Document:

LOAN AGREEMENT
                                 --------------

         THIS LOAN AGREEMENT ("Agreement") is made as of this 14 day of
September, 2000 between OLD POINT COMFORT HOTEL, L.L.C., a Virginia limited
liability company ("Borrower"), and JDI HAMPTON, L.L.C., an Illinois limited
liability company ("Lender").

                                    RECITALS

         A. Borrower has requested that Lender make a loan (the "Loan") to
Borrower in the principal amount of ONE MILLION SIX HUNDRED SEVENTY-FIVE
THOUSAND AND NO/100 DOLLARS ($1,675,000.00) to refinance the existing loan of
Borrower on a 185-room hotel located in the City of Hampton, Virginia, and
commonly known as the Chamberlin Hotel in Hampton, Virginia, and legally
described on Exhibit A attached hereto (the "Property"). The Property, the
foregoing improvements and all other improvements now or hereafter located on
the Property (collectively referred to as the "Improvements"), and all tangible
and intangible property of the Borrower now or hereafter owned or leased by
Borrower in connection with the Property or the Improvements are collectively
referred to as the "Project".

         B. The Project is subject to a lease (the "Lease") between Borrower, as
tenant, and Department of the Army, as landlord, dated June 30, 1998, as amended
on _________; Borrower's interest in the Lease is called the "Leasehold".

         C. All capitalized terms used but not defined herein shall have the
respective meanings ascribed to them in the Deed of Trust (as hereinafter
defined).

         NOW, THEREFORE, in consideration of the foregoing and the mutual
conditions and agreements contained herein the parties agree as follows:

                                   Article 1.

                                    The Loan
                                    --------

         1.1 Funding. On the Closing Date, Lender shall lend to Borrower the sum
of ONE MILLION SIX HUNDRED SEVENTY-FIVE THOUSAND AND NO/100 DOLLARS
($1,675,000.00), which sum shall be immediately used by Borrower solely for the
refinance of the Property.

         1.2 Loan Term. Unless otherwise accelerated pursuant to the Loan
Documents (as defined in Section 3.1(B) herein), the Loan shall mature on
September 13, 2001 (the "Maturity Date").

         1.3 Interest Rate. Borrower shall pay interest monthly in arrears on
the outstanding principal balance of the Loan at Prime plus five percent (5%)
per annum, provided, however, that in the event that any amount is not paid when
due (whether by acceleration or otherwise), the Loan shall bear interest after
the due date of such default until cured at a rate equal to twenty-five percent
(25%) per annum. Interest shall be calculated based on a 360-day year and
charged for the actual number of days elapsed. For purposes of this Agreement,
"Prime" shall mean the rate

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of interest publicly announced by Bank of America, or its successors or assigns,
from time to time as its prime rate, which may not be the lowest rate charged by
Bank of America, or its successors or assigns, and said rate shall fluctuate as
and when the prime rate fluctuates.

          1.4 Interest Payments. On the date of the first disbursement of the
Loan, Borrower shall pay Lender an amount of interest equal to the interest that
would be earned from said date until and including the last day of the calendar
month in which the first disbursement takes place. Thereafter, Borrower shall
make interest payments, in arrears, on the first (1st) day of each month
commencing November 1, 2000, with a final payment on the Maturity Date.

          1.5 Prepayment. Borrower reserves the privilege, without cost or
penalty, to prepay all or any part (but not less than $100,000.00) of the
principal balance of the Loan upon ten (10) days prior written notice to Lender
of its intention to do so.

          1.6 Loan Fee. Borrower shall pay to Lender, or Lender shall advance
out of the proceeds of the loan, a loan fee of $66,000.00 ($25,000 has been
previously paid) and such fee shall be deemed fully earned and shall not be
refundable.

          1.7 Reserves. Lender shall withhold from the Loan a sum of $59,000,
which shall be deposited in a money market account (the "Interest Reserve
Account") at The Private Bank or such other bank acceptable to Lender (the
"Bank") in the name of Lender, with interest accruing for the benefit of Lender.
For the purposes of the Loan, any amounts deposited by Lender into the Interest
Reserve Account shall be deemed a disbursement of the Loan and shall accrue
interest at the rate set forth in the Note. Provided that there is no Event of
Default occurring, Lender shall apply the Interest Reserve Account to interest
due under the Note. In addition, in the event of any uncured default by Borrower
under the Loan Documents, Borrower authorizes Lender to withdraw and apply any
of the funds in the Interest Reserve Account to cure such default after
delivering five (5) days written notice to Borrower, which Borrower agrees to be
commercially reasonable notice thereof. Borrower grants to Lender a security
interest in the Interest Reserve Account.

         In addition, Lender shall withhold from the Loan a sum of $ _________ ,
which shall be designated in a money market account (the "Tax Reserve Account")
at the Bank in the name of Lender, with interest accruing for the benefit of
Lender. In addition, Borrower shall deposit $_________ monthly into the Tax
Reserve Account, which amount may be increased or decreased at Lender's
discretion. For the purposes of the Loan, any amounts deposited by Lender into
the Tax Reserve Account shall be deemed a disbursement of the Loan and shall
accrue interest at the rate set forth in the Note. Provided that there is no
Event of Default occurring, Lender shall apply the Tax Reserve Account to real
property taxes due with respect to the Project. In the event of any uncured
default by Borrower under the Loan, Borrower authorizes Lender to withdraw and
apply any of the funds in the Tax Reserve Account to cure such default after
delivering five (5) days written notice to Borrower, which Borrower agrees to be
commercially reasonable notice thereof. Borrower grants Lender a security
interest in the Tax Reserve Account. The Interest Reserve Account and Tax
Reserve Account are collectively referred to herein as the "Reserve Account."
Any amounts remaining in the Reserve Account at the payoff of the Loan shall be
reimbursed to Borrower.

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                                   Article 2.

                                    Security
                                    --------

         2.1 General. The Loan and all other indebtedness and obligations under
the Loan Documents shall be secured by the following: (a) a Mortgage Note from
Borrower to Lender in the principal amount of $1,675,000.00 (the "Note"); (b) a
first priority lien on the Leasehold pursuant to a Leasehold Deed of Trust,
Assignment of Rents and Lessor's Interest in Leases, Security Agreement,
Financing Statement and Fixture Filing of even date herewith from the Borrower
to Lender (the "Deed of Trust"); (c) a first absolute assignment of rents and
leases on the Project pursuant to an Assignment of Rents and Lessor's Interest
in Leases of even date herewith from Borrower to Lender (the "Assignment of
Rents"); (d) a first priority security interest in all personal property of
Borrower now owned and hereafter acquired pursuant to a Security Agreement of
even date herewith from Borrower to Lender (the "Security Agreement"); (e) the
guaranty of the obligations of Borrower under the Note and Deed of Trust
pursuant to a Continuing Guarantee of even date herewith from John Knorr
("Guarantor") in favor of Lender (the "Guarantee"); (f) the indemnification of
Lender against any hazardous substances relating to the Property pursuant to an
Environmental Indemnity Agreement of even date herewith from Guarantor and
Borrower in favor of Lender (the "Environmental Indemnity Agreement"); (g) a
collateral assignment of the management contract (the' "Management Contract")
with ____________________ ("Manager") pursuant to a Collateral Assignment of
Management Agreement of even date herewith by and between Borrower and Lender
(the "Collateral Assignment of Managerial Contract") consented to by Manager
pursuant to a Manager's Consent to Assignment and Subordination Agreement of
even date herewith made by Manager to Lender (the "Manager's Consent"); and (h)
any other collateral or security described in this Agreement or in any of the
other Loan Documents.

                                   Article 3.

                              Conditions Precedent
                              --------------------

         3.1 Closing Conditions. Lender's obligation to close the Loan is
subject to satisfaction of all of the following conditions:

         A. No Default. (i) No Event of Default or unmatured Event of Default
shall have occurred and be continuing or will result from the making of the
Loan, (ii) Borrower's representations and warranties shall be true and correct
as of the date of such Loan, (iii) there shall have been no material adverse
change with respect to any of Borrower's, Guarantor's or the Property's
business, credit, operations, financial condition or prospects since the date
hereof or notice of any prospective material adverse change with respect to any
insurance maintained by Borrower, and (iv) that the Budget (as hereinafter
defined) is satisfactory to Lender, in its sole and absolute discretion.

         B. Loan Documents. Lender shall have received the following
documentation (collectively with this Agreement, referred to as the "Loan
Documents"), all in form and substance satisfactory to Lender:

               (i)  the Note;

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               (ii) the Deed of Trust;

               (iii) the Assignment of Rents;

               (iv) the Security Agreement;

               (v)  the Guarantee;

               (vi) the Environmental Indemnity Agreement;

               (vii) the Collateral Assignment of Management Contract;

               (viii) such other documents as Lender may reasonably require.

         C. Opinions of Counsel. Lender shall have received opinions of counsel
for Borrower and Guarantor, counsel being duly authorized to practice in
Virginia or Florida, as necessary, to the effect that:

                  (i) Borrower is a partnership duly formed, validly existing,
         in good standing under the laws of the Commonwealth of Virginia, and
         fully qualified to do business in the Commonwealth of Virginia and has
         the authority to enter into the obligations contemplated by this
         Agreement and the Loan Documents and to carry out the obligations
         contemplated hereby and thereby;

                  (ii) This Agreement and the Loan Documents have been duly
         authorized, executed and delivered by Borrower or Guarantor, as the
         case may be, and constitute legal valid and binding obligations of such
         parties, enforceable in accordance with their respective terms, are in
         proper form under the laws of the applicable state for the creation,
         perfection and enforcement of the liens contemplated thereby against
         the interest of Borrower and Guarantor in the applicable collateral
         described in such agreements, subject only to applicable bankruptcy,
         insolvency, principles of equity and other laws affecting creditors'
         rights;

                  (iii) The transaction in question is not usurious under the
         laws of the Commonwealth of Virginia;

                  (iv) The execution and delivery of the Loan Documents, and the
         carrying out of the transactions contemplated thereby will not, to such
         counsel's knowledge, violate, conflict with or constitute a default
         under the Lease or any agreement to which Borrower or Guarantor is a
         party or by which it or they may be bound; and

                  (v) To the best of counsel's knowledge, without any duty of
         investigation, there are no actions, suits or proceedings pending, or
         threatened against Borrower, Guarantor, or the Property, either at law
         or in equity or before or by any governmental authority, which would
         affect the validity or enforceability of the Loan Documents or which
         would substantially impair the ability of such party to pay when due
         any amounts which may become payable under the Loan Documents or to
         perform such party's obligations under the Loan Documents.

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<PAGE>

         D. Leases. Lender shall have received and approved the Lease and any
equipment leases and real estate leases or occupancy agreements for the Property
(collectively, the "Leases").

         E. Title. Lender shall have received a lender's title insurance policy,
in the face amount of the Loan, from Chicago Title Insurance Company (or any
other title company acceptable to Lender) (the "Title Company"), insuring
Borrower's leasehold interest in the Property, the marketability of title and
that the Deed of Trust is a valid first lien on the Leasehold, free and clear of
liens and encumbrances other than as set forth on Exhibit B attached hereto (the
"Permitted Exceptions") and exceptions to title approved in writing by Lender.
The title policy shall also contain any endorsements required by Lender.

         F. Environmental Report. Lender shall have received a Phase I
Environmental Audit of the Property from a consultant acceptable to Lender in
its sole discretion. The audit shall (i) be addressed to Lender; (ii) state that
Lender may rely thereon; and (iii) be acceptable to Lender in its sole
discretion.

         G. Survey. Prior to the Closing Date, Lender shall have received five
(5) copies of a current plat of survey of the Property. The surveyor shall
certify that the Property not in a flood hazard area as identified by the
Secretary of Housing and Urban Development. The survey shall be certified to
Lender and the Title Company as made in accordance with the Minimum Standard
Detail Requirements for Land Title Surveys of the American Land Title
Association and the American Congress on Surveying and Mapping promulgated in
1992, including all Table A additional survey requirements as applicable, or in
accordance with such .other standards as may be acceptable to Lender, in its
sole discretion, and sufficient for the Title Company to remove the general
survey exception.

         H. Credit Reports. Lender shall have received credit reports with
respect to Borrower and Guarantor, which may be "investigative consumer
reports", and which may include information as to character, general reputation,
mode of living and credit history. The results of all credit reports shall be
acceptable to Lender, in its sole discretion. Upon written request, Lender shall
furnish to Borrower and Guarantor a disclosure pursuant to the Equal Credit
Opportunity Act. Lender shall also have received and approved UCC searches and
financial statements relating to Borrower and Guarantor. Notwithstanding the
foregoing, Lender shall have the right to request and receive credit reports on
Borrower and Guarantor during the term of the Loan, at such times as Lender may
reasonably deem proper, and the cost and expense of such reports shall be paid
by Borrower.

         I. Insurance. Borrower shall insure the Property for such amounts, upon
such terms, with such mortgagee clauses and written by such insurers as Lender
shall reasonably require. All policies shall be endorsed to provide Lender at
least thirty (30) days written notice of any material change, cancellation or
non-renewal. Lender shall receive binders evidencing the required coverage,
together with paid receipts therefor, prior to the Closing Date, and certified
copies of the policies within thirty (30) days after the Closing Date. Borrower
will be responsible for insuring the Property notwithstanding any other parties'
obligation to insure same.

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<PAGE>

         J. Organizational Documents. Lender shall have received and approved
all operating agreements, resolutions, authorizations, consents, certificates
and other documentation required by Lender regarding Borrower and Guarantor.

         K. Certificate of Occupancy; Code; Permits. Lender shall have received
a final certificate of occupancy (or equivalent), an acceptable building code
violation search report if available, and copies of all applicable permits and
licenses necessary for the operation of the Property, including, without
limitation, the liquor licenses for the Property.

         L. Budget and Operating Agreements. Lender shall have received and
approved, in its sole discretion, a budget for the operation of the Property
(the "Operations Budget"), the Management Contract, and any other management,
license or operating agreements affecting the Property. A copy of the Budget
approved by Lender is attached hereto as Exhibit C.

                                   Article 4.

                         Representations and Warranties
                         ------------------------------

         As an inducement to tender to disburse the Loan, Borrower hereby
represents and warrants as follows, which representations and warranties, shall
be true as of the date hereof and shall remain true throughout the term of the
Loan:

         4.1 Existence. Borrower is a single asset entity organized as a duly
formed, validly existing and in good standing under the laws of the Commonwealth
of Virginia with its principal place of business at 104 Woodhall Drive,
Richmond, Virginia 23229. ______________________________________________ is the
Manager of Borrower, and has the full right, power and authority to execute the
Loan Documents on behalf of Borrower and no consents of any third parties are
required. The execution, delivery and compliance with the terms and provisions
of this Agreement and the Loan Documents by Borrower and Guarantor will not (i)
violate any provisions of law or any applicable regulation, order or other
decree of any court or governmental entity, or (ii) require any consent of any
third party not previously obtained.

         4.2 Binding, Obligation. This Agreement and the Loan Documents have
each been duly authorized, executed and delivered and each constitutes the
legally binding obligation of Borrower and Guarantor, as the case may be,
enforceable against Borrower and Guarantor and any other signatories (other than
Lender), as the case may be, in accordance with each of their respective terms.

         4.3 Ownership Documents. A true and complete copy of the articles of
organization and the operating agreement creating Borrower and any and all
amendments thereto (collectively, the "Organizational Agreement") has been
furnished to Lender. The Organizational Agreement constitutes the entire
agreement among the members of Borrower and is binding upon and enforceable
against each of the members in accordance with its terms. There are no other
agreements, oral or written, among any of the members relating to Borrower. No
breach exists under the Organizational Agreement and no condition exists which,
with the giving of notice or the passage of time would constitute a breach under
the Organizational Agreement.

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<PAGE>

         4.4 Lease and Other Operating Agreements. Borrower has previously
delivered to Lender a true, complete and correct copy of the Leases and the
Management Contract as in effect on the date hereof. Borrower has delivered to
Lender true, complete and correct copies of any agreements between Borrower and
any affiliate related in any way to the Property and any other agreements
materially affecting the use and operation of the Property, all of which are
listed on Schedule 4.4 attached hereto. Borrower is not in default under the
Leases, the Management Contract, or any contract, agreement or commitment to
which it is a party or is otherwise bound (collectively, the "Operating
Agreements") and the Operating Agreements have not been amended or modified.
Borrower is not in default under any provision of any of the Operating
Agreements and no event has occurred which, with the passage of time or the
giving of notice or both, would constitute: an event of default under any of the
Operating Agreements. The execution, delivery and compliance with the terms of
this Agreement and the Loan Documents will not conflict or be inconsistent with,
or result in any default under, the Operating Agreements.

         4.5 Improvements. The Improvements are presently in good condition and
working order. The present use of the Property complies, and any future
improvements to be constructed and the future use of the Property will comply,
in all respects with all: (a) applicable legal and contractual requirements with
regard to the use, occupancy, construction and operation thereof, including,
without limitation, all zoning, subdivision, environmental, concurrency, flood
hazard, fire safety, health, handicapped facilities, building and other laws,
ordinances, codes, regulations, orders and requirements of any governmental
agency; (b) building, occupancy and other permits, licenses and approvals; and
(c) declarations, easements, rights-of-way, covenants, conditions and
restrictions of record. All of the Improvements are located on the Property.

         4.6 Capital Improvements. [INTENTIONALLY DELETED]

         4.7 Property. The Leasehold is owned by Borrower free and clear of all
liens, claims, encumbrances, covenants, conditions arid restrictions, security
interests and claims of others, except the Permitted Exceptions. The zoning and
subdivision approval of the Project and the right and ability to construct, use
or operate the Improvements are not in any way dependent on or related to any
real estate other than the Property. There are no alleged or asserted violations
of law, regulations, ordinances, codes, declarations, covenants, conditions, or
restrictions of record, or other agreements relating to the Property or the
Improvements, or any part thereof. No person or entity has any option to acquire
ownership of the Property or any portion thereof.

         4.8 Property Access. The Property is accessible through all current
access points, each of which connects directly to a fully improved and dedicated
road accepted for maintenance and public use by the public authority having
jurisdiction.

         4.9 Utilities. All utility services necessary and sufficient for the
construction; use or operation of the Property are currently connected at the
boundary of the Property directly to lines owned by the applicable utility and
lying in dedicated roads, including water, storm, sanitary sewer, gas, electric
and telephone facilities. Unconditional written permission has been obtained
from the applicable utilities or municipalities, as the case may be, to connect
the Property with each of such services at such points.

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<PAGE>

         4.10 Flood Hazards/Wetlands. The Property is not situated in an area
designated as having special flood hazards as defined by the Flood Disaster
Protection Act of 1973, as amended, or as a wetlands by any governmental entity
having jurisdiction over the Property. This Property complies in all respects
with the requirements of the Chesapeake Bay Preservation Act and all local
ordinances, rules, regulations, permits, best management practices, and other
requirements adopted by applicable governing authorities pursuant to the
Chesapeake Bay Preservation Act as applied to the Property.

         4.11 Taxes/Assessments. There are no unpaid or outstanding real estate
or other taxes or assessments on or against the Property or any part thereof.
The tax bills affecting the Property cover the entire Property, and do not cover
or apply to any other property. Borrower has not received any notice of any
supplemental taxes which may be owing or otherwise assessed.

         4.12 Eminent Domain. There is no eminent domain or condemnation
proceeding pending or, to the best of Borrower's knowledge threatened, relating
to the Property or any part thereof.

         4.13 Litigation. There is no litigation, arbitration or other
proceeding or governmental investigation pending or, to the best of Borrower's
and Guarantor's knowledge, threatened against or relating to Borrower, any
member of Borrower, Guarantor or any of their property, assets, or business,
including the Property, which, if decided adversely, would affect the business,
affairs, . assets or financial condition of Borrower, Guarantor, the Property,
or the prospects for repayment of the Loan.

         4.14 Compliance. There are no alleged or asserted violations of law,
municipal ordinances, public or private contracts, declarations, covenants,
conditions, or restrictions of record, or other requirements with respect to the
Property or the Improvements. All licenses, permits and approvals, if any,
needed in connection with the construction, use, operation and occupancy of the
Improvements have been duly issued, paid for and are in full force and effect.
True and complete copies of each of the foregoing have been delivered to Lender.

