MICRO LINEAR CORP /CA/
EXHIBIT 10.4
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>4
<FILENAME>f97547exv10w4.txt
<DESCRIPTION>EXHIBIT 10.4
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.4

Recording Requested By
and When Recorded Return to:

Ralph C. Navarro, Esq.                      WE CERTIFY THIS TO BE A TRUE AND
Coudert Brothers                            CORRECT COPY OF THE ORIGINAL

Twentieth Floor                             RECORDED 10-5-99  Series # 15007425

1055 W. Seventh Street                      By:  _______________________________
Los Angeles, CA 90017                            First American Title Company

                         DEED OF TRUST AND SECURITY AGREEMENT

                MICRO LINEAR CORPORATION, A DELAWARE CORPORATION,

                                    BORROWER,

                                       TO

                     FIRST AMERICAN TITLE GUARANTY COMPANY,

                                   AS TRUSTEE,

                               FOR THE BENEFIT OF

                      SUN LIFE ASSURANCE COMPANY OF CANADA,

                                   BENEFICIARY

<PAGE>

                            DEED OF TRUST AND SECURITY AGREEMENT

                       Cover Sheet DATE: October 1, 1999

BORROWER          Micro Linear Corporation, a Delaware Corporation

BORROWER'S NOTICE ADDRESS:

         2092 Concourse Drive San Jose,
         California 95131

TRUSTEE:          First American Title Guaranty Company and all successors and
assigns for the benefit of Lender (as determined below).

TRUSTEE'S NOTICE ADDRESS:

         345 California Street, Suite 2400
         San Francisco, California 94104

LENDER            Sun Life Assurance Company of Canada, a Canadian corporation,
                  together with other holders from time to time of the Note (as
                  herein defined).

LENDER'S NOTICE ADDRESS: c/o Sun Life of Canada
                             One Sun Life Executive Park Wellesley Hills,
                             Massachusetts 02481 Attention:
                             Mortgage Investments Group

NOTE AMOUNT:      $3,000,000

STATE:   California

RECORD OWNER OF THE LAND (AS DEFINED HEREIN): Micro Linear Corporation, a
                                                Delaware Corporation

Exhibit A hereto is incorporated herein by reference.

This document prepared by: Ralph C. Navarro

                                       ii
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                                Table of Contents

1.       DEFINITION OF TERMS

2.       GRANTING CLAUSES

3.       REPRESENTATIONS AND WARRANTIES

    3.1       Due Organization; Authority
    3.2       Execution, Delivery and Effect of Loan Documents
    3.3       Other Obligations
    3.4       Construction and Completion of Improvements
    3.5       Legal Actions
    3.6       Financial Statements
    3.7       Adverse Change to Property
    3.8       Title to Property
    3.9       Compliance with Laws and Private Covenants
    3.10      Independence of the Property
    3.11      Contamination

4.       COVENANTS

    4.1       Payments
              (a) Secured Debt
              (b) Property Taxes and Charges
              (c) Escrow
              (d) Taxes on Trustee or Lender
              (e) Liabilities
              (f) Right to Contest
              (g) Expenses
    4.2       Operation of the Property
              (a) Maintenance; Alterations
              (b) Liens
              (c) Compliance with Laws and Private Covenants
              (d) Use
              (e) Inspection
              (f) Notification of Contamination; Clean-Up
    4.3       Insurance
    4.4       Sales and Encumbrances
    4.5       Financial Records and Statements
    4.6       Indemnity
    4.7       Notices
    4.8       Estoppel Certificates
    4.9       Legal Existence
    4.10      Defense and Notice of Actions
    4.11      Lost Note
    4.12      Personalty
    4.13      Further Assurances
    4.14      Year 2000 Compliance

                                      iii
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5.       CASUALTIES AND TAKINGS

    5.1       Notice to Lender
    5.2       Repair and Replacement
    5.3       Insurance and Taking Proceeds
              (a) Collection
              (b) Assignment to Lender
    5.4       Disbursement of Insurance Proceeds to Borrower

6.       ASSIGNMENT OF RENTS, ISSUES AND PROFITS

    6.1       Assignment of Rents
    6.2       Performance of Leases

7.       CONCERNING TRUSTEE

    7.1       Trustee's Covenants
    7.2       Resignation of Trustee
    7.3       Substitution of Trustee
    7.4       Reconveyance and Agreements
    7.5       Release of Lien
    7.6       Exculpation and Indemnification of Trustee

8.       LEGAL PROCEEDINGS

9.       DEFAULTS; REMEDIES OF LENDER

    9.1       Events of Default
              (a) Breach of Named Covenants
              (b) Breach of Other Covenants
              (c) Misrepresentations
              (d) Bankruptcy
              (e) Adverse Court Action
    9.2       Remedies
              (a) Acceleration
              (b) Foreclosure
              (c) Offset Rights
              (d) Cure Rights
              (e) Possession of Property
              (f) Receiver
              (g) Uniform Commercial Code Remedies
              (h) Judicial Actions
              (i) Subrogation Q) Sale
              (k) Other
    9.3       Holding Over
    9.4       General Provisions
              (a) Multiple Sales
              (b) Cumulative Remedies
              (c) Right to Purchase

                                       iv
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              (d) Right to Terminate Proceedings
              (e) No Waiver or Release
              (f) Waivers and Agreements Regarding Remedies
              (g) Waiver of Jury Trial
              (h) Lender's Discretion
              (i) Sales

10.      POSSESSION AND DEFEASANCE

    10.1      Possession
    10.2      Defeasance

11.      GENERAL

    11.1      Lender's Right to Waive, Consent or Release
    11.2      No Impairment
    11.3      Amendments
    11.4      No Usury
    11.5      Notices
    11.6      Successors and Assigns
    11.7      Severability
    11.8      Gender and Construction
    11.9      Joint and Several Liability
    11.10     Modifications
    11.11     Governing Law
    11.12     Captions
    11.13     N/A
    11.14     Sale, Assignment or Conversion of Secured Debt
    11.15     Acknowledgment of Receipt
    11.16     Time of the Essence
    11.17     Exhibits

    EXHIBIT A - Property Description

                                       v
<PAGE>

1.       DEFINITION OF TERMS. As used herein, the terms defined on the cover
         sheet hereof shall have the meanings given on such sheet, and the
         following terms shall have the following meanings:

         1.1      Commitment: a certain commitment executed by Borrower and
                  Lender for the loan secured by this Deed of Trust.

         1.2      Casualty: as defined in Paragraph 5.1.

         1.3      Clean-Up: removal and/or remediation of Contamination in
                  accordance with Laws and good commercial practice.

         1.4      Contamination: the presence of, use, generation, manufacture,
                  storage, treatment, disposal, discharge or release on, from or
                  to the Property of Hazardous Substances.

         1.5      Contested Sum: as defined in clause (f) of Paragraph 4.1.

         1.6      Deed of Trust: this Deed of Trust and Security Agreement and
                  all modifications or amendments thereto or extensions thereof.

         1.7      Environmental Actions or Claims: any claim, action or
                  proceeding brought by a governmental authority in connection
                  with Contamination or any claim or action brought by a third
                  party relating to Contamination.

         1.8      Event of Default: as defined in Paragraph 9.1.

         1.9      N/A

         1.10     Hazardous Substances: all substances and compounds prohibited
                  or regulated under any Laws; materials containing asbestos or
                  urea formaldehyde; gasoline and other petroleum products;
                  flammable explosives; radon and other natural gases;
                  radioactive materials; and polychlorinated biphenyls and
                  similar solvents.

         1.11     Improvements: all buildings, structures and other improvements
                  now or hereafter existing, erected or placed on or under the
                  Land, or in any way used in connection with the use,
                  enjoyment, occupancy or operation of the Land or any portion
                  thereof; all fixtures of every kind and nature whatsoever now
                  or hereafter owned by Borrower and used or procured for use in
                  connection with the Realty.

