or  hereafter  owing by  Mortgagor  to
Mortgagee,  however  incurred,  but not  including  sums  owed by  Mortgagor  to
Mortgagee  in  respect  of  franchise  fees,  management  fees or any other sums
payable under the License Agreement or the Management  Agreement (as hereinafter
defined)) and the performance and observance of all the provisions hereof and of
the Note,  including the payment of any sums advanced by Mortgagee to pay taxes,
assessments,  insurance  premiums,  or the costs of  repairing,  maintaining  or
preserving  the Premises to the extent the  aggregate of such sums and any other
sums  expended  pursuant  hereto exceed the sum of the Mortgage  Amount,  hereby
gives, grants, bargains, sells, warrants,  aliens, remises,  releases,  conveys,
assigns,  transfers,  sets over and  confirms  unto  Mortgagee,  all its estate,
right,  title  and  interest  in,  to and  under  any and  all of the  following
described property (hereinafter,  the "Mortgaged Property") whether now owned or
held or hereafter acquired:

                  (i)      the Premises;

                  (ii)     the Improvements;

                  (iii)    the Chattels;

                  (iv)     the Premises Documents;

                  (v)      all  rents,  royalties,   issues,  profits,  revenue,
         income, recoveries,  reimbursements and other benefits of the Mortgaged
         Property  (hereinafter,  the "Rents")  and all leases of the  Mortgaged
         Property or  portions  thereof now or  hereafter  entered  into and all
         right, title and interest of Mortgagor thereunder,  including,  without
         limitation,   cash  or  securities   deposited   thereunder  to  secure
         performance  by the lessees of their  obligations  thereunder,  whether
         such cash or  securities  are to be held  until the  expiration  of the
         terms of such leases or applied to one or more of the  installments  of
         rent coming due immediately  prior to the expiration of such terms, and
         including  any  guaranties  of such leases and any lease  cancellation,
         surrender or termination fees in respect thereof, all subject, however,
         to the provisions of Section 4.01;

                  (vi)     all  (a)   development   work  product   prepared  in
         connection   with  the  Premises,   including,   but  not  limited  to,
         engineering,  drainage,  traffic,  soil and other  studies  and  tests;
         water,  sewer,  gas,  electrical  and  telephone  approvals,  taps

                                       4
<PAGE>

         and  connections;  surveys,  drawings,  plans and  specifications;  and
         subdivision,  zoning and  platting  materials;  (b)  building and other
         permits,  rights,  licenses and approvals relating to the Premises; and
         (c) contracts and agreements (including, without limitation,  contracts
         with architects and engineers, construction contracts and contracts for
         the maintenance or management of the Premises), contract rights, logos,
         trademarks,  trade names, copyrights and other general intangibles used
         or useful in connection  with the ownership,  operation or occupancy of
         the Premises or any part thereof;

                  (vii)    all   proceeds  of  the   conversion,   voluntary  or
         involuntary,  of any of the foregoing  into cash or liquidated  claims,
         including,  without limitation,  proceeds of insurance and condemnation
         awards, and all rights of Mortgagor to refunds of real estate taxes and
         assessments;

                  (viii)   all  revenue  and income  received by or on behalf of
         Mortgagor  resulting  from the  operation  of the  Premises as a hotel,
         including  all sums (1) paid by  customers  for the use of hotel  rooms
         located  within  the  Premises,  (2)  derived  from  food and  beverage
         operations  located  within the Premises,  (3) generated by other hotel
         operations,  including any parking, convention, sports and recreational
         facilities and (4) business interruption insurance proceeds;

                  (ix)     all accounts and accounts  receivable,  including all
         present and future right to payment from any consumer  credit or charge
         card organization or entity (such as those  organizations which sponsor
         or administer  the American  Express,  Carte  Blanche,  Discover  Card,
         Diners  Club,  Visa and Master  Card)  arising  out of the  leasing and
         operation  of, or the  business  conducted at or in relation to, all or
         any part of the Premises; and

                  (x)      any deposit, operating or other account including the
         entire  balance  therein  (now  or  hereafter  existing)  of  Mortgagor
         containing  proceeds of the  operation of the Premises with any banking
         or  financial  institution  and  all  money,  instruments,  securities,
         documents,  chattel paper,  credits,  demands,  and any other property,
         rights,  or  interests of  Mortgagor  relating to the  operation of the
         Premises which at any time shall come into the  possession,  custody or
         control of any banking or financial institution.

         TO HAVE AND TO HOLD the  Mortgaged  Property  with all and singular the
parts,  rights,  members and appurtenances  thereto now or hereafter  belonging,
relating  or  appertaining,  to the use,  benefit and behalf of  Mortgagee,  its
successors and assigns forever.

                                       5
<PAGE>

                                    ARTICLE I

                             COVENANTS OF MORTGAGOR

         Mortgagor represents, except as known by Mortgagee or its affiliates to
the  contrary,  or disclosed to  Mortgagee  in  connection  with the sale of the
Mortgaged Property to Mortgagor, and Mortgagor covenants and agrees as follows:

         Section 1.01.  (a) Warranty of Title;  Power and  Authority.  Mortgagor
warrants that,  with respect to the fee interest in the Premises,  it has a good
and marketable title to an indefeasible fee estate subject to no lien, charge or
encumbrance,  that the Ground Lease is subject to no lien, charge or encumbrance
of any kind and is prior to all liens,  charges and  encumbrances  whatsoever on
the fee interest of the landlord  thereunder,  except in either case such as are
listed as exceptions to title in the title policy insuring the lien hereof; and,
Mortgagor  further warrants that, with respect to the leasehold  interest in the
Premises,  that it is the owner of a valid  and  subsisting  interest  as tenant
under the Ground Lease, that the Ground Lease is in full force and effect, there
are no defaults thereunder and no event has occurred or is occurring which after
notice or  passage of time or both will  result in such a default;  that it owns
the Chattels,  all leases and the Rents in respect of the Mortgaged Property and
all  other  personal  property  encumbered  hereby  free and  clear of liens and
claims; and Mortgagor warrants that this Mortgage is and will remain a valid and
enforceable  lien on the  Mortgaged  Property  subject  only  to the  exceptions
referred to above.  Mortgagor has full power and lawful authority to subject the
Mortgaged  Property  to the lien  hereof in the manner and form  herein  done or
intended hereafter to be done. Mortgagor will preserve such title, will preserve
such leasehold  estate created by the Ground Lease and will forever  warrant and
defend the same to Mortgagee and  Mortgagee and will forever  warrant and defend
the validity  and priority of the lien hereof  against the claims of all persons
and parties  whomsoever.  Mortgagor will perform or cause to be performed all of
the  covenants  and  conditions  required to be performed by it under the Ground
Lease,  will  do  all  things  necessary  to  preserve   unimpaired  its  rights
thereunder,  and will not (i) enter into any agreement modifying or amending the
Ground Lease that would reduce the term of the Ground Lease, increase the amount
of rent payable  thereunder  (except as  contemplated  by the  provisions of the
Ground  Lease) or have a  material  adverse  effect on the lien  created by this
Mortgage or the rights of Mortgagee  hereunder or (ii) for so long as the Ground
Lease is in effect, release the landlord thereunder from any obligations imposed
upon it  thereby.  If  Mortgagor  receives a notice of default  under the Ground
Lease, it shall immediately cause a copy of such notice to be sent by registered
United States mail to Mortgagee.

         (b)  Hazardous  Materials.   To  the  best  of  Mortgagor's  knowledge,
Mortgagor  represents  and warrants  that (i) the Premises and the  improvements
thereon and the surrounding  areas are not currently and have never been subject
to Hazardous Materials or their effects, in each case in amounts in violation of
applicable  Environmental  Laws, (ii) neither it nor any portion of the Premises
or improvements thereon is in violation of, or subject to any existing,  pending
or threatened investigation or proceeding by any governmental authorities under,
any Environmental Law, (iii) there are no claims,

                                       6
<PAGE>

litigation,  administrative or other proceedings,  whether actual or threatened,
or judgments or orders,  concerning  Hazardous  Materials relating in any way to
the Premises or the  improvements  thereon and (iv) Mortgagor is not required by
any  Environmental Law to obtain any permits or licenses to construct or use any
improvements, fixtures or equipment with respect to the Premises, or if any such
permit or  license  is  required  it has been  obtained  and is capable of being
mortgaged  and  assigned  hereby.  Mortgagor  will  comply  with all  applicable
Environmental  Laws and will, at its sole cost and expense,  promptly remove, or
cause the removal of, any and all Hazardous  Materials or the effects thereof at
any time identified as being on, in, under or affecting the Premises.

         (c) Flood Hazard Area.  Mortgagor  represents that neither the Premises
nor any part thereof is located in an area  identified  by the  Secretary of the
United States  Department of Housing and Urban  Development or by any applicable
federal  agency as having  special  flood  hazards or, if it is,  Mortgagor  has
obtained the insurance required by Section 1.09.

         Section 1.02. (a) Further Assurances.  Mortgagor will, at its sole cost
and expense,  do,  execute,  acknowledge  and deliver all and every such further
acts,  deeds,  conveyances,   mortgages,  assignments,  notices  of  assignment,
transfers  and  assurances  as  Mortgagee  shall  from  time to time  reasonably
require,  for  the  better  assuring,  conveying,  assigning,  transferring  and
confirming unto Mortgagee the property and rights hereby conveyed or assigned or
intended now or hereafter so to be, or which  Mortgagor  may be or may hereafter
become bound to convey or assign to Mortgagee, or for carrying out the intention
or facilitating the performance of the terms hereof, or for filing,  registering
or recording this Mortgage and, on demand, will execute and deliver,  and hereby
authorizes Mortgagee to execute and file in Mortgagor's name, to the extent they
may  lawfully do so, one or more  financing  statements,  chattel  mortgages  or
comparable  security  instruments,  to  evidence  or  perfect  more  effectively
Mortgagee's security interest in and the lien hereof upon the Chattels and other
personal property encumbered hereby.

         (b) Information  Reporting and Back-up Withholding.  Mortgagor will, at
its sole cost and expense,  do,  execute,  acknowledge and deliver all and every
such acts,  information  reports,  returns and withholding of monies as shall be
necessary or appropriate to comply fully, or to cause full compliance,  with all
applicable  information  reporting and back-up  withholding  requirements of the
Internal  Revenue  Code of 1986  (including  all  regulations  now or  hereafter
promulgated  thereunder) in respect of the Premises and all transactions related
to the  Premises,  and will at all times  provide  Mortgagee  with  satisfactory
evidence of such compliance and notify Mortgagee of the information  reported in
connection with such compliance.

         Section  1.03.  (a)  Filing  and  Recording  of  Documents.   Mortgagor
forthwith upon the execution and delivery  hereof,  and thereafter  from time to
time,  will cause this Mortgage and any security  instrument  creating a lien or
evidencing  the lien hereof upon the  Chattels  and each  instrument  of further
assurance to be filed,  registered or recorded in such manner and in such places
as may be required  by any  present or future law in order to publish  notice of
and fully to protect the lien hereof upon, and the interest of Mortgagee in, the
Mortgaged Property.

                                       7
<PAGE>

         (b) Filing and Recording Fees and Other Charges. Mortgagor will pay all
filing,  registration  or  recording  fees,  and all  expenses  incident  to the
execution and  acknowledgment  hereof,  any mortgage  supplemental  hereto,  any
security instrument with respect to the Chattels,  and any instrument of further
assurance,   and  any  reasonable  expenses   (including   attorneys'  fees  and
disbursements)  incurred by Mortgagee in connection  with the Loan, and will pay
all federal,  state,  county and municipal stamp taxes and other taxes,  duties,
imposts,  assessments  and  charges  arising  out of or in  connection  with the
execution and delivery of the Note,  this  Mortgage,  any mortgage  supplemental
hereto,  any security  instrument with respect to the Chattels or any instrument
of further assurance.