         4.15 Employee Benefit Plans. Neither Borrower nor Guarantor sponsors
any pension plan, as defined in the Employee Retirement Income Act of 1974, as
amended ( "ERISA" )

         4.16 Labor Controversies. There are no labor controversies pending or
threatened against Borrower which, if adversely determined, would materially and
adversely affect Borrower's business, credit, operations, financial condition or
prospects.

         4.17 Tax Status. Borrower and Guarantor have made or filed all income
and other tax returns, reports and declarations required by any jurisdiction to
which any of them are subject, have paid all taxes, assessments and other
charges shown or determined to be due on such returns, reports and declarations,
and have set aside adequate reserves against liability for taxes, assessments
and charges applicable to periods subsequent to those covered by such returns,
reports and declarations.

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<PAGE>

         4.18 Accuracy. Neither this Agreement nor any document, financial
statement, credit information, certificate or statement furnished to Lender by
Borrower or Guarantor, including without limitation, the Budget and the
Operating Budget, contains any untrue statement of a material fact or omits to
state a material fact which could affect Lender's decision to make the Loan.

         4.19 Foreign Ownership. Neither Borrower nor any member of Borrower or
Guarantor is or will be, and no legal or beneficial interest of a partner in
Borrower is or will be held, directly or indirectly, by a "foreign corporation",
"foreign partnership," "foreign trust," "foreign estate", "foreign person,"
"affiliate" of a "foreign person" or a "United States intermediary" of a
"foreign person" within the meaning of Internal Revenue Code of 1986, as
amended, Sections 897 and 1445, the Foreign Investments in Real Property Tax Act
of 1980, the International Foreign Investment Survey Act of 1976, the
Agricultural Foreign Investment Disclosure Act of 1978, or the regulations
promulgated pursuant to such Acts or any amendments to such Acts.

         4.20 Solvency. Neither Borrower nor Guarantor is insolvent and no: (i)
assignment for the benefit of the creditors of any of them; (ii) appointment of
a receiver for any of them or for the property of any of them; or (iii)
bankruptcy, reorganization, or liquidation proceeding, is pending or threatened
(whether voluntary or involuntary) instituted by or against any of them.

         4.21 Lawful Interest. The amounts to be received by Lender which are or
may be deemed to be interest under the terms of the Note, this Agreement, or
otherwise in connection with the transactions contemplated herein constitute
lawful interest and are not usurious or illegal.

         4.22 Financial Statements/No Change. Borrower has heretofore delivered
to Lender copies of the most current financial statements of Borrower and
Guarantor. Said financial statements were prepared on a basis consistent with
that of preceding years, and all of such financial statements present fairly the
financial condition of said Borrower and Guarantor, as of the dates in question
and the results of operations for the periods indicated. Since the dates of such
statements, there has been no material adverse change in the business or
financial condition of Borrower and Guarantor. Neither Borrower nor Guarantor
have any material contingent liabilities not provided for or disclosed in said
financial statements. There has been no material adverse change in the
structure, business operations, credit, prospects or financial condition of
Borrower, Guarantor, or the Property

         4.23 Casualty. As of the date hereof, there is no damage or destruction
to any part of the Property or the Improvements by fire or other casualty that
has not been repaired. As of the date hereof, there are presently no existing
defects in the Property or the Improvements and no repairs or alterations
thereof are reasonably necessary or appropriate except for routine maintenance.

         4.24 No Material Misstatements or Omissions. Neither the Loan Documents
nor any statement, list, certificate or other information furnished or to be
furnished by Borrower to Lender in connection with the Loan contains any untrue
statement of a material fact, or omits to state a material fact necessary to
make the statements therein not misleading. Borrower has

                                       9
<PAGE>

disclosed in writing to Lender everything to which it has knowledge regarding
the business, operations, property, financial condition, or business prospects
of itself and the Property which would have a material adverse effect on such
entities or the Property or the collectability of the Loan.

         4.25 Brokers. Borrower has not dealt with any broker or finder in
connection with the transaction contemplated by this Agreement and agrees to
indemnify and hold Lender harmless from and against any losses, damages, costs,
or expenses (including attorneys' fees) incurred by Lender due to a breach of
the foregoing warranty by Borrower.

         4.26 Survival. of Representations. All representations and warranties
in this Agreement, the Loan Documents and all representations and warranties in
any certificate delivered by Borrower pursuant hereto and thereto, shall survive
execution of the Loan Documents and the making of the Loan, and may be relied
upon by Lender as being true and correct until the Loan is fully and irrevocably
paid.

                                   Article 5.

                              Affirmative Covenants
                              ---------------------

         5.1 Payment of Indebtedness; Performance of Obligations. Borrower shall
promptly pay when due all payment obligations of Borrower to Lender and shall
promptly perform all other obligations of Borrower to Lender as set forth herein
or in the Loan Documents.

         5.2 Books and Records/Audits. Borrower shall keep and maintain (and
provide Lender with reasonable access and copies of same if so requested by
Lender) at all times at Borrower's address stated below or at the Property, or
such other place as Lender may approve in writing, complete and accurate books
of accounts and records adequate to reflect the results of the operation of the
Property, the financial statements required to be provided to Lender pursuant to
the Deed of Trust and this Agreement, and copies of all written. contracts,
correspondence, and other documents affecting the Property. Borrower shall
prepare and furnish (or cause to be so prepared and furnished) to Lender: (i)
twenty-five (25) days after the end of each month, (A) an income statement and a
balance sheet for the Property during the preceding month, all expenditures made
from Revenue (broken down by line item in accordance with the Operating Budget)
during the preceding month and all expenditures made with respect to the
Property from funds from any source other than revenue generated by the Project
for the preceding month, together with a cash reconciliation report showing the
remaining revenue on the last day of the preceding month and such other
documentation as Lender may request from time to time, and (B) a variance report
with respect to the Operating Budget showing each item of actual and projected
revenue and expenses for such month and the year to date, with (A) and (B)
certified as true, correct and complete by Borrower; (ii) within ninety (90)
days before the end of the calendar year, a complete and detailed revision and
update of the Operating Budget for Lender's review and approval (which approval
shall not be unreasonably withheld), setting forth the projected revenue and
expenses relating to the operation and management of the Property for the
ensuing year; and (iii) within ninety (90) days after the end of the calendar
year, a copy of the annual financial statements for the year just ended fairly
presenting the financial condition of the

                                       10
<PAGE>

Property, and the results of the operations of the Property, including, without
limitation, a balance sheet, an income statement and such additional information
as Lender may request from time to time, all of which shall be prepared and
certified as true, correct and complete by the Borrower. If requested by Lender
or its representatives, Borrower will provide supporting documentation for all
receipts and expenditures, including, but not limited to, bank statements,
contracts, invoices, copies of checks and general ledgers. Borrower shall
provide Lender and any professional retained by Lender, with reasonable,
immediate and continuing access to any and all books, records, documents and
information relevant to Borrower's operations, the status of the Property and
appraisals or other documents relating to the value of the Property prepared by
third parties. Lender may audit the accuracy of Borrower's records and
computations at any time and the costs and expenses of any such audit shall be
paid by Borrower.

         5.3 Use of Proceeds. Borrower shall use the proceeds of the Loan only
for the refinance of the Project and subject to the terms and provisions of the
Loan Documents and for no other purpose, without Lender's prior written consent,
in Lender's sole discretion. No portion of the proceeds of the Loan shall be
used by Borrower to pay any amounts to Borrower, General Partner or any
affiliate of either of them or in any manner that might cause the borrowing or
the application of such proceeds to violate Regulation G, Regulation U,
Regulation T or Regulation X or any other regulation of the Board of Governors
of the Federal Reserve System or to violate the Exchange Act.

         5.4 Notice of Default. Borrower and Guarantor shall provide Lender with
a copy of all notices of default under any of the Operating Agreements
(including, without limitation, any default under the Leases), and violations of
laws, regulations, codes, ordinances and the like received by Borrower or
Guarantor relating to the Property, including without limitation, any notice of
default or noncompliance with the terms and provisions of the Operating
Agreements.

         5.5 Taxes and Liabilities. Borrower shall promptly pay when due in
accordance with Section 5.13 below all taxes, duties, assessments and other
liabilities relating to the Property, except such taxes, duties, assessments and
other liabilities as Borrower is diligently contesting in good faith and by
appropriate proceedings; provided that Borrower has provided for and is
maintaining adequate reserves with respect thereto in accordance with generally
accepted accounting principles, consistently applied ("GAAP").

         5.6 Compliance with Applicable Law. Borrower shall comply with the
requirements of all applicable laws, rules, regulations, and orders of all
governmental authorities (Federal, state, local or foreign, and including,
without limitation, environmental laws, rules, regulations and orders), a breach
of which would materially and adversely affect Borrower's business, credit,
operations, financial condition or prospects, except where Borrower is
contesting an alleged breach in good faith and by proper proceedings and for
which Borrower is maintaining adequate reserves in accordance with GAAP.

         5.7 Maintenance of Property. Borrower shall keep the Property,
including all buildings and improvements now or hereafter situated thereon, in
good condition, not commit or permit any waste thereof, make all repairs,
replacements and improvements and complete and restore promptly and in good
workmanlike manner any building, improvements or other items of the Property
which may be damaged, or destroyerd and pay when due all costs incurred
therefor.

                                       11
<PAGE>

         5.8 Operating Deficits. Borrower shall fund any and all operating
deficits respecting the Property.

         5.9 Business and Existence. Borrower shall perform all things necessary
to preserve and keep in full force and effect the existence and rights of
Borrower; comply with all laws applicable to Borrower; conduct and operate its
business in the normal course and keep in full force and effect any permit or
approval issued with respect to the Renovation or the operation of the Property.

         5.10 Notification of Attachment or Other Action. Borrower shall
immediately notify Lender in writing; of any attachment or other legal process
levied or threatened against the Property, or the institution of any action,
suit or proceeding by or against Borrower, Guarantor, or the Property, or any
information received by Borrower relative to Guarantor or the Property which may
adversely affect (i) Borrower's ability to pay the Indebtedness, (ii) the value
of the Property or the value, validity or priority of Lender's security
interests granted pursuant to the Deed of Trust or any of the other Loan
Documents, (iii) Guarantor's ability to perform under the Guaranty, or (iv) any
other rights and remedies of Lender granted and continued pursuant to the Loan
Documents.

         5.11 Defense of Collateral. Borrower shall pay when due, all
obligations, lawful claims or demands with respect to the Properly which, if
unpaid, might result in, or permit the creation of, any lien or encumbrance on
the -Property, including but not limited to all lawful claims for labor,
materials and supplies; provided that Borrower shall have the right to contest
any such claim so long as Borrower posts a bond acceptable to Lender to protect
Lender's interest in the Property, and, in general, do or cause to be done
everything necessary to fully preserve the rights and interests of Lender under
this Agreement and the other Loan Documents. Borrower shall at all times defend,
or cause to be defended, Lender's interest in and to the Property, and the first
priority position of said interest, against any and all claims of any person
adverse to Lender. Borrower and Guarantor, shall take all actions reasonably
deemed necessary or appropriate by Lender to give effect to Lender's priority of
interests contemplated by this Agreement and the other Loan Documents.

         5.12 Insurance. Borrower shall keep the Property, including all
buildings and improvements now or hereafter situated thereon, insured against
loss or damage by fire, with extended coverage endorsement, in an amount not
less than the full replacement cost thereof and against other hazards as may be
reasonably required by Lender, including, without limitation, an all risks, rent
loss or business interruption insurance, flood, tornado, hurricane and
earthquake insurance, and dramshop insurance and liability insurance for
personal injury, death and property damage. All policies of insurance will be in
forms and amounts reasonably satisfactory to Lender, and with companies
reasonably satisfactory to Lender, with standard mortgagee clauses attached to
all policies in favor of and in form reasonably satisfactory to Lender. The
insurance shall contain a provision requiring that the coverage will not be
terminated, canceled, amended or materially modified without at least 30 days'
prior written notice, including additional and renewal policies, to Lender.
Borrower shall deliver certified copies of all policies to Lender, and, in the
case of insurance about to expire, shall deliver certified copies of renewal
policies not less than 30 days prior to their respective expiration dates.

                                       12
<PAGE>

         5.13 Tax Deposits. Borrower shall deposit with Lender commencing with
the first interest payment due under the Loan and on the first day of each month
thereafter until the Indebtedness is fully paid, a sum equal to one-twelfth
(1/12) of the total annual taxes and assessments (general and special)
respecting the Property, based upon Lender's reasonable estimate as to the
amount of taxes and assessments to be levied and assessed. Borrower's initial
deposit shall be increased by an amount equal to Lender's reasonable estimate of
the amount of such taxes to become owing on the due dates for the payment of
such taxes less the monthly payments to be deposited hereunder prior to such due
dates. If any such taxes levied and assessed upon the Property are also a levy
and assessment upon any other premises, the amount of any deposit hereunder
shall be based upon the entire amount of such taxes or assessments, and Borrower
shall not apportion the total amount of the taxes or assessments levied or
assessed as between such other premises and the Property for the purposes of
computing the amount of any deposit hereunder. Such deposits shall be held
without any allowance of interest. Such deposits shall be used for the payment
of such taxes and assessments on the Property next due and payable when and as
they become due. If the funds so deposited are insufficient to pay any such
taxes or assessments for any year when the same shall become due and payable,
Borrower shall, within 10 days after receipt of demand therefor from Lender but
in no event later than thirty (30) days prior to the due date of any such
payment, deposit such additional funds as may be necessary to pay such taxes and
assessments in full at least thirty (30) days in advance of the due date
thereof. If the funds so deposited exceed the amount required to pay such taxes
and assessments for the year, the excess shall be applied on a subsequent
deposit or deposits. Said deposits need not be kept separate and apart from
other funds of Lender. Upon the occurrence of an Event of Default, Lender may,
at its option, without being required to do so, apply any monies at the time on
deposit, pursuant to this Section 5.13 on any of the Indebtedness, in such order
and manner as Lender may elect. When the Indebtedness has been fully paid, any
remaining deposits shall be paid to Borrower or to the then owner or owners of
the Property. A security interest within the meaning of the Uniform Commercial
Code of the Commonwealth of Virginia is hereby granted to Lender in and to any
monies at any time on deposit pursuant to this Section 5.13, as additional
security for the Indebtedness. Such funds shall be applied by Lender for the
purposes made hereunder and shall not be subject to the direction or control of
Borrower. Lender shall not be liable for any failure to apply the funds so
deposited hereunder to the payment of any particular taxes or assessments unless
Borrower, while not in default hereunder, shall have requested Lender in writing
to make application of such funds to the payment of the particular taxes or
assessments for payment of which they were deposited, accompanied by the bills
for such taxes or assessments. Lender shall not be liable for any act or
omission taken in good faith or pursuant to the instruction of any party, but
shall be liable only for willful misconduct.

         5.14 Payment of Obligations. Borrower shall pay and discharge, or cause
to be paid and discharged, all indebtedness and obligations of Borrower to other
persons promptly in accordance with normal terms and practices of its
businesses; before they shall become in default, as well as all lawful claims
for labor, materials and supplies which otherwise, if unpaid, might become a
lien or charge upon its properties or any part thereof.

         5.15 Notice of Event of Default. Borrower and Guarantor shall furnish,
or cause to be furnished, to Lender, immediately upon becoming aware of the
existence of an Event of Default or any condition which, with the giving of
notice or lapse of time, or both, would constitute an

                                       13
<PAGE>

Event of Default, written notice of the existence of any such event or the
existence of any such condition. Borrower and Guarantor shall furnish to Lender
any notices of defaults or Events of Default under the Operating Agreements.

         5.16 Furnishings. Without Lender's prior written consent, Borrower
shall not enter into any contract for the acquisition of any furnishings,
fixtures and equipment for use in connection with or forming a part of the
Property which obligates Borrower to pay more than $50,000.00.

         5.17 Hold Disbursements in Trust. Other than the proceeds of the Loan,
which shall be used for the refinance of the Project, Borrower will receive and
hold in trust all advances made hereunder directly to Borrower for the purpose
of paying costs of completion of the Project and Borrower will not apply the
same for any other purposes.

         5.18 Casualty and Condemnation. In the event of a casualty to or
condemnation of the Project or any portion thereof, for which Lender, in its
sole discretion, elects, or is required to pursuant to the Deed of Trust, to use
all or any portion of the proceeds for the restoration or repair of the Project,
Borrower shall deposit amount of casualty or condemnation proceeds as determined
by Lender into an escrow account, to be disbursed in accordance with the terms
of lender's standard construction escrow instructions. To the extent there
remain excess proceeds after such deposit into such escrow account and after
completion of such restoration or repair, such proceeds shall be used to reduce
the principal of the Loan.

         5.19 Single Purpose Entity. The Borrower has not and shall not:

         (a) engage in any business or activity. other than the ownership,
operation and maintenance of the Project, and activities incidental thereto;

         (b) acquire or own any material assets other than (i) the Project, and
(ii) such incidental personal property as may be necessary for the operation of
the Project;

         (c) merge into or consolidate with any person or entity or dissolve,
terminate or liquidate in whole or in part, transfer or otherwise dispose of all
or substantially all of its assets or change its legal structure, without in
each case Lender's consent;

         (d) fail to preserve its existence as an entity duly organized, validly
existing and in good standing (if applicable) under the laws of the jurisdiction
of its organization or formation, and qualification to do business in the state
where the Project is located, if applicable, or without the prior written
consent of Lender or its successors or assigns materially amend, modify,
terminate or fail to comply with the provisions of this Agreement or Borrower's
Incorporation Documents;

         (e) own any subsidiary or make any investment in, any person or entity
without the consent of Lender;

         (f) commingle its assets with the assets of any of its shareholders,
members, partners, principals, affiliates or of any other person or entity;

                                       14
<PAGE>

         (g) incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than indebtedness to Lender,
except for trade payables in the ordinary course of its business of owning and
operating the Project, provided that such debt is not evidenced by a note and is
paid when due;

         (h) become insolvent and fail to pay its debts and liabilities from its
assets as the same shall become due;

         (i) fail to maintain its records, books of account and bank accounts
separate and apart from those of the shareholders, principals and affiliates of
Borrower, the affiliates of a shareholder or principal of Borrower, and any
other person or entity;

         (j) enter into any contract or agreement with any shareholder, member,
partner, principal or affiliate of Borrower, or any shareholders, member,
partner, principal or affiliate thereof, except upon terms and conditions that
are intrinsically fair and substantially similar to those that would be
available on an arms-length basis with third parties other than any shareholder,
member, partner, principal or affiliate of Borrower, or any shareholder, member,
partner, principal or affiliate thereof;

         (k) seek the dissolution or winding up in whole, or in part, of
Borrower;

         (1) fail to correct any known misunderstandings regarding the separate
identity of Borrower;

         (m) hold itself out to be responsible for the debts of another entity
or person;

         (n) make any loans or advances to any third party, including any
shareholder, member, partner, principal or affiliate of Borrower, or any
shareholder, member, partner, principal or affiliate thereof;

         (o) fail to file its own tax returns;

         (p) fail either to hold itself out to the public as a legal entity
separate arid distinct from any other entity or person or to conduct its
business solely in its own name in- order not (i) to mislead others as to the
identity of the party with which such other party is transacting business, or
(ii) to suggest that Borrower is responsible for the debts of any third party
(including any shareholder, member, partner, principal or affiliate to Borrower,
or any shareholder, member, partner, principal or affiliate thereof;

         (q) fail to maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations;

         (r) file or consent to the filing of any petition, either voluntary or
involuntary, to take advantage of any applicable insolvency, bankruptcy,
liquidation or organization statute, or make an assignment for the benefit of
creditors; or

         (s) share any common logo with or hold itself out as or be considered
as a department or division of (i) any shareholder, member, partner, principal
or affiliate of Borrower, (ii) any affiliate of a shareholder, member, partner,
principal or affiliate of Borrower, or (iii) any other person or entity.

                                       15
<PAGE>

         5.20 Further Assurances. Borrower and Guarantor shall provide Lender
with such further assurances, information and/or documentation as Lender may
reasonably require from time to time.

                                   Article 6.