         1.12     In its sole unfettered discretion: as defined in Paragraph
                  11.8.

         1.13     Insurance Premiums: as defined in Paragraph 4.3.

         1.14     Insurance Proceeds: as defined in clause (a) of Paragraph 5.3.

         1.15     Land: the land described in Exhibit A attached hereto,
                  together with all estate, title, interests, title reversion
                  rights, rents, increases, issues, profits, rights of way or
                  uses, additions, accretions, servitudes, gaps, gores,
                  liberties, privileges, water rights, water courses, alleys,
                  streets, passages, ways, vaults, adjoining strips of ground,
                  licenses,

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                  tenements, franchises, hereditaments, rights, appurtenances
                  and easements, now or hereafter owned by Borrower and
                  existing, belonging or appertaining to the Land, all claims or
                  demands whatsoever of Borrower therein or thereto, either at
                  law or in equity, in possession or in expectancy and all
                  estate, right, title and interest of Borrower in and to all
                  streets, roads and public places, opened or proposed, now or
                  hereafter used in connection with, existing, belonging or
                  appertaining to the Land.

         1.16     Laws: any and all Federal, regional, state or local laws,
                  ordinances, rules, regulations, statutes, decisions, orders,
                  judgments, directives or decrees of any governmental or
                  regulatory authority, court or arbitrator whether now in force
                  or as amended or enacted in the future, including, without
                  limitation, the Americans with Disabilities Act of 1990, the
                  Water Pollution Control Act, the Toxic Substances Control Act,
                  the Comprehensive Environmental Response, Compensation, and
                  Liability Act of 1980 as amended by the Superfund Amendment
                  and Reauthorization Act of 1986, the Resource Conservation and
                  Recovery Act of 1976, and all regulations thereunder.

         1.17     Leases: all leases, license agreements and other occupancy or
                  use agreements (whether oral or written), now or hereafter
                  existing, which cover or relate to all or any portion of the
                  Property, together with all options therefor, amendments
                  thereto and renewals, modifications and guarantees thereof,
                  and all rents, royalties, issues, profits, revenues, income
                  and other benefits of the Property arising at any time
                  (including, without limitation, after the filing of any
                  petition under any present or future Federal or state
                  bankruptcy or similar law) from the use or enjoyment thereof,
                  including, without limitation, cash or securities deposited
                  thereunder to secure performance by the tenants of their
                  obligations thereunder, whether said cash or securities are to
                  be held until the expiration of the terms of the Leases or
                  applied to one or more of the installments of rent coming due,
                  additional, percentage, participation and other rentals, fees
                  and deposits.

         1.18     Lease Assignment: a certain Assignment of Leases and Rents of
                  even date herewith from Borrower to Lender and all
                  replacements, substitutions, modifications or amendments
                  thereto or extensions thereof .

         1.19     Loan Documents: this Deed of Trust, the Note, the Lease
                  Assignment, the Guaranty, and any and all other documents or
                  instruments related thereto or to the Secured Debt now or
                  hereafter given by or on behalf of Borrower and the
                  Guarantor(s) to or for the benefit of Lender.

         1.20     Net Proceeds: as defined in Paragraph 5.3.

         1.21     Note: a certain Promissory Note of even date herewith made by
                  Borrower in favor of Lender in the Note Amount and all
                  replacements, substitutions, modifications, renewals and
                  extensions thereof, which Note is payable in Monthly Payments,
                  until the Maturity Date (as each term is defined in the Note).

         1.22     Parties in Interest: as defined in clause (d) of Paragraph
                  9.1.

         1.23     Permitted Encumbrances: matters set forth or referred to in
                  Schedule B Part 1 of Lender's title insurance policy issued in
                  connection with the execution and recording of

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                  this Deed of Trust and the matters disclosed that certain
                  ALTA/ACSM survey dated September 24, 1999 prepared by Mission
                  Engineers, Inc. (Job No. 94571).

         1.24     Personalty: all of Borrower's interest in personal property of
                  any kind or nature whatsoever, whether tangible or intangible,
                  which is used or will be used in the construction of the
                  Realty, all accounts, documents, instruments, chattel paper,
                  equipment, and general intangibles (as those terms are defined
                  in the Uniform Commercial Code of the State) relating to the
                  ownership or occupancy of the Property, all plans and
                  specifications, contracts and subcontracts for the
                  construction, reconstruction or repair of the Improvements,
                  all bonds, permits, licenses, guarantees, warranties, causes
                  of action, judgments, claims, profits, security deposits,
                  utility deposits, refunds of fees, Insurance Premiums,
                  deposits paid to any governmental authority, letters of
                  credit, insurance policies, Insurance Proceeds, Taking
                  Proceeds, and escrowed funds together with all present and
                  future attachments, accretions, accessions, replacements, and
                  additions thereto and products and proceeds thereof.
                  Notwithstanding anything to the contrary herein or in any
                  other Loan Document, the term "Personalty" shall not include
                  and in no event shall Lender have any lien, interest or other
                  right whatsoever in any item of process heating, ventilating,
                  cooling, plumbing, or electrical equipment, communications
                  equipment, production machinery or equipment, moveable
                  partitions, or any other equipment, machinery, inventory,
                  furniture or fixtures located within the Improvements which
                  may be removed from the Property without any material
                  permanent damage to the Property or the building systems
                  thereof. Upon request, Lender shall execute such documents as
                  Borrower shall reasonably request to evidence the foregoing
                  exception to any prospective purchaser or lender of Borrower
                  of such property.

         1.25     Property. the Realty and Personalty or any portion thereof or
                  interest therein, except as the context otherwise requires.

         1.26     Property Liabilities: as defined in clause (e) of Paragraph
                  4.1.

         1.27     Property Taxes and Charges: all real estate taxes, personal
                  property taxes, betterments, assessments (general and
                  special), imports, levies, water, utility and sewage charges,
                  any and all income, franchise, withholding, profits and gross
                  receipts taxes, all other taxes and public charges, imposed
                  upon or assessed against Borrower or the Property or upon the
                  revenues, rents, issues, income and profits of use or
                  possession thereof, and any stamp or other taxes which may be
                  required to be paid with respect to any of the Loan Documents,
                  any of which might, if unpaid, result in a lien on the
                  Property, regardless to whom paid or assessed.

                  The term "real estate taxes" in the foregoing sentence shall
                  include any form of assessment, license fee, license tax,
                  business license fee or tax, commercial rental tax, levy,
                  charge, penalty, tax or similar imposition, imposed by any
                  authority having the direct power to tax, including any city,
                  county, state or Federal government, or any school,
                  architectural, lighting, drainage or other improvement or
                  special assessment district thereof, against any legal or
                  equitable interest in the Property, except general business
                  taxes, net income taxes and franchise taxes imposed on Lender
                  other than taxes or other amounts referred to in Paragraph
                  4.1(d).

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         1.28     Realty: the Land and Improvements or any portion thereof or
                  interest therein, as the context requires.

         1.29     Restoration: as defined in clause (a)(i) of Paragraph 5.4.

         1.30     Secured Debt: to the extent not prohibited by Laws, all
                  principal, interest, late charges and other sums, charges,
                  premiums, prepayment and other indemnification amounts or
                  other amounts due or to become due under the Loan Documents,
                  together with any other sums expended or advanced by or on
                  behalf of Lender under the Loan Documents or otherwise with
                  respect to the care, maintenance or preservation of the
                  Property or the enforcement of the Loan Documents.

         1.31     Taking: as defined in Paragraph 5.1.

         1.32     Taking Proceeds: as defined in clause (a) of Paragraph 5.3.

         1.33     Trustee: as defined on the cover sheet hereof.

2.       GRANTING CLAUSES. For valuable consideration, the receipt and
         sufficiency of which are hereby acknowledged, Borrower has executed and
         delivered the Loan Documents and hereby irrevocably and absolutely
         grants, transfers, assigns, mortgages, bargains, sells and conveys to
         Trustee for the benefit of Lender with all POWERS OF SALE AND STATUTORY
         RIGHTS AND COVENANTS in the State, all of Borrower's estate, right,
         title and interest in, to and under the Realty, and grants to Lender a
         first and prior security interest in the Personalty and any and all of
         the following, whether now owned or held or hereafter acquired or owned
         by Borrower:

         (a)      all Leases;

         (b)      all profits and sales proceeds including, without limitation,
                  earnest money and other deposits, now or hereafter becoming
                  due by virtue of any contract or contracts for the sale of
                  Borrower's interest in the Property; and

         (c)      all proceeds (including claims thereto or demands therefore)
                  of the conversion, voluntary or involuntary, permitted or
                  otherwise, of any of the foregoing into cash or liquidated
                  claims.