         Section 1.04. Payment and Performance of Loan Documents. Mortgagor will
punctually  pay the  principal  and interest and all other sums to become due in
respect hereof and of the Note at the time and place and in the manner specified
therein,  according to the true intent and meaning  thereof,  all in currency of
the United  States of America  which at the time of such payment  shall be legal
tender for the  payment of public and  private  debts.  Mortgagor  will duly and
timely  comply  with and  perform all of the terms,  provisions,  covenants  and
agreements contained in said documents and in all other documents or instruments
executed or delivered by Mortgagor to Mortgagee in connection with the Loan, and
will permit no failures of performance thereunder.

         Section  1.05.   Maintenance  of  Existence;   Compliance   with  Laws.
Mortgagor,  if other than a natural person,  will, so long as it is owner of all
or part of the Mortgaged Property,  do all things necessary to preserve and keep
in full force and effect its existence,  franchises,  rights and privileges as a
business or stock corporation,  partnership, limited liability company, trust or
other entity under the laws of the state of its  formation.  Mortgagor will duly
and  timely  comply  with all laws,  regulations,  rules,  statutes,  orders and
decrees  of any  governmental  authority  or  court  applicable  to it or to the
Mortgaged Property or any part thereof.

         Section 1.06. After-Acquired Property. All right, title and interest of
Mortgagor  in  and  to  all  extensions,  improvements,  betterments,  renewals,
substitutes and  replacements  of, and all additions and  appurtenances  to, the
Mortgaged  Property,  hereafter  acquired  by,  or  released  to,  Mortgagor  or
constructed,  assembled  or  placed  by  Mortgagor  on  the  Premises,  and  all
conversions  of  the  security  constituted   thereby,   immediately  upon  such
acquisition, release, construction,  assembling, placement or conversion, as the
case may be, and in each such case,  without any further  mortgage,  conveyance,
assignment or other act by Mortgagor, shall become subject to the lien hereof as
fully and completely, and with the same effect, as though now owned by Mortgagor
and  specifically  described in the Granting  Clause hereof,  but at any and all
times  Mortgagor  will execute and deliver to Mortgagee any and all such further
assurances,  mortgages,  conveyances  or  assignments  thereof as Mortgagee  may
reasonably require for the purpose of expressly and specifically  subjecting the
same to the lien hereof.

         Section 1.07. (a) Payment of Taxes and Other Charges.  Mortgagor,  from
time to time before the same shall become delinquent, will pay and discharge all
taxes of every

                                       8
<PAGE>

kind and  nature  (including  real  and  personal  property  taxes  and  income,
franchise,  withholding,  profits  and gross  receipts  taxes),  all general and
special assessments, levies, permits, inspection and license fees, all water and
sewer  rents and  charges,  and all other  public  charges  whether of a like or
different nature,  imposed upon or assessed against it or the Mortgaged Property
or any part thereof or upon the revenues,  rents, issues,  income and profits of
the Mortgaged Property or arising in respect of the occupancy, use or possession
thereof. Mortgagor will, upon Mortgagee's request, deliver to Mortgagee receipts
evidencing the payment of all such taxes,  assessments,  levies, fees, rents and
other  public  charges  imposed  upon or  assessed  against it or the  Mortgaged
Property or any portion thereof.

         Mortgagee  may, at its option  following the  occurrence of an Event of
Default,  to be exercised by thirty (30) days' notice to Mortgagor,  require the
deposit by Mortgagor,  at the time of each payment of an installment of interest
or principal  under the Note (but no less often than monthly),  of an additional
amount  sufficient to discharge the obligations  under this clause (a) when they
become due.  The  determination  of the amount so payable and of the  fractional
part  thereof to be  deposited  with  Mortgagee,  so that the  aggregate of such
deposits shall be sufficient for this purpose, shall be made by Mortgagee in its
sole  discretion.  Such amounts shall be held by Mortgagee  without interest and
applied to the payment of the  obligations in respect of which such amounts were
deposited or, at Mortgagee's  option, to the payment of said obligations in such
order or priority as  Mortgagee  shall  determine,  on or before the  respective
dates on which the same or any of them would become delinquent. If one (1) month
prior to the due date of any of the aforementioned  obligations the amounts then
on deposit  therefor shall be insufficient for the payment of such obligation in
full,  Mortgagor  within ten (10) days after demand shall  deposit the amount of
the  deficiency  with  Mortgagee.  Nothing herein  contained  shall be deemed to
affect any right or remedy of Mortgagee  under any  provisions  hereof or of any
statute  or rule of law to pay any such  amount  and to add the  amount so paid,
together with interest at the Default Rate, to the indebtedness hereby secured.

         (b) Payment of Mechanics and Materialmen. Mortgagor will pay, from time
to time when the same  shall  become  due,  all  lawful  claims  and  demands of
mechanics, materialmen,  laborers, and others which, if unpaid, might result in,
or permit the creation of, a lien on the Mortgaged Property or any part thereof,
and in general will do or cause to be done everything necessary so that the lien
hereof shall be fully preserved, at the cost of Mortgagor and without expense to
Mortgagee,  other  than those  liens  which  Mortgagee  or its  affiliates  have
indemnified  Mortgagor  pursuant to the provisions set forth in the Agreement of
Sale.

         (c) Good Faith Contests. Nothing in this Section 1.07 shall require the
payment or discharge of any obligation imposed upon Mortgagor by this Section so
long as Mortgagor shall in good faith and at its own expense contest the same or
the validity  thereof by appropriate  legal  proceedings  which shall operate to
prevent  the  collection  thereof or other  realization  thereon and the sale or
forfeiture  of the  Mortgaged  Property or any part thereof to satisfy the same;
provided,  however,  that (i)  during  such  contest  Mortgagor  shall set aside
reserves  sufficient to discharge  Mortgagor's  obligation

                                       9
<PAGE>

hereunder  and of any  additional  charge,  penalty or expense  arising  from or
incurred  as a result of such  contest  and (ii) if at any time  payment  of any
obligation  imposed upon Mortgagor by clause (a) above shall become necessary to
prevent the delivery of a tax deed or other  instrument  conveying the Mortgaged
Property or any portion thereof because of non-payment, then Mortgagor shall pay
the same in  sufficient  time to prevent the  delivery of such tax deed or other
instrument.

         Section 1.08. Taxes on Mortgagee.  Mortgagor will pay any taxes, except
income taxes,  imposed on Mortgagee by reason of their  ownership of the Note or
this Mortgage,  provided that Mortgagee can require  payment of the Note in full
within  ninety (90) days if it shall be illegal for  Mortgagor to pay any tax or
if the  payment  of such tax by  Mortgagor  would  result  in the  violation  of
applicable usury laws .

         Section 1.09.  Insurance.  (a) Mortgagor will at all times (directly or
indirectly) provide, maintain and keep in force:

                  (i)      policies  of   insurance   insuring   the   Premises,
         Improvements and Chattels against loss or damage by fire and lightning;
         against loss or damage by other risks  embraced by coverage of the type
         now known as All Risk  Replacement  Cost  Insurance  with agreed amount
         endorsement,  including  but not  limited to riot and civil  commotion,
         vandalism,  malicious  mischief and theft; and against such other risks
         or hazards as Mortgagee  from time to time  reasonably may designate in
         an amount  sufficient to prevent Mortgagee or Mortgagor from becoming a
         co-insurer under the terms of the applicable policies, but in any event
         in an amount  not less than 100% of the then full  replacement  cost of
         the Improvements (exclusive of the cost of excavations, foundations and
         footings  below  the  lowest  basement  floor)  without  deduction  for
         physical depreciation;

                  (ii)     policies of insurance  insuring the Premises  against
         the loss of "rental value" of the buildings which  constitute a part of
         the  Improvements  on a "rented  or vacant  basis"  arising  out of the
         perils insured against  pursuant to clause (i) above in an amount equal
         to  not  less  than  one  (1)  year's  gross  "rental   value"  of  the
         Improvements.  "Rental  value" as used  herein is defined as the sum of
         (A) the total  anticipated gross rental income from tenant occupancy of
         such buildings as furnished and equipped, (B) the amount of all charges
         which are the legal  obligation of tenants and which would otherwise be
         the  obligation  of  Mortgagor  and (C) the  fair  rental  value of any
         portion of such  buildings  which is occupied by  Mortgagor.  Mortgagor
         hereby  assigns the  proceeds of such  insurance  to  Mortgagee,  to be
         applied by Mortgagee  in payment of the  interest and  principal on the
         Note,  insurance premiums,  taxes,  assessments and private impositions
         until such time as the Improvements shall have been restored and placed
         in full  operation,  at which time,  provided  Mortgagor is not then in
         default hereunder, the balance of such insurance proceeds, if any, held
         by Mortgagee shall be paid over to Mortgagor;

                  (iii)    if all or part of the Premises are located in an area
         identified by the Secretary of the United States  Department of Housing
         and Urban  Development or

                                       10
<PAGE>

         by  any  applicable  federal  agency  as a  flood  hazard  area,  flood
         insurance in an amount at least equal to the maximum  limit of coverage
         available  under the National  Flood  Insurance Act of 1968,  provided,
         however,  that Mortgagee  reserves the right to require flood insurance
         in excess of said limit if such insurance is commercially  available up
         to the amount provided in clause (i) above;

                  (iv)     during any period of  restoration  under this Section
         1.09 or Section  1.13,  a policy or  policies of  builder's  "all risk"
         insurance,  written on a Standard  Builder's Risk Completed  Value Form
         (100%  non-reporting),  in an amount  not less than the full  insurable
         value  of  the  Premises   against  such  risks   (including,   without
         limitation,   fire  and  extended  coverage,  collapse  and  earthquake
         coverage to agreed limits) as Mortgagee may reasonably request, in form
         and substance acceptable to Mortgagee;

                  (v)      a  policy  or  policies   of  workers'   compensation
         insurance  as  required  by  workers'   compensation   insurance   laws
         (including  employer's liability insurance,  if requested by Mortgagee)
         covering all employees of Mortgagor;

                  (vi)     comprehensive  liability insurance on an "occurrence"
         basis  against  claims  for  "personal  injury"  liability,  including,
         without limitation,  bodily injury, death or property damage liability,
         with a limit of not less than  $15,000,000  in the  event of  "personal
         injury" to any number of persons or of damage to  property  arising out
         of one  "occurrence".  Such policies shall name Mortgagee as additional
         insured  by an  endorsement,  and  shall  contain  cross-liability  and
         severability of interest clauses, all satisfactory to Mortgagee; and

                  (vii)    such other insurance (including,  but not limited to,
         earthquake insurance), and in such amounts, as may from time to time be
         reasonably  required by Mortgagee  against the same or other  insurable
         hazards.

         Notwithstanding  anything  herein to the contrary,  for so long as that
certain Management  Agreement of even date herewith between Lessee and Mortgagee
with respect to the  Premises  remains in full force and effect (as the same may
be amended,  the  "Management  Agreement"),  the types and amounts of  insurance
required by the Management  Agreement to the extent  inconsistent with those set
forth above shall govern and control Mortgagor's obligations in respect thereof.

         (b) All policies of insurance required under this Section 1.09 shall be
issued  by  companies  having  Best's  ratings  and being  otherwise  reasonably
acceptable  to  Mortgagee,  shall  be  subject  to the  reasonable  approval  of
Mortgagee as to amount,  content,  form and expiration  date and, except for the
liability  policies  described in clauses (a)(v) and (vi) above, shall contain a
Non-Contributory   Standard   Mortgagee   Clause  and   Lender's   Loss  Payable
Endorsement, or their equivalents, in favor of Mortgagee, and shall provide that
the proceeds thereof shall be payable to Mortgagee. Mortgagee shall be furnished
with the  original of each  policy  required  hereunder,  which  policies  shall
provide that they shall not lapse, nor be modified or cancelled,  without thirty
(30) days'

                                       11
<PAGE>

written  notice to  Mortgagee.  At least thirty (30) days prior to expiration of
any policy required  hereunder,  Mortgagor shall furnish  Mortgagee  appropriate
proof of issuance of a policy  continuing in force the insurance  covered by the
policy so expiring. Mortgagor shall furnish to Mortgagee, promptly upon request,
receipts or other  satisfactory  evidence of the payment of the premiums on such
insurance policies.  In the event that Mortgagor does not deposit with Mortgagee
a new  certificate  or policy of insurance  with evidence of payment of premiums
thereon  at least  thirty  (30) days  prior to the  expiration  of any  expiring
policy,  then  Mortgagee  may,  but  shall not be  obligated  to,  procure  such
insurance  and pay the  premiums  therefor,  and  Mortgagor  agrees  to repay to
Mortgagee  the  premiums  thereon  promptly on demand,  together  with  interest
thereon at the Default Rate.