                               Negative Covenants
                               ------------------

         6.1 No Amendments. Borrower and Guarantor shall not:

         (i) suffer or permit any material amendment or modification of the
Organizational Agreements of Borrower;

         (ii) suffer or permit the amendment, modification or rejection of any
of the Operating Agreements.

         6.2 Leases. Borrower shall not, without the prior written consent of
Lender, enter into any lease or other rental or occupancy arrangement or
concession agreement with respect to the Property other than the rental of hotel
or banquet rooms in the ordinary course of business.

         6.3 Lienable Work. Subject to the provisions of Section 5.16 hereof,
Borrower shall not, without Lender's prior written approval, exercisable in
Lender's sole discretion, cause or permit any material alteration of a
structural component of the improvements on the Property which costs more than
$50,000.00 to complete, without Lender's prior written approval of the scope of
work, the plans and specifications, the contractor, the construction contract,
the costs (including the costs of installation, labor and materials), the timing
and manner of payment and the sources of funding thereof. Should any claim of
lien or other lien be filed against the Property by reason of any act or
omission of Borrower or any of Borrower's agents, employees, contractors or
representatives, then Borrower and Guarantor shall cause the same to be canceled
and discharged of record by bond pursuant to Va. Code ss.43-71 (1950, as
amended) or otherwise within ten (10) days after the filing thereof. Should
Borrower and Guarantor fail to discharge such lien within such ten (10) day
period, then Lender may discharge the same, in which event Borrower and
Guarantor shall reimburse Lender, on demand, for the amount of the lien or the
amount of the bond, if greater, plus all administrative costs incurred by Lender
in connection therewith. The remedies provided herein shall be in addition to
all other remedies available to Lender under the Loan Documents or otherwise.

         6.4 Conversion. Borrower shall not permit the Property or any portion
thereof to be converted or take any preliminary actions which-could lead to a
conversion to condominium or cooperative form of ownership until such time as
the Loan is paid in full, together with all interest thereon.

         6.5 Mangier. Borrower shall not change the Manager or amend or
terminate the Management Contract or permit the Manager to reduce substantially
the -staffing of the Project without Lender's prior written consent.

                                       16
<PAGE>

         6.6 No Commingling Funds. Borrower shall not commingle any funds
related to the Property with funds from any other property.

         6.7 No Change in Nature of Business. Borrower shall not make any
material change in the nature of its business carried on as of the date hereof.

         6.8 No Mergers, Consolidations, Sales. Borrower shall not be a party to
any merger, consolidation or exchange of ownership interests, or purchase or
otherwise acquire all or substantially all of the assets or stock of any class
of, or any partnership or joint venture interest in, any other person or entity,
or sell, transfer, convey or lease all or any substantial part of its assets, or
sell or assign, with or without recourse, any receivables.

         6.9 No Change in Ownership. Borrower shall not permit any person or
entity to become a member of Borrower or permit any member to assign, transfer,
pledge, hypothecate or sell any interest in Borrower.

         6.10 Other Agreements. Borrower and Guarantor shall not enter into any
agreement containing any provision which would be violated or breached by the
performance of its obligations hereunder or under any instrument or document
delivered or to be delivered by it hereunder or in connection herewith or which
would violate or breach any provision hereof or of any such instrument or
document.

         6.11 Non-Competition. Neither Borrower, Guarantor nor any affiliate of
Borrower or Guarantor shall, during the term of the Loan, become directly or
indirectly interested in any business within a five (5) mile radius of the
Property similar to or competitive with the business of Borrower, whether as
proprietor, stockholder, director, manager, partner, employee, trustee,
beneficiary or in any other capacity.

         6.12 Debt. Borrower shall not, directly or indirectly, incur any debt
or enter into any guarantees, hypothecation, contracts or other agreements which
would make such party liable for any debt or expense outside the ordinary course
of such party's operations.

         6.13 Application of Loan Proceeds. Borrower shall not use or apply any
portion of any funds provided by Lender pursuant to the Loan Documents for any
purpose other than the payment of actual costs incurred to refinance the
Premises.

         6.14 Other Encumbrances. Borrower shall not hereafter grant or allow to
be sustained a security interest, lien, mortgage or encumbrance upon the
Property or any portion thereof other than the Permitted Encumbrances.

         6.15 Sale or Refinancing. Borrower shall not sell, assign, transfer,
convey, mortgage, pledge, lease, refinance or otherwise alienate or encumber the
Property or any interest therein, whether legal or equitable; provided, however,
Borrower shall be entitled to sell any personal property, in the ordinary course
of its operation of the Property, upon replacement of same with personal
property of the same style or type and of an equal or greater value.

         6.16 Assertion of Certain Claims and Defenses. To the extent permitted
by applicable law, neither Borrower nor Guarantor shall assert in any judicial
proceeding any lender

                                       17
<PAGE>

liability claim or counterclaim, the defense of lack of consideration or
violation of any applicable usury laws or any similar legal or equitable defense
to the validity or enforceability of this Agreement or any other Loan Document.

         6.17 Compensation and Fees. Any payment of management, license or
franchise fees to Borrower's affiliates shall be subordinate to the scheduled
principal and interest payments due to Lender pursuant to the Note. In no event
shall Borrower pay, with regard to the Property, a management fee in excess of
three and one-half percent (3.50%) of revenues.

         6.18 Loans, Advances, Guaranties. Borrower shall not lend or advance
money or credit to any person or entity or purchase or repurchase (or agree,
contingently or otherwise, to do so) the indebtedness of, or assume, guarantee
(directly or indirectly or by an instrument having the effect of assuming
another's payment or performance of any obligation or capability of so doing, or
otherwise), or endorse or otherwise become liable, directly or indirectly, with
respect to the obligations, stock or dividends of any person or entity.

         6.19 Other Business. Borrower shall not engage in any trade or
business other than the operations of the Property.

         6.20 Distributions. Borrower shall not make any distribution to
Borrower, Guarantor or any of their affiliates, members or shareholders, except
to the extent permitted in Section 6.17 hereof, unless Lender's prior written
consent is first obtained. This Section 6.20 does not apply to any payments made
in connection with the operation of the Project in the normal course of
business, except for the payment of the license and management fees set forth in
Section 6.17 of this Agreement.

         6.21 Other Accounts. Borrower, upon prior notice to Lender may
establish a hotel operating bank account, a restaurant operating bank account, a
payroll account, and a savings account. Other than the accounts specified in
this Section 6.21, Borrower shall not, without Lender's prior written consent,
open or maintain any deposit or other account with regard to the Project.

                                   Article 7.

                 Events of Default; Acceleration of Indebtedness
                 -----------------------------------------------

         7.1 Events of Default. The occurrence of any one or more of the
following events, automatically and without notice (except as expressly provided
below) shall constitute an "Event of Default" under this Agreement:

         (a) failure of Borrower to pay punctually when due any of the
Indebtedness, including any payment due under the Note, this Agreement, or the
Loan Documents and such failure shall continue for a period of five (5) days
after such payment was due;

         (b) failure of Borrower to pay monthly when due any of the deposits to
the tax escrow account and such failure shall continue for a period of five (5)
days after such payment was due;

                                       18
<PAGE>

         (c) default or breach of any agreement, covenant, representation or
warranty other than as set forth in any subsection hereof which is not cured
within thirty (30) days after written notice thereof from Lender;

         (d) default and the expiration of any cure period applicable thereto
under any other Loan Document;

         (e) default and the expiration of any cure period applicable thereto
under any of the Operating Agreements;

         (f) Borrower or any Guarantor shall make application for or seek relief
or protection of itself or himself or for the benefit of their creditors under
any of the sections, chapters or provisions of Title 11 of the United States
Code, 11 U.S.C. ss.ss. 101 et. seq. (the "Bankruptcy Code"), or (ii) any other
Federal, state of local insolvency or debtor relief law, or any involuntary
petition (which is not dismissed within thirty (30) days after filing) is filed
against Borrower or Guarantor under any section, chapter or provision of the
Bankruptcy Code;

         (g) any material statement, report, or certificate made or delivered by
Borrower or Guarantor or any of their partners, members, officers, employees, or
agents, to Lender is not true and correct;

         (h) payroll tax deposits are not made by Borrower when due;

         (i) any of the collateral intended to be secured by the Loan Documents
or any other of Borrower's or Guarantor's assets are attached, seized, subjected
to a writ or distress warrant, or are levied upon, or come within the possession
of any receiver, trustee, custodian or assignee for the benefit of creditors;

         (j) Borrower is enjoined, restrained or in any way prevented by court
order from conducting all or any material part of its business affairs;

         (k) the bankruptcy liquidation, dissolution or merger of Borrower or
the bankruptcy, death, permanent disability or adjudicated incompetence of John
Knorr.

         (l) an application is made by Borrower or Guarantor for, or a court of
competent jurisdiction orders, the appointment of a receiver, trustee, examiner
or custodian for such party or for any of the collateral or any other of such
party's assets;

         (m) Any material adverse change occurs with respect to (i) the Property
or (ii) the financial condition or credit standing of Borrower (or if Borrower
or any Guarantor is a partnership, joint venture, trust or other business
association, partners, beneficiaries or other beneficial owners of such entity);

         (n) there is a monetary variance in any financial information or
computation submitted by Borrower (or on Borrower's behalf) in excess of five
percent (5%) which is detrimental to Lender; or

                                       19
<PAGE>

         (o) for any reason, other than failure of Lender to take any action
available to it to maintain perfection of the liens created in favor of Lender
pursuant to the Loan Documents, any Loan Document ceases to be in full force and
effect or any lien with regard to any of the collateral intended to be secured
by the Loan Documents ceases to be, or is not valid, perfected and prior to all
other liens or is terminated, revoked or declared void or invalid.

         7.2 Acceleration; Remedies. Upon the occurrence of an Event of Default,
unless Lender elects to waive such default in its sole and absolute discretion,
all amounts due Lender under the Loan Documents shall become immediately due and
payable without notice to Borrower and Lender shall be entitled to all of the
rights and remedies provided in the Loan Documents or at law or; in equity. Each
remedy provided in the Loan Documents is distinct and cumulative of all other
rights or remedies under the Loan Documents or afforded by law or equity, and
may be exercised concurrently, independently, or successively, in any order
whatsoever. Upon the occurrence of an Event of Default, and notwithstanding the
automatic stay set forth in section 362(a) of the Bankruptcy Code, (a) Lender
shall thereupon be entitled to immediate relief from any automatic stay imposed
by Section 362 of the Bankruptcy Code, or otherwise, on or against the exercise
of the rights and remedies otherwise available to Lender as provided herein, in
the Note, or in the Loan Documents, or as otherwise provided at law or in
equity; (b) Borrower and Guarantor shall consent and do hereby consent to
Lender's relief from any aforementioned stay and to Lender's exercise of the
rights otherwise available to Lender herein, in the Note or Loan Documents; (c)
Borrower and Guarantor shall not seek nor apply for any expansion of the
provisions of Section 362 of the Bankruptcy Code or any injunction against
Lender's exercise of its rights herein, in the Note or Loan Documents; (d)
Lender shall be entitled to remain in possession of the Project or any other
collateral pledged to secure any obligation of Borrower to Lender, and to
collect the rents therefrom and Borrower shall and hereby consents thereto; (e)
Borrower and Guarantor shall consent to a cash collateral order in a form
acceptable to the Lender, in Lender's sole and absolute discretion, if requested
by Lender; and (f) Borrower and Guarantor shall not, without Lender's prior
consent (exercisable in Lender's sole discretion), seek any extension of any
time period within which to file or obtain confirmation of any plan of
reorganization.

         7.3 Waiver of Certain Rights.

         A. Borrower and Guarantor expressly and irrevocably waive and release
any right to claim, in a bankruptcy court or in any other Federal court or state
court, that any stay, injunction, or other restraint or prohibition of any kind
should be issued, imposed, or reimposed with respect to the terms of this
Agreement, which waiver and release includes (but is not limited to) any and all
proceedings for injunctive relief of any kind filed by or on behalf of Borrower
pursuant to Bankruptcy Code ss.105 or ss. 362, Bankruptcy Rule 7065, Rule of the
Federal Rules of Civil Procedure, or any other or similar substantive or
procedural provisions of Federal law, state law, or Federal or state rules of
procedure.

         B. Borrower further waives all rights of presentment and notice of
dishonor and waives the benefit of any and all homestead exemptions.

         C. Until the Agreement is performed in its entirety, Borrower and
Guarantor, will not petition for, agree to, support, or permit the filing of a
bankruptcy case under any chapter of the

                                       20
<PAGE>

Bankruptcy Code, whether voluntary or involuntary, by or against it. Borrower
and Guarantor will oppose the filing of any such bankruptcy case; and Borrower
and Guarantor will make all reasonable efforts to cause any such bankruptcy case
to be dismissed if it is filed.

         D. Borrower and Guarantor know and understand that there are rights and
remedies provided under the Bankruptcy Code, the Federal Rules of Civil
Procedure, and the Bankruptcy Rules, pursuant to which parties otherwise bound
by a previously entered order can attempt to obtain relief from such an order by
alleging circumstances which may warrant a change or modification in the order,
or circumstances such as fraud, mistake, inadvertence, excusable neglect, newly
discovered evidence, or similar matters which may justify vacating the order
entirely, or otherwise changing or modifying it (collectively "Changed
Circumstances"). With full knowledge and understanding of what are, or may be,
its present or future rights and remedies based on allegations of Changed
Circumstances, Borrower and Guarantor: (i) expressly disavows that there are any
matters which constitute any kind of Changed Circumstances as of the date
hereof; and (ii) in all events, expressly waives any and all rights and remedies
which it has, or may have, now or in the future, based on any Changed
Circumstances, and Borrower and Guarantor voluntarily assume the risk of any
Changed Circumstances.

                                   Article 8.

                                  Miscellaneous
                                  -------------

         8.1 Expenditures and Expenses. Borrower agrees to promptly pay all
reasonable Costs incurred by Lender in connection with the underwriting,
approval, documentation, modification, workout, collection or enforcement of the
Loan or any of the Loan Documents (as applicable) (including, but not limited to
all fees, costs and expenses of Lender's Inspectors ) and all such Costs shall
be included as additional indebtedness bearing interest at the Default Rate set
forth in the Note until paid. For the purposes hereof "Costs" shall mean all
expenditures and expenses which may be paid or incurred by or on behalf of
Lender including repair costs, payments to remove or protect against liens,
attorneys' (primary and local) and legal fees and costs (including, but not
limited to, all appellate level and post judgment proceedings), receivers' fees,
appraisers' fees, engineers' fees, accountants' fees, independent consultants'
fees (including environmental consultants), all costs and expenses incurred in
connection with any of the foregoing, Lender's out-of-pocket costs and expenses
related to any audit or inspection of the Property, outlays for documentary and
expert evidence, stenographers' charges, documentary transfer and stamp taxes,
publication costs, and costs (which may be estimates as to items to be expended
after entry of an order or judgment) for procuring all such abstracts of title,
title searches and examination, title insurance policies, and similar data and
assurances with respect to title as Lender may deem reasonably necessary either
to prosecute any action or to evidence to bidders at any sale of the Collateral
the true condition of the title to, or the value of, the Collateral.

         8.2 Right to Cure. Lender may from time to time, in its sole and
absolute discretion (but shall have no obligation to do so), for Borrower's
account and at Borrower's expense, pay any amount or do any act required of
Borrower hereunder or required under the Loan Documents, or requested by Lender
to preserve, protect, maintain or enforce the Loan, the Property or any other
collateral, and which Borrower fails to pay or do or cause to be paid or done,
including,

                                       21
<PAGE>

without limitation, payment of insurance premiums, taxes or assessments,
warehouse charge, finishing or processing charge, landlord's claim, and any
other lien upon or with respect to the or any other collateral. All payments
that Lender makes pursuant to this Section and all out-of-pocket costs and
expenses that Lender pays or incurs in connection with any action taken by it
hereunder shall be deemed Costs. Any payment made or other action taken by
Lender pursuant to this Section shall be without prejudice to any right to
assert an Event of Default hereunder and to pursue Lender's other rights and
remedies with respect thereto.

         8.3 Disclosure of Information. Borrower agrees that Lender shall have
the right (but shall be under no obligation) to make available to any party for
the purpose of granting participation in or selling, transferring, assigning or
conveying all or any part of the Loan (including any governmental agency or
authority and any prospective bidder at any sale of the Property) any and all
information which Lender may have with respect to the Property, Borrower and
Guarantor whether provided by such party or any third party or obtained as a
result of any environmental assessments. Borrower and Guarantor agree that
Lender shall have no liability whatsoever as a result of delivering any such
information to any third party, and Borrower and Guarantor, on behalf of
themselves and their successors and assigns, hereby release and discharge Lender
from any and all liability, claims, damages, or causes of action, arising out
of, connected with or incidental to the delivery of any such information to any
third party.

         8.4 Sale of Loan. Lender, at any time and without the consent of
Borrower or Guarantor, may grant, participation in or sell, transfer, assign and
convey all or any portion of its right, title and interest in and to the Loan,
this Agreement and the other Loan Documents, any guaranties given in connection
with the Loan and any collateral given to secure the Loan. In addition,
notwithstanding anything herein to the contrary, Borrower agrees that Lender may
assign, pledge or transfer this Agreement and its rights hereunder and the
assignee shall be entitled to the performance of all of Borrower's agreements
and obligations under this Agreement, and shall be entitled to enforce all the
rights and remedies of Lender under this Agreement for the benefit of assignee,
as fully as if assignee were herein by name specifically given such-rights and
remedies. Borrower expressly agrees that it will assert no claims or defenses
that it may have against Lender against the assignee, except those specifically
available under this Agreement.

         8.5 Intentionally Deleted.

         8.6 Forbearance by Lender Not a Waiver. Any forbearance by Lender in
exercising any right or remedy under any of the Loan Documents, or otherwise
afforded by applicable law, shall not be a waiver of or preclude the exercise of
any right or remedy. Lender's acceptance of payment of any sum secured by any of
the Loan Documents after the due date of such payment shall not be a waiver of
Lender's right to either require prompt payment when due of all other sums so
secured or to declare a default for failure to make prompt payment. The
procurement of insurance or the payment of taxes or other liens or charges by
Lender shall not be a waiver of Lender's right to accelerate the maturity of the
Loan, nor shall Lender's receipt of any awards, proceeds or damages operate to
cure or waive Borrower's or Guarantor's, default in payment or sums secured by
any of the Loan Documents. With respect to all Loan Documents, only waivers made
in writing by Lender shall be effective against Lender.

                                       22
<PAGE>

         8.7 Waiver of Statute of Limitations and Other Defenses. Borrower and
Guarantor hereby waive the right to assert any statute of limitations or any
other defense as a bar to the enforcement of the lien created by any of the Loan
Documents or to any action brought to enforce the Note or any other obligation
secured by any of the Loan Documents.

         8.8 Governing Law; Severabilty. This Agreement and the Loan Documents
shall be governed by and construed in accordance with the laws of the
Commonwealth of Virginia, which shall govern the enforceability and validity of
the obligations arising under the Note and the Loan Documents. The invalidity,
illegality or enforceability of any provision of this Agreement shall not affect
or impair the validity, legality or enforceability of the remainder of this
Agreement, and to this end, the provisions of this Agreement are declared to be
severable.

         8.9 Relationship and Indemnity.

         (i) The relationship between Lender and Borrower and Guarantor shall be
that of creditor-debtor only. No term in this Agreement or in the other Loan
Documents arid no course of dealing between the parties shall be deemed to
create any relationship of agency, partnership or joint venture or any
fiduciary duty by Lender to any other party.

         (ii) To the, fullest extent permitted by law, Borrower hereby agrees to
indemnify, protect, hold harmless and defend Lender, its successors, assigns and
shareholders, directors, officers, employees, and agents from and against any
and all losses, damages, costs, expenses (including attorneys' fees [including,
but not limited to, all appellate level and post judgment proceedings]), claims;
proceedings, penalties, fines and other sanctions in connection with (a) the
Property, the collateral or any act or omission of Borrower or Guarantor, their
respective employees or agents, whether actual or alleged other than if caused
by Lender or Lender's agents wrongful conduct or breach of this Agreement, and
(b) any and all brokers' commissions or other costs of similar type by any party
in connection with the Loan except those arising from Lender's conduct. Upon
written request by an indemnities, Borrower will undertake, at its own costs and
expense, on behalf of such indemnities, using counsel satisfactory to the
indemnities in such indemnitee's reasonable discretion, the defense of any legal
action or proceeding whether or not such indemnitee shall be a party and for
which such indemnitee is entitled to be indemnified pursuant to this section. At
Lender's option, Lender may, at Borrower's expense, prosecute or defend any
action involving the priority, validity or enforceability of the Deed of Trust.