         FOR THE PURPOSE OF SECURING THE FOLLOWING OBLIGATIONS OF BORROWER TO
         LENDER, in such order of priority as Lender may elect:

         (1)      payment of the Secured Debt;

         (2)      payment of such additional sums with interest thereon which
                  (i) may hereafter be loaned to Borrower by Lender where
                  evidenced by another note or notes, reciting it is so secured,
                  payable to Lender or order or any successor in ownership; or
                  (ii) advanced under the Loan Documents, even if the sum of the
                  amounts outstanding at any time exceeds the Note Amount; and

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         (3)      due, prompt and complete observance, performance, fulfillment
                  and discharge of each and every obligation, covenant,
                  condition, warranty, agreement and representation contained in
                  the Loan Documents.

         This Deed of Trust is also intended to be a security agreement under
         the Uniform Commercial Code as in force from time to time in the State.

3.       REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and warrants
         to Lender that the following are true, correct and complete as of the
         date of this Deed of Trust.

         3.1      Due Organization; Authority. Borrower is duly organized and
                  validly existing and in good standing under the laws of the
                  State and has power adequate to carry on its business as
                  presently conducted, to own the Property, to make and enter
                  into the Loan Documents and to carry out the transactions
                  contemplated therein.

         3.2      Execution, Delivery and Effect of Loan Documents. The Loan
                  Documents have each been duly authorized, executed and
                  delivered by Borrower, and each is a legal, valid and binding
                  obligation of Borrower, enforceable in accordance with its
                  terms, except to the extent that the enforceability thereof
                  may be limited by bankruptcy, insolvency or other similar laws
                  affecting creditors' rights generally and subject to the
                  exercise of judicial discretion in accordance with general
                  principles of equity and statutes and judicial decisions
                  limiting the enforceability of indemnities, due on sale or
                  similar provisions of the Loan Documents..

         3.3      Other Obligations. Borrower is not in violation of any
                  material term or provision of any document governing its
                  organization or existence or in default under any material
                  instruments or obligations relating to Borrower's business,
                  Borrower's assets or the Property. No party has asserted any
                  material claim or default relating to the Property or any
                  other claim which is reasonably likely to have a material
                  adverse effect on the business, properties or financial
                  position of the Borrower and its subsidiaries, taken as a
                  whole (a "Material Adverse Effect"). The execution and
                  performance of the Loan Documents and the consummation of the
                  transactions contemplated thereby will not materially violate
                  or contravene or constitute a material default under any
                  charter, certificate, by laws, partnership agreement, trust
                  declaration, contract, agreement, document or other instrument
                  to which Borrower is a party or by which Borrower may be bound
                  or affected, do not and will not violate or contravene any
                  Laws to which Borrower is subject, in either case, in a manner
                  which is reasonably likely to have a Material Adverse Effect;
                  nor do any such instruments impose or contemplate any
                  obligations which are or will be materially inconsistent with
                  the Loan Documents. Borrower has filed all Federal, state,
                  county and municipal income tax returns required to have been
                  filed by Borrower and has paid all taxes which have become due
                  pursuant to such returns or pursuant to any assessments
                  received by Borrower except when the failure to file or the
                  nonpayment is immaterial. Borrower does not know of any basis
                  for additional assessment with regard to any such material
                  tax. No approval by, authorization of, or filing with any
                  Federal, state or municipal or other governmental authority is
                  necessary in connection with the authorization, execution and
                  delivery of the Loan Documents.

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<PAGE>

         3.4      Construction and Completion of Improvements. The presently
                  existing Improvements have been completed and installed in a
                  good and workmanlike manner, in compliance in all material
                  respects with Laws and any plans and specifications previously
                  delivered to, and approved in writing by, Lender. The
                  Improvements do not contain any urea formaldehyde or asbestos.
                  The Improvements are served by electric, gas, sewer, water,
                  telephone and other utilities required for the present and
                  contemplated uses and operation thereof. Any and all streets,
                  utility lines and off-site improvements, which provide access
                  to the Property or are necessary for its present and
                  contemplated uses, have been completed, are serviceable and
                  have been accepted or approved by appropriate governmental
                  bodies.

         3.5      Legal Actions. There are no material actions suits or
                  proceedings including, without limitation, any Environmental
                  Actions or Claims (whether or not material), condemnation,
                  insolvency or bankruptcy proceedings, pending or, to the best
                  of Borrower's knowledge and belief, threatened against or
                  affecting Borrower, its business or the Property; or
                  investigations, at law or in equity before or by any court or
                  governmental authority pending or, to the best of Borrower's
                  knowledge and belief, threatened against or affecting
                  Borrower, Borrower's business or the Property, except in all
                  the foregoing cases, actions, suits and proceedings fully
                  covered by insurance and heretofore fully disclosed in writing
                  to Lender or, which if resolved adversely to Borrower, would
                  not have a material, adverse effect on Borrower or the
                  Property. Borrower is not in default with respect to any
                  order, writ, injunction, decree or demand of any court or any
                  governmental authority affecting Borrower or the Property.
                  Furthermore, to the best knowledge and belief of Borrower,
                  there is no basis for any unfavorable decision, ruling or
                  finding by any court or governmental authority which would in
                  any material respect adversely affect the validity or
                  enforceability of the Loan Documents, or have a Material
                  Adverse Effect on Borrower (financial or otherwise) or
                  adversely affect the ability of Borrower to meet Borrower's
                  obligations under the Loan Documents.

         3.6      Financial Statements. All statements, financial or otherwise,
                  submitted to Lender in connection with the Commitment are
                  true, correct and complete in all material respects, and such
                  financial statements have been prepared in accordance with
                  generally accepted accounting principles consistently applied
                  (or other basis of accounting practices permitted by Lender)
                  and fairly present the financial condition of the parties or
                  entities covered by such statements as of the date thereof.
                  Since the date thereof, and, except as disclosed to Lender in
                  writing, neither Borrower nor any such party or entity has
                  experienced any material adverse change in its finances,
                  business, operations, affairs and prospects taken as a whole.

         3.7      Adverse Change to Property. No event or series of events has
                  occurred since the date of the Commitment which would, either
                  individually or collectively, materially and adversely affect
                  the Property.

         3.8      Title to Property. Borrower has good and clear record and
                  marketable title to the Realty and good and merchantable title
                  to the Personalty, free of all liens, claims, encumbrances or
                  restrictions other than the Permitted Encumbrances.

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<PAGE>

         3.9      Compliance with Laws and Private Covenants. The Property
                  complies in all material respects with all Laws. Borrower has
                  examined and is familiar with all private covenants affecting
                  the Property, including, without limitation, private covenants
                  contained in the Permitted Encumbrances and there now exists
                  no material violation thereof. Borrower has no notice that any
                  of the Improvements encroach upon any easement over the Land
                  or encroach upon adjacent property or that buildings or other
                  structures on adjacent property encroach upon the Land.

         3.10     Independence of the Property. The Land is a separate and
                  distinct parcel for tax purposes and is not subject to
                  Property Taxes and Charges against any other land. Borrower
                  has not by act or omission permitted any building or other
                  improvements on property not covered by this Deed of Trust to
                  rely on the Property or any part thereof or any interest
                  therein to fulfill any municipal or governmental requirement
                  for the existence of such property, building or improvement,
                  except for the matters included in the Permitted Exceptions,
                  and no Improvement on the Property relies on any property not
                  covered by this Deed of Trust or any interest therein to
                  fulfill any governmental or municipal requirement. Borrower
                  has not by act or omission impaired the integrity of the
                  Property as a single, separate, subdivided zoning lot separate
                  and apart from all other property.