         (c) Mortgagor hereby assigns to Mortgagee all proceeds of any insurance
required to be maintained  by this Section 1.09 which  Mortgagor may be entitled
to receive for loss or damage to the  Premises,  Improvements  or Chattels.  All
such  insurance  proceeds  shall be payable to Mortgagee,  and Mortgagor  hereby
authorizes and directs any affected  insurance  company to make payment  thereof
directly to Mortgagee  subject,  however,  to clause (f) below.  Mortgagor shall
give  prompt  notice to  Mortgagee  of any  casualty,  whether  or not of a kind
required to be insured  against  under the  policies to be provided by Mortgagor
hereunder,  such  notice to  generally  describe  the  nature  and cause of such
casualty  and the extent of the damage or  destruction.  Mortgagor  may  settle,
adjust or compromise any claims for loss,  damage or destruction,  regardless of
whether  or not there are  insurance  proceeds  available  or  whether  any such
insurance proceeds are sufficient in amount to fully compensate for such loss or
damage,  subject to Mortgagee's  prior consent.  Notwithstanding  the foregoing,
Mortgagee  shall have the right to join  Mortgagor  in  settling,  adjusting  or
compromising  any loss of  $100,000 or more.  Mortgagor  hereby  authorizes  the
application  or release by Mortgagee of any insurance  proceeds under any policy
of insurance, subject to the other provisions hereof. The application or release
by Mortgagee of any  insurance  proceeds  shall not cure or waive any default or
notice of default hereunder or invalidate any act done pursuant to such notice.

         (d) In the event of the  foreclosure  hereof or other  transfer  of the
title to the Mortgaged Property in  extinguishment,  in whole or in part, of the
indebtedness  secured hereby,  all right, title and interest of Mortgagor in and
to any insurance  policy,  or premiums or payments in  satisfaction of claims or
any other  rights  thereunder  then in force,  shall  pass to the  purchaser  or
grantee  notwithstanding the amount of any bid at such foreclosure sale. Nothing
contained  herein shall  prevent the accrual of interest as provided in the Note
on any  portion of the  principal  balance due under the Note until such time as
insurance  proceeds  are actually  received and applied to reduce the  principal
balance outstanding.

         (e) Mortgagor shall not take out separate insurance  concurrent in form
or contributing  in the event of loss with that required to be maintained  under
this Section 1.09 unless  Mortgagee is included  thereon as a named insured with
loss payable to Mortgagee under standard mortgage  endorsements of the character
and to the extent above  described.  Mortgagor shall promptly  notify  Mortgagee
whenever any such

                                       12
<PAGE>

separate  insurance is taken out and shall  promptly  deliver to  Mortgagee  the
policy or policies of such insurance.

         (f) Any and all monies  received  as  payment  which  Mortgagor  may be
entitled to receive for loss or damage to the Premises, Improvements or Chattels
under any  insurance  maintained  pursuant  to this  Section  1.09  (other  than
proceeds under the policies required by clause (a)(ii) above) shall be paid over
to Mortgagee and, at Mortgagee's option, either applied to the prepayment of the
Note and all interest  and other sums  accrued and unpaid in respect  thereof or
disbursed  from  time to time to  Mortgagor  in  reimbursement  of its costs and
expenses  incurred in the  restoration of the  Improvements  in accordance  with
Mortgagee's standard  construction lending practices,  terms and conditions,  in
either  case,  less  Mortgagee's  reasonable  expenses  for  collecting  and, if
applicable,   disbursing  the  insurance  proceeds,  or  otherwise  incurred  in
connection   therewith.   Notwithstanding  the  provisions  of  the  immediately
preceding  sentence,  provided no default exists hereunder,  Mortgagee agrees to
apply any such proceeds received by it to the reimbursement of Mortgagor's costs
of restoring the Improvements.  Advances of insurance  proceeds shall be made to
Mortgagor from time to time in accordance with Mortgagee's standard construction
lending practices, terms and conditions;  amounts not required for such purposes
shall be applied,  at Mortgagee's  option,  to the prepayment of the Note and to
interest  accrued and unpaid thereon in such order and  proportions as Mortgagee
may elect.  In no event shall  Mortgagee be required to advance such proceeds to
Mortgagor  unless Mortgagee shall have (i) received  satisfactory  evidence that
the  funding/expiration  dates  of the  commitment,  if any,  for the  permanent
financing of the  Improvements  have been extended for such period of time as is
reasonably necessary to complete said restoration and (ii) reasonably determined
that the restoration of the  Improvements  can be completed by the Maturity Date
of the Note at a cost which does not  exceed the amount of  available  insurance
proceeds  or, in the event  that such  proceeds  are  reasonably  determined  by
Mortgagee to be inadequate,  Mortgagee shall have received from Mortgagor a cash
deposit  equal to the  excess of said  estimated  cost of  restoration  over the
amount  of  said  available  proceeds.  If the  conditions  for the  advance  of
insurance  proceeds for  restoration set forth in clauses (i) and (ii) above are
not satisfied  within sixty (60) days of Mortgagee's  receipt  thereof or if the
actual  restoration shall not have been commenced within such period,  Mortgagee
shall have the option at any time thereafter to apply such insurance proceeds to
the payment of the Note and to interest accrued and unpaid thereon in such order
and proportions as Mortgagee may elect.

         Section 1.10. Protective Advances by Mortgagee. If Mortgagor shall fail
to perform any of the covenants contained herein, Mortgagee may make advances to
perform the same on its behalf and all sums so advanced shall be a lien upon the
Mortgaged  Property and shall be secured hereby.  Mortgagor will repay on demand
all sums so advanced on its behalf together with interest thereon at the Default
Rate.  The  provisions  of this  Section  shall not  prevent  any default in the
observance  of any  covenant  contained  herein  from  constituting  an Event of
Default.

         Section  1.11.  (a)  Visitation  and  Inspection.  Mortgagor  will keep
adequate  records and books of account in  accordance  with  generally  accepted
accounting

                                       13
<PAGE>

principles  and  will  permit  Mortgagee,  by  their  agents,   accountants  and
attorneys,  to visit and inspect the Mortgaged  Property and examine its records
and books of account  and make  copies  thereof or  extracts  therefrom,  and to
discuss  its  affairs,  finances  and  accounts  with the  officers  or  general
partners,  as the case may be, of Mortgagor,  at such reasonable times as may be
requested by Mortgagee.

         (b)  Financial  and  Other  Information.   Mortgagor  will  deliver  to
Mortgagee with reasonable  promptness such financial information with respect to
Mortgagor or the Premises as Mortgagee may reasonably request from time to time.
All  financial  statements  of Mortgagor  shall be prepared in  accordance  with
generally  accepted  accounting  principles  and  shall  be  accompanied  by the
certificate of a principal  financial or accounting  officer or general partner,
as the case may be, of Mortgagor,  dated within five (5) days of the delivery of
such  statements  to  Mortgagee,  stating  that he or she  knows  of no Event of
Default,  nor of any event  which  after  notice or lapse of time or both  would
constitute an Event of Default, which has occurred and is continuing, or, if any
such event or Event of Default has occurred and is  continuing,  specifying  the
nature and period of existence  thereof and what action  Mortgagor  has taken or
proposes to take with  respect  thereto,  and,  except as  otherwise  specified,
stating that  Mortgagor  has  fulfilled  all of its  obligations  hereunder  and
otherwise  in respect of the Loan which are required to be fulfilled on or prior
to the date of such certificate.

         (c)  Estoppel  Certificates.  Mortgagor,  within  three  (3) days  upon
request in person or within five (5) days upon  request by mail,  will furnish a
statement,  duly  acknowledged,  of the  amount due  whether  for  principal  or
interest on this  Mortgage  and whether any offsets,  counterclaims  or defenses
exist against the indebtedness secured hereby.

         Section 1.12. Maintenance of Premises and Improvements.  Mortgagor will
not  commit  any  waste on the  Premises  or make any  change  in the use of the
Premises  which  will in any way  increase  any  ordinary  fire or other  hazard
arising out of  construction  or operation.  Mortgagor  will, or shall cause its
Lessee  to,  at all  times,  maintain  the  Improvements  and  Chattels  in good
operating  order and condition and will promptly  make,  from time to time,  all
repairs,  renewals,  replacements,  additions  and  improvements  in  connection
therewith which are needful or desirable to such end. The Improvements shall not
be  demolished  or  substantially  altered,  nor shall any  Chattels  be removed
without Mortgagee's prior consent except where appropriate  replacements free of
superior title, liens and claims are immediately made of value at least equal to
the value of the removed Chattels.

         Section  1.13.  Condemnation.  Mortgagor,  immediately  upon  obtaining
knowledge of the  institution or pending  institution of any proceedings for the
condemnation  of the  Premises or any  portion  thereof,  will notify  Mortgagee
thereof.   Mortgagee  may  participate  in  any  such  proceedings  and  may  be
represented therein by counsel of Mortgagee's selection.  Mortgagor from time to
time will  deliver to  Mortgagee  all  instruments  requested by it to permit or
facilitate such  participation.  In the event of such condemnation  proceedings,
the award or  compensation  payable is hereby  assigned  to and shall be paid to
Mortgagee.  Mortgagee shall be under no obligation to question

                                       14
<PAGE>

the  amount of any such  award or  compensation  and may  accept the same in the
amount  in  which  the  same  shall  be  paid.  The  proceeds  of any  award  or
compensation so received shall, at Mortgagee's option,  either be applied to the
prepayment  of the Note and all  interest  and other sums  accrued and unpaid in
respect thereof at the rate of interest provided therein  regardless of the rate
of interest payable on the award by the condemning authority, or be disbursed to
Mortgagor from time to time for  restoration of the  Improvements  in accordance
with Mortgagee's standard construction lending practices,  terms and conditions,
in either case,  less  Mortgagee's  reasonable  expenses for collecting  and, if
applicable, disbursing the award, or otherwise incurred in connection therewith.
Notwithstanding the provisions of the immediately  preceding sentence,  provided
no  monetary  or  bankruptcy  related  default  or any Event of  Default  exists
hereunder,  Mortgagee  agrees  to apply  any such  condemnation  award  proceeds
received  by it to the  reimbursement  of  Mortgagor's  costs of  restoring  the
Improvements. Advances of condemnation award proceeds shall be made to Mortgagor
from time to time in accordance with Mortgagee's  standard  construction lending
practices, terms and conditions; amounts not required for such purposes shall be
applied,  at Mortgagee's  option,  to the prepayment of the Note and to interest
accrued and unpaid thereon (at the rate of interest provided therein  regardless
of the rate of interest  payable on the award by the  condemning  authority)  in
such order and proportions as Mortgagee may elect.