         8.10 Notice. Any notice or other communication required or permitted to
be given shall be in writing addressed to the respective party as set forth
below and may be personally served, telecopied or sent by overnight courier or
U.S. Mail and shall be deemed given: (a) if served in person, when served; (b)
if telecopied, on the date of transmission if before 3:00 p.m. (Chicago time) on
a business day; (c) if telecopied, on the date after transmission if on or after
3:00 p.m. (Chicago time) on a business day; provided that in the case of (b) or
(c) above, a hard copy of such notice is also sent pursuant to (d) or (e) below;
(d) if by overnight courier, on the first business day after delivery to the
courier; or (e) if by U.S. Mail, certified or registered mail, return receipt
requested on the third (3rd) day after deposit in the mail postage prepaid.

                                       23
<PAGE>

Notices to Borrower:           Old Point Comfort Hotel, L.L.C.
                               104 Woodhall Drive
                               Richmond, VA 23229
                               Attn: John Knorr
                               Fax: (804) 750-1087

With a copy to:                Gorham Rutter, Jr.
                               517 Springcreek Drive
                               Longwood, FL 32779
                               Fax: (407) 869-5584

Notices to Lender:             JDI Hampton, L.L.C.
                               c/o JDI Realty L.L.C.
                               150 South Wacker Drive, Suite 2660
                               Chicago, Illinois 60606
                               Attention: Jeffrey I. Aeder or
                                          Kevin C. Connor
                               Fax: (312) 782-4563

With a copy to:                D'Ancona & Pflaum LLC
                               111 East Wacker Drive
                               Suite 2800
                               Chicago, Illinois 60601
                               Attention: Marc S. Joseph
                               Fax: (312) 602-3060

         8.11 Successors and Assigns Bound; Joint and Several Liability; Agents;
and Captions. The covenants and agreements contained in the Loan Documents shall
bind, and the rights thereunder shall inure to, the respective successors and
assigns of Lender, Borrower and Guarantor subject to the provisions of this
Agreement. Borrower acknowledges and agrees that Lender may assign; pledge or
transfer this Agreement and its rights hereunder and the assignee shall be
entitled to the performance of all of Borrower's agreements and obligations
under this Agreement, and shall be entitled to enforce all the rights and
remedies of Lender under this Agreement for the benefit of assignee, as fully as
if assignee were herein by name specifically given such rights and remedies.
Borrower expressly agrees that it will assert no claims or defenses that it may
have against Lender against the assignee, except those specifically available
under this Agreement. All covenants and agreements of Borrower and Guarantor
shall be joint and several. In exercising any rights under the Loan Documents or
taking any actions provided for therein, Lender may act through its employees,
agents or independent contractors as authorized by Lender.

         8.12 Headings. The captions and headings of the paragraphs of this
Agreement are for convenience only and are not to be used to interpret or define
the provisions hereof.

                                       24
<PAGE>

         8.13 Terms and Usage. As used in the Loan Documents "business day"
means any day, other than a Saturday or a Sunday, when banks in Chicago,
Illinois are not required or authorized to be closed.

         8.14 Loss of Note. Upon notice from Lender of the loss, theft, or
destruction of the Note and upon receipt of an indemnity reasonably satisfactory
to Borrower from Lender, or in the case of mutilation of the Note, upon
surrender of the mutilated Note, Borrower shall make and deliver a new note of
like tenor in lieu of the then to be superseded Note.

         8.15 Time of Essence. Time is of the essence of this Agreement and the
performance of each of the covenants and agreements contained herein.

         8.16 Service of Process/Venue. Borrower hereby consents to service of
process, and to be sued, in the State of Illinois and consents to the
jurisdiction of the courts of the State of Illinois, Cook County and the United
States District Court for the Northern District of Illinois as well as the
jurisdiction of all courts from which an appeal may be taken from such courts,
for the purpose of any suit, or other proceeding arising out of any of their
obligations hereunder, and expressly waive any and all objections they may have
as to venue in any such courts and consents that all such services of process
may be made by certified mail return receipt requested, directed to Borrower at
the address indicated herein and service so made shall be complete five (S) days
after the same has been deposited in the U.S. mails as aforesaid.

         8.17 Jury Trial Waiver. BORROWER AND LENDER HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR
RELATED TO, THE SUBJECT MATTER OF THIS AGREEMENT AND THE BUSINESS RELATIONSHIP
THAT IS BEING ESTABLISHED. THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY MADE BY BORROWER AND LENDER, AND BORROWER ACKNOWLEDGES THAT NEITHER
LENDER NOR ANY PERSON ACTING ON BEHALF OF LENDER HAS MADE ANY REPRESENTATIONS OF
FACT TO INCLUDE THIS WAIVER OF TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN
ANY WAY MODIFY OR NULLIFY ITS EFFECT. BORROWER AND LENDER ACKNOWLEDGE THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH
OF THEM HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND
THAT EACH OF THEM WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE
DEALINGS. BORROWER AND LENDER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF
THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL.

         8.18 Counterparts. This Agreement may be executed in counterparts,
contain more than one counterpart of the signature page, and executed by the
affixing of the signatures of each of the parties to one or more of such
counterpart signature pages. All of such counterpart signature pages shall be
read as though one, and they shall have the same force and effect as though all
of the signers had signed a single signature page.

                                       25
<PAGE>

         8.19 Final Agreement/Modification. This Agreement, together with the
other Loan Documents, is intended as the final expression of the agreement
between Borrower and Lender. All prior discussions, negotiations and agreements
are of no further force and effect. This Agreement can be modified only in
writing executed by all parties.

         8.20 Continuing Agreement. This Agreement shall in all respects be a
continuing agreement and shall remain in full force and effect (notwithstanding,
without limitation, the death, incompetency or dissolution of Borrower or
Guarantor).

         8.21     No Third Party Benefits. This Agreement, the Deed of Trust
the Note and the other Loan Documents are made for the sole benefit of Lender
and Borrower, and no other party shall have any legal interest of any kind under
or by reason of any of the foregoing. Whether or not Lender elects to employ any
or all the rights, powers or remedies available to it under any of the
foregoing, Lender shall have no obligation or liability of any kind to any third
party by reason of any of the foregoing or any of the Lender's actions or
omissions pursuant thereto or otherwise in connection with this transaction.

         8.22 ACKNOWLEDGMENT. BORROWER ACKNOWLEDGES THAT IT HAS THOROUGHLY READ
AND REVIEWED THE TERMS AND PROVISIONS OF THIS AGREEMENT, THE ATTACHED SCHEDULES
AND THE LOAN DOCUMENTS AND IS FAMILIAR WITH THE TERMS OF SAME; THAT THE TERMS
AND PROVISIONS CONTAINED IN THIS AGREEMENT HAVE BEEN THOROUGHLY READ BY BORROWER
AND ARE CLEARLY UNDERSTOOD AND FULLY AND UNCONDITIONALLY CONSENTED TO BY
BORROWER. BORROWER HAS HAD FULL BENEFIT AND ADVICE OF COUNSEL OF ITS SELECTION,
IN REGARD TO UNDERSTANDING THE TERMS, MEANING, AND EFFECTS OF THIS AGREEMENT.
BORROWER FURTHER ACKNOWLEDGES THAT ITS EXECUTION OF THIS AGREEMENT AND THE LOAN
DOCUMENTS IS DONE FREELY, VOLUNTARILY AND WITH FULL KNOWLEDGE, AND WITHOUT
DURESS, AND THAT IN EXECUTING THIS AGREEMENT AND THE LOAN DOCUMENTS, BORROWER
HAS RELIED ON NO OTHER REPRESENTATIONS, EITHER WRITTEN OR ORAL, EXPRESS OR
IMPLIED, MADE TO IT BY ANY OTHER PARTY TO THE AGREEMENT; AND THAT THE
CONSIDERATION RECEIVED BY BORROWER UNDER THIS AGREEMENT AND THE LOAN DOCUMENTS
AND HAS BEEN ACTUAL AND ADEQUATE.

                                       26
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
have caused the same to be executed by their duly authorized representatives as
of the date first above written.

                                           BORROWER:

                                           OLD POINT COMFORT HOTEL, L.L.C.,
                                           a Virginia limited liability company

                                           By: /s/ C. John Knorr, Jr.
                                              ---------------------------------
                                           Its:  President
                                              ---------------------------------
                                           Name: C. John Knorr
                                              ---------------------------------

                                           LENDER:

                                           JDI HAMPTON, L.L.C., an Illinois
                                           limited liability company

                                           By:
                                              ---------------------------------
                                           Its:
                                              ---------------------------------
                                           Name:
                                              ---------------------------------

                                       27
<PAGE>

                                  Exhibit "A"

    All those certain parcels of land located on the United States Military
 Reservation at Fort Monroe, City of Hampton, Virginia, commonly known as "The
  Chamberlin Hotel" together with the buildings and improvements thereon; more
                       particularly described as follows:

    Beginning at the point of intersection of the inside or west side of the
 sidewalk on the west side of Ingalls Road and the inside or south side of the
  sidewalk on the south side of Fenwick Road; thence, along the inside of the
sidewalk on the south side of Fenwick Road westerly to the northwest end of the
seawall; thence, southerly, southeasterly, northeasterly and again southeasterly
along the seawall to the inside or west side of the sidewalk on the west side of
Ingalls Road, thence along the inside of the sidewalk on the westside of Ingalls
 Road northerly to the point of beginning, containing 5.09 acres, more or less,
   as shown outlined in red on map entitled "Lease to Richmond Hotels, Inc. -
                   Chamberlin Hotel, Fort Monroe, Virginia."

<PAGE>

                                   EXHIBIT B

                              Permitted Exceptions
                              --------------------

Exceptions ________________________ and __________________, as shown on Title
Commitment No. ____________, issued as of _____________, 2000 by Nations Title
Company.

                                       29
<PAGE>

                                   EXHIBIT C

                                     Budget
                                     ------

                                       30
<PAGE>

RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:

Marc S. Joseph
D'Ancona & Pflaum LLC
111 East Wacker Drive
Suite 2800
Chicago, Illinois 60601

TAX MAP NUMBER:
              ---------------------

TAX INDENTIFICATION
NUMBER:
       -------------------------

            LEASEHOLD DEED OF TRUST, ASSIGNMENT OF RENTS AND LESSOR'S
            ---------------------------------------------------------
         INTEREST IN LEASES, SECURITY AGREEMENT. FINANCING STATEMENT AND
         ---------------------------------------------------------------
                                 FIXTURE FILING
                                 --------------

         This Leasehold Deed of Trust, Assignment of Rents and Lessor's Interest
in Leases, Security Agreement and Financing Statement and Fixture Filing (called
"Deed of Trust") is made this 14 day of September, 2000, by and among, OLD
POINT COMFORT HOTEL, L.L.C., a Virginia limited liability company, whose mailing
address is 104 Woodhall Drive, Richmond, VA 23229, hereinafter called "Trustor",
E. DUFFY MYRTETUS, whose mailing address is c/o LeClair Ryan, a Professional
Corporation, 707 East Main Street, 11th Floor, Richmond, Virginia 23219,
hereinafter called "Trustee", and JDI HAMPTON, L.L.C., an Illinois limited
liability company, whose mailing address is c/o JDI Realty L.L.C., 150 South
Wacker Drive, Suite 2660, Chicago, Illinois, 60606, hereinafter called
"Beneficiary".

                                  WITNESSETH:
                                  -----------

         Trustor is justly indebted to Beneficiary in the principal sum of ONE
MILLION SIX HUNDRED SEVENTY-FIVE THOUSAND AND NO/100 DOLLARS ($1,675,000.00)
(the "Loan") evidenced by a certain Note (the "Note") of even date herewith in
that amount, made by Trustor and payable to the order of and delivered to
Beneficiary, in and by which said Note Trustor promises to pay the said
principal sum and interest in the manner and at the rates as provided therein.
The unpaid principal amount and all accrued and unpaid interest due under the
Note, if not sooner paid, shall be due on September 13, 2001, except that if
certain conditions described in the Note are not satisfied in accordance with
the provisions thereof, the unpaid principal amount and all accrued and unpaid
interest due under the Note shall be due on such earlier date or dates as are
specified in the Note. All such payments on account of the indebtedness
evidenced by the Note shall be first applied to interest on the unpaid principal
balance and the remainder to principal, and all of said principal and interest
shall be payable at such place as the holder or holders of the Note may from
time to time in writing appoint, and in the absence of such appointment, then at
the office of Beneficiary, at c/o. JDI Realty L.L.C., 150 South Wacker Drive,
Suite 2660, Chicago, Illinois 60606.

<PAGE>

         NOW, THEREFORE, Trustor, to secure the payment of said principal sum of
money and said interest in accordance with the terms, provisions and limitations
of this Deed of Trust, the Loan Agreement (as hereinafter defined) and of the
Note secured hereby, together with any extensions, renewals or refinancings
thereof, and the performance of the covenants and agreements herein contained
and in the Note and the other Loan Documents (as hereinafter defined) by Trustor
or Guarantor (as hereinafter defined) to be performed, and of any and all
additional loans or advances made by Beneficiary to Trustor and/or the then
record owner or owners of all or part of the property described herein, and
extensions, modifications or renewals, when evidenced by a promissory notes)
reciting that they are secured by this Deed of Trust, and also in consideration
of the sum of TEN DOLLARS ($10.00) in hand paid, the receipt and sufficiency of
which are hereby acknowledged, does by these presents irrevocably grant, convey,
transfer, and assign to Trustee, in trust, with power of sale, all of Trustor's
present and future estate, right, title and interest in and to the leasehold
estate created under and by virtue of that certain Department of the Army Lease
dated June 30, 1998 by and between a secretary of the Army, as Lessor, and
Mortgagor, as Lessee, recorded on October 2, 2000 as Instrument 015373 and all
extensions, renewals and assignments thereof (the "Ground Lease"), which Ground
Lease demises for a term of forty (40) years, that real property located in the
City of Hampton, Virginia and commonly known as the Chamberlin Hotel in Hampton,
Virginia and legally described in Exhibit A attached hereto and made a part
hereof, which, together with the property hereinafter described, is referred to
herein as the "Premises";

         TOGETHER with all easements, rights of way, strips and gores of land,
vaults, streets, alleys, water rights, mineral rights, and rights used in
connection with the Premises or to provide a means of access to the Premises,
and all tenements, hereditaments and appurtenances thereof and thereto
pertaining or belonging, and all underground and overhead passageways and
licenses in connection therewith;

         TOGETHER with all leasehold estates, right, title and interest of the
Trustor in any and all leases, subleases, licenses, management agreements,
arrangements, concessions, or agreements, written or oral, relating to the use
and occupancy of the Premises and improvements or any portion thereof located
thereon, now or hereafter existing or entered into;

         TOGETHER with all rentals, earnings, income, deposits, security
deposits, receipts, royalties, revenues, issues and profits, accounts
receivables, room rentals, food and beverage revenues and other amounts
generated from the use, occupancy and operation of the Premises for so long and
during all such times as Trustor may be entitled thereto (which are pledged
primarily and on a parity with said real estate and not secondarily);

         TOGETHER with any and all buildings and improvements now or hereafter
erected on the Premises, including, but not limited to, the fixtures,
attachments, appliances, equipment, machinery, and other articles attached to
said buildings and improvements and all tangible personal property owned by
Trustor now or any time hereafter located on or at the Land or used in
connection therewith, including, but not limited to, all goods, machinery,
tools, equipment (including fire sprinklers and alarm systems, air conditioning,
heating, boilers, refrigerating, electronic monitoring, water, lighting, power,
sanitation, waste removal, entertainment, recreational, window or structural
cleaning rigs, maintenance and all other equipment of every kind), any and all
lobby and other indoor or outdoor furniture (including tables, chairs, planters,

                                       2
<PAGE>

desks, sofas, shelves, lockers and cabinets), furnishings, appliances,
inventory, rugs, carpets and other floor coverings, draperies, drapery rods and
brackets, awnings, venetian blinds, partitions, chandeliers and other lighting
fixtures, and all other fixtures, apparatus, equipment, furniture, furnishings,
and articles used in connection with the operation of the Premises, it being
understood that the enumeration of any specific articles of property shall in
nowise result in or be held to exclude any items of property not specifically
mentioned;

         TOGETHER with all the estate, interest, right, title, and other claim
or demand, including claims or demands with respect to the proceeds of insurance
in effect with respect thereto, which Trustor now has or may hereinafter acquire
in the Premises, and any and all awards made for the taking by eminent domain,
or by any proceedings or purchase in lieu thereof, of the whole or any part of
the Premises, including without limitation any awards resulting from the change
of grade of streets and awards for severance damages.

          All of the land, estate and property hereinabove described, real,
personal and mixed, whether affixed or annexed or not (except where otherwise
hereinabove specified) and all rights hereby conveyed and mortgaged are intended
so to be as a unit and are hereby understood, agreed and declared to form a part
and parcel of the real estate and to be appropriated to the use of the real
estate, and shall for the purposes of this Deed of Trust be deemed to be real
estate and conveyed and mortgaged hereby.

          Trustor represents and covenants that it is the holder of a leasehold
interest in the Premises, that it is lawfully seized of the Premises, that the
same are unencumbered except for such liens and encumbrances as shall have been
expressly approved in writing by Beneficiary (the "Permitted Exceptions"), and
that it has good right, full power and lawful authority to convey and mortgage
the same, and that it will warrant and forever defend said Premises and the
quiet and peaceful possession of the same against the lawful claims of all
persons whomsoever.

          IT IS FURTHER UNDERSTOOD AND AGREED THAT:

         1.       Maintenance, Repair and Restoration of Improvements Payment of
                  --------------------------------------------------------------
                  Prior Liens etc.
                  ----------------

          Trustor shall (a) promptly repair, restore or rebuild any buildings or
improvements now or hereafter on the Premises which may become damaged or be
destroyed; (b) keep the Premises in good condition and repair, without waste,
and free from mechanics' liens or other liens or claims for lien, except that
Trustor shall have the right to contest in good faith and with diligence the
validity of any such lien or claim upon: (i) placing a bond with Beneficiary in
an amount, form, content and issued by a surety acceptable to Beneficiary for
the payment of any such lien, or (ii) obtaining a title indemnity insuring
Beneficiary's interest against said lien in an amount, form, content and issued
by a title insurance company acceptable to Beneficiary, in either case within
ten (10) days after the filing of such lien; (c) immediately pay when due any
indebtedness which may be secured by a lien or charge on the Premises superior
or inferior to the lien hereof (no such superior or inferior lien to be
permitted hereunder), and upon request, exhibit satisfactory evidence of the
discharge of any such lien to Beneficiary; (d) complete any building or
buildings, and all construction work with respect thereto, now or at any time in
process of construction upon the Premises; (e) comply with all requirements of
law, municipal ordinances

                                       3
<PAGE>

and restrictions of record with respect to the Premises or the use thereof,
including, without limitation, those relating to building, zoning, environmental
protection, health, fire and safety; (f) make no structural or non-structural
alterations to the Premises or any buildings or other improvements now or
hereafter constructed thereon, without the prior written consent of Beneficiary,
except as provided for in the Loan Agreement (as hereinafter defined); (g)
suffer or permit no change in the general nature of the occupancy of the
Premises, without the prior written consent of Beneficiary; (h) initiate or
acquiesce in no zoning reclassification without the prior written consent of
Beneficiary; and (i) pay each item of indebtedness secured by this Deed of Trust
when due according to the terms hereof or of the Note. As used in this Article
and elsewhere in this Deed of Trust, the term "indebtedness" shall mean and
include the principal sum evidenced by the Note, together with all interest
thereon and all other amounts payable to Beneficiary thereunder, and all other
sums at any time secured by this Deed of Trust.