         3.11     Contamination. To the best of Borrower's knowledge and belief,
                  after due investigation and inquiry, no Hazardous Materials
                  are present in the soil, groundwater, surface water, air or
                  building materials of the Property, other that as disclosed in
                  that certain Environmental Site Assessment dated September 22,
                  1999 prepared by Allwest Environmental Inc. which has been
                  provided to Lender.

4.       COVENANTS

         4.1      Payments.

                  (a)      Secured Debt. Borrower shall pay to Lender the
                           Secured Debt at the times and in the manner provided
                           in the Note and the other Loan Documents.

                  (b)      Property Taxes and Charges. Except as provided in
                           Paragraph 4.1(f), Borrower shall pay, prior to the
                           date on which interest begins to accrue thereon or
                           any assessment becomes delinquent, all Property Taxes
                           and Charges. Upon Lender's written request, Borrower
                           shall furnish to Lender, within 30 days after the
                           date on which any such Property Taxes and Charges are
                           due and payable, official receipts from the
                           appropriate taxing authority, or other proof
                           satisfactory to Lender, evidencing the payment
                           thereof.

                  (c)      Escrow. Borrower shall pay to Lender monthly, on each
                           date on which a Monthly Payment (as defined in the
                           Note) is due, 1/12 of such amount as Lender from time
                           to time estimates will be required to pay all
                           Property Taxes and Charges when due. If the Property
                           Taxes and Charges are due in less than twelve months
                           from the First Payment Date (as defined in the Note),
                           Borrower shall make equal monthly payments in amounts
                           sufficient to pay the Property Taxes and Charges when
                           due. Borrower shall also pay to Lender monthly, on
                           each date on which a Monthly Payment is due under the
                           Note, 1/12 of such amount as Lender from time

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<PAGE>

                           to time estimates will be required to pay Insurance
                           Premiums. If the Insurance Premiums are due in less
                           than twelve months from the date of the first Monthly
                           Payment after the occurrence of an Event of Default,
                           Borrower shall make equal monthly payments in amounts
                           sufficient to pay the Insurance Premiums when due.
                           Lender's estimates shall be based on the amounts
                           actually payable or, if unknown, on the amounts
                           actually paid for the year preceding that for which
                           such payments are being made. Borrower shall transmit
                           to Lender bills for the Property Taxes and Charges
                           and Insurance Premiums as soon as received. When
                           Lender has received funds sufficient to pay the same,
                           Lender shall, except as provided in Paragraph 10.2,
                           pay such bills. If the amount paid by Borrower in any
                           year exceeds the aggregate required, such excess
                           shall be applied to escrow payments for the
                           succeeding year. Any deficiencies shall be paid by
                           Borrower to Lender within the (10) days following
                           delivery of Lender's written request. Payments for
                           such purposes may be made by Lender at its discretion
                           even though subsequent owners of the Property may
                           benefit thereby. Lender shall not be a trustee of
                           such funds and may commingle them with its general
                           assets without any obligation to pay interest thereon
                           or account for any earnings, income or interest on
                           such funds.

                  (d)      Taxes on Trustee or Lender. If any Law imposes upon
                           Trustee or Lender the obligation to pay the whole or
                           any part of the Property Taxes and Charges or changes
                           in any way Laws relating to taxation so as to affect
                           adversely the Loan Documents, then Borrower shall pay
                           such Property Taxes and Charges or reimburse Trustee
                           and Lender immediately therefor, unless in the
                           reasonable, informed opinion of counsel to either
                           Trustee or Lender, it might be unlawful to require
                           Borrower to pay the same or such payment might result
                           in the imposition of interest prohibited by Laws. In
                           such case, an Event of Default shall exist, but if
                           Lender accelerates the Secured Debt solely because of
                           such Event of Default, the Secured Debt shall not
                           include the prepayment indemnification provided for
                           in paragraph 13 of the Note.

                  (e)      Liabilities. Except as provided in Paragraph 4.1(f),
                           Borrower shall pay, prior to delinquency, all debts
                           and liabilities incurred in the construction,
                           operation, development, use, enjoyment, repair,
                           maintenance, replacement, restoration, management and
                           Clean-Up of the Property ("Property Liabilities")
                           including without limitation, utility charges, sums
                           due to mechanics and materialmen and other sums
                           secured or which might be secured by liens on the
                           Property.

                  (f)      Right to Contest. Borrower may, in good faith and by
                           appropriate proceedings, contest the validity,
                           applicability or amount of any asserted Property
                           Taxes and Charges, Property Liabilities or liens,
                           charges, attachments or lis pendens under Paragraph
                           4.2(b) ("Contested Sum") after written notice of the
                           same to Lender. During such contest, Borrower shall
                           not be deemed in default hereunder if: (i) prior to
                           delinquency of the Contested Sum, Borrower deposits
                           with Lender or Lender's nominee cash or other
                           security, in form reasonably satisfactory to Lender,
                           adequate to cover the payment of such Contested Sum
                           and any obligation, whether matured or contingent, of
                           Borrower, Trustee or Lender therefor, together with
                           interest, costs and penalties thereon; and (ii)
                           Borrower promptly pays any amounts adjudged to be
                           due, together with all costs, penalties and interest
                           thereon, on or before such judgment becomes final.
                           Each such contest shall be

                                       8
<PAGE>

                           concluded and the Contested Sum, interest, costs and
                           penalties thereon shall be paid prior to the date any
                           writ or order is issued under which the Property
                           could be sold pursuant to such judgment, but in any
                           event on or before the 15th day following the date
                           the judgment becomes final.

                  (g)      Expenses. To the extent allowed by Laws, Borrower
                           shall pay, on demand, but without counterclaim,
                           setoff, deduction, defense, abatement, suspension,
                           deferment, discrimination or reduction all fees
                           (including, without limitation, reasonable attorneys'
                           fees and disbursements) taxes, recording fees,
                           commissions and other liabilities, costs and expenses
                           incurred in connection with: (i) the making or
                           enforcement of the Loan Documents; (ii) Trustee's or
                           Lender's exercise and enforcement of its rights and
                           remedies under Paragraphs 7 and 8 hereof; (iii)
                           Trustee's or Lender's protection of the Property and
                           its interest therein in accordance with the Loan
                           Documents; and (iv) any amendments, consents,
                           releases, or waivers requested by Borrower if granted
                           by Lender under the Loan Documents.

                  Borrower shall not be entitled to any credit on the Secured
                  Debt by reason of its payment of any sums required to be paid
                  under Paragraph 4.1(b) through (f) unless such sums are paid
                  to reimburse Lender for amounts paid by Lender and added by
                  Lender to the Secured Debt.

         4.2      Operation of the Property.

                  (a)      Maintenance; Alterations. Borrower shall maintain and
                           preserve the Property in good repair and condition
                           and shall correct any defects or faults in the
                           Property. Borrower shall not commit, permit or suffer
                           any demolition or waste of the Property or any use or
                           occupancy which constitutes a public or private
                           nuisance. Borrower shall not do, permit or suffer to
                           be done any act whereby the value of the Property may
                           be materially decreased. Borrower shall not make any
                           material alterations, improvements, additions,
                           utility installments or the like to the Property
                           without the prior written consent of Lender in each
                           instance; provided, however, Borrower may make
                           replacements or substitutions of any item of the
                           Personalty if the replacement or substitution is of a
                           quality, utility, value, condition and character
                           similar to or better than the replaced or substituted
                           item and is free and clear of any lien, charge,
                           security interest or encumbrance, except for the
                           Permitted Liens and those as created or permitted by
                           this Deed of Trust.

                  (b)      Liens. Except as provided in Paragraph 4.1(f)
                           Borrower shall promptly discharge any mechanics,
                           laborers', materialmens' or similar lien or any other
                           lien, charge, attachment, or lis pendens filed or
                           recorded against the Property which relates to
                           Borrower, the Property or any Contamination.

                  (c)      Compliance with Laws and Private Covenants. Borrower
                           shall keep, observe, and satisfy and not suffer
                           violations of Laws and private covenants (whether or
                           not listed as Permitted Encumbrances) materially
                           affecting the Property.