         Section 1.14.  Leases. (a) Mortgagor will not (i) execute an assignment
of the rents or any part  thereof from the Premises  without  Mortgagee's  prior
consent,  (ii) except  where the lessee is in default  thereunder,  terminate or
consent to the  cancellation or surrender of any lease of the Premises or of any
part thereof,  now existing or hereafter to be made, having an unexpired term of
one (1) year or more,  provided,  however,  that any lease may be  cancelled  if
promptly after the cancellation or surrender thereof a new lease is entered into
with a new lessee  having a credit  standing at least  equivalent to that of the
lessee  whose  lease  was  cancelled,  on  substantially  the same  terms as the
terminated or cancelled lease,  (iii) modify any such lease so as to shorten the
unexpired  term thereof or so as to decrease,  waive or compromise in any manner
the amount of the rents payable  thereunder or materially expand the obligations
of the lessor thereunder,  (iv) accept prepayments of more than one month of any
installments of rents to become due under such leases, except prepayments in the
nature of security for the  performance of the lessees  thereunder,  (v) modify,
release  or  terminate  any  guaranties  of any such  lease or (vi) in any other
manner impair the value of the Mortgaged Property or the security hereof.

         (b)  Mortgagor  will not  execute  any  lease  of all or a  substantial
portion of the Premises except for actual occupancy by the lessee  thereunder or
its property manager,  and will at all times promptly and faithfully perform, or
cause to be performed, all of the covenants, conditions and agreements contained
in all leases of the Premises or portions thereof now or hereafter existing,  on
the part of the lessor thereunder to be kept and performed and will at all times
do all things  reasonably  necessary to compel  performance  by the lessee under
each lease of all  obligations,  covenants  and  agreements by such lessee to be
performed thereunder. If any of such leases provide for the giving by the lessee
of  certificates  with  respect to the status of such  leases,  Mortgagor  shall
exercise  its right to

                                       15
<PAGE>

request  such  certificates  within  five (5)  days of any  demand  therefor  by
Mortgagee and shall deliver copies thereof to Mortgagee promptly upon receipt.

         (c) In the  event  of the  enforcement  by  Mortgagee  of the  remedies
provided  for  hereby or by law,  the  lessee  under  each of the  leases of the
Premise will, upon request of any person succeeding to the interest of Mortgagor
as a  result  of such  enforcement,  automatically  become  the  lessee  of said
successor in interest,  without change in the terms or other  provisions of such
lease, provided,  however, that said successor in interest shall not be bound by
(i) any  payment  of rent or  additional  rent  for more  than one (1)  month in
advance,  except  prepayments  in the nature of security for the  performance by
said  lessee  of its  obligations  under  said  lease or (ii) any  amendment  or
modification  of the  lease  made  without  the  consent  of  Mortgagee  or such
successor in interest.  Each lease shall also provide that, upon request by said
successor in interest,  such lessee shall  execute and deliver an  instrument or
instruments confirming such attornment.

         Section 1.15.  Premises  Documents.  Mortgagor  shall (a) do all things
reasonably necessary to cause the due compliance and faithful performance by the
other  parties  to the  Premises  Documents  with  and of  all  obligations  and
agreements by such other  parties to be complied with and performed  thereunder,
except for any  continuing  failure of the  Premises to comply with the Premises
Documents of the date of the acquisition hereof from Mortgagee or its affiliate,
and (b) deliver  promptly to Mortgagee  copies of any notices  which it gives or
receives under any of the Premises Documents.

         Section  1.16.  Trust  Fund;  Lien Laws.  Mortgagor  will  receive  the
advances  secured  hereby and will hold the right to receive such  advances as a
trust  fund  to be  applied  first  for the  purpose  of  paying  the  costs  of
improvements  on the  Premises  and will apply the same first to the  payment of
such costs before using any part of the total of the same for any other purpose.
Mortgagor  will  indemnify  and  hold  Mortgagee  harmless  against  any loss or
liability,  cost or  expense,  including,  without  limitation,  any  judgments,
attorney's  fees,  costs of appeal bonds and printing  costs,  arising out of or
relating to any  proceeding  instituted by any claimant  alleging a violation by
Mortgagor of any applicable lien law.

         Section  1.17.  Assignment of Rents.  As further  security for the debt
hereby secured Mortgagor sells,  assigns,  sets over and transfers to Mortgagee,
presently,  absolutely  and  irrevocably,  all of  the  Rents  now or  hereafter
accruing,  reserving  only the right and license to collect the Rents as long as
an  Event  of  Default  has not  occurred.  The  aforesaid  assignment  shall be
effective immediately upon the execution of this Mortgage and is not conditioned
upon the occurrence of any Event of Default  hereunder or any other  contingency
or event.  Upon the  occurrence of an Event of Default said right and license of
Mortgagor  shall be  automatically  terminated and of no further force or effect
and  Mortgagee  may enter upon the  Mortgaged  Property  and  collect the Rents.
Mortgagee  is  hereby  constituted  and  appointed  as the  exclusive  agent and
attorney-in-fact of Mortgagor to collect the Rents by any appropriate proceeding
and Mortgagee is authorized to pay a rental or real estate agent 10%  commission
for  collecting  the Rents.  The net amount of the Rents so  collected  shall be
applied  towards  the debt hereby  secured.  Nothing in this  Mortgage  shall be
construed to obligate Mortgagee to discharge

                                       16
<PAGE>

or perform the duties of a landlord to a tenant or to impose any  liability as a
result of the exercise of the option to collect rents hereunder by virtue of the
occurrence  of an Event of  Default,  and it is agreed  that the  collection  or
participation therein by Mortgagee shall be as agent only for Mortgagor.

         Section 1.18.  Assignment  of Leases.  Mortgagor  hereby  covenants and
agrees  that it will  assign to  Mortgagee,  as  security  for the debt  secured
hereby,  the  lessor's  interest in any and all leases  covering  the  Mortgaged
Property,  or any part  thereof,  and  Mortgagor's  interest in all  agreements,
contracts,   licenses  and  permits  affecting  the  Mortgaged  Property,   such
assignments to be made by instruments in form satisfactory to Mortgagee. No such
assignment shall be construed as a consent by Mortgagee to any lease, agreement,
contract,  license  or  permit so  assigned,  or to impose  upon  Mortgagee  any
obligation with respect thereto.

         Section 1.19. New Leases.  Notwithstanding any other provisions of this
Article I, Mortgagor may not, except as otherwise provided in the Comfort Letter
of even date  herewith  from  Mortgagee  to Fee  Owner,  enter into any lease or
rental  contract of the Premises,  or any part thereof,  except on the following
conditions:  (a) each such lease or contract  shall contain a provision that the
rights of such lessee or tenant  thereunder are expressly  subordinate to all of
the rights and title of  Mortgagee  under this  Mortgage;  (b) any such lease or
contract  shall  contain  an  express  provision  whereby  the  lessee or tenant
thereunder   expressly   recognizes  and  agrees  that,   notwithstanding   such
subordination,  Mortgagee,  its  successors or assigns,  or other holder of this
Mortgage and the Note, may sell the Mortgaged Property,  or any part thereof, in
the manner  provided in Part IV of Section  2.01  hereof,  and  thereby,  at the
option of Mortgagee,  its successors or assigns or other holder of this Mortgage
and the Note,  sell the same  subject  to the lease or tenant  contract  of such
lessee or tenant; and (c) at or prior to the time of execution of any such lease
or contract by any such lessee or tenant,  Mortgagor  shall,  as a condition  to
such  execution,  procure  from such lessee or tenant an  agreement  in favor of
Mortgagee,  or other holder of this Mortgage and the Note, in form and substance
satisfactory  to  Mortgagee  or such  holder,  whereunder  such lessee or tenant
agrees to be bound by the provisions of Part IV of Section 2.01 hereof regarding
the manner in which  Mortgagee  or such  holder may  exercise  its power of sale
under said Part IV.

                                   ARTICLE II

                         EVENTS OF DEFAULT AND REMEDIES

         Section 2.01. Events of Default and Certain Remedies. If one or more of
the following Events of Default shall happen, that is to say:

                  (a) if (i)  default  shall  be  made  in  the  payment  of any
         principal,  interest,  fees or other sums  under the Note,  in any such
         case,  when and as the same shall  become due and  payable,  whether at
         maturity or by  acceleration or as part of any payment or prepayment or
         otherwise,  in each case, as herein or in the Note  provided,  and such
         default  shall  have  continued  for a period  of ten (10) days or (ii)
         default  shall  be  made in the  payment  of any  tax or  other  charge
         required  by

                                       17
<PAGE>

         Section 1.07 to be paid and said  default  shall have  continued  for a
         period of twenty (20) days; or

                  (b) if  default  shall  be  made  in  the  due  observance  or
         performance of any covenant,  condition or agreement in the Note,  this
         Mortgage or in any other document executed or delivered to Mortgagee in
         connection  with the Loan,  and such default shall have continued for a
         period of thirty (30) days after notice  thereof  shall have been given
         to Mortgagor  by  Mortgagee,  or, in the case of such other  documents,
         such shorter grace period, if any, as may be provided for therein; or

                  (c) if any  representation  or warranty  made by  Mortgagor in
         Section  1.01 shall be  incorrect,  or if any other  representation  or
         warranty made to Mortgagee in this Mortgage,  or in any other document,
         certificate  or  statement   executed  or  delivered  to  Mortgagee  in
         connection  with the Loan shall be incorrect  in any  material  respect
         when made or remade; or

                  (d) if by  order  of a  court  of  competent  jurisdiction,  a
         trustee,  receiver or liquidator of the Mortgaged  Property or any part
         thereof, or of Mortgagor shall be appointed and such order shall not be
         discharged or dismissed within sixty (60) days after such  appointment;
         or

                  (e) if Mortgagor shall file a petition in bankruptcy or for an
         arrangement or for  reorganization  pursuant to the Federal  Bankruptcy
         Act or any similar federal or state law, or if, by decree of a court of
         competent  jurisdiction,  Mortgagor shall be adjudicated a bankrupt, or
         be declared  insolvent,  or shall make an assignment for the benefit of
         creditors,  or shall  admit in writing its  inability  to pay its debts
         generally as they become due, or shall consent to the  appointment of a
         receiver or receivers of all or any part of its property; or

                  (f) if any of the creditors of Mortgagor shall file a petition
         in  bankruptcy  against  Mortgagor or for  reorganization  of Mortgagor
         pursuant to the Federal  Bankruptcy Act or any similar federal or state
         law, and if such petition  shall not be discharged or dismissed  within
         sixty (60) days after the date on which such petition was filed; or

                  (g) if  final  judgment  for the  payment  of  money  shall be
         rendered  against  Mortgagor and Mortgagor shall not discharge the same
         or cause it to be  discharged  within  sixty  (60)  days from the entry
         thereof,  or shall not appeal  therefrom  or from the order,  decree or
         process  upon which or pursuant  to which said  judgment  was  granted,
         based or entered,  and secure a stay of execution  pending such appeal;
         or

                  (h) Intentionally Omitted;

                  (i) if there shall occur a default  which is not cured  within
         the applicable grace period, if any, under any mortgage,  deed of trust
         or other  security  instrument  covering  all or part of the  Mortgaged
         Property  regardless  of whether

                                       18
<PAGE>

         any such mortgage,  deed of trust or other security instrument is prior
         or  subordinate  hereto or under any  mortgage,  deed of trust or other
         security  instrument  now or  hereafter  securing the Note or any other
         note of Fee Owner to Mortgagee;  it being  further  agreed by Mortgagor
         that an Event of Default hereunder shall constitute an Event of Default
         under any such  mortgage,  deed of trust or other  security  instrument
         held by or for the benefit of Mortgagee; or

                  (j) if there shall occur a default  which is not cured  within
         the  applicable  grace  period,  if  any,  under  any of  the  Premises
         Documents,  except for any continuing failure of the Premises to comply
         with the Premises  Documents of the date of the acquisition hereof from
         Mortgagee  or its  affiliate;  or if any of the  Premises  Documents is
         amended, modified, supplemented or terminated without Mortgagee's prior
         consent; or