         2.       Payment of Taxes and Assessments.
                  --------------------------------

         Trustor shall pay before any penalty or interest attaches all general
taxes, special taxes, special assessments, water charges, sewer service charges,
and electric, gas and other utility charges, and all other liens or charges
levied or assessed against the Premises of any nature whatsoever when due, and
shall furnish to Beneficiary, upon request, duplicate receipts of payment
therefor. If any special assessment is permitted by applicable law to be paid in
installments, Trustor shall have the right to pay such assessment in
installments, so long as all such installments are paid prior to the due date
thereof.

         3.       Tax Deposits.
                  ------------

         In order to more fully protect the security of this Deed of Trust and
to provide security to Beneficiary for the payment of the amounts required under
Paragraph 2 above, Trustor agrees to pay tax deposits to Beneficiary, at such
place as Beneficiary may from time to time in writing appoint and in the absence
of such appointment, then at the office of the Beneficiary in Chicago, Illinois,
each month at the due date for the monthly installments of principal and
interest as provided for under the Note (in addition to paying the principal and
interest provided for under the Note) in an amount as determined by Beneficiary
pursuant to the terms of the Loan Agreement. Any Such deposits made by Trustor
shall be disbursed in accordance with the terms and conditions of the Loan
Agreement.

         4.       Beneficiary's Interest In and Use of Deposits.
                  ---------------------------------------------

         In the event of a default under any of the provisions contained in this
Deed of Trust, the Note or the Loan Documents, Beneficiary may, at its option,
without being required so to do, apply any monies at the time on deposit
pursuant to Paragraph 3 hereof to any of Trustor's obligations herein or in the
Note or Loan Documents contained, in such order and manner as Beneficiary may
elect. When the indebtedness secured hereby pledged as additional security for
the indebtedness hereunder and shall be irrevocably applied by Beneficiary for
the purposes for which made hereunder and shall not be subject to the direction
or control of Trustor; provided, however, that Beneficiary shall not be liable
for any failure to apply such funds after

                                       4
<PAGE>

an Event of Default (as defined in Paragraph 13 hereof). In addition,
Beneficiary shall not be liable for any act or omission taken in good faith or
pursuant to the instruction of any party.

         5.       Insurance.
                  ---------

         Trustor shall at all times keep all buildings, improvements, fixtures
and articles of personal property now or hereafter situated on the Premises
insured, pursuant to an all risk policy of insurance issued by a company rated
A-13 or better by Best among property and casualty insurers, or such other
rating as approved by Beneficiary, against loss or damage by fire and such other
hazards as may reasonably be required by Beneficiary, including without
limitation: (a) fire and extended coverage insurance, with vandalism and
malicious mischief endorsements, for the full replacement value of the Premises;
(b) rent or business loss insurance for the same perils described in (a) above,
payable at the rate per month specified from time to time by Beneficiary and for
a period of one year; (c) boiler and sprinkler damage insurance in an amount
satisfactory to Beneficiary, if and so long as the Premises shall contain a
boiler and sprinkler system, respectively; (d) if the Premises are located in a
flood hazard district, flood insurance whenever in the opinion of Beneficiary
such protection is necessary and is available; (e) dramshop insurance in an
amount satisfactory to Beneficiary; and (f) such other insurance as Beneficiary
may from time to time require. Trustor also shall at all times maintain
comprehensive public liability, property damage and workers' compensation
insurance covering the Premises and any employees thereon, with such limits for
personal injury, death and property damage as Beneficiary may require. All
policies of insurance to be furnished hereunder shall be in forms, amounts and
deductibles, and from companies, satisfactory to Beneficiary, with mortgage
clauses attached to all policies in favor of and in form satisfactory to
Beneficiary, including a provision requiring that the coverage evidenced thereby
shall not be terminated or materially modified without fifteen (15) days' prior
written notice to Beneficiary. Trustor shall deliver all policies, including
additional and renewal policies, to Beneficiary, and, in the case of insurance
about to expire, shall deliver renewal policies not less than fifteen (15) days
prior to their respective dates of expiration.

         Trustor shall not take out separate insurance concurrent in form or
contributing in the event of loss with that required to be maintained hereunder
unless Beneficiary is included thereon under a standard Mortgage clause
acceptable to Beneficiary. Trustor immediately shall notify Beneficiary whenever
any such separate insurance is taken out and promptly shall deliver to
Beneficiary the policy or policies of such insurance.

         In the event of loss Trustor will give immediate notice of such loss by
mail to Beneficiary, who shall have the right, but not the obligation, to make
proof of loss. Beneficiary is at all times authorized to collect and receipt for
any insurance money. Each insurance company concerned is hereby authorized and
directed to make payment for such loss to Trustor and Beneficiary jointly, and
the insurance proceeds, or any part thereof, shall, at the option of
Beneficiary, either be applied by Beneficiary to (i) the outstanding
indebtedness due from Trustor to Beneficiary or (ii) the restoration or repair
of the property damaged as provided in Paragraph 19 hereof. In the event of
judicial foreclosure, non-judicial sale or deed in lieu of foreclosure, all
right, title and interest of Trustor in and to any and all insurance policies
then in

                                       5
<PAGE>

force shall pass to the party acquiring title to the Premises as the result
thereof. Trustor shall furnish Beneficiary, without cost to Beneficiary, at the
request of Beneficiary, from time to time, evidence of the replacement value of
the Premises. In the event of an entry of decree of foreclosure, Trustor
authorizes and empowers Beneficiary to effect insurance upon the Premises in the
amounts aforesaid, for a period covering the time from entry of said decree to
and including the date of sale, and if necessary therefor, to cancel any or all
existing insurance policies.

         6.       Condemnation.
                  ------------

         If all or any part of the Premises are damaged, taken or acquired,
either temporarily or permanently, in any condemnation proceeding, or by
exercise of the right of eminent domain, the amount of any award or other
payment for such taking or damage made in consideration thereof, to the extent
of the full amount of the remaining unpaid indebtedness secured by this
instrument, is hereby assigned to Beneficiary, who is empowered to collect and
receive the same and to give proper receipts therefor in the name of Trustor,
and the same shall be paid forthwith to Beneficiary, who shall release any such
award or monies so received or apply the same in whole or in part, after the
payment of all of its expenses, including costs and attorneys fees, at the
option of Beneficiary either to (i) the outstanding indebtedness due from
Trustor to Beneficiary or (ii) the restoration or repair of the property damaged
as provided in Paragraph 19 hereof, if the property can be restored or repaired
to constitute a complete architectural unit. In the event the said property
cannot be restored or repaired to constitute a complete architectural unit, then
such award or monies received, after the payment of the expenses of Beneficiary
as aforesaid, shall be applied on account of the unpaid principal balance of the
Note, irrespective of whether such principal balance is then due and payable.
Furthermore, in the event such award or monies so received shall exceed the cost
of restoration or repair of the property and the expenses of Beneficiary as
aforesaid, then such excess monies shall be applied on account of the unpaid
principal balance of the Note.

         7.       Documentary/Transfer Taxes
                  --------------------------

         If, by the laws of the United States of America, or of any state having
jurisdiction over Trustor, any tax is due or becomes due in respect of the
issuance of this Deed of Trust or the Note hereby secured, Trustor covenants and
agrees to pay such tax in the manner required by any such law: Trustor further
covenants to reimburse Beneficiary for any sums which Beneficiary may expend by
reason of the imposition of any tax on the issuance of this Deed of Trust or the
Note secured hereby. Notwithstanding the foregoing, Trustor shall not be
required to pay any income or franchise taxes of Beneficiary.

         8.       Observance of Lease Assignment
                  ------------------------------

         As additional security for the payment of the Note secured hereby and
for the faithful performance of the terms and conditions contained herein,
Trustor, as lessor, has assigned to Beneficiary all of its right, title and
interest as lessor in and to all leases, rentals, earnings, income, deposits,
security deposits, receipts, royalties, revenues, issues and profits, accounts
receivables, room rental, food and beverage revenues and other amounts.
generated from the use,

                                       6
<PAGE>

occupancy and operation of the Premises which now or hereafter affect the
Premises pursuant to the Assignment of Rents and Lessor's Interest in Leases of
even date herewith.

         Trustor will not, without Beneficiary's prior written consent: (i)
execute, renew, cancel, modify or amend any lease for all or any portion of the
Premises; (ii) execute an assignment or pledge of any rents and/or any leases
affecting all or any portion of the Premises; or (iii) accept any prepayment of
any installment of any rents more than thirty (30) days before the due date of
such installment, other than security and other deposits.

         Trustor at its sole cost and expense will (i) at all times promptly and
faithfully abide by, discharge and perform all of the covenants, conditions and
agreements contained in all leases affecting all or any portion of the Premises,
on the part of the lessor thereunder to be kept and performed; (ii) use its best
efforts to enforce or secure the performance of all of the covenants, conditions
and agreements of such leases on the part of the lessees to be kept and
performed; (iii) appear in and defend any action or proceeding arising under,
growing out of or in any manner connected with such leases or the obligations,
duties or liabilities of the lessor or of the lessees thereunder; (iv) as
additional security for the payment of the Note secured hereby and for the
faithful performance of the terms and conditions contained herein, transfer and
assign to Beneficiary any lease or leases affecting all or any portion of the
Premises heretofore or hereafter entered into, and make, execute and deliver to
Beneficiary, upon demand, any and all instruments required to effectuate said
assignment; (v) give written notice to Beneficiary within five (5) days of the
occurrence of any material default under any lease affecting all or any portion
of the Premises; and (vi) exercise within five (5) days of any demand therefor
by Beneficiary any right to request from the lessee under any lease affecting
all or any portion of the Premises a certificate with respect to the status
thereof.

         Nothing in this Deed. of Trust or in any other documents relating to
the loan secured hereby shall be construed to obligate Beneficiary, expressly or
by implication, to perform any of the covenants of Trustor as lessor under any
of the leases assigned to Beneficiary or to pay any sum of money or damages
therein provided to be paid by the lessor, each and all of which covenants and
payments Trustor agrees to perform and pay.

         In the event of the enforcement by Beneficiary of the remedies provided
for by law or by this Deed of Trust, the lessee under each lease affecting all
or any portion of the Premises shall, at the option of Beneficiary, attorn to
any person succeeding to the interest of Trustor as a result of such enforcement
and shall recognize such successor in interest as lessor under such lease
without change in the terms or other provisions thereof; provided, however, that
said successor in interest shall not be bound by any payment of rent or
additional rent for more than one (1) month in advance or any amendment or
modification to any lease made without the consent of Beneficiary or said
successor in interest. Each lessee, upon request by said successor in interest,
shall execute and deliver an instrument or instruments confirming such
attornment.

         Beneficiary shall have the option to declare this Deed of Trust (after
the expiration of the cure period expressly provided for in Paragraph 13(b)
below) in default because of a default of the lessor under any lease affecting
all or any portion of the Premises which is not cured by the lessor within the
applicable cure period, if any, whether or not such default is cured by
Beneficiary pursuant to the right granted herein. It is covenanted and agreed
that a default

                                       7
<PAGE>

remaining uncured after the expiration of any applicable cure periods expressly
provided for under the Assignment of Rents and Lessor's Interest in Leases
referred to in the first grammatical paragraph of this Paragraph 8 or under any
assignment of leases executed pursuant to this Paragraph 8 shall constitute a
default hereunder on account of which the whole of the indebtedness secured
hereby shall at once, at the option of Beneficiary, become immediately due and
payable without notice to Trustor.

         9.       Effect of Extensions of Time.
                  ----------------------------

         If the payment of said indebtedness or any part thereof be extended or
varied or if any part of any security for the payment of the indebtedness be
released, all persons now or at any time hereafter liable therefor, or
interested in the Premises, shall be held to assent to such extension, variation
or release, and their liability and the lien and all provisions hereof shall
continue in full force, the right of recourse against all such persons being
expressly reserved by Beneficiary, notwithstanding such extension, variation or
release.

         10.      Effect of Changes in Laws Regarding Taxation.
                  --------------------------------------------

         In the event of the enactment after this date of any law of the State
of Virginia deducting from the value of the land for the purpose of taxation any
lien thereon, or imposing upon Beneficiary the payment of the whole or any part
of the taxes or assessments or charges or liens herein required to be paid by
Trustor, or changing in any way the laws relating to the taxation of deeds of
trust or debts secured by deeds of trust or Beneficiary's interest in the
Premises, or the manner of collection of taxes, so as to affect this Deed of
Trust or the debt secured hereby or the holder or holders thereof, then, and in
any event, Trustor, upon demand by Beneficiary, shall pay such taxes or
assessments, or reimburse Beneficiary therefor; provided, however, that Trustor
shall not be deemed to be required to pay any income or franchise taxes of
Beneficiary. Notwithstanding the foregoing, if in the opinion of counsel for
Beneficiary (a) it might be unlawful to require Trustor to make such payment or
(b) the making of such payment might result in the imposition of interest beyond
the maximum amount permitted by law, then and in such event, Beneficiary may
elect, by notice in writing given to Trustor, to declare all of the indebtedness
secured hereby to be and become due and payable thirty (30) days from the giving
of such notice.

         ll.      Beneficiary's Performance of Defaulted Acts.
                  -------------------------------------------

         In case of default hereunder or under any Loan Document, Beneficiary
may, but need not, make any payment or perform any act herein required of
Trustor in any form and manner deemed expedient, and may, but need not, make
full or partial payments of principal or interest on prior encumbrances, if any,
and purchase, discharge, compromise or settle any tax lien or other prior lien
or title or claim thereof, or redeem from any tax sale or forfeiture affecting
the Premises or consent to any tax or assessment or cure any default of Landlord
under any lease affecting all or any portion of the Premises. All monies paid
for any of the purposes herein authorized and all expenses paid or incurred in
connection therewith, including attorneys fees (including, but not limited to,
all appellate level and post judgment proceedings) and any other monies advanced
by Beneficiary in regard to any tax referred to in Paragraph 7 hereof or to
protect the Premises or the lien hereof, shall be so much additional
indebtedness secured hereby,

                                       8
<PAGE>

and shall become immediately due and payable without notice and with interest
thereon at an annual rate equal to the Default Rate (as defined in the Note).
The interest accruing under this Paragraph 11 shall be immediately due and
payable by Trustor to Beneficiary, and shall be additional indebtedness
evidenced by the Note and secured by this Deed of Trust. Inaction of Beneficiary
shall never be considered as a waiver of any right accruing to it on account of
any default on the part of Trustor.

         12.      Beneficiary's Reliance on Tax bills and Claims for Lien.
                  -------------------------------------------------------

         Beneficiary, in making any payment hereby authorized: (a) relating to
taxes and assessments, may do so according to any bill, statement or estimate
procured from the appropriate public office without inquiry into the accuracy of
such bill, statement or estimate or into the validity of any tax, assessment,
sale, forfeiture, tax lien or title or claim thereof; or (b) for the purchase,
discharge, compromise or settlement of any other prior lien, may do so without
inquiry as to the validity or amount of any claim for lien which may be
asserted.

         13.      Acceleration of Indebtedness in Event of Default
                  ------------------------------------------------

         The occurrence of any one or more of the following shall constitute an
"Event of Default" for purposes of this Deed of Trust:

         (a) Trustor fails to pay on the date when due any installment of
principal or interest or other monetary sum payable pursuant to the Note or the
Loan Documents and such failure shall continue for a period of five (5) days
after such payment was due;

         (b) Trustor fails promptly to perform or cause to be performed any
other obligation or to observe any other condition, covenant, term, agreement or
provision required to be performed or observed by Trustor under this Deed of
Trust; provided, however, that unless and until the continued operation or
safety of the Premises, or the priority, validity or enforceability of this Deed
of Trust or the lien hereof or the lien of any other security granted to
Beneficiary or the value of the Premises is immediately threatened or
jeopardized, Trustor shall have a period not to exceed thirty (30) days after
written notice of such failure of performance or observance to cure the same;
provided, however, that said cure period shall not apply to monetary defaults;

         (c) John Knorr ("Guarantor") or Trustor fails promptly to perform or
cause to be performed any other obligation or to observe any other condition,
covenant, term, agreement or provision required to be performed or observed by
such party under (i) the Note, (ii) the Loan Agreement of even date herewith
made by and between Trustor and Beneficiary (the "Loan Agreement"), (iii)
Assignment of Rents and Security Agreement of even date herewith from Trustor to
Beneficiary, (iv) the Security Agreement of even date herewith from Trustor to
Beneficiary, (v) the Continuing Guarantee of even date herewith from Guarantor
in favor of Beneficiary, (vii) the Environmental Indemnity Agreement of even
date herewith from Guarantor in favor of Beneficiary, (viii) the Collateral
Assignment of Management Agreement of even date herewith by and between Trustor
and Beneficiary, consented to by Manager pursuant to a Consent to Assignment and
Subordination Agreement of even date herewith made by __________________________
("Manager") to Beneficiary (the documents described in sections (i) through
(viii) above, both inclusive of this Deed of Trust, and any and

                                       9
<PAGE>

all other documents executed in connection therewith, being hereinafter
collectively referred to as the "Loan Documents"); provided, however, that
unless and until the continued operation or safety of the Premises, or the
priority, validity or enforceability of this Deed of Trust or the lien hereof or
the lien of any other security granted to Beneficiary or the value of the
Premises is immediately threatened or jeopardized, Trustor shall have a period
as provided for in the applicable Loan Document, if any, to cure such failure,
provided, however, that said cure period shall not apply to monetary defaults;

         (d) Any inaccuracy or untruth arises in any material representation
when made, or in any covenant or warranty at any time, made in this Deed of
Trust or in any of the other Loan Documents;

         (e) At any time, Trustor or any Guarantor files a voluntary petition in
bankruptcy, or is adjudicated a bankrupt or insolvent, or institutes (by
petition, application, answer, consent or otherwise) any bankruptcy, insolvency,
reorganization, arrangement, composition, readjustment, dissolution, liquidation
or similar proceedings under any present or future Federal, state or other
statute or law, or admits in writing his or its inability to pay his or its
debts as they mature, or makes an assignment for the benefit of his or its
creditors, or seeks or consents to the appointment of any receiver, trustee or
similar officer for all or any substantial part of his or its property;

         (f) The commencement of any involuntary petition in bankruptcy against
Trustor or Guarantor or the institution against Trustor or any Guarantor of any
reorganization, arrangement, composition, readjustment, dissolution, liquidation
or similar proceedings under any present or future Federal, state or other
statute or law, or the appointment of a receiver, trustee or similar officer for
all or any substantial part of the property of Trustor or Guarantor which shall
remain undismissed or undischarged for a period of sixty (60) days;

         (g) A transfer in violation of the provisions of Paragraph 26 hereof
occurs;

         (h) The bankruptcy, dissolution, merger or liquidation of Trustor or
the bankruptcy, death or adjudicated incompetence of Guarantor; or

         (i) Mortgagor is in default under the Ground Lease.

         If an Event of Default occurs, Beneficiary may, at its option, declare
the whole of the indebtedness hereby secured to be immediately due and payable
without demand, presentment for payment, notice of nonpayment, grace, protest,
notice of protest, notice of intent to accelerate the indebtedness, notice of
acceleration of the indebtedness, or any other notice, all of which are
expressly waived by Trustor, may, with interest thereon from the date of such
Event of Default at the Default Rate. If, while any insurance proceeds or
condemnation awards are being held by Beneficiary to reimburse Trustor for the
cost of rebuilding or restoration of buildings or improvements on the Premises,
as set forth in Paragraph 19 hereof, Beneficiary shall be or become entitled to,
and shall accelerate the indebtedness secured hereby, then and in such event,
Beneficiary shall be entitled to apply all such insurance proceeds and
condemnation awards then held by it in reduction of the indebtedness hereby
secured and any excess held by it over the

                                       10
<PAGE>

amount of the indebtedness then due hereunder shall be returned to Trustor or
any party entitled thereto without interest.