                  (d)      Use. Borrower shall not permit the use or occupancy
                           of the Property other than Permitted Leases as
                           defined in the Lease Assignment and other than
                           pursuant to

                                       9
<PAGE>

                           Leases which shall have been approved in advance and
                           in writing by Lender pursuant to the Lease Assignment
                           or which require no approval thereunder. Borrower
                           shall not use or permit the use or occupancy of the
                           Property in a manner which will result in the release
                           or disposal of Hazardous Materials to the soil,
                           ground water, surface water, air or building
                           materials of the Property and Borrower shall take all
                           steps reasonably necessary under the circumstances
                           including, without limitation, periodic inspections
                           and assessments of the Property, to determine whether
                           the release or disposal of Hazardous Materials to the
                           soil, ground water, surface water, air or building
                           materials of the Property has occurred.

                  (e)      Inspection. Whether or not an Event of Default (as
                           defined in Paragraph 9.1) has occurred and exists,
                           Lender and its agents and contractors, shall have the
                           right, but not the duty or obligation, to enter upon
                           the Property at reasonable times without delay,
                           hindrance or restriction, in order to conduct
                           appraisals and inspections of the Property,
                           including, but not limited to environmental
                           inspections. If, in the reasonable belief of Lender,
                           the release or disposal of Hazardous Materials to the
                           soil, ground water, surface water, air or building
                           materials of the Property has occurred or is likely
                           to occur Lender shall have the right, but not the
                           duty or obligation to conduct, or cause to be
                           conducted, testing, including, but not limited to,
                           soil, air and groundwater sampling, regarding such
                           release or disposal of Hazardous Materials to the
                           soil, ground water, surface water, air or building
                           materials of the Property. Any environmental
                           inspections or testing shall be paid for by Borrower.
                           Lender shall have the right, but not the duty or
                           obligation, to disclose the results of such
                           inspections and testing as required by Laws or as
                           deemed appropriate by Lender.

                  (f)      Notification of Contamination; Clean-Up. Borrower
                           shall notify Lender immediately upon discovery of any
                           release or disposal of Hazardous Materials to the
                           soil, ground water, surface water, air or building
                           materials of the Property. Borrower shall not,
                           without Lender's prior consent, initiate Clean-Up of
                           any Contamination, or enter into any settlement
                           agreement, consent decree or other compromise with
                           respect to any violation or alleged violation of any
                           Laws concerning Hazardous Substances, if such
                           Clean-up, settlement agreement, consent decree or
                           other compromise might, in Lender's sound business
                           judgment, impair the value of Lender's security
                           hereunder; provided, however, that Lender's prior
                           consent shall not be required in the event the
                           Contamination either poses an immediate threat to the
                           health, safety or welfare of any individual or is of
                           such a nature that an immediate remedial response is
                           necessary, such that it is impossible to obtain
                           Lender's consent before taking such remedial action;
                           provided further, however, that in such event,
                           Borrower shall notify Lender as soon as practicable
                           of any remedial action so taken.

         4.3      Insurance. Borrower shall obtain and keep in force, with one
                  or more insurers with a Best's Rating of A-NII or higher, such
                  insurance as Lender may from time to time specify by notice to
                  Borrower, including, as a minimum, insurance providing: (i)
                  commercial general liability and property damage coverage with
                  a broad form coverage endorsement, with limits of liability
                  determined to be acceptable by Lender from time to time and a
                  combined single limit of at least $3,000,000; (ii) protection
                  against fire, "extended coverage" and other "All Risk" perils,
                  including, if specifically

                                       10
<PAGE>

                  required by Lender, earthquake, to the full replacement cost
                  of the Property; (iii) rent loss insurance in an amount of not
                  less than a sum equal to 12 months of rental income from all
                  Leases; and (iv) flood insurance if the Property is located in
                  an area identified by the Secretary of Housing and Urban
                  Development as an area having special flood hazards or in
                  which flood insurance has been made available under applicable
                  Laws. All property insurance policies shall include the
                  standard mortgagee clause in the State naming Lender as the
                  first mortgagee with all losses payable to Lender, and shall
                  also include an agreed-amount endorsement sufficient to
                  prevent Borrower from becoming a co-insurer. All liability
                  policies shall name Lender as an additional insured. All
                  insurance policies shall provide that the policy may not be
                  cancelled without 30 days prior written notice to Lender or
                  otherwise modified without 10 days prior written notice to
                  Lender, and that no act or thing done by Borrower shall
                  invalidate the policy as against Lender, and that the
                  deductible for any single Casualty shall not be more than
                  $25,000, or, in the case of earthquake or flood insurance,
                  such other higher deductible as is commercially reasonable and
                  customary. At least 30 days prior to the expiration date of
                  any policy required hereunder, Borrower shall provide Lender
                  or Lender's designee with evidence of compliance with this
                  Paragraph 4.3, in such form as required from time to time by
                  Lender. Such form shall bear notations evidencing the prior
                  payment of premiums ("Insurance Premiums") or shall be
                  accompanied by other evidence satisfactory to Lender that such
                  payment has been made.

                  All property insurers shall agree not to acquire any rights of
                  recovery against Lender by subrogation. Borrower, to the full
                  extent permitted by Laws and to the full extent permitted
                  without invalidating the insurance policies required above,
                  shall obtain endorsements by all insurers waiving any right of
                  subrogation against tenants under any Leases and shall require
                  the same of such tenants. Lender shall not because of
                  accepting, rejecting, approving or obtaining insurance, incur
                  any liability for the existence, nonexistence, continuation,
                  form or legal sufficiency of any insurance, the solvency of
                  any insurer, or the payment of losses.

                  Borrower shall furnish to Lender or Lender's designee an
                  original of all policies of insurance required under this Deed
                  of Trust, provided, however, that if Lender consents to
                  Borrower providing any of the insurance required under this
                  Deed of Trust through blanket policies carried by Borrower and
                  covering more than one location, Borrower shall furnish Lender
                  or Lender's designee with a certificate of insurance for each
                  such policy, setting forth the coverage, the limits of
                  liability as to the Property, the name of the insurer, the
                  policy number and the expiration date, or with a certified
                  true copy of the original of each such policy.

                  Borrower shall keep, observe and satisfy, and not suffer
                  violations of the requirements, including those requirements
                  pertaining to acts committed or conditions existing on the
                  Property, of insurance companies and any bureau or agency
                  which establishes standards of insurability affecting the
                  Property. Borrower shall not carry separate or additional
                  insurance concurrent in form or contributing in the event of
                  loss with that required by this Deed of Trust.

                  Upon foreclosure of this Deed of Trust or other transfer of
                  title or assignment of the Property in discharge, in whole or
                  part, of the Secured Debt, all right, title and interest

                                       11
<PAGE>

                  of Borrower in and to all policies of insurance required by
                  this Paragraph 4.3 shall inure to the benefit of and pass to
                  Lender.

         4.4      Sales and Encumbrances. Except as herein expressly provided,
                  Borrower shall not, without the prior written consent of
                  Lender, which consent, if given in Lender's sole unfettered
                  discretion, may be conditioned upon a change in the interest
                  rate under the Note, payment of a fee or change in the term of
                  the Note, adjustment of the Maturity Date or amortization
                  period or one or more of the foregoing or other requirements
                  of Lender:

                  (a)      convey, assign, sell, mortgage, encumber, pledge,
                           dispose of, hypothecate, grant a security interest
                           in, grant options with respect to, or otherwise
                           dispose of (directly or indirectly or by operation of
                           law or otherwise, of record or not) all or any part
                           of any legal or beneficial interest in any part or
                           all of the Property or the Leases, or any interest
                           therein; or

                  (b)      directly or indirectly sell, assign or otherwise
                           dispose of (whether or not of record or for
                           consideration), or permit the sale, assignment or
                           other disposition of; (i) any legal or beneficial
                           interest in the stock of any corporation which is
                           either Borrower or is a beneficial owner of all or
                           part of Borrower or the Property; or (ii) any legal
                           or beneficial interest in Borrower (or any trust of
                           which Borrower is a trustee) if Borrower is a limited
                           or general partnership, limited liability company,
                           joint venture, trust, nominee trust, tenancy in
                           common or other unincorporated form of business
                           association or form of ownership, except limited
                           partnership interests if Borrower is a limited
                           partnership.