                  (k) if  Mortgagor  shall  transfer,  or agree to transfer  (or
         suffer or permit the transfer or agreement to transfer), in any manner,
         either voluntarily or involuntarily,  by operation of law or otherwise,
         all or any portion of the Mortgaged Property, or any interest or rights
         therein  (including air or  development  rights)  without,  in any such
         case,  Mortgagee's  prior consent.  As used in this clause,  "transfer"
         shall include, without limitation,  any sale, assignment,  lease (other
         than to Lessee) or conveyance  except leases for occupancy  subordinate
         hereto and to all  advances  made and to be made  hereunder  or, in the
         event  Mortgagor  (or a general  partner or  co-venturer  thereof) is a
         partnership,   joint  venture,  limited  liability  company,  trust  or
         closely-held  corporation,  the  sale,  conveyance,  transfer  or other
         disposition  of more than 10%,  in the  aggregate,  of any class of the
         issued and outstanding  capital stock of such closely-held  corporation
         or of the beneficial  interest of such  partnership,  venture,  limited
         liability  company or trust, or a change of any general partner,  joint
         venturer,  member  or  beneficiary,  as the case may be.  In the  event
         Mortgagor is a limited  partnership,  and so long as a limited  partner
         has contributed to (or remains  personally  liable for) the present and
         future  partnership  capital  contributions  required  of such  limited
         partner by the partnership  agreement,  such partner may sell,  convey,
         devise, transfer or dispose of all or a part of his limited partnership
         interest to his spouse,  children,  grandchildren  or a family trust in
         which his spouse, children or grandchildren are sole beneficiaries; or

                  (l) if Mortgagor shall encumber,  or agree to encumber, in any
         manner,  either  voluntarily or  involuntarily,  by operation of law or
         otherwise,  all  or  any  portion  of the  Mortgaged  Property,  or any
         interest  or  rights  therein  (including  air or  development  rights)
         without,  in any such case,  Mortgagee's prior consent. As used in this
         clause,  "encumber" shall include,  without limitation,  the placing or
         permitting  the placing of any mortgage,  deed of trust,  assignment of
         rents  or  other  security  device.  (Mortgagee  may  grant or deny its
         consent under this clause and the immediately  preceding  clause in its
         sole discretion  and, if consent should be given,  any such transfer or
         encumbrance  shall be subject hereto and to any other  documents  which
         evidence or secure the Loan,  and, if a transfer,  any such  transferee
         shall assume all of  Mortgagor's  obligations  hereunder and thereunder

                                       19
<PAGE>

         and agree to be bound by all  provisions  and perform  all  obligations
         contained  herein  and  therein;   consent  to  one  such  transfer  or
         encumbrance  shall not be deemed to be a waiver of the right to require
         consent to future or successive transfers or encumbrances);

then and in every such case:

                  I.  During  the  continuance  of any such  Event  of  Default,
         Mortgagee, by notice to Mortgagor,  may declare the entire principal of
         the  Note  then  outstanding  (if not then  due and  payable),  and all
         accrued and unpaid  interest and other sums in respect  thereof,  to be
         due  and  payable  immediately,  and  upon  any  such  declaration  the
         principal  of the Note and said  accrued and unpaid  interest and other
         sums shall become and be immediately  due and payable,  anything herein
         or in the Note (other than Section 4.08 hereof,  the provisions thereof
         limiting interest payable thereunder to the maximum amount permitted by
         applicable law) to the contrary notwithstanding.

                  II.  During  the  continuance  of any such  Event of  Default,
         Mortgagee personally, or by its agents or attorneys, may enter into and
         upon all or any part of the Premises,  and each and every part thereof,
         and are each hereby given a right and license and appointed Mortgagor's
         attorney-in-fact  and  exclusive  agent  to  do  so,  and  may  exclude
         Mortgagor,  its agents and servants  wholly  therefrom;  and having and
         holding the same, may use, operate, manage and control the Premises and
         conduct   the   business   thereof,   either   personally   or  by  its
         superintendents,  managers,  agents, servants,  attorneys or receivers;
         and upon every such entry,  Mortgagee,  at the expense of the Mortgaged
         Property,   from  time  to  time,   either  by  purchase,   repairs  or
         construction,  may maintain and restore the Mortgaged Property, whereof
         it shall become  possessed as aforesaid;  may complete the construction
         of the  Improvements and in the course of such completion may make such
         changes  in  the  contemplated   Improvements  as  Mortgagee  may  deem
         desirable and may insure the same; and likewise,  from time to time, at
         the expense of the Mortgaged Property, Mortgagee may make all necessary
         or  proper  repairs,   renewals  and   replacements   and  such  useful
         alterations,   additions,  betterments  and  improvements  thereto  and
         thereon  as  Mortgagee  may  seem  advisable;  and in every  such  case
         Mortgagee  shall have the right to manage  and  operate  the  Mortgaged
         Property and to carry on the  business  thereof and exercise all rights
         and powers of  Mortgagor  with  respect  thereto  either in the name of
         Mortgagor  or otherwise as  Mortgagee  shall deem best;  and  Mortgagee
         shall be  entitled  to  collect  and  receive  the Rents and every part
         thereof,  all of which shall for all  purposes  constitute  property of
         Mortgagor;  and in furtherance of such right  Mortgagee may collect the
         rents  payable  under all  leases  of the  Premises  directly  from the
         lessees  thereunder  upon  notice to each such  lessee that an Event of
         Default exists hereunder accompanied by a demand on such lessee for the
         payment  to  Mortgagee  of all rents  due and to  become  due under its
         lease,  and Mortgagor FOR THE BENEFIT OF MORTGAGEE AND EACH SUCH LESSEE
         hereby  covenants  and agrees that the lessee shall be under no duty to
         question  the  accuracy of  Mortgagee's  statement of default and shall
         unequivocally

                                       20
<PAGE>

         be  authorized  to pay said rents to  Mortgagee  without  regard to the
         truth of Mortgagee's  statement of default and notwithstanding  notices
         from Mortgagor disputing the existence of an Event of Default such that
         the  payment  of rent by the  lessee to  Mortgagee  pursuant  to such a
         demand shall constitute  performance in full of the lessee's obligation
         under the lease for the  payment of rents by the  lessee to  Mortgagor;
         and after deducting the expenses of conducting the business thereof and
         of  all  maintenance,  repairs,  renewals,  replacements,  alterations,
         additions,  betterments and improvements  and amounts  necessary to pay
         for taxes,  assessments,  insurance  and prior or other proper  charges
         upon the Mortgaged  Property or any part  thereof,  as well as just and
         reasonable  compensation  for the  services  of  Mortgagee  and for all
         attorneys,  counsel, agents, clerks, servants and other employees by it
         engaged  and  employed,  Mortgagee  shall  apply the moneys  arising as
         aforesaid,  first,  to the payment of the principal of the Note and the
         interest thereon, when and as the same shall become payable and in such
         order and  proportions  as  Mortgagee  shall elect and  second,  to the
         payment of any other sums required to be paid by Mortgagor hereunder.

                  III.  Mortgagee  with or without  entry,  personally or by its
         agents or attorneys, insofar as applicable, may:

                           (1)  sell  the  Mortgaged   Property  to  the  extent
                  permitted and pursuant to the  procedures  provided by law and
                  all  estate,  right,  title and  interest,  claim  and  demand
                  therein, and right of redemption thereof, at one or more sales
                  as an entity  or in  parcels  or  parts,  and at such time and
                  place,  and upon such terms and  conditions  after such notice
                  thereof as may be required or permitted by applicable law; or

                           (2) institute proceedings for the complete or partial
                  foreclosure hereof; or

                           (3) take such steps to protect and enforce its rights
                  whether by action,  suit or proceeding in equity or at law for
                  the  specific  performance  of  any  covenant,   condition  or
                  agreement in the Note or herein, or in aid of the execution of
                  any power herein granted, or for any foreclosure hereunder, or
                  for  the  enforcement  of  any  other   appropriate  legal  or
                  equitable remedy or otherwise as Mortgagee shall elect.

                  IV.  Mortgagor  hereby grants to Mortgagee,  and to the lawful
         holder of the Note, the following  irrevocable power of attorney, to be
         exercised at its option,  in lieu of or additional to any remedy at law
         or in  equity  which  might  be  pursued  or any  other  remedy  herein
         provided, viz:

                           During the  continuance of any such Event of Default,
                  Mortgagee,  or the  holder of said  Note,  may at its  option,
                  without notice to Mortgagor,  sell the Mortgaged Property,  or
                  part thereof,  at auction,  at the usual place for  conducting
                  sales at the  courthouse  in the County  where the Premises or
                  any part thereof lies, to the highest  bidder for cash,  after
                  advertising the

                                       21
<PAGE>

                  time,  terms  and  place of such  sale once a week for 4 weeks
                  immediately  preceding  such sale (but  without  regard to the
                  number of days) in a newspaper  published  in the County where
                  the  Premises  lies,  or in the paper in which  the  Sheriff's
                  advertisements  for such County are then being published,  all
                  other notice being hereby waived by Mortgagor. Mortgagee shall
                  execute and deliver to the  purchaser  or  purchasers  of said
                  property a deed  conveying  the  Mortgaged  Property,  or part
                  thereof,  in fee simple,  which deed shall contain recitals as
                  to the Event of Default  upon  which the power of sale  herein
                  granted is exercised,  and Mortgagor  hereby  constitutes  and
                  appoints Mortgagee the agent and attorney-in-fact of Mortgagor
                  to  execute  such  deed and make  such  recitals,  and  hereby
                  covenants  and agrees that the  recitals so made by  Mortgagee
                  shall be binding  and  conclusive  upon  Mortgagor.  Mortgagor
                  agrees that the  conveyance  to be made by Mortgagee  shall be
                  binding and  conclusive  upon Mortgagor and shall be effective
                  to bar all equity of redemption of Mortgagor and others in and
                  to the  Mortgaged  Property and  Mortgagee  shall  collect the
                  proceeds of such sale and apply the same as provided in clause
                  (d) of Section  2.02  hereof.  All of the  provisions  of this
                  Article  II, to the extent not  contradictory  to the power of
                  sale granted in this Part IV, shall be applicable  hereto. The
                  power  and the  agency  hereby  granted  are  coupled  with an
                  interest,  are  irrevocable,  and are granted as cumulative to
                  the remedies for collection and foreclosure as provided by law
                  and in this Mortgage.

                           It  is  expressly   understood  and  agreed  that  in
                  exercising  its power of sale  pursuant to the  provisions  of
                  this Part IV, Mortgagee may, at its option, sell the Mortgaged
                  Property,  or part  thereof,  at  such  sale  subject  to such
                  leases,  tenant and rental contracts of lessees and tenants in
                  possession of the Premises as shall be specifically designated
                  in the advertisements of sale required under the provisions of
                  this Part IV.

                  In the case of a sale pursuant to the foregoing power of sale,
         Mortgagor,  or any person in possession  under  Mortgagor,  as to whose
         interest  such  sale was not made  subject,  shall,  at the  option  of
         Mortgagee,  then become and be tenants holding over and shall forthwith
         deliver  possession  to the  purchaser  at such sale,  or be  summarily
         dispossessed  in accordance  with the  provisions of law  applicable to
         tenants holding over.

         Section 2.02. Other Matters Concerning Sales. (a) Mortgagee may adjourn
from time to time any sale by it to be made  hereunder  or by  virtue  hereof by
announcement at the time and place appointed for such sale or for such adjourned
sale or sales; and, except as otherwise provided by any applicable  provision of
law, Mortgagee, without further notice or publication, may make such sale at the
time and place to which the same shall be so adjourned.