         14.      Foreclosure: Expense of Litigation.
                  -----------------------------------

         When the indebtedness hereby secured, or any part thereof, shall become
due, whether by acceleration or otherwise, Beneficiary may give notice of
election to cause the Premises to be sold as may be required by law or may be
necessary to cause Trustee to exercise the power of sale granted herein.
Beneficiary may also elect to commence proceedings for foreclosure of this Deed
of Trust in the manner provided by law for such foreclosure. In case of any
foreclosure sale of the Premises, the same may be sold in one or more parcels.
The foregoing may be accomplished in such manner as permitted or required by
applicable Virginia law relating to the sale of real estate and relating to the
sale of personalty after default by a debtor. In any suit to foreclose the lien
hereof, there shall be allowed and included as additional indebtedness in the
decree for sale all expenditures and expenses which may be paid or incurred by
or on behalf of Beneficiary for reasonable attorneys' fees, (including, but not
limited to all appellate level and post judgement proceedings) appraisers' fees,
outlays for documentary and expert :evidence, stenographers' charges,
publication costs and costs (which may be estimated as to items to be expended
after entry of the decree) of procuring all such abstracts of title, title
searches and examinations, title insurance policies, and similar data and
assurances with respect to title, as Beneficiary may deem necessary either to
prosecute such suit or to evidence to bidders at any sale which may be had
pursuant to such decree the true condition of the title to or the value of the
Premises. All expenditures and expenses of the nature in this Paragraph 14
mentioned and such expenses and fees as may be incurred in the protection of the
Premises and the maintenance of the lien of this Deed of Trust, including the
fees of any attorney employed by Beneficiary in any litigation or other
proceeding affecting this Deed of Trust, the Note or the Premises, including
probate and bankruptcy proceedings, or in preparation for the commencement or
defense of any litigation or other proceeding or threatened litigation or other
proceeding, shall be immediately due and payable by Trustor, with interest
thereon at the Default Rate, and shall be secured by this Deed of Trust.

         Without limiting the liability of Trustor as set forth above, Trustor
shall indemnify Beneficiary and its officers, directors, employees and agents,
and hold them harmless from and against all claims, injury, damage, loss and
liability of any and every kind to any persons or property by reason of (i) the
buildings and all construction work with respect thereto; -(ii) the operation or
maintenance of the Premises; or (iii) any other action or inaction by, or matter
which is the responsibility of, Trustor.

         This Deed of Trust shall be construed to confer and impose upon the
parties hereto, and the Beneficiaries hereunder, the rights, duties and
obligations set forth in Va. Code ss.ss. 55-59, et seq. (1950, as amended) in
effect as of the date of acknowledgment hereof, and further to incorporate
herein the following provisions, by short term reference below pursuant to the
provisions of Va. Code ss.55-60 (1950, as amended)

         (a)      Identified by Trustee's signature;
         (b)      Exemptions waived;
         (c)      Subject to all upon default;

                                       11
<PAGE>

         (d)      Priority in direct order of maturity;
         (e)      Substitution of Trustee permitted;
         (f)      Any Trustee may act;
         (g)      Advertisement Required. Publication at least four times in a
                  newspaper published or having general circulation in the
                  wherein the property is located;
         (h)      Trustee's commission of five percent (5%) gross proceeds of
                  sale;
         (i)      insurance required: $3,000,000.

NOTICE -- THE DEBT SECURED HEREBY IS SUBJECT TO CALL IN FULL OR THE TERMS
THEREOF BEING MODIFIED IN THE EVENT OF SALE OR CONVEYANCE OF THE PROPERTY
CONVEYED.

         15.      Application of Proceeds of Foreclosure Sale:
                  -------------------------------------------

         The proceeds of any foreclosure sale of the Premises shall be
distributed and applied in accordance with applicable law.

         16.      Appointment of Receiver.
                  -----------------------

         Upon, or at any time after, the filing of a complaint to foreclose this
Deed of Trust, the court in which such complaint is filed may appoint a receiver
of the Premises. Such appointment may be made either before or after sale,
without notice, without regard to the solvency or insolvency of Trustor at the
time of application for such receiver and without regard to the then value of
the Premises or whether the same shall be then occupied as a homestead or not,
and Beneficiary or any holder of the Note may be appointed as such receiver.
Such receiver shall have power to collect the rents, issues and profits of and
from the Premises during the pendency of such foreclosure suit and, in case of a
sale and a deficiency during the full statutory period of redemption, whether
there be redemption or not, as well as during any further period when Trustor,
except for the intervention of such receiver, would be entitled to collect such
rents, issues and profits, and all other powers which may be necessary or are
usual in such cases for the protection, possession, control, management and
operation of the Premises during the whole of said period. The court from time
to time may authorize the receiver to apply the net income in his or her hands
in payment in whole or in part of: (a) the indebtedness secured hereby, or by
any decree foreclosing this Deed of Trust, or any tax, special assessment or
other lien which may be or become superior to the lien hereof or of such decree,
provided such application is made prior to foreclosure sale; and/or (b) the
deficiency in case of a sale and deficiency.

         17.      Rights Cumulative.
                  -----------------

         Each right, power and remedy herein conferred upon Beneficiary is
cumulative and in addition to every other right, power or remedy, express or
implied, given now or hereafter existing, at law or in equity, and each and
every right, power and remedy herein set forth or otherwise so existing may be
exercised from time to time as often and in such order as may be deemed
expedient by Beneficiary, and the exercise or the beginning of the exercise of
one right, power or remedy shall not be a waiver of the right to exercise at the
same time or thereafter any other right, power or remedy, and no delay or
omission of Beneficiary in the exercise of any

                                       12
<PAGE>

right, power or remedy accruing hereunder or arising otherwise shall impair any
such right, power or remedy, or be construed to be a waiver of any default or
acquiescence therein.

         18.      Beneficiary's Right of Inspection.
                  ---------------------------------

         Beneficiary and its agents shall have the right to inspect the Premises
at all reasonable times and access thereto shall be permitted for that purpose.

         19.      Disbursement of Insurance or Condemnation Proceeds.
                  --------------------------------------------------

         In the event Beneficiary elects to apply insurance or condemnation
proceeds to restoration:

                  (a) Before commencing to repair, restore or rebuild following
         damage to, or destruction of, all or a portion of the Premises or of
         the improvements upon the Premises, whether by fire or other casualty
         or by condemnation or a taking under the power of eminent domain,
         Trustor shall obtain from Beneficiary its approval of all site and
         building plans and specifications pertaining to such repair,
         restoration or rebuilding.

                  (b) Prior to the payment or application of insurance proceeds
         or a condemnation or eminent domain award to the repair or restoration
         of the Premises or of the improvements upon the Premises as provided in
         Paragraphs S and 6 hereof, Beneficiary shall be entitled to evidence of
         the following:

                           (i) That Trustor is not then in default under any of
                  the terms, covenants or conditions of the Note or of the Loan
                  Documents;

                           (ii) That either such property has been fully
                  restored, or that the expenditure of such money as may be
                  received from such insurance proceeds or condemnation or
                  eminent domain award will be sufficient to repair, restore or
                  rebuild the Premises or the improvements upon the Premises,
                  free and clear of all liens, except the lien of this Deed of
                  Trust;

                           (iii) That in the event such insurance proceeds or
                  condemnation or eminent domain award shall be insufficient to
                  repair, restore or rebuild such property, Trustor shall
                  deposit with Beneficiary funds equaling such deficiency,
                  which, together with the insurance proceeds or condemnation or
                  eminent domain award, shall be sufficient to repair, restore
                  and rebuild such property; and

                           (iv) That prior to the disbursement of any such
                  proceeds or award held by Beneficiary in accordance with the
                  terms of this Paragraph 19 for the cost of any repair,
                  restoration or rebuilding, Beneficiary shall be furnished with
                  a statement of Trustor's architect, certifying the extent of
                  the repair, restoration and rebuilding completed to the date
                  thereof, and that such repair, restoration and rebuilding have
                  been performed to date in conformity with the plans and
                  specifications approved by Beneficiary; and Beneficiary shall
                  be furnished with appropriate evidence of payment for labor or
                  materials furnished to the Premises, and total or partial lien
                  waivers substantiating such payments.

                                       13
<PAGE>

                  (c) Prior to the payment or application of insurance proceeds
         or a condemnation or eminent domain award to the repair, restoration or
         rebuilding of the Premises or of the improvements upon the Premises as
         provided in Paragraphs 5 and 6 hereof, there shall have been delivered
         to Beneficiary the following:

                           (i) A waiver of subrogation from any insurer which
                  claims that no liability exists as to Trustor or the then
                  owner or other assured under the policy of insurance in
                  question; and

                           (ii) Such performance and payment bonds, and such
                  insurance, in such amounts, issued by such company or
                  companies and in such forms and substance, as are required by
                  Beneficiary.

                  (d) In the event Trustor shall fail to repair, restore or
         rebuild the Premises or the improvements upon the Premises within a
         reasonable time, then Beneficiary, at its option, and upon not less
         than thirty (30) days' written notice to Trustor, may commence to
         repair, restore or rebuild such property for or on behalf of Trustor,
         and for such purpose, may perform all necessary acts to accomplish such
         repair, restoration or rebuilding. In the event that insurance proceeds
         or a condemnation or eminent domain award shall exceed the amount
         necessary to complete the repair, restoration or rebuilding of the
         Premises or of the improvements upon the Premises, such excess shall be
         applied on account of the unpaid principal balance of the Note.

                  (e) In the event that Trustor commences the repair,
         restoration or rebuilding of the Premises or of the improvements upon
         the Premises, but fails to comply with the conditions precedent to the
         payment or application of insurance proceeds or a condemnation or
         eminent domain award set forth in this Paragraph 19, or in the event
         that Trustor shall fail to repair, restore or rebuild the Premises or
         the improvements upon the Premises within a reasonable time, and if
         Beneficiary does not repair, restore or rebuild such property as
         provided in Paragraph 19(d) hereof, then Beneficiary may, at its
         option, accelerate the indebtedness evidenced by the Note and apply all
         or any part of the insurance proceeds or condemnation or eminent domain
         award against the indebtedness secured hereby.

20.      Release Upon Payment and Discharge of Trustor's Obligations
         -----------------------------------------------------------

         Beneficiary shall release this Deed of Trust and the lien thereof by
proper instrument upon payment and discharge of all indebtedness secured hereby,
including payment of expenses incurred by Beneficiary in connection with the
execution of such release.

21.      Notices.
         -------

         Any notice or other communication required or permitted to be given
shall be in writing addressed to the respective party as set forth below and may
be personally served, telecopied or sent by overnight courier or U.S. Mail and
shall be deemed given: (a) if served in person, when served; (b) if telecopied,
on the date of transmission if before 3:00 p.m. (Chicago time) on a business
day; (c) if telecopied, on the date after transmission if on or after 3:00 p.m.
(Chicago

                                       14
<PAGE>

time) on a business day; provided that a in the case of (b) or (c) above, hard
copy of such notice is also sent pursuant to (d) or (e) below; (d) if by
overnight courier, on the first business day after delivery to the courier; or
(e) if by U.S. Mail, certified or registered mail, return receipt requested on
the third (3rd) day after deposit in the mail postage prepaid.

To Beneficiary:                              JDI Hampton, L.L.C.
                                             c/o JDI Realty L.L.C.
                                             150 South Wacker Drive, Suite 2660
                                             Chicago, Illinois 60606
                                             Attn: Jeffrey I. Aeder or
                                                   Kevin C. Connor
                                             Fax: (312) 782-4563

with a copy to:                              D'Ancona & Pflaum LLC
                                             111 East Wacker Drive
                                             Suite 2800
                                             Chicago, Illinois 60601
                                             Attn: Marc S. Joseph, Esq.
                                             Fax: (312) 602-3000

To Trustor:                                  Old Point Comfort Hotel, L.L.C.
                                             104 Woodhall Drive
                                             Richmond, VA 23229
                                             Attn: John Knorr
                                             Fax: (804) 750-1087

with a copy to:                              Gorham Rutter, Jr.
                                             517 Springcreek Drive
                                             Longwood, FL 32779
                                             Fax: (407) 869-5584

To Trustee:                                  E. Duffy Myrtetus
                                             LeClair Ryan
                                             707 East Main Street, 11th Floor
                                             Richmond, Virginia 23219

Either party may designate a different address for notice purposes by giving
notice thereof in accordance with this Paragraph 21; provided, however, that
such notice shall not be deemed given until actually received by the addressee.

22.      Waiver of Defenses.
         ------------------

         No action for the enforcement of the lien or of any provision hereof
shall be subject to any defense which would not be good and available to the
party interposing the same in an action at law upon the Note hereby secured.

                                       15
<PAGE>

23.      Waiver of Rights.
         ----------------

         To the extent permitted by law, Trustor shall not and will not apply
for or avail itself of any appraisement, valuation, stay, extension or exemption
laws, or any so-called "Moratorium Laws," now existing or hereafter enacted, in
order to prevent or hinder the enforcement or foreclosure of this Deed of Trust,
but hereby waives the benefit of all such laws. To the extent permitted by law,
Trustor, for itself and all who may claim through or under it, waives any and
all right to have the property and estates comprising the Premises marshaled
upon any foreclosure of the lien hereof and agrees that any court having
jurisdiction to foreclose such lien may order the Premises sold as an entirety.

24.      Expenses Relating to Note and Deed of Trust.
         -------------------------------------------

         Trustor will pay all expenses charges costs and fees, including all
Costs as such term is defined in the Loan Agreement, relating to the loan
evidenced by the Note and secured by this Deed of Trust or necessitated by the
terms of the Note, this Deed of Trust or any of the other Loan Documents,
including without limitation, Beneficiary's attorneys' (both primary and local)
fees in connection with the negotiation, underwriting, approval, documentation,
administration, servicing and enforcement of the Note, this Deed of Trust and
the other Loan Documents, all of Beneficiary's inspection costs, fees and
expenses with regard to the Premises, all filing, registration and recording
fees, all other expenses incident to the execution and acknowledgment of this
Deed of Trust and all Federal, state, county and municipal taxes, and other
taxes (provided Trustor shall not be required to pay any income or franchise
taxes of Beneficiary), duties, imposts, assessments and charges arising out of
or in connection with the execution and delivery of the Note or this Deed of
Trust. All expenses, charges, costs and fees described in the preceding sentence
shall be so much additional indebtedness secured hereby, shall bear interest
from the date so incurred until paid at the Default Rate and shall be paid,
together with such interest, by Trustor forthwith upon demand.

25.      Business Purpose.
         ----------------

         Trustor covenants that the property secured hereby is to be used as a
hotel, the proceeds of the loan evidenced by the Note and secured by this Deed
of Trust will be used for the purposes specified in the Loan Agreement and that
the principal obligation secured hereby constitutes a business loan.

26.      Transfer of Premises: Further Encumbrance.
         -----------------------------------------

         In determining whether or not to make the loan secured hereby,
Beneficiary examined the creditworthiness of Trustor and found it acceptable and
relied and continues to rely upon the same as the means of repayment of the
Note. Beneficiary also evaluated the background and experience of Trustor in
owning and operating property such as the Premises, found it acceptable and
relied and continues to rely upon the same as the means of maintaining the value
of the Premises, which is Beneficiary's security for the Note. Trustor was ably
represented by a licensed attorney at law in the negotiation and documentation
of the loan secured hereby, or had the opportunity to be so represented, and
bargained at arm's length and without duress of any kind for all of the terms
and conditions of the loan, including this provision. Trustor recognizes

                                       16
<PAGE>

that Beneficiary in connection with any refinancing is entitled to keep its loan
portfolio at current interest rates by either making new loans at such rates or
collecting assumption fees and/or increasing the interest rate on a loan.
Trustor further recognizes that any secondary or junior financing placed upon
the Premises: (a) may divert funds which would otherwise be used to pay the Note
secured hereby; (b) could result in acceleration and foreclosure by any such
junior encumbrances which would force Beneficiary to take measures and incur
expenses to protect its security; (c) would detract from the value of the
Premises should Beneficiary come into possession thereof with the intention of
selling the same; and (d) would impair Beneficiary's right to accept a deed in
lieu of foreclosure, as a foreclosure by Beneficiary would be necessary to clear
the title to the Premises.

         In accordance with the foregoing and for the purposes of (i) protecting
Beneficiary's security, both of repayment by Trustor and of the value of the
Premises; (ii) giving Beneficiary the full benefit of its bargain and contract
with Trustor; (iii) allowing Beneficiary to raise the interest rate and/or
collect assumption fees; and (iv) keeping the Premises free of subordinate
financing liens, Trustor agrees that if this Paragraph 26 be deemed a. restraint
on alienation, that it is a reasonable one, and that any sale, conveyance,
assignment, further encumbrance or other transfer of title to the Premises or of
any interest in the Premises (whether voluntary or by operation of law,
including, without limitation, the entering into of an installment agreement for
the sale of the Premises, the placement or granting; of liens on all or any part
of the Premises or the placement or granting of chattel mortgages,conditional
sales contracts, financing statements or security agreements which would be or
create a lien on the personal property utilized in the operation of the
Premises, or the granting of a mortgage commonly known as a "wrap around" or an
improvement loan, without Beneficiary's prior written consent), shall be an
Event of Default hereunder. For the purpose of, and without limiting the
generality of, the preceding sentence, the occurrence at any time of any of the
following events shall be deemed to be an permitted transfer of title to the
Premises and therefore an Event of Default hereunder: any sale, conveyance,
assignment or other transfer of, or the grant of a security interest in, all or
any part of the title to the Premises, or any membership interest in Trustor,
except as permitted by the terms of the Loan Agreement. Any waiver by
Beneficiary of an Event of Default under this Paragraph 26 shall not constitute
a consent to, or a waiver of, any right, remedy or power of Beneficiary upon a
subsequent Event of Default under this Paragraph 26. Notwithstanding any of the
foregoing, the entering into of such leases as are specifically permitted under
this Deed of Trust shall not be deemed a violation of this Paragraph 26. Trustor
acknowledges that any agreements, liens or encumbrances created or entered into
in violation of the provisions of this Paragraph 26 shall be void and of no
force or effect.

27.      Financial Statements.
         --------------------

         Trustor shall cause to be delivered to Beneficiary, thirty (30) days
prior to each yearly anniversary hereof during the term of this Deed of Trust,
financial statements of the Premises and Trustor prepared by Trustor, and
certified to be true, complete and correct by Trustor in such detail as
Beneficiary may require.

                                       17
<PAGE>

28.      Statement of Indebtedness.
         -------------------------

         Trustor, within seven (7) days after being so requested by Beneficiary,
shall furnish a duly acknowledged written statement setting forth the amount of
the debt secured by this Deed of Trust and the date to which interest has been
paid, and stating either that no offsets or defenses exist against the Deed of
Trust debt or, if such offsets or defenses are alleged to exist, the nature
thereof.

29.      Further Instruments.
         -------------------

         Upon request of Beneficiary, Trustor will execute, acknowledge and
deliver all such additional instruments and further assurances of title, and
will do or cause to be done all such other further acts and things, as may be
necessary fully to effectuate the intent of this Deed of Trust.

30.      Security Agreement and Financing Statements.
         --------------------------------------------

Trustor and Beneficiary agree: (i) that this Deed of Trust shall constitute a
Security Agreement within the meaning of the Virginia Uniform Commercial Code
(the "Code") with respect to all sums on deposit with the Beneficiary pursuant
to Sections 3 and 4 hereof ("Deposits") and with respect to any property
included in the definition herein of the word "Premises," which property may not
be deemed to form a part of the real estate described in Exhibit A or may not
constitute a "fixture" (within the meaning of the Code), and all replacements of
such property, substitutions, additions and the proceeds thereof being sometimes
herein collectively referred to as the "Collateral"); and (ii) that a security
interest in and to the Collateral and Deposits is hereby granted to the
Beneficiary; and (iii) that the Deposits and all of Trustor's right, title and
interest therein are hereby assigned to the Beneficiary; all to secure payment
of the indebtedness and to secure performance by the Trustor of the terms,
covenants and provisions hereof. In that regard the following information is
provided:

         Name of Debtor:                     Old Point Comfort Hotel, L.L.C.
         Address of Debtor:                  104 Woodhall Drive
                                             Richmond, VA 23229

         Name of Secured Party:              JDI Hampton, L.L.C.
         Address of Secured Party:           c/o JDI Realty, Inc.
                                             150 South Wacker Drive, Suite 2660
                                             Chicago, IL 60606

         The Trustor warrants and represents that the loan made by the
Beneficiary to the Trustor in accordance with the Note, this Deed of Trust, the
Loan Agreement, and the other Loan Documents is made for the acquisition or
conduct of a business or investment within the meaning ascribed to those terms
under 6.1-330.75 of the Code, as amended.