         4.5      Financial Records and Statements. Borrower shall keep accurate
                  books and records in accordance with generally accepted
                  accounting principles consistently applied (or other basis of
                  accounting practices prescribed or permitted by Lender) in
                  which full, true and correct entries shall be promptly made as
                  to all operations of the Property and shall permit all such
                  books and records to be inspected and copied by Lender, its
                  designees or its representatives during customary business
                  hours. Borrower shall deliver to Lender within 120 days after
                  the close of its financial year, and upon request by Lender at
                  any time during the term of the loan secured by the Loan
                  Documents, a statement of condition or balance sheet of
                  Borrower relating solely to the Property as of the end of such
                  year and an annual operating statement showing in reasonable
                  detail all income and expenses of Borrower with respect to the
                  Property, both certified as to accuracy by either an
                  independent certified public accountant acceptable to Lender
                  (if requested by Lender) or the senior financial officer or
                  partner of Borrower. Borrower shall also deliver to Lender
                  within 120 days after the close of its financial year and upon
                  request by Lender at any time during the year a current list
                  of all persons then occupying portions of the Property under
                  Leases, the rentals payable by such tenants and the unexpired
                  terms of their Leases, certified as to their accuracy by a
                  representative of Borrower acceptable to Lender, and in form
                  and substance satisfactory to Lender.

         4.6      Indemnity. Borrower shall indemnify, defend and hold harmless
                  Trustee and Lender, its agents, employees and contractors from
                  and against, and upon demand, reimburse Trustee and Lender for
                  all claims, demands, liabilities, losses, damages, judgments,

                                       12
<PAGE>


                  penalties, costs and expenses, including, without limitation,
                  reasonable attorneys' fees and disbursements, which may be
                  imposed upon, asserted against or incurred or paid by either
                  Trustee or Lender by reason of, on account of or in connection
                  with:

                  (a)      any violation of Laws;

                  (b)      any bodily injury or death or property damage
                           occurring in, upon or in the vicinity of the Property
                           through any cause whatsoever;

                  (c)      any Contamination, any Clean-Up, any Environmental
                           Actions or Claims, or the imposition or recording of
                           a lien against the Property due to any Contamination;

                  (d)      any act performed or omitted to be performed under
                           the Loan Documents or on account of any transaction
                           arising out of or in any way connected with the
                           Property or the Loan Documents;

                  (e)      any expenditures or amounts advanced (other than
                           advances of principal under the Note) by Lender at
                           any time under the Loan Documents; and

                  (f)      any act or omission of Lender under any Lease or
                           under the Loan Documents as a result of Lender's
                           exercise of rights or remedies under Paragraph 10.2
                           or under any of the other Loan Documents.

                  The foregoing indemnification shall apply in all instances,
                  unless the claim was directly caused by the gross negligence
                  or intentional misconduct of Lender, but shall not apply to
                  Contamination first present on the Property on or after a
                  foreclosure of this Deed of Trust (or a deed in lieu of such
                  foreclosure), and any Clean-Up or Environmental Actions or
                  Claims relating to such Contamination.

                  Borrower shall have the right to control any action for which
                  an indemnity is required pursuant to this Paragraph 4.6
                  through counsel of its choice, subject to Lender's consent;
                  however, at Lender's option, Lender may participate in such
                  action through its own counsel at Borrower's expense. If
                  Borrower does not notify Lender of its intent to control such
                  action within 30 days of delivery to Borrower of Lender's
                  notice of such claim, Lender may control and settle such
                  action, including a settlement for non-monetary relief such as
                  Clean-Up, without Borrower's consent and at Borrower's
                  expense.

                  If Borrower is a general or limited partnership or limited
                  liability company, Borrower waives any rights it may have to
                  require Lender to proceed against the assets of the
                  partnership or limited liability company before proceeding
                  against the assets of individual general partners in the
                  exercise of its rights under this Paragraph 4.6.

         4.7      Notices. Borrower shall deliver to Lender at Lender's Notice
                  Address promptly upon receipt of the same, copies of all
                  notices, certificates, documents and instruments received by
                  Borrower which materially and adversely affect Borrower, the
                  Property or the Leases, including, without limitation, those
                  given in connection with Contamination or Environmental
                  Actions or Claims.

                                       13
<PAGE>

         4.8      Estoppel Certificates. Borrower shall promptly furnish to
                  Lender from time to time, on the request of Lender, written
                  certifications signed and, if so requested, acknowledged
                  setting forth the then unpaid principal and interest under the
                  Note and specifying any claims, offsets or defenses which
                  Borrower asserts against the Secured Debt or any obligations
                  to be paid or performed by Borrower under the Loan Documents,
                  together with any other information reasonably requested by
                  Lender.

         4.9      Legal Existence. Borrower shall continuously maintain its
                  existence as a legal entity and its right to own the Property
                  and to do business in the State.

         4.10     Defense and Notice of Actions. Borrower shall, without
                  liability, cost or expense to Trustee or Lender protect,
                  preserve and defend title to the Property, the security hereof
                  and the rights or powers of Trustee or Lender hereunder,
                  against all adverse claimants to title or any possessory or
                  non-possessory interests therein, whether or not such
                  claimants or encumbrancers assert title paramount to that of
                  Borrower, Trustee or Lender or claim their interest on the
                  basis of events or conditions arising subsequent to the date
                  hereof.

         4.11     Lost Note. Borrower shall, if the Note is mutilated,
                  destroyed, lost, or stolen, deliver to Lender a new promissory
                  note containing the same terms and conditions as the Note with
                  a notation thereon of the unpaid principal and accrued and
                  unpaid interest, whereupon the prior note shall be void and of
                  no further force and effect. Any such new note shall be
                  secured hereby and shall be deemed to be the "Note" referred
                  to herein.

         4.12     Personalty. Borrower shall use the Personalty primarily for
                  business purposes and keep it at the Land. Borrower shall
                  immediately notify Lender in writing of any change in its
                  principal place of business and, as of the execution hereof
                  and hereafter from time to time when requested by Lender, upon
                  any acquisition of items of property constituting Personalty,
                  Borrower shall provide Lender with a current, accurate
                  inventory of the Personalty.

         4.13     Further Assurances. Borrower shall promptly upon request of
                  Lender or Trustee: (a) correct any defect, error or omission
                  which may be discovered in the contents of any Loan Document
                  or in the execution or acknowledgement thereof; (b) execute,
                  acknowledge, deliver and record or file such further
                  instruments (including, without limitation, mortgages, deeds
                  of trust, security agreements, financing statements and
                  specific assignments of rents or leases); and (c) do such
                  further acts as may be necessary, desirable or proper in
                  Trustee's or Lender's opinion to: (i) protect and preserve the
                  first and valid lien, title and security interest of this Deed
                  of Trust on the Property or subject thereto any property
                  intended by the terms thereof to be covered thereby,
                  including, without limitation, any renewals, additions,
                  substitutions or replacements thereto; or (ii) protect the
                  interest and security interest of Trustee or Lender under the
                  Loan Documents in the Property against the rights or interests
                  of third parties.

                  Borrower hereby appoints each of Trustee and Lender as its
                  attorney-in-fact, coupled with an interest, to take the above
                  actions and to perform such obligations on behalf of

                                       14
<PAGE>


                  Borrower, at Borrower's sole expense, if Borrower fails to
                  comply with this Paragraph 4.13.

         4.14     Year 2000 Compliance. Borrower has reviewed and assessed its
                  business operations and computer systems and applications to
                  address the "Year 2000 Problem" (that is, that computer
                  applications and equipment used by Borrower, directly or
                  indirectly through third parties, may be unable to properly
                  perform date-sensitive functions before, during and after
                  January 1, 2000). Borrower reasonably believes that the Year
                  2000 Problem will not result in a material adverse change in
                  Borrower's business condition (financial or otherwise),
                  operations, properties or prospects or ability to repay
                  Lender. Borrower will promptly deliver to Lender such
                  information relating to this representation at Lender
                  reasonably requests from time to time.