         (b) Upon the completion of any sale or sales made by Mortgagee under or
by virtue of this Article II, Mortgagee, or an officer of any court empowered to
do so, shall

                                       22
<PAGE>

execute  and  deliver  to the  accepted  purchaser  or  purchasers  a  good  and
sufficient instrument or instruments  conveying,  assigning and transferring all
estate,  right,  title and  interest  in and to the  property  and rights  sold.
Mortgagee  is hereby  appointed  the true and  lawful  attorney  irrevocable  of
Mortgagor,   in  its  name  and  stead,  to  make  all  necessary   conveyances,
assignments,  transfers and  deliveries of the Mortgaged  Property and rights so
sold and for that purpose  Mortgagee  may execute all necessary  instruments  of
conveyance, assignment and transfer, and may substitute one or more persons with
like power, Mortgagor hereby ratifying and confirming all that its said attorney
or  such  substitute  or  substitutes   shall  lawfully  do  by  virtue  hereof.
Nevertheless, Mortgagor, if requested by Mortgagee, shall ratify and confirm any
such sale or sales by executing and delivering to Mortgagee or to such purchaser
or  purchasers  all such  instruments  as may be  advisable,  in the judgment of
Mortgagee,  for the purpose,  and as may be designated in such request. Any such
sale or sales made under or by virtue of this Article II, whether made under the
power of sale herein granted or under or by virtue of judicial proceedings or of
a judgment or decree of  foreclosure  and sale,  shall operate to divest all the
estate, right, title, interest,  claim and demand whatsoever,  whether at law or
in equity,  of Mortgagor in and to the  properties and rights so sold, and shall
be a perpetual bar both at law and in equity  against  Mortgagor and against any
and all persons  claiming or who may claim the same,  or any part thereof  from,
through or under Mortgagor.

         (c) In the event of any sale or sales  made  under or by virtue of this
Article II (whether  made under the power of sale herein  granted or under or by
virtue of judicial  proceedings  or of a judgment or decree of  foreclosure  and
sale), the entire principal of, and interest and other sums on, the Note, if not
previously due and payable,  and all other sums required to be paid by Mortgagor
pursuant hereto,  immediately thereupon shall, anything in any of said documents
(other than Section 4.08 hereof) to the contrary notwithstanding, become due and
payable.

         (d) The  purchase  money,  proceeds or avails of any sale or sales made
under or by virtue of this Article II,  together  with any other sums which then
may be held by Mortgagee hereunder, whether under the provisions of this Article
II or otherwise, shall be applied as follows:

                  First:  To the payment of the costs and expenses of such sale,
         including reasonable compensation to Mortgagee, its agents and counsel,
         and of any judicial  proceedings  wherein the same may be made,  and of
         all  expenses,  liabilities  and advances made or incurred by Mortgagee
         hereunder,  together  with interest at the Default Rate on all advances
         made by  Mortgagee,  and of all taxes,  assessments  or other  charges,
         except any taxes,  assessments  or other  charges  subject to which the
         Mortgaged Property shall have been sold.

                  Second:  To the payment of the whole amount then due, owing or
         unpaid upon the Note for principal  and interest,  with interest on the
         unpaid  principal at the Default  Rate from and after the  happening of
         any Event of Default  described  in clause (a) of Section 2.01 from the
         due date of any such  payment of principal  until the same is paid,  in
         such order and amounts as Mortgagee may elect.

                                       23
<PAGE>

                  Third: To the payment of any other sums required to be paid by
         Mortgagor  pursuant to any provision  hereof or of the Note,  including
         all  expenses,  liabilities  and advances made or incurred by Mortgagee
         hereunder or in connection with the enforcement  hereof,  together with
         interest at the Default Rate on all such advances.

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

         (e) Upon any sale or sales made under or by virtue of this  Article II,
whether  made  under the power of sale  herein  granted or under or by virtue of
judicial  proceedings  or of a  judgment  or  decree  of  foreclosure  and sale,
Mortgagee may bid for and acquire the Mortgaged Property or any part thereof and
in lieu of paying cash therefor may make  settlement  for the purchase  price by
crediting  upon the  indebtedness  secured  hereby  the net  sales  price  after
deducting therefrom the expenses of the sale and the costs of the action and any
other sums which Mortgagee is authorized to deduct hereunder.

         Section  2.03.  Payment of Amounts Due. (a) In case an Event of Default
described in clause (a) of Section 2.01 shall have  happened and be  continuing,
then, upon demand of Mortgagee, Mortgagor will pay to Mortgagee the whole amount
which then  shall have  become due and  payable on the Note,  for  principal  or
interest or both,  as the case may be, and after the  happening of said Event of
Default  will also pay to  Mortgagee  interest at the  Default  Rate on the then
unpaid  principal  of the Note,  and the sums  required to be paid by  Mortgagor
pursuant to any provision hereof, and in addition thereto such further amount as
shall be  sufficient  to cover the costs and expenses of  collection,  including
reasonable  compensation  to Mortgagee,  its agents and counsel and any expenses
incurred by Mortgagee hereunder.  In the event Mortgagor shall fail forthwith to
pay all such amounts upon such demand, Mortgagee shall be entitled and empowered
to institute such action or proceedings at law or in equity as may be advised by
its counsel for the collection of the sums so due and unpaid,  and may prosecute
any such action or proceedings to judgment or final decree,  and may enforce any
such judgment or final decree against Mortgagor and collect, out of the property
of Mortgagor wherever situated, as well as out of the Mortgaged Property, in any
manner provided by law, moneys adjudged or decreed to be payable.

         (b) Mortgagee shall be entitled to recover judgment as aforesaid either
before,  after or during the pendency of any  proceedings for the enforcement of
the provisions hereof; and the right of Mortgagee to recover such judgment shall
not be affected by any entry or sale hereunder,  or by the exercise of any other
right,  power or remedy for the  enforcement  of the provisions  hereof,  or the
foreclosure  of the lien  hereof;  and in the  event of a sale of the  Mortgaged
Property, and of the application of the proceeds of sale, as herein provided, to
the payment of the debt hereby  secured,  Mortgagee shall be entitled to enforce
payment of, and to receive all amounts then  remaining due and unpaid upon,  the
Note,  and to  enforce  payment  of all other  charges,  payments  and costs due
hereunder or otherwise in respect of the Loan,  and shall be entitled to recover
judgment  for any portion of the debt  remaining  unpaid,  with  interest at the
Default  Rate.  In  case of  proceedings  against  Mortgagor  in  insolvency  or
bankruptcy  or  any  proceedings  for  its

                                       24
<PAGE>

reorganization or involving the liquidation of its assets,  then Mortgagee shall
be entitled to prove the whole amount of principal,  interest and other sums due
upon the Note to the full amount thereof,  and all other  payments,  charges and
costs due  hereunder  or  otherwise  in respect of the Loan,  without  deducting
therefrom  any proceeds  obtained  from the sale of the whole or any part of the
Mortgaged Property,  provided, however, that in no case shall Mortgagee receive,
from the aggregate amount of the proceeds of the sale of the Mortgaged  Property
and the  distribution  from the estate of Mortgagor,  a greater amount than such
principal and interest and such other payments, charges and costs.

         (c) No  recovery  of any  judgment  by  Mortgagee  and  no  levy  of an
execution  under any  judgment  upon the  Mortgaged  Property  or upon any other
property of  Mortgagor  shall  affect in any manner or to any  extent,  the lien
hereof upon the Mortgaged  Property or any part thereof,  or any liens,  rights,
powers or remedies of Mortgagee hereunder,  but such liens,  rights,  powers and
remedies of Mortgagee shall continue unimpaired as before.

         (d) Any moneys thus  collected  by  Mortgagee  under this  Section 2.03
shall be applied by Mortgagee in accordance with the provisions of clause (d) of
Section 2.02.

         Section 2.04. Actions;  Receivers.  After the happening of any Event of
Default and immediately upon the commencement of any action, suit or other legal
proceedings  by Mortgagee to obtain  judgment for the  principal of, or interest
on, the Note and other sums  required  to be paid by  Mortgagor  pursuant to any
provision  hereof,  or of any other nature in aid of the enforcement of the Note
or hereof,  Mortgagor  will (a) waive the  issuance  and  service of process and
enter its  voluntary  appearance in such action,  suit or proceeding  and (b) if
required by Mortgagee,  consent to the appointment of a receiver or receivers of
all or part of the Mortgaged  Property and of any or all of the Rents in respect
thereof. After the happening of any Event of Default and during its continuance,
or upon the  commencement  of any  proceedings  to foreclose this Mortgage or to
enforce  the  specific  performance  hereof  or  in  aid  thereof  or  upon  the
commencement of any other judicial proceeding to enforce any right of Mortgagee,
Mortgagee shall be entitled, as a matter of right, if it shall so elect, without
the giving of notice to any other  party and without  regard to the  adequacy or
inadequacy of any security for the indebtedness secured hereby, forthwith either
before  or  after  declaring  the  unpaid  principal  of the  Note to be due and
payable, to the appointment of such a receiver or receivers.

         Section 2.05.  Mortgagee's  Right to  Possession.  Notwithstanding  the
appointment  of any receiver,  liquidator or trustee of Mortgagor,  or of any of
its property, or of the Mortgaged Property or any part thereof,  Mortgagee shall
be entitled to retain  possession  and control of all  property now or hereafter
held hereunder.

         Section 2.06. Remedies  Cumulative.  No remedy herein conferred upon or
reserved  to  Mortgagee  is  intended  to be  exclusive  of any other  remedy or
remedies,  and each and every such remedy shall be  cumulative,  and shall be in
addition to every other remedy given  hereunder or now or hereafter  existing at
law, in equity or by statute.  No delay or omission of Mortgagee to exercise any
right or power accruing upon any Event of Default shall impair any such right or
power,  or shall be construed to be a waiver of

                                       25
<PAGE>

any such Event of  Default  or any  acquiescence  therein;  and every  power and
remedy given hereby to Mortgagee may be exercised  from time to time as often as
may be deemed by them expedient.  Nothing herein or in the Note shall affect the
obligation of Mortgagor to pay the principal of, and interest and other sums on,
the Note in the manner and at the time and place therein respectively expressed.

         Section 2.07. Moratorium Laws; Right of Redemption.  Mortgagor will not
at any time insist upon, or plead,  or in any manner  whatever claim or take any
benefit or advantage of any stay or extension or  moratorium  law, any exemption
from execution or sale of the Mortgaged  Property or any part thereof,  wherever
enacted,  now or at any time hereafter in force,  which may affect the covenants
and terms of performance  hereof,  nor claim, take or insist upon any benefit or
advantage of any law now or hereafter in force  providing  for the  valuation or
appraisal of the Mortgaged Property,  or any part thereof,  prior to any sale or
sales thereof which may be made pursuant to any provision herein, or pursuant to
the decree, judgment or order of any court of competent jurisdiction; nor, after
any such sale or sales, claim or exercise any right under any statute heretofore
or  hereafter  enacted to redeem the  property  so sold or any part  thereof and
Mortgagor  hereby  expressly  waives all benefit or advantage of any such law or
laws,  and covenants  not to hinder,  delay or impede the execution of any power
herein granted or delegated to Mortgagee, but to suffer and permit the execution
of  every  power  as  though  no such  law or laws  had  been  made or  enacted.
Mortgagor, for itself and all who may claim under it, waives, to the extent that
it lawfully may, all right to have the  Mortgaged  Property  marshaled  upon any
foreclosure hereof.

         Section 2.08. Intentionally Omitted.

         Section 2.09.  Mortgagee's  Rights  Concerning  Application  of Amounts
Collected.  Notwithstanding  anything to the contrary contained herein, upon the
occurrence of an Event of Default,  Mortgagee may apply, to the extent permitted
by law, any amount collected  hereunder to principal,  interest or any other sum
due  under  the Note or  otherwise  in  respect  of the Loan in such  order  and
amounts,  and to such  obligations,  as  Mortgagee  shall  elect in its sole and
absolute discretion.

                                   ARTICLE III

                               SECURITY AGREEMENT

         Section  3.01.  Scope and  Intent.  In the  event  that  Mortgagor  and
Mortgagee shall respectively  become the "Debtor" and the "Secured Party" in any
one or more Uniform  Commercial  Code financing  statements  affecting  property
either referred to or described herein, or in any way connected with the use and
enjoyment  of the  Premises,  Mortgagor  warrants,  covenants  and  agrees,  and
Mortgagee, by acceptance hereof, agrees, as provided in this Article III.