         If an Event of Default occurs under this Deed of Trust, Beneficiary,
pursuant to the appropriate provisions of the Code, shall have an option to
proceed with respect to both the real property and Collateral in accordance with
its rights, powers and remedies with respect to the

                                       18
<PAGE>

real property in which event the default provisions of the Code shall not apply.
The parties agree that if the Beneficiary shall elect to proceed with respect
to the Collateral separately from the real property, Beneficiary shall have all
remedies available in a secured party under the Code ***************************
****************************ILLEGIBLE*******************************************
expenses of retaking, holding, preparing for sale, selling and the like incurred
by Beneficiary shall include, but not be limited to, attorneys fees and legal
expenses incurred by Beneficiary. Trustor agrees that, without the written
consent of Beneficiary, Trustor will not remove or permit to be removed from the
Premises any of the Collateral except that so long as the Trustor is not in
default hereunder, Trustor shall be permitted to sell or otherwise dispose of
the Collateral when obsolete, worn out, inadequate, unserviceable or unnecessary
for use in the operation of the Premises, but only upon replacing the same or
substituting for the same other Collateral at least equal in value and utility
to the initial value and utility of that disposed of and in such a manner that
said replacement or substituted Collateral shall be subject to the security
interest created hereby and that the security interest of Beneficiary shall be
perfected and first in priority, it being expressly understood and agreed that
all replacements, substitutions and additions to the Collateral shall be and
become immediately subject to the security interest of this Deed of Trust and
covered hereby. Trustor covenants and represents that all Collateral now is, and
that all replacements thereof, substitutions therefor or additions thereto,
unless Beneficiary otherwise consents, will be free and clear of liens,
encumbrances, title retention devices and security interests of others.

         Trustor and Beneficiary agree, to the extent permitted by law, that:
(i) all of the goods described within the definition of the word "Premises"
herein are or are to become fixtures on the land described in Exhibit A (ii)
this instrument, upon recording or registration in the real estate records of
the proper office, shall constitute a "fixture filing" within the meaning of the
Code; and (iii) Trustor is the record owner of the land described in Exhibit A.
The addresses of the Trustor and Beneficiary are set forth in Section 21 hereof.

         Trustor, upon request by Beneficiary from time to time, shall execute,
acknowledge and deliver to Beneficiary, or cause any affiliated party to so
execute, acknowledge and deliver to Beneficiary, separate Security Agreement,
Financing Statement or other similar security instruments, in form satisfactory
to Beneficiary, covering all property of any kind whatsoever owned by Trustor or
such Affiliated Party, as the case may be, which in the sole opinion of
Beneficiary is essential to the operation of the Premises and which constitutes
goods within the meaning of the Code or concerning which there may be any doubt
whether the title to same has been conveyed by or security interest perfected by
this Deed of Trust under the laws of the state in which the Premises are
located, and will further execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, any financing statement, affidavit,
continuation statement or certificate or other document as Beneficiary may
request in order to perfect, preserve, maintain, continue and extend the
security interest under and the priority of this Deed of Trust and such security
interest under such security instrument. Trustor further agrees to pay to
Beneficiary on demand all costs and expenses incurred by Beneficiary in
connection with the preparation, execution, recording, filing and re-filing of
any such document. Trustor shall from time to time, on request of Beneficiary,
deliver to Beneficiary an inventory of the Collateral in reasonable detail.

         31.      Miscellaneous.
                  -------------

                                       19
<PAGE>

         (a)      Successors and Assigns.
                  ----------------------

                  This Deed of Trust and all provisions hereof shall extend to
         and be binding upon Trustor and its successors, grantees and assigns,
         any subsequent owner or owners of the Premises who acquire the Premises
         subject to this Deed of Trust, and all persons claiming under or
         through Trustor, and the word "Trustor" when used herein shall include
         all such persons and all persons liable for the payment of the
         indebtedness or any part thereof, whether or not such persons shall
         have executed the Note or this Deed of Trust. The word "Beneficiary"
         when used herein shall include the successors and assigns of
         Beneficiary named herein, and the holder or holders, from time to time,
         of the Note secured hereby. Notwithstanding anything herein to the
         contrary, Trustor acknowledges and agrees that Beneficiary may assign,
         pledge or transfer this Deed of Trust and its rights hereunder and the
         assignee shall be entitled to the performance of all of Trustor's
         agreements and obligations under this Deed of Trust, and shall be
         entitled to enforce all the rights and remedies of Beneficiary under
         this Deed of Trust, for the benefit of assignee, as fully as if
         assignee were herein by name specifically given such rights and
         remedies. Trustor expressly agrees that it will assert no claims or
         defenses that it may have against Beneficiary against the assignee,
         except those specifically available under this Deed of Trust.

         (b)      Invalidity of Provisions.
                  ------------------------

                  In the event one or more of the provisions contained in this
         Deed of Trust or in the Note secured hereby or in any security
         documents given to secure the: payment of the Note secured hereby shall
         for any reason be held to be invalid, illegal or unenforceable in any
         respect by a court of competent jurisdiction, such invalidity,
         illegality or unenforceability shall, at the option of Beneficiary, not
         affect any other provision of this Deed of Trust, and this Deed of
         Trust shall be construed as if such invalid, illegal or unenforceable
         provision were not contained herein or therein. This Deed of Trust and
         the Note it secures shall be governed by and construed in accordance
         with the laws of the Commonwealth of Virginia.

         (c)      Municipal and Zoning, Requirements.
                  -----------------------------------

                  Trustor shall not by act or omission permit any building or
         other improvement on premises not subject to the lien of this Deed of
         Trust to rely on the Premises or any part thereof or any interest
         therein to fulfill any municipal or governmental requirement, and
         Trustor hereby assigns to Beneficiary any and all rights to give
         consent for all or any portion of the Premises or any interest therein
         to be so used. Similarly, no building or other improvement on the
         Premises shall rely on any premises not subject to the lien of this
         Deed of Trust or any interest therein to fulfill any municipal or
         governmental requirement. Trustor shall not by act or omission impair
         the integrity of the Premises as a single zoning lot separate and apart
         from all other premises. Any act or omission by Trustor which would
         result in a violation of any of the provisions of this Paragraph 31(c)
         shall be void.

         (d)      Right of Tenants.
                  ----------------

                                       20
<PAGE>

                  Beneficiary shall have the right and option to commence a
         civil action to foreclose this Deed of Trust and to obtain a Decree of
         Foreclosure and Sale subject to the rights of any tenant or tenants of
         the Premises. The failure to join any such tenant or tenants as party
         or parties defendant in any such civil action or the failure of any
         Decree of Foreclosure and Sale to foreclose his, her, its or their
         rights shall not be asserted by Trustor as a defense in any civil
         action instituted to collect the indebtedness secured hereby, or any
         part thereof or any deficiency remaining unpaid after foreclosure and
         sale of the Premises, any statute or rule of law at any time existing
         to the contrary notwithstanding.

         (e)      Option of Beneficiary to Subordinate.
                  ------------------------------------

                  At the option of Beneficiary, this Deed of Trust shall become
         subject and subordinate, in whole or in part (but not with respect to
         priority of entitlement to insurance proceeds or any condemnation or
         eminent domain award) to any and all leases of all or any part of the
         Premises upon the execution by Beneficiary and recording thereof, at
         any time hereafter, in ____________ , of a unilateral declaration to
         that effect.

         (f)      Use of Proceeds.
                  ---------------

                  Trustor warrants that the proceeds evidenced by the Note
         secured hereby will not be used for the purchase of registered equity
         securities within the purview of Regulation G issued by the Board of
         Governors of the Federal Reserve System and will only be used for
         refinancing the existing first mortgage leasehold debt on the Ground
         Lease.

         (g)      Value for Purposes of Insurance.
                  -------------------------------

                  Upon request by Beneficiary, Trustor agrees to furnish
         evidence of replacement value, without cost to Beneficiary, of the type
         which is regularly and ordinarily provided to insurance companies, with
         respect to the buildings and other improvements on the Premises.

         (h)      Beneficiary in Possession.
                  -------------------------

                  Nothing herein contained shall be construed as constituting
         Beneficiary a beneficiary in possession in the absence of the actual
         taking of possession of the Premises by Beneficiary pursuant to this
         Deed of Trust.

         (i)      Relationship of Beneficiary and Trustor.
                  ---------------------------------------

                  Beneficiary shall in no event be construed for any purpose to
         be a partner, joint venturer, agent or associate of Trustor or of any
         lessee, operator, concessionaire or licensee of Trustor in the conduct
         of their respective businesses.

         (j)      Time of the Essence.
                  -------------------

                                       21
<PAGE>

                  Time is of the essence of the payment by Trustor and its sole
         beneficiaries of all amounts due and owing to Beneficiary under the
         Note and the performance and observance by Trustor of all of the terms,
         conditions, obligations and agreements contained in this Deed of Trust.

         (k)      Future Advances.
                  ---------------

                  In Beneficiary's sole discretion, Beneficiary may (but in no
         way shall be obligated to) from time to time within twenty (20) years
         from the date of this Deed of Trust or within such lesser period of
         time as may in the future be provided by law as a prerequisite for the
         sufficiency of actual or record notice of optional future or additional
         advances as against the rights of creditors or subsequent purchasers
         for valuable considerations, make further advances to Trustor, or
         Trustor's permitted successors in title, which shall be collateralized
         by the lien of this Deed of Trust, provided that at no time shall the
         outstanding principal indebtedness collateralized by this Deed of
         Trust, including advances, exceed a sum which is five (5) times the
         principal amount of the Loan as shown on page one (1) of this Deed of
         Trust, plus interest and any disbursements made for the payment of
         taxes, levies or insurance or other matters on the Premises with
         interest on those disbursements. Trustor shall immediately upon request
         of Beneficiary execute and deliver to Beneficiary a note evidencing
         each and every such future advance (which note shall recite that it is
         -secured in part by this Deed of Trust) and notices of such advances in
         recordable form. All such notes shall be of equal dignity and a
         default-in the payment of any one shall be of equal dignity and a
         default in the payment of any one shall constitute a default in the
         payment of all other notes.

         32. Indemnity. Trustor shall indemnify and save Beneficiary harmless
from and against any and all liabilities, obligations, losses, damages, claims,
costs and expenses (including attorneys' fees and court costs) [including, but
not limited to all appellate level and post judgment proceedings] of whatever
kind or nature which may be imposed on, incurred by or asserted against
Beneficiary at any time which relate to or arise from: the making of the loan
evidenced by the Note and secured by this Deed of Trust; any suit or other
proceeding (including probate and bankruptcy proceedings), or the threat
thereof, in or to which Beneficiary may or does become a party, either as a
plaintiff or as a defendant, by reason of this Deed of Trust, or for the purpose
of protecting the lien of this Deed of Trust; and/or the ownership, use,
operation and/or maintenance of the Premises, unless caused by Beneficiary's or
its agents' and/or assigns' wrongful conduct or breach of the Loan Agreement.
All costs provided for herein and paid for by Beneficiary shall be so much
additional indebtedness secured hereby and shall become immediately due and
payable without notice and together with interest thereon at the Default Rate.

         33. Hazardous Substances. As used below, "Hazardous Substances" shall
mean and include all hazardous and toxic substances, wastes or materials, any
pollutants or contaminants (including, without limitation, asbestos and raw
materials which include hazardous constituents), petroleum products, or any
other similar substances, or materials which are included under or regulated by
any local, state or federal law, rule or regulation pertaining to environmental
regulation, contamination or clean-up, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Resource Conservation

                                       22
<PAGE>

and Recovery Act of 1976, or state lien or state super lien or environmental
clean-up statutes (all such laws, rules and regulations being referred to
collectively as "Environmental Laws"). Trustor warrants, represents and
covenants, as follows:

                  (a) Neither the Premises nor any other personal or real
         property owned by Trustor is subject to any private or governmental
         lien or judicial or administrative notice or action relating to
         Hazardous Substances or environmental problems, impairments or
         liabilities with respect to the Premises or such other property, or the
         direct or indirect violation of any Environmental Laws.

                  (b) No Hazardous Substances are located on or have been
         stored, processed or disposed of on or released or discharged from
         (including ground water contamination) the Premises and no above or
         underground storage tanks, exist on the Premises. Trustor shall not
         allow any Hazardous Substances to be stored, located, discharged,
         possessed, managed, processed or otherwise handled on the Premises and
         shall comply with all Environmental Laws affecting the Premises.

                  (c) Trustor shall comply with any and all laws, regulations or
         orders with respect to the discharge and removal of Hazardous
         Substances, shall pay promptly when due the costs of removal of any
         such Hazardous Substances and shall keep the Premises free of any lien
         imposed pursuant to such laws, regulations or orders.

Trustor hereby agrees to indemnify and hold Beneficiary harmless from and
against, and shall reimburse Beneficiary for, any and all loss, claim,
liability, damages, injuries to person, property or natural resources, cost,
expense, action or cause of action, arising from, out of or as a consequence,
direct or otherwise, of the release or presence of any Hazardous Substance at
the Premises whether originating at the Premises or any property adjacent
thereto, whether foreseeable or unforeseeable, and whether or not known to
Trustor, regardless of when such release occurred or such presence is
discovered. The foregoing indemnity includes, but shall not be limited to, all
costs of removal, remediation of any kind, detoxification, clean up and disposal
of such Hazardous Substances, all costs of determining whether the Premises is
in compliance and causing the Premises to be in compliance with all applicable
Environmental Laws, all costs and fees associated with claims for damages to
persons, property, or natural resources, and Trustor's attorneys' fees
(including, but not limited to, all appellate level and post judgment
proceedings) and consultants' fees and court costs in respect thereto whether or
not litigation or administrative proceedings shall occur. It is expressly
understood and agreed that to the extent Trustor is strictly liable under any
applicable statute or regulation pertaining to the protection of the
environment, this indemnity shall likewise be without regard to fault on the
part of Trustor or Beneficiary with respect to the violation of law which
results in liability to Beneficiary, INCLUDING ALL LIABILITY ARISING FROM OR
RELATING TO BENEFICIARY'S NEGLIGENCE, MISCONDUCT AND/OR STRICT LIABILITY, but
excluding such liability arising from Beneficiary's gross negligence or
intentional misconduct. The provisions of the foregoing shall survive
foreclosure of this Deed of Trust and satisfaction of the Note, and shall be in
addition to any other rights and remedies of Beneficiary.

         34. Reconveyance by Trustee. Upon payment in full of the Loan and all
indebtedness in connection with the Loan and upon Beneficiary's written notice
thereof to Trustee, Trustee

                                       23
<PAGE>

will, upon payment by Trustor of any Trustee fees in connection with the Loan,
convey the Premises, without warranty, to Trustor or to the person or persons
then legally, entitled thereto. The recitals in such reconveyance of any matters
shall be conclusive proof of the truthfulness thereof and the grantee in such
reconveyance may be described as "the person or persons legally entitled
thereto."

         35. Trustee. Trustee may resign by mailing or delivering notice thereof
to Beneficiary and Trustor. Beneficiary may appoint a successor Trustee in the
manner prescribed by law. A successor Trustee herein shall, without conveyance
from the predecessor Trustee, succeed to all the predecessor's title, estate,
rights, powers and duties.

         The term Beneficiary shall mean the owner and holder of the Note,
whether or riot named as Beneficiary herein.

         Trustee accepts this Trust when this Deed .of Trust; `duly. executed
and acknowledged, is made a public record as provided by law. Trustee is not
obligated to notify any party hereto of a pending sale under any other Deed of
Trust or of any action or proceeding in which Trustor, Beneficiary or Trustee
shall be a party unless brought by Trustee.

         The trust relationship created by this Deed of Trust is limited solely
to the creation and enforcement of a security interest in the Premises. All of
Trustee's duties, whether fiduciary or otherwise, are strictly limited to those
duties imposed by this Deed of Trust, and no additional duties, burdens or
responsibilities are or shall be placed on Trustee.

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

                                           TRUSTOR:

                                           OLD POINT COMFORT HOTEL, L.L.C., a
                                           Virginia limited liability company

                                             By: /s/ C. John Knorr, Jr.
                                                --------------------------------
                                             Its: President
                                                --------------------------------
                                             Name  C. John Knorr, Jr.
                                                -------------------------------

                                       24
<PAGE>

STATE OF VIRGINIA        )
                         ) SS.
CITY OF RICHMOND         )

         I, Lynda A. Cooke, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that C. John Knorr, a Manager of Old Point Comfort
Hotel, L.L.C., personally known to me to be the same person whose name is
subscribed to the foregoing instrument as such managing member, appeared before
me this day in person and acknowledged that he signed and delivered the said
instrument as his own free and voluntary act, and as the free and voluntary act
of said limited liability company, for the uses and purposes therein set forth.

         GIVEN under my hand and notarial seal, this 14th of September, 2000.

                                             /s/  Lynda A. Cooke
                                             ----------------------------------
                                                  NOTARY PUBLIC

                                                                 (SEAL)

My commission expires:  January 31, 2001
                        -----------------

                                       25
<PAGE>

                                  Exhibit "A"

         All those certain parcels of land located on the United States
              Military Reservation at Fort Monroe, City of Hampton,
               Virginia, commonly known as "The Chamberlin Hotel"
              together with the buildings and improvements thereon;
                        more particularly described as
                                    follows:

    Beginning at the point of intersection of the inside or west side of the
 sidewalk on the west side of Ingalls Road and the inside or south side of the
  sidewalk on the south side of Fenwick Road; thence, along the inside of the
sidewalk on the south side of Fenwick Road westerly to the northwest end of the
seawall; thence, southerly, southeasterly northeasterly and again southeasterly
along the seawall to the inside or west side of the sidewalk on the west side of
   Ingalls Road, thence along the inside of the sidewalk on the west side of
Ingalls Road northerly to the point of beginning, containing 5.09 acres, more or
 less, as shown outlined in red on map entitled "Lease to Richmond Hotels,Inc.-
                   Chamberlin Hotel, Fort Monroe, Virginia."

                                   INSTRUMENT #000016139
                                   RECORDED IN THE CLERK'S OFFICE OF
                                   HAMPTON ON,
                                   OCTOBER 16, 2000 AT 12:53PM
                                   JAMES P. BOHNAKER, CLERK

                                   BY:  ILLEGIBLE
                                      ------------------------

                                       26EXHIBIT 10.3

                             JOINT VENTURE AGREEMENT

THIS AGREEMENT is done this 28th day of December, 2000, by and between SUNGLOBE
FIBER SYSTEMS CORPORATION, a Delaware corporation with principal offices located
at 1550 Sawgrass Corporate Parkway, Suite 370, Sunrise, FL 33325 ("Sunglobe");
and MULTI HOLDING CORPORATION, a Cayman Islands corporation with principal
offices located at Ave. Samuel Lewis, Torre Hong Kong Bank, 11th floor, Panama
City, Panama ("MHC").

                                   WITNESSETH:

         WHEREAS, MHC is a holding company involved in the telecommunications
industry in Panama; and

         WHEREAS, Sunglobe provides international telecommunications services in
the Caribbean utilizing terrestrial, submarine and satellite facilities; and

         WHEREAS, the parties wish to collaborate with one another in the
creation of a network access point ("NAP") in Panama for the provision of
broadband Internet services into and out of that country;

         NOW, THEREFORE, in consideration for the covenants and conditions
contained herein and for other good and valuable consideration, the parties
hereto have agreed and undertake as follows:

         I. THE PROJECT

         1.1 The parties will jointly undertake design, construction and
operation of the NAP (the "Project") in accordance with the terms more
specifically set forth in Article II below at a location in Panama to be
mutually agreed upon by the parties. Ownership and any division of profits from
operation of the NAP shall be governed by the provisions of Article III hereof.

         1.2 It is agreed that the NAP shall be ready to commence operations
within 12 months of the execution of this Agreement (the "Provisional
Operational Date"), and the parties hereby agree to cooperate with one another
in the performance of their respective duties hereunder and to use all
reasonable commercial efforts to have the NAP operational by the Provisional
Operational Date.