5.       CASUALTIES AND TAKINGS.

         5.1      Notice to Lender. In the case of any act or occurrence of any
                  kind or nature which results in damage, loss or destruction to
                  the Property ("Casualty"), or commencement of any proceedings
                  or actions which might result in a condemnation or other
                  taking for public or private use of the Property or which
                  relates to injury, damage, benefit or betterment thereto
                  ("Taking"), Borrower shall immediately notify Lender
                  describing the nature and the extent of the Taking or the
                  Casualty, as the case may be. Borrower shall promptly furnish
                  to Lender copies of all notices, pleadings, determinations and
                  other papers in any such proceedings or negotiations.

         5.2      Repair and Replacement. In case of a Casualty or Taking,
                  Borrower shall promptly (at Borrower's sole cost and expense
                  and regardless of whether the Insurance Proceeds or the Taking
                  Proceeds, if any, shall be sufficient or made available by
                  Lender for the purpose) restore, repair, replace and rebuild
                  the Property as nearly as possible to its quality, utility,
                  value, condition, and character immediately prior to the
                  Casualty or the Taking, as the case may be. However, upon a
                  Casualty or Taking resulting in a restoration cost that
                  exceeds 25% of the then replacement value of the Improvements
                  or a Taking of more than 25% of the area of the Land, and
                  application by Lender of the Insurance Proceeds or the Taking
                  Proceeds to reduction of the Secured Debt in accordance with
                  this Deed of Trust, Borrower shall be obligated only to remove
                  any debris from the Property and take such actions as are
                  necessary to make the undamaged or non-taken portion of the
                  Property into a functional economic unit insofar as it is
                  possible under the circumstances.

         5.3      Insurance Proceeds and Taking Proceeds.

                  (a)      Collection. Borrower shall use its best efforts to
                           collect the maximum amount of insurance proceeds
                           payable on account of any Casualty ("Insurance
                           Proceeds"), and the maximum award, payment or
                           compensation payable on account of any Taking
                           ("Taking Proceeds"). In the case of a Casualty,
                           Lender may, in its sole unfettered discretion, make
                           proof of loss to the insurer, if not made promptly by
                           Borrower. Borrower shall not settle or otherwise
                           compromise any claim for Insurance Proceeds or Taking
                           Proceeds without Lender's prior written consent.

                                       15
<PAGE>

                  (b)      Assignment to Lender. Borrower hereby assigns, sets
                           over and transfers to Lender all Insurance Proceeds
                           and Taking Proceeds and authorizes payment of such
                           Insurance Proceeds and Taking Proceeds to be made
                           directly to Lender. Lender shall apply the Insurance
                           Proceeds and Taking Proceeds first to pay all
                           expenses incurred by Lender in connection with the
                           Casualty or Taking, including, without limitation,
                           attorney's fees and title fees.

                  (c)      Application of Proceeds. Unless the conditions set
                           forth in Paragraph 5.4 for the application of
                           Insurance Proceeds to Restoration are satisfied,
                           Lender may, in its sole unfettered discretion, apply
                           the balance of the Insurance Proceeds or Taking
                           Proceeds ("Net Proceeds") to either of the following,
                           or any combination thereof:

                           (i)      to the payment of the Secured Debt, either
                                    in whole or in part, in any order determined
                                    by Lender in its sole unfettered discretion;
                                    or

                           (ii)     to repair or replacement, either partly or
                                    entirely, of any part of the Property so
                                    destroyed, damaged or taken, in which case
                                    Lender may impose such terms, conditions and
                                    requirements for the disbursement of the
                                    Insurance Proceeds or Taking Proceeds as it,
                                    in its sole unfettered discretion, deems
                                    advisable. Lender shall be a trustee with
                                    respect to any Insurance Proceeds or Taking
                                    Proceeds, and shall deposit the Insurance
                                    Proceeds or Taking Proceeds in an interest
                                    bearing account.

                  If any portion of the Secured Debt shall thereafter be unpaid,
                  Borrower shall not be excused from the payment thereof in
                  accordance with the terms of the Loan Documents. Lender shall
                  not, in any event or circumstance, be liable or responsible
                  for failure to collect or exercise diligence in the collection
                  of any Insurance Proceeds or Taking Proceeds.

         5.4      Disbursement of Insurance Proceeds to Borrower.
                  Notwithstanding anything to the contrary in the Loan
                  Documents, Lender will disburse the Insurance Proceeds to
                  Borrower, subject to and in accordance with the terms and
                  conditions of this Paragraph 5.4, provided that: (1) there
                  exists no Event of Default or occurrence or facts which with
                  the passage of time, the giving of notice, or both, will be an
                  Event of Default which remains uncured at the commencement of
                  or during the Restoration; (2) the Casualty does not occur
                  within nine months of the Maturity Date; (3) Lender's security
                  is not impaired by the Restoration or release of Insurance
                  Proceeds; and (4) Borrower has submitted evidence satisfactory
                  to Lender that Restoration can be completed within 270 days
                  after the Casualty, subject to delay beyond Borrower's
                  control, other than lack of funds.

                  As to any loss or damage which Lender estimates can be
                  repaired for less than 1/2 of 1 % of the then Secured Debt,
                  Lender shall disburse to Borrower from the Net Proceeds the
                  amount which it determines is necessary to repair the damage,
                  which amounts shall be used by Borrower to restore the damage
                  to the Property caused by the Casualty.

                  As to all other Casualties, Lender shall disburse the Net
                  Proceeds related thereto to Borrower on the following terms
                  and conditions:

                                       16
<PAGE>

                  (a)      Prior to the first and each subsequent disbursement,
                           Borrower shall give proof satisfactory to Lender
                           that:

                           (i)      Lender is holding a fund comprised of the
                                    Net Proceeds and, if necessary, additional
                                    deposits made by Borrower or tenants of the
                                    Property, sufficient to restore the Property
                                    to its condition and use immediately prior
                                    to such loss or damage ("Restoration"),
                                    together with a fund comprised of Net
                                    Proceeds or funds deposited by Borrower,
                                    sufficient to pay operating expenses,
                                    Property Taxes and Charges, the Monthly
                                    Payments (as defined in the Note) and other
                                    so-called "carrying costs" of the Property
                                    during the period of Restoration;

                           (ii)     there are no Laws preventing Restoration of
                                    the Property;

                           (iii)    immediately after Restoration, the Leases on
                                    the Property will produce sufficient income
                                    to provide a debt coverage ratio of at least
                                    1.1 : 1. The debt coverage ratio shall be
                                    calculated by dividing the operating income
                                    (less operating expenses and Property Taxes
                                    and Charges) obtained from the Leases during
                                    the twelve month period immediately after
                                    the Restoration by the total principal and
                                    interest payments due on all indebtedness
                                    secured by the Property during the same
                                    period;

                           (iv)     the Restoration will be conducted under the
                                    supervision of an architect, engineer and/or
                                    a general contractor selected by and paid by
                                    Borrower and approved by Lender;

                           (v)      the Restoration will be performed pursuant
                                    to plans and specifications approved by
                                    Lender and by a contractor or contractors
                                    approved by Lender; and

                           (vi)     the Property, after such Restoration, shall
                                    be in compliance with Laws.

                  (b)      With respect to each disbursement and accompanying
                           each request therefor, there shall be delivered to
                           Lender:

                           (i)      a certificate addressed to Lender and
                                    executed by Borrower and by the architect,
                                    engineer or general contractor supervising
                                    the Restoration that such disbursement is to
                                    pay for costs of the Restoration not paid
                                    previously by any other prior disbursement,
                                    that the amount of such disbursement does
                                    not exceed the aggregate of such costs
                                    incurred or paid on account of work, labor
                                    or services performed and materials
                                    installed in or stored upon the Property at
                                    the date of such certificate and that the
                                    disbursement requested, together with the
                                    disbursements made prior thereto,
                                    collectively, as a percentage of the total
                                    Net Proceeds, do not exceed the percentage
                                    of completion of the Restoration; and

                           (ii)     an endorsement to Lender's title insurance
                                    policy, in which the making of the
                                    disbursement is recognized and the effective
                                    date of coverage is changed to the date of
                                    disbursement.