         Section  3.02.  Security  Agreement.  This  Mortgage  shall be deemed a
security  agreement as defined in the Uniform  Commercial Code as enacted in the
State of Georgia,  the rights of Mortgagee  and Mortgagor in and to the Chattels
shall be as

                                       26
<PAGE>

provided in this Mortgage and the remedies for any  violation of the  covenants,
terms  and  conditions  of  the  agreements  herein  contained  shall  be (i) as
prescribed  herein,  or (ii) by  general  law,  or (iii) as to such  part of the
security  which  is also  reflected  in any  such  financing  statement,  by the
specific  statutory  consequences now or hereafter enacted and specified in said
Uniform Commercial Code, all at Mortgagee's sole election.

         Section 3.03.  Warranties  and Covenants.  Mortgagor  warrants that (i)
Mortgagor's (that is,  "Debtor's") name,  identity or corporate  structure,  and
residence or principal place of business is as set forth in Section 3.05 hereof;
(ii) Mortgagor (that is,  "Debtor") has been using or operating under said name,
identity or corporate  structure without change for the time period set forth in
said  Section  and (iii) the  location  of the  Chattels is as set forth in said
Section.  Mortgagor  covenants and agrees that Mortgagor will furnish  Mortgagee
with  notice of any change in (i) or (iii) of this  Section  within  thirty (30)
days of the  effective  date of any such  change  and  Mortgagor  will  promptly
execute  any  financing   statements  or  other  instruments  deemed  reasonably
necessary by Mortgagee to prevent any filed  financing  statement  from becoming
seriously  misleading or losing its perfected status. In addition to Mortgagee's
other remedies  hereunder,  Mortgagor shall be liable to Mortgagee for any loss,
damage or impairment of Mortgagee's  security  interest in the Chattels suffered
by  Mortgagee  resulting  or arising  from any breach of  warranty  or  covenant
contained in this Section.

         Section  3.04.  Nature of  Interest.  The filing of any such  financing
statement in the records  normally  having to do with  personal  property  shall
never be construed as in anywise  derogating from or impairing this  declaration
and hereby stated  intention of Mortgagor and Mortgagee that  everything used in
connection with the production of income from the Premises  (including,  without
limitation,  all  Chattels)  and/or  adapted  for use  therein  and/or  which is
described  or  reflected  in this  Mortgage,  is,  and at all  times and for all
purposes and in all  proceedings  both legal and equitable shall be, regarded as
part of the real estate  irrespective  of whether (i) any item of  collateral is
physically  attached to the  improvements,  (ii) serial numbers are used for the
better  identification  of  certain  items of  collateral  capable of being thus
identified in a recital contained herein or in any list filed with Mortgagee, or
(iii) any item of collateral  is referred to or reflected in any such  financing
statement  so filed at any time.  Similarly,  the mention in any such  financing
statement  of (i) the rights in or to the  proceeds  of any fire  and/or  hazard
insurance policy,  or (ii) any award in eminent domain  proceedings for a taking
or for loss of value, or (iii)  Mortgagor's  (that is,  "Debtor's")  interest as
lessor in any present or future lease or rights to income growing out of the use
and/or occupancy of the Premises,  whether pursuant to lease or otherwise, shall
never be  construed  as in anywise  altering  any of the rights of  Mortgagee as
determined by this Mortgage or impugning  the priority of  Mortgagee's  security
title  and lien  granted  hereby  or by any other  recorded  document,  but such
mention in any such financing  statement is declared to be for the protection of
Mortgagee  in the event any court or judicial  authority  shall at any time hold
with  respect to any matter  mentioned  in  clauses  (i),  (ii) or (iii) of this
sentence that notice of Mortgagee's priority of interest to be effective against
a  particular  class of  persons,  including  but not  limited  to, the  Federal
government  and any  subdivision  or entity of the Federal  government,  must be
filed in the Uniform Commercial Code records.

                                       27
<PAGE>

         Section 3.05.  Financing  Statement.  The names of the "Debtor" and the
"Secured Party", the identity or corporate  structure and residence or principal
place of business of "Debtor",  and the time period for which  "Debtor" has been
using or operating under said name and identity or corporate  structure  without
change,  are with  respect to Fee Owner as set forth in Part 1 of  SCHEDULE  B-1
attached  hereto and by  reference  made a part  hereof and are with  respect to
Lessee as set forth in Part 1 of said  SCHEDULE B-2  attached  hereto and made a
part hereof.  The mailing address of the "Secured Party" from which  information
concerning  the security  interest may be obtained,  and the mailing  address of
"Debtor",  are with respect to Fee Owner as set forth in Part 2 of said SCHEDULE
B-1 and are with respect to Lessee as set forth in Part 2 of said  SCHEDULE B-2.
A statement  indicating  the types,  or describing  the items of Chattels is set
forth  in  the  "Certain  Definitions"  provided  hereinabove.  The  information
contained  in this Section  3.05 is provided in order that this  Mortgage  shall
comply with the  requirements of the Uniform  Commercial Code, as enacted in the
State of Georgia, for instruments to be filed as financing statements.

                                   ARTICLE IV

                                  MISCELLANEOUS

         Section 4.01. Intentionally Omitted.

         Section 4.02. Intentionally Omitted.

         Section 4.03. Application of Certain Payments. In the event that all or
any part of the Mortgaged  Property is encumbered by one or more  mortgages held
by or for the benefit of Mortgagee,  Mortgagor hereby irrevocably authorizes and
directs  Mortgagee to apply any payment  received by Mortgagee in respect of any
note secured hereby or by any other such mortgage to the payment of such of said
notes  as  Mortgagee  shall  elect  in its sole  and  absolute  discretion,  and
Mortgagee  shall  have the  right to apply  any such  payment  in  reduction  of
principal and/or interest and in such order and amounts as Mortgagee shall elect
in its sole and  absolute  discretion  without  regard  to the  priority  of the
mortgage securing the note so repaid or to contrary directions from Mortgagor or
any other party.

         Section  4.04.  Severability.  In the  event  any  one or  more  of the
provisions  contained  herein or in the Note  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 this Mortgage
shall be construed as if such invalid,  illegal or  unenforceable  provision had
never been contained herein or therein.

         Section 4.05. Modifications and Waivers in Writing. No provision hereof
may be changed,  waived,  discharged or terminated  orally or by any other means
except an instrument in writing signed by the party against whom  enforcement of
the change, waiver,  discharge or termination is sought. Any agreement hereafter
made by Mortgagor and Mortgagee  relating hereto shall be superior to the rights
of the holder of any intervening or subordinate lien or encumbrance.

                                       28
<PAGE>

         Section 4.06. Notices. All notices,  demands,  consents,  approvals and
statements  required  or  permitted  hereunder  shall be in writing and shall be
deemed to have been sufficiently given or served for all purposes when presented
personally,  three (3) days  after  mailing by  registered  or  certified  mail,
postage  prepaid,  or one (1) day  after  delivery  to a  nationally  recognized
overnight  courier  service  providing  evidence of the date of delivery,  if to
Mortgagor at its address  stated  above,  with a copy to Thomas E. Davis,  Esq.,
Jenkens & Gilchrist, 1445 Ross Avenue, Suite 3200, Dallas, Texas 75202-2799, and
if to Mortgagee to its address stated above, or at such other address of which a
party shall have  notified the party giving such notice in  accordance  with the
provisions of this Section.

         Section 4.07.  Successors  and Assigns.  All of the grants,  covenants,
terms,  provisions and conditions herein shall run with the land and shall apply
to, bind and inure to the benefit of, the  successors  and assigns of Mortgagor,
the successors in trust of Mortgagee and the endorsees, transferees,  successors
and assigns of Mortgagee.

         Section 4.08. Limitation on Interest. Anything herein or in the Note to
the contrary  notwithstanding,  the obligations of Mortgagor hereunder and under
the Note shall be subject to the limitation  that payments of interest shall not
be required to the extent that receipt of any such payment by Mortgagee would be
contrary to provisions of law applicable to Mortgagee  limiting the maximum rate
of interest that may be charged or collected by Mortgagee.

         Section 4.09. Counterparts. This Mortgage 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 mortgage.

         Section 4.10. Substitute Mortgages. Mortgagor and Mortgagee shall, upon
their mutual  agreement to do so,  execute such documents as may be necessary in
order  to  effectuate  the  modification  hereof,  including  the  execution  of
substitute  mortgages,  so as to  create  two (2) or more  liens on or  security
titles in respect of the  Mortgaged  Property in such amounts as may be mutually
agreed upon but in no event to exceed,  in the aggregate,  the unpaid  principal
portion of the Note Amount; in such event, Mortgagor covenants and agrees to pay
the reasonable fees and expenses of Mortgagee and its counsel in connection with
any such modification.

         Section 4.11.  Cancellation.  Should the indebtedness hereby secured be
paid  according  to the tenor and effect  thereof when the same shall become due
and payable,  and should Mortgagor perform all covenants  contained herein, then
this Mortgage shall be cancelled and surrendered,  it being the intention of the
parties  hereto  that this  instrument  shall  operate  as a deed,  and not as a
mortgage.

         Section 4.12. Subrogation.  Mortgagee shall be subrogated to all right,
title,  lien,  or equity of all persons to whom it may have paid moneys,  either
directly or  indirectly,  in  settlement or discharge of liens,  charges,  or in
acquisition  of title of or for its  benefit

                                       29
<PAGE>

hereunder, or for the benefit and account of Mortgagor at the time of making the
loan secured hereby, or subsequently under any of the provisions hereof.

         Section  4.13.  Georgia  Code Title 44.  This  Mortgage  is executed to
conform to Title 44,  Chapter 14 of the Official Code of Georgia  Annotated,  as
amended.

         Section  4.14.   Mortgagee's  Sale  of  Interests  in  Loan.  Mortgagor
recognizes that Mortgagee may sell and transfer  interests in the Loan to one or
more participants or assignees and that all documentation, financial statements,
appraisals  and other  data,  or copies  thereof,  relevant  to  Mortgagor,  any
Guarantor or the Loan, may be exhibited to and retained by any such  participant
or assignee or prospective participant or assignee.

         Section  4.15.  No  Merger  of  Interests.  Unless  expressly  provided
otherwise,  in the event  that  ownership  hereof  and  title to the fee  and/or
leasehold  estates in the Premises  encumbered hereby shall become vested in the
same  person or entity,  this  Mortgage  shall not merge in said title but shall
continue to be and remain a valid and subsisting  lien and/or trust deed on said
estates in the Premises for the amount secured hereby.

         Section 4.16. CERTAIN WAIVERS.  MORTGAGOR EXPRESSLY AND UNCONDITIONALLY
WAIVES BY EXECUTION  HEREOF,  AND  MORTGAGEE  WAIVES BY  ACCEPTANCE  HEREOF,  IN
CONNECTION  WITH ANY  FORECLOSURE  OR  SIMILAR  ACTION OR  PROCEDURE  BROUGHT BY
MORTGAGEE ASSERTING AN EVENT OF DEFAULT UNDER CLAUSE (A) OF SECTION 2.01 OF THIS
MORTGAGE, ANY AND EVERY RIGHT IT MAY HAVE TO A TRIAL BY JURY.