         1.3 The parties will establish a separate corporation in Panama ("JV
Corporation") for the design, construction, ownership and operation of the NAP,
which entity shall be owned in accordance with the provisions of Article III
below.

                                       51

<PAGE>

         II. CONTRIBUTIONS OF THE PARTIES

         2.1 MHC shall contribute to the Project up to a maximum of U.S. Ten
Million Dollars (U.S.$10,000,000), in cash or in kind, to pay for the
construction and operation of the Project. This contribution will be comprised
of the following elements:

                 (a) A site of appropriate size for the construction and
operation of the NAP. Selection of such site shall be subject to Sunglobe's
reasonable prior approval, which approval shall be based on assuring that the
NAP is able to meet the technical specifications provided by Sunglobe. Any
improvements on such site which must be constructed, completed or altered in
order to meet Sunglobe's design specifications shall be provided at MHC's sole
cost. The site shall comply with the parties' jointly agreed security concerns
and with all governmental environmental and other regulatory requirements for
the operation of the NAP. MHC shall decide whether the site will be contributed
to the equity of the JV Corporation or will be leased by it,..

                  (b) All requisite governmental authorizations, including any
necessary zoning approvals, for the Project.

                  (c) Securing guarantees for the procurement of credit.

                  (d) At Sunglobe's request, capacity on terrestrial
telecommunications networks and undersea fiber optic cables and satellites
necessary to support the operation of the NAP beyond the fiber optic and
satellite capacity which Sunglobe will make available to the Project.

         2.2 Sunglobe shall contribute to the Project as follows:

                  (a) Preparation of technical specifications for the site and
any improvements thereon required to house and operate the NAP, excluding,
however, architectural designs.

                  (b) Network technical design, business plan and operating
budgets for the NAP.

                  (c) Oversight of the technical construction of the NAP,

                  (d) Capacity on undersea fiber optic cables and satellites to
support operation of the NAP. Sunglobe will be paid by the Project at its most
favored customer rate for the use of such fiber optic and satellite capacity.
The JV Corporation shall not be required to use Sunglobe's capacity if other
less expensive alternatives or better services are available to it.

                  (e) Client development and marketing efforts,

                  (f) Other technical support requested by the parties for
development of the Project.

                                       52
<PAGE>

2.3 The parties will agree on the fair value of all assets and services
contributed in kind to the Project or JV Corporation pursuant to Section 2.1 and
2.2 above.

         III. FINANCIAL TERMS; OWNERSHIP

         3.1 In consideration for the parties' respective contributions to the
Project, as set forth in Article II above, it is agreed that MHC will own
Eighty-Five Percent (85%) and Sunglobe will own Fifteen Percent (15%) of the
Project, including assets, liabilities and revenues. Promptly after the
execution of this Agreement, the parties shall incorporate the Project as a
separate entity. The cost of such incorporation will be funded out of MHC's
initial contribution to the Project. MHC, or a wholly-owned subsidiary of MHC,
will own 85% of the shares, and Sunglobe will own 15% of the shares, of the
jointly owned entity.

         3.2 Until the incorporation of the JV corporation as a separate entity,
each party shall be responsible for the timely payment of all income and other
taxes (including social security contributions) relating to its execution and
delivery of this Agreement and the performance of its respective obligations
contemplated in this Agreement.

         3.3 In the event that construction or operation of the NAP exceed the
aggregate cost of the respective contributions of the parties set forth in
Sections 2.1. and 2.2. (the "Projected Project Cost"), then MHC shall contribute
Eighty-Five Percent (85%) and Sunglobe shall contribute Fifteen Percent (15%) of
the costs in excess of the Projected Project Cost (the "Excess Project Cost").
Should Sunglobe be unable, or unwilling, to contribute all of its agreed portion
of the Excess Project Cost, Sunglobe's equity in the Project shall be reduced in
an amount proportionate to the portion of its agreed contribution it is unable
to pay. The parties agree that new partners or investors may be brought into the
Project.

         IV. PROJECT MANAGEMENT & MARKETING

         4.1 Primary responsibility for the operation and marketing of the NAP
from and after the Provisional Operational Date will rest with an independent
management team hired by the joint venture for this purpose with the technical
advice of Sunglobe. If Sunglobe is retained as - management or technical
consultant to the Project after the Provisional Operational Date, it will be
compensated for fulfillment of its responsibilities at rates to be agreed by the
parties.

         4.2 Once this Project is incorporated as a separate entity, decisions
will be taken by the Board of Directors of the jointly owned entity. The parties
will be represented at the Board of Directors according to their respective
ownership interests in the jointly owned entity.

         4.3 As a condition subsequent to the effectiveness of this Agreement,
and prior to the N Corporation becoming operational, the parties will negotiate
in good faith and agree upon the terms of the Articles of Incorporation and/or
of a shareholders agreement governing the operation of the JV Corporation, to
incorporate standard preemptive rights, rights of first refusal, proportional
representation of shareholders in the Board of Directors and supermajority vote

                                       53
<PAGE>

for extraordinary corporate actions such as dissolution of the company, merger,
filing forbankruptcy, substantial technical changes, and sale of all or
substantially all assets of the corporation. All other corporate actions will be
adopted by a majority of votes.

         V. TERM

         5.1 The term of this Agreement shall commence upon its execution by the
parties and shall continue for a two-year period, unless terminated earlier in
accordance with Article XIV below. No later than Sixty (60) days prior to the
end of such initial term, the parties shall meet to discuss whether (a) they
elect to extend the term, (b) one of them elects to acquire the interests of the
other in the Project on terms to be agreed, or (c) they elect to terminate the
Project and not renew or extend the term of the Agreement.

         VI. REPRESENTATIONS AND W ARRANTIES

         6.1 As an inducement to Sunglobe entering into and performing this
Agreement, MHC hereby represents and warrants to Sunglobe as follows:

                  (a) MHC is a corporation duly organized and validly existing
and is in good standing under the laws of the Cayman Islands.

                  (b) MHC has full power and authority to enter into this
Agreement and carry out the transactions contemplated hereunder. MHC has taken
all necessary action required by law, its [articles of incorporation and
by-laws] and otherwise to authorize the execution and performance of this
Agreement, and this Agreement is a valid and binding obligation of MHC
enforceable in accordance with its terms.

                  (c) The execution, delivery and performance of this Agreement
does not and will not violate any provision of the articles of incorporation of
MHC, except as disclosed to Sunglobe prior to the date of this Agreement, any
provision of any agreement or commitment to which MHC is a party, or which is
applicable to MHC, or to its knowledge violate any statute, law, regulation or
rule or any judicial or administrative judgment, decree or order to which it is
a party or is subject.

                  (d) No consent, order, permit, or other authorization,
approval or similar action is required from any party, court, governmental
authority or agency for MHC to enter into this Agreement and assume the
responsibilities assigned to it hereunder.

         6.2 As an inducement to MHC entering into and performing this
Agreement, Sunglobe hereby represents and warrants to MHC as follows:

                  (a) Sunglobe is a corporation duly organized and validly
existing and is in good standing under the laws of the State of Delaware, United
States of America.

                  (b) Sunglobe has full power and authority to enter into this
Agreement and carry out the transactions contemplated hereunder. Sunglobe has
taken all necessary action required by law, its articles of incorporation and

                                       54
<PAGE>

by-laws and otherwise to authorize the execution and performance of this
Agreement, and this Agreement is a valid and binding obligation of Sunglobe
enforceable in accordance with its terms.

                  (c) The execution, delivery and performance of this Agreement
does not and will not violate any provision of the articles of incorporation or
by-laws of Sunglobe, any provision of any agreement or commitment to which MHC
is a party, or which is applicable to Sunglobe, or to its knowledge violate any
statute, law, regulation or rule or any judicial or administrative judgment,
decree or order to which it is a party or is subject.

                  (d) No consent, order, permit, or other authorization,
approval or similar action is required from any party, court, governmental
authority or agency for Sunglobe to enter into this Agreement and assume the
responsibilities assigned to it hereunder.

         VII. RELATIONSHIP OF PARTIES

         7.1 It is expressly understood and agreed that this Agreement
establishes a relationship of independent contractors and, except as their
respective roles in the Project are expressly described herein, creates no
partnership between the parties, and neither party shall be empowered or
authorized to act as an agent for the other or to bind the other in any manner
except as specifically herein provided.

         VIII. TRADE NAMES AND TRADEMARKS

         8.1 Neither party will in any manner represent that it has any rights
in or to the trade names or trademarks of the other party hereto (the "Trademark
Party") used to identify such the Trademark Party's business, services or
products, nor will it attempt to use or display such trade names or trademarks
unless the Trademark Party gives prior written approval for such representation
or usage to be made. Neither party hereto shall register or attempt to register
any such trade name or trademark of the Trademark Party under the laws of any
jurisdiction and will not at any time do or cause to be done any act or thing
impairing the distinctiveness of such trade names or trademarks or any part of
the Trademark Party's interest therein, whether or not such trade names or
trademarks are registered.

         IX. INDEMNIFICATION

         9.1 Each party (the "Indemnifying Party") shall indemnify and hold
harmless the other party, its directors, officers, employees, agents, successors
and permitted assigns (collectively , the "Indemnified Parties") from and
against any losses, damages, liabilities, expenses, costs, claims, suits,
demands, actions, causes of action, proceedings, judgments, assessments,
deficiencies and charges, including physical damage to tangible property and
personal injuries, including death, to all persons arising from:

                  (a) any negligent act or omission or willful or reckless
misconduct by the Indemnifying Party in the performance of this Agreement;

                                       55
<PAGE>

                  (b) the Indemnifying Party's relationships with its employees,
suppliers, subcontractors, agents and consultants in the course of its
performance of this Agreement; or

                  (c) any claim that the Indemnifying Party, in the course of
performance of this Agreement, has violated any letters patent, copyright, mask
work, trademark, trade name, trade secret or other intellectual property of any
third party.

         9.2 In the event an Indemnified Party is entitled to indemnification
hereunder for any claim, the Indemnified party shall promptly, and in no event
more than fifteen (15) days after becoming aware of the claim for which
indemnification is sought, provide written notice of such claim to the
Indemnifying Party .The Indemnifying Party shall promptly defend such claim by
counsel of its own choosing and the Indemnified Party shall cooperate with the
Indemnifying Party in the defense of such claim, including the settlement of the
matter on the basis stipulated by the Indemnifying Party, with the Indemnifying
Party being responsible for all costs and expenses associated with such
settlement. The Indemnifying Party shall keep the Indemnified Party reasonably
advised of the progress of any lawsuit or other proceeding or negotiation, and
of any settlement proposal and discussions with respect to such claim. If the
Indemnifying Party within a reasonable time after notice of an indemnified claim
fails to defend the Indemnified Party, the Indemnified Party shall be entitled
to undertake the defense, compromise or settlement of such claim at the expense
of and for the account and risk of the Indemnifying Party .The Indemnifying
Party shall be entitled to settle or compromise a claim hereunder as it sees
fit, provided, however, that

                  (a) if there is a reasonable probability that the settlement
or compromise of the claim may materially and adversely affect the Indemnified
Party, the Indemnifying Party will not settle or compromise the claim without
the consent of the Indemnified Party, which consent shall not be unreasonably
withheld or delayed, and

                  (b) if the facts giving rise to indemnification hereunder
involve a possible claim by the Indemnified party against a third party, the
Indemnifying Party that is providing indemnification hereunder shall be
entitled, at its own cost and expense, to undertake the prosecution, settlement
and compromise of such claim against such third party.

         X. LIMITATION OF LIABILITY

         10.1 Except as provided under Article X above, neither party shall be
liable to the other for any amounts representing loss of profits, loss of
business, or other indirect, special, exemplary, consequential or punitive
damages of any nature whatsoever, whether for breach of contract, tort or under
any other legal theory.

                                       56
<PAGE>

         XI. FORCE MAJEURE

         11.1 Neither party hereunder shall be liable to the other for any delay
in performance or failure to perform due to or resulting from acts of God or of
the public enemy or of a governmental agency of appropriate jurisdiction, fires,
floods, earthquakes, epidemics, quarantines, strikes, walkouts or work
stoppages, war, civil strife or insurrection.

         11.2 The failure of a party to perform due to Force Majeure as defined
above shall be excused for so long as such cause of Force Majeure persists,
provided, however, that the party whose performance is impacted by such Force
Majeure shall take all reasonable steps to avoid or remove such causes of
nonperformance and shall continue or resume performance promptly upon the
removal of such causes of Force Majeure.

         11.3 In the event any cause of Force Majeure prevents the timely
performance of this Agreement for a period of sixty (60) days or more, either
party shall be entitled to terminate this Agreement without any further
liability to the other party.

         XII. CONFIDENTIALITY AND MEDIA RELEASES

         12.1 It is understood that, in the course of their performance of this
Agreement, the parties might gain access to financial information, business
plans, personnel information, software, inventions (whether patented or not),
intellectual property, trade secrets and other confidential and proprietary
information of one another not routinely disclosed to the public (collectively,
"Confidential Information"). Each party (the "Receiving Party") agrees to treat
such Confidential Information of the other party (the "Disclosing Party") with
confidentiality and not to disclose it to any other party or to use it for any
purpose other than the performance of this Agreement.

         12.2 This covenant of confidentiality shall not apply to Confidential
Information of a Disclosing Party which is known to the other Receiving Party
prior to its disclosure during the course of performance of this Agreement, or
which becomes public information without disclosure by the Receiving Party, or
which is required to be disclosed to a court or administrative agency of
competent jurisdiction, provided that, in such latter case, the Receiving Party
shall inform the Disclosing Party of the judicial or administrative order for
disclosure and shall give the Disclosing Party a reasonable opportunity to
oppose such order, or which is required to be disclosed by law or rules and
regulations of any stock exchange of appropriate jurisdiction.

         12.3 This covenant of confidentiality shall survive the termination of
this Agreement for any reason whatsoever by three years.

         12.4 Except for disclosures required by legal, accounting or regulatory
requirements beyond the reasonable control of either party hereto (including,
rules of any stock exchange), any media release, public announcement or public
disclosure of this Agreement shall be coordinated by the parties and mutually
approved in advance of being publicized.

                                       57
<PAGE>

         12.5 The parties acknowledge that a violation of the terms of this
article shall not be susceptible to adequate remedy through the payment of
monetary damages and that, as a result, either party shall be entitled to
equitable relief to enjoin the other party from breaching or continuing to
breach the terms of this article.

         XIII. TERMINATION

         13.1     This Agreement may terminate under any of the following
circumstances:

                  (a) Upon expiration of the term of this Agreement, or any
renewal or extension thereof, without agreement by the parties for renewal or
further renewal.

                  (b) At any time by mutual agreement of the parties.

                  (c) By unilateral decision of either party (the "Terminating
Party") following a default of a material provision of this Agreement by the
other party (the "Defaulting Party") and failure by the Defaulting Party to cure
such default within thirty (30) days of receiving written notice thereof from
the Terminating Party; it being understood and agreed by the parties that
failure to provide quality services that must be provided under this Agreement
would be deemed a default of a material provision of this Agreement. ,

                  (d) By unilateral decision of the Terminating party in the
event the other party voluntarily seeks protection of the bankruptcy laws of any
appropriate jurisdiction, or has a petition for involuntary bankruptcy filed
against it which petition it is unable to dismiss within sixty (60) days, or
makes a general assignment for the benefit of its creditors, or ceases to
function as a going concern.

         XIV. NOTICES

         14.1 Any notices required or permitted to be given or made by a party
under this Agreement shall be in writing and shall be provided to the other
party to the following addressees:

If to MHC:                 Mr. Emanuel Gonzalez-Revilla L.
                           HSBC Building, II th Floor
                           Samuel Lewis Avenue
                           Panama City, Republic of Panama
                           Fax: (507) 263-1563

With a copy to:            Ricardo M. Arango, Esq.
                           Arias, Fabrega & Fabrega
                           Bancomer Building, 16 Floor
                           50th Street
                           Panama City, Republic of Panama
                           Fax: (507) 263-8919

                                       58
<PAGE>

If to Sunglobe:            Mr. Barry Pasternak, CEO
                           Sung1obe Fiber Systems Corporation
                           Suite 370
                           1550 Sawgrass Corporate Parkway
                           Sunrise, FL 33325
                           United States of America
                           Fax: 954-835-0064

With a copy to:            Delbert D. Smith, Esq.
                           Dorsey & Whitney LLP
                           Suite 300 South
                           1001 Pennsylvania Ave., N.W.
                           Washington, DC 20004
                           Fax: 202-824-8990

         14.2 Notices given hereunder may be made by personal delivery,
facsimile (with confirmation of transmittal completed) or prepaid international
courier, with confirmed tracking number. Notice shall be deemed to be received
on the earliest of (a) the date of actual receipt, (b) the first business day
following facsimile transmittal with confirmation of transmittal, or (c) two
business days following dispatch by international courier.

         XV. DISPUTE RESOLUTION

         15.1 In the event of a dispute arising under or with regard to the
terms of this Agreement which cannot be resolved by the good faith efforts of
the parties within fifteen (15) days, either party may commence a binding
arbitration of such dispute under the rules of the American Arbitration
Association. Such arbitration shall be conducted in Miami, Florida, in the
English language. Each party shall appoint, within ten business (10) days of the
filing of a request for arbitration, an arbitrator and the two arbitrators
appointed by the parties shall, within another ten (10) business days of their
appointment, appoint a third arbitrator to consider the case.

         15.2 The parties agree that the results of any such arbitration shall
be legally binding on them, provided that the successful party in such an
arbitration may seek enforcement of the arbitral award in a court of competent
jurisdiction.

                                       59
<PAGE>

         XVI MISCELLANEOUS PROVISIONS

         16.1 This Agreement, and any disputes arising under it, shall be
governed by and construed in accordance with the terms of the laws of Panama,
without giving effect to the conflict of law provisions thereof.

         16.2 The parties agree that they shall enter into such further
undertakings or agreements, and sign such other documents, as shall be necessary
and appropriate for the fulfillment of the terms of this Agreement.

         16.3 All documentation, notices, reports and correspondence under this
Agreement shall be submitted and maintained in the English language.

         16.4 Neither party shall have the right to assign this Agreement or any
rights or responsibilities arising under it without the prior written consent of
the other party, except that MHC may assign this Agreement to any wholly-owned
subsidiary of MHC, for the performance of which MHC will remain responsible to
Sunglobe hereunder.

         16.5 During the term of this Agreement and for a period of one year
after the termination of this Agreement, Sunglobe will not, directly or
indirectly, participate in another project, nor will it provide services to a
third party, to create a network access point in Panama for the provision of
broadband Internet services into and out of Panama, unless such termination
resulted from the breach of the terms of this Agreement on the part of MHC or
MHC's bankruptcy.

         16.6 If any provision of this Agreement is declared or found to be
illegal, unenforceable, contrary to public policy or otherwise void, the parties
shall negotiate in good faith to agree upon a substitute provision that is legal
and enforceable and is as nearly as possible consistent with the intentions
underlying the original provision. If the remainder of this Agreement is not
materially affected by such declaration or finding and is capable of substantial
performance, then the remainder of the Agreement shall be enforced to the extent
permitted by law.

         16.7 A waiver or failure to enforce by either party of any of the
covenants, conditions or undertakings to be performed by the other party
hereunder shall not constitute or be construed as a waiver of any succeeding
breach thereof or of any other covenant, condition or undertaking or of this
Agreement taken generally.

         16.8 Nothing in this Agreement is intended or shall be construed to
confer upon or give to any person, firm or entity , other than the parties
hereto and their respective successors and permitted assigns any right,
authority, remedy or claim by reason of this Agreement or any term, covenant or
condition hereof, all of which shall be for the sole and exclusive benefit of
the parties hereto.

         16.9 This Agreement constitutes the entire and exclusive understanding
of the parties regarding the subject matter hereof and supersedes any and all
oral or other written representations, understandings or agreements relating
thereto. This Agreement may not be amended except by the joint written agreement
of both parties hereto.

                                       60
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have affixed their
signatures and seals below, the first date set forth above, intending to be
bound thereby.

SUNGLOBE FIBER SYSTEMS                              MULTIHOLDING CORPORATION
CORPORATION

By:   Illegible                                    By:   Illegible
   ------------------------                           --------------------------
   President and CEO                                   Chief Executive Officer

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