         Section 4.17.  GOVERNING LAW. THE PERFORMANCE REQUIRED BY THIS MORTGAGE
SHALL,  INSOFAR AS IS  POSSIBLE,  BE RENDERED TO THE  MORTGAGEE AT ITS OFFICE IN
TENNESSEE.  MORTGAGOR AND MORTGAGEE INTEND THAT THE VALIDITY AND CONSTRUCTION OF
THE OBLIGATIONS SECURED BY THIS MORTGAGE BE GOVERNED BY THE LAWS OF THE STATE OF
TENNESSEE  INCLUDING ALL OBLIGATIONS  AND LIABILITIES  HEREUNDER WITH RESPECT TO
THE PAYMENT OF INTEREST OR ANY OTHER  COMPENSATION  FOR THE USE,  FORBEARANCE OR
DETENTION OF MONEY.  THIS MORTGAGE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TENNESSEE,  WITHOUT  REFERENCE TO THE CONFLICTS OF
LAW  PRINCIPLES  OF THAT  STATE,  EXCEPT  ONLY TO THE EXTENT  THAT  GEORGIA  LAW
EXPRESSLY  PROVIDES THAT IT GOVERNS AND THAT A CONTRARY AGREEMENT BY THE PARTIES
IS  INEFFECTIVE  AND EXCEPT THAT THE LAW OF THE STATE OF GEORGIA  SHALL APPLY TO
ANY AND ALL ACTS WITH  RESPECT TO THE  CREATION  AND PRIORITY OF THE LIEN OF THE
MORTGAGE AND  ASSIGNMENT  OF LEASES AND RENTS ON THE MORTGAGED  PROPERTY  HEREBY
EVIDENCED  AND  SALE BY  MORTGAGEE  ON THE  MORTGAGED  PROPERTY.  MORTGAGOR  AND
MORTGAGEE  COVENANT  AND AGREE TO TAKE ANY AND ALL ACTION WHICH MAY BE

                                       30
<PAGE>

NECESSARY  UNDER GEORGIA LAW WITH RESPECT TO SALE  CONTEMPLATED  HEREUNDER UNDER
THE LAWS OF THE STATE OF GEORGIA.  SHOULD ANY  OBLIGATION  OR REMEDY  UNDER THIS
MORTGAGE BE INVALID OR  UNENFORCEABLE  UNDER THE LAWS PROVIDED HEREIN TO GOVERN,
THE LAWS OF ANOTHER  STATE WHOSE LAWS CAN  VALIDATE  AND APPLY TO THIS  MORTGAGE
SHALL APPLY.

                                       31
<PAGE>

         IN WITNESS WHEREOF,  this Mortgage has been duly executed and delivered
by Mortgagor.

                                       APPLE SUITES, INC.,
Attest:                                a Virginia corporation

  /s/  Michelle Fuller                 By  /s/  Glade M. Knight           [SEAL]
----------------------------              -------------------------------
Name:                                       Name:  Glade M. Knight
                                            Title: President

Signed, sealed and delivered this
20th day of December,
1999 in the presence of:

  /s/  Tina R. Hansen
----------------------------
Unofficial Witness

  /s/  Deanna Jost
----------------------------
Notary Public

[Notarial Seal]
[Notarial Stamp]

                                       APPLE SUITES MANAGEMENT, INC.,
Attest:                                a Virginia corporation

  /s/  Michelle Fuller                 By  /s/  Glade M. Knight           [SEAL]
----------------------------              -------------------------------
Name:                                       Name:  Glade M. Knight
                                            Title: President

Signed, sealed and delivered this
20th day of December,
1999 in the presence of:

  /s/  Tina R. Hansen
----------------------------
Unofficial Witness

  /s/  Deanna Jost
----------------------------
Notary Public

[Notarial Seal]
[Notarial Stamp]

<PAGE>

                                   SCHEDULE A

ALL THAT TRACT OR PARCEL OF LAND situated,  lying and being in Land Lot 284, 6th
District,  Gwinnett County, Georgia, being Lot 2, Block "B", Unit One, Westland,
more particularly described as follows:

BEGINNING at the  intersection of the land lot line separating Land Lots 283 and
284 with the most  southeasterly  right-of-way  line of Georgia  Highway No. 141
(a/k/a  Peachtree  Parkway);  thence  running  North 22 11' 17" East  along  the
aforesaid  right-of-way line 68.35 feet; thence running  northeasterly  long the
aforesaid  right-of-way  line and  following a clockwise  curve,  subtended by a
chord of North 29 02' 26" East 107.19 feet,  with a radius of 5579.578  feet; an
arc of 107.19 feet to the intersection of the aforesaid  right-of-way  line with
the miter formed by the intersection of the aforesaid right-of-way line with the
most  southwesterly  right-of-way  line of Technology  Parkway;  thence  running
northeasterly,  along the  aforesaid  miter,  and  following a clockwise  curve,
subtended  by a chord  of North 75 02' 43" East  17.10  feet,  with a radius  of
12,000 feet, an arc of 19.04 feet to the  intersection  of the  aforesaid  miter
with the most  southwesterly  right-of-way  line of Technology  Parkway;  thence
running  South  59 30'  00"  East  along  the  aforesaid  right-of-way  line  of
Technology Parkway 145.35 feet; thence running southeasterly along the aforesaid
right-of-way line and following a counterclockwise  curve,  subtended by a chord
of South 73 49' 02" East 334.64 feet,  with a radius of 676,620  feet, an arc of
338.15 feet;  thence  running South 10 52' 00" West 167.90 feet;  thence running
South 57 55' 00" West 340.99 feet to the land lot line  separating Land Lots 283
and 284;  thence running North 32 04' 54" West along the aforesaid land lot line
415.01 feet TO THE TRUE POINT OF BEGINNING.

AFORESAID  tract or  parcel of land  containing  3.4500  acres  and  being  more
particularly  described  and shown on that  certain plat of Unit One Westland by
Hannon,  Meeks & Bagwell,  Surveyors & Engineers,  Inc.,  dated August 18, 1987,
last revised November 10, 1988,  bearing the seal and  certification of Miles H.
Hannon, Georgia Registered Land Surveyor No. 1528, said survey being recorded in
Plat Book 47, page 11, Gwinnett County, Georgia, records and incorporated herein
by this reference.

<PAGE>

                                  SCHEDULE B-1
                                  ------------

                                     Part 1
                                     ------

Name of Debtor:                         Apple Suites, Inc.

Name of Secured Party:                  Promus Hotels, Inc.

Identity or corporate
structure of Debtor:                    Virginia corporation

Residence or principal
place of business of Debtor:            306 East Main Street
                                        Richmond, Virginia 23219
                                        Attn:   Mr. Glade M. Knight

Time period Debtor is using, or operating  under,  its current name or corporate
structure without change:           Less than one (1) year

                                     Part 2
                                     ------

Mailing address of Secured Party:

         Promus Hotels, Inc.
         755 Crossover Lane
         Memphis, Tennessee 38117-4900

Mailing address of Debtor:

         306 East Main Street
         Richmond, Virginia 23219
         Attn:   Mr. Glade M. Knight

<PAGE>

                                  SCHEDULE B-2
                                  ------------

                                     Part 1
                                     ------

Name of Debtor:                         Apple Suites Management, Inc.

Name of Secured Party:                  Promus Hotels, Inc.

Identity or corporate
structure of Debtor:                    Virginia corporation

Residence or principal
place of business of Debtor:            306 East Main Street
                                        Richmond, Virginia 23219
                                        Attn:   Mr. Glade M. Knight

Time period Debtor is using, or operating  under,  its current name or corporate
structure without change:                 Less than one (1) year

                                     Part 2

Mailing address of Secured Party:

         Promus Hotels, Inc.
         755 Crossover Lane
         Memphis, Tennessee 38117-4900

Mailing address of Debtor:

         306 East Main Street
         Richmond, Virginia 23219
         Attn:   Mr. Glade M. KnightExhibit 4.4

                   DEED TO SECURE DEBT MODIFICATION AGREEMENT

         DEED TO SECURE DEBT MODIFICATION AGREEMENT (this "Agreement") made this
22nd day of December,  1999, among PROMUS HOTELS, INC., a Delaware  corporation,
having  an  office  at  755  Crossover  Lane,  Memphis,   Tennessee   38117-4900
("Mortgagee"),  and APPLE SUITES,  INC., a Virginia  corporation  ("Fee Owner"),
APPLE SUITES MANAGEMENT,  INC., a Virginia corporation ("Lessee";  together with
Fee Owner,  collectively,  "Mortgagor"),  each of Fee Owner and Lessee having an
office at 306 East Main Street, Richmond, Virginia 23219.

                              Preliminary Statement

         Mortgagee is the lawful owner and holder of the obligations  secured by
the Fee and  Leasehold  Deed To  Secure  Debt  dated  November  29,  1999,  from
Mortgagor to Mortgagee,  recorded in the Records of Cobb County, Georgia in Deed
Book ______,  Page ______ (the "Deed To Secure  Debt").  The Deed To Secure Debt
secures a $30,210,000 note (the "Original Note") of Fee Owner dated November 29,
1999,  which  evidences a purchase  money loan (the  "Loan") in that amount from
Mortgagee  to Fee Owner.

         Pursuant to the  Agreement  of Sale (as defined in the  Mortgage),  Fee
Owner  is to  acquire  certain  additional  premises  described  therein  and in
connection  therewith,  Fee Owner will borrow  $4,384,500 from Mortgagee and has
executed and delivered to Mortgagee its note, dated the date hereof,  obligating
it to pay the sum of  $4,384,500  (the "New  Note"),  with  interest  thereon as
therein  provided and with final payment  being due on January 1, 2001.  The New
Note by this  reference is made a part hereof and of the Deed To Secure Debt.

<PAGE>

         In  consideration  of such  additional  loan by Mortgagee to Fee Owner,
Mortgagee and Mortgagor  have agreed to modify the Deed To Secure Debt to secure
the New Note and thereby increase the amount secured by the Deed To Secure Debt,
all in the manner hereinafter set forth.

         NOW,  THEREFORE,  in  consideration  of the premises and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, the parties hereto covenant and agree as follows:

         1. The Deed To Secure  Debt is  modified  as  follows:  The term "Note"
shall mean,  collectively,  the Original  Note and the New Note, as the same may
hereafter  be  amended,  modified,   extended,  severed,  assigned,  renewed  or
restated,  from time to time,  such that the Deed To Secure Debt shall be in the
amount of $34,594,500.

         2.  Mortgagor  warrants  and  represents  that  there are no  defenses,
offsets  or  counterclaims  with  respect to its  obligations  under the Deed To
Secure Debt, as modified hereby, including,  without limitation,  its obligation
for the payment of the Note.

         3. Except as modified in the manner set forth above, the Deed To Secure
Debt shall remain unmodified and in full force and effect.

         4. This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument, and any party
hereto may execute this Agreement by signing any such counterpart.

                                       2

<PAGE>

         IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by each of the parties hereto as of the date first above written.

                                         PROMUS HOTELS, INC.,
Attest:                                  a Delaware corporation

/s/ Glenda Long                          By  /s/ Joseph P. Pidkowciz      [SEAL]
--------------------------                  ------------------------------
Name: Glenda Long                           Joseph P. Pidkowicz
                                            Vice President

Signed, sealed and delivered this
16th day of December,
1999 in the presence of:

/s/ [Illegible]
--------------------------
Unofficial Witness

/s/ Julia A. Hill
--------------------------
Notary Public

[Notarial Seal]
[Notarial Stamp]

                                         APPLE SUITES, INC.,
Attest:                                  a Virginia corporation

 /s/ Michelle Fuller                     By  /s/ Glade M. Knight          [SEAL]
--------------------------                  ---------------------------
Name:                                         Name:
                                              Title:

Signed, sealed and delivered this
20th day of December,
1999 in the presence of:

/s/ [Illegible]
--------------------------
Unofficial Witness

/s/ Deanna Jost
--------------------------
Notary Public

[Notarial Seal]
[Notarial Stamp]

<PAGE>

                                      APPLE SUITES MANAGEMENT, INC.,
Attest:                               a Virginia corporation

/s/ Michelle Fuller                   By  /s/ Glade M. Knight             [SEAL]
--------------------------                --------------------------------
Name:                                     Name:
                                          Title:

Signed, sealed and delivered this
20th day of December,
1999 in the presence of:

/s/ [Illegible]
--------------------------
Unofficial Witness

/s/ Deanna Jost
--------------------------
Notary Public

[Notarial Seal]
[Notarial Stamp]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00000-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00000-of-00352.parquet"}]]