                                       17
<PAGE>

                  (c)      Each disbursement shall be in the amount not greater
                           than 90% of the costs described in the certificate
                           referred to in Paragraph 5.4(b)(i) hereof.
                           Disbursement of the final balance of the Net
                           Proceeds, constituting not less than ten percent
                           (10%) thereof, shall be disbursed only upon delivery
                           to Lender of the following, in addition to the
                           foregoing:

                           (i)      evidence satisfactory to Lender that all
                                    claims then existing for labor, services and
                                    materials enforceable by lien upon the
                                    Property have been paid in full or provision
                                    acceptable to Lender has been made therefor;

                           (ii)     a certificate of such architect, engineer or
                                    general contractor that the Restoration of
                                    the Property has been completed in a good
                                    workmanlike manner and in accordance with
                                    all Laws;

                           (iii)    an estoppel affidavit in form satisfactory
                                    to Lender from each tenant occupying or
                                    leasing space in the Property affected by
                                    the Casualty; and

                           (iv)     an as-built survey of the Improvements
                                    certified to Lender and in form satisfactory
                                    to Lender.

                  (d)      If the quality of the Restoration is at least equal
                           to the quality of the Improvements before the
                           Casualty, any Net Proceeds in excess of the amount
                           used in payment of the Restoration shall be
                           distributed to Borrower.

                  Lender shall not be a trustee with respect to any Insurance
                  Proceeds, and may mingle Insurance Proceeds with its funds
                  without obligation to pay interest thereon. Lender shall in no
                  event be liable for the performance or observance of any
                  covenant or condition arising under any Lease in connection
                  with the Property nor obligated to take any action to restore
                  the Property.

6.       ASSIGNMENT OF RENTS, ISSUES AND PROFITS.

         6.1      Assignment of Rents. Borrower hereby assigns to Lender the
                  rents, issues, profits, royalties, and payments payable under
                  any lease of the Property, or portion thereof including any
                  oil, gas or mineral lease, or any installments of money
                  payable pursuant to any agreement or any sale of said property
                  or any part thereof, reserving to Borrower the rights prior to
                  default by Borrower in payment of the Secured Debt secured
                  hereby or in the performance of any agreement hereunder, to
                  collect and retain such rents, issues, profits, royalties,
                  payments and installments of money as they may become due and
                  payable. Upon any such default, Lender, without regard to the
                  adequacy of any security for the Secured Debt hereby secured,
                  such be entitled to (1) collect such rents, issues, profits,
                  royalties, payments and installments of money and apply the
                  same as more particularly set forth in this Paragraph, all
                  without taking possession of the Property, or (2) enter and
                  take possession of the Property or any part thereof, in
                  person, by agent, or by a receiver to be appointed by the
                  court and to sue for or otherwise collect such rents, issues,
                  profits, royalties, payments and installments of money. Lender
                  may apply any such rents, issues, profits, royalties, payments
                  and installments of money so collected, less costs and
                  expenses of

                                       18
<PAGE>

                  operation and collection, including reasonable attorneys'
                  fees, upon any indebtedness secured hereby, in such order as
                  Lender may determine, and, if such costs and expenses and
                  attorneys' fees shall exceed the amount collected, the excess
                  shall be immediately due and payable. The collection of such
                  rents, issues, profits, royalties, payments and installments
                  of money and the application thereof as set forth above shall
                  not cure or waive any default or notice of default hereunder
                  or invalidate any act done pursuant to such notice, except to
                  the extent any such default fully is cured. Failure or
                  discontinuance of Lender at any time, or from time to time, to
                  collect any such moneys shall not impair in any manner the
                  subsequent enforcement by Lender of the right, power and
                  authority herein conferred on Lender. Nothing contained
                  herein, including the exercise of any right, power or
                  authority herein granted by Lender, shall be, or be construed
                  to be, an affirmation by Lender of any tenancy, lease or
                  option, or an assumption of liability under, or the
                  subordination of the lien or charge of this Deed of Trust to
                  any such tenancy, lease or option. Borrower hereby agrees
                  that, in the event Lender exercises its rights as in this
                  Paragraph provided, Borrower waives any right to compensation
                  for the use of Borrower's furniture, furnishings or equipment
                  in the Property for the period such assignment of rents or
                  receivership is in effect, it being understood that the rents,
                  issues, profits, royalties, payments and installments of money
                  derived from the use of any such items shall be applied to
                  Borrower's obligation hereunder as above provided. In the
                  event that Borrower concurrently herewith or hereafter
                  executes any separate assignment of rents or leases to Lender,
                  then to the extent of any inconsistency between the provisions
                  hereof and any such assignment, the provisions of such
                  assignment shall control.

         6.2      Performance of Leases. Borrower promises and agrees to keep,
                  perform and observe all of the lessor's covenants, agreements
                  and obligations, under the terms of all leases now or
                  hereafter executed relating to all or any portion of the
                  Property, to require that lessees under said leases keep,
                  perform, and observe all of the covenants, agreements and
                  obligations thereunder on their part to be kept, performed and
                  observed; not to alter, amend or modify such leases or any of
                  them without the prior written consent of Lender; and upon
                  default by Borrower in the performance thereof, Lender herein
                  or at its request the Borrower herein, without incurring any
                  obligations so to do or releasing Borrower from any obigations
                  herein secured, may perform said covenants, obligations or
                  agreements, or exercise any right or remedy which Borrower may
                  have either at law or in equity or under said leases or any of
                  them to require lessees to perform such covenants, obligations
                  or agreements, and all amounts expended or incurred, including
                  but not limited to costs, expenses and attorneys' fees, by
                  Lender or Trustee in so doing shall be due and payable
                  immediately from Lender.

8.       CONCERNING TRUSTEE.

         7.1      Trustee's Covenants. Trustee, by its acceptance hereof,
                  covenants faithfully to perform and fulfill the trusts herein
                  created, being liable, however, only for gross negligence or
                  willful misconduct, and hereby waives any statutory fee and
                  agrees to accept reasonable compensation, in lieu thereof, for
                  any services rendered by it in accordance with the terms
                  hereof.

         7.2      Resignation of Trustee. Trustee may resign at any time upon
                  giving 30 days notice in writing to Borrower and to Lender.

                                       19
<PAGE>

         7.3      Substitution of Trustee. In the event of the death, removal,
                  resignation, refusal to act, or the inability to act of
                  Trustee, or in Lender's sole unfettered discretion for any
                  reason whatsoever, Lender may, at any time or from time to
                  time without notice and without specifying any reason therefor
                  and without applying to any court, select and appoint a
                  successor trustee, and all powers, rights, duties and
                  authority of Trustee, as aforesaid, shall thereupon become
                  vested in such successor without conveyance from the
                  predecessor trustee. Such substitute trustee shall not be
                  required to give bond for the faithful performance of its
                  duties unless required by Lender. Such substitute trustee
                  shall be appointed by written instrument duly recorded in the
                  county where the Realty is located, which appointment may be
                  executed by an authorized agent of Lender, and such
                  appointment shall be conclusively presumed to be executed with
                  authority and shall be valid and sufficient without proof of
                  any action by the Board of Directors and any superior officer
                  of Lender. Borrower hereby ratifies and confirms any and all
                  acts which the herein-named Trustee or its successors or
                  assigns in this trust shall do lawfully by virtue hereof.
                  Borrower hereby agrees, on behalf of itself and its heirs,
                  executors, administrators, legal representatives and assigns,
                  that the recitals contained in any deed or deeds executed in
                  due form by Trustee or any substitute trustee, acting under
                  the provisions of this Deed of Trust, shall be prima facie
                  evidence of the facts recited therein, and that it should not
                  be necessary to prove in any court, otherwise than by such
                  recitals, the existence of the facts essential to authorize
                  the execution and delivery of such deed or deeds and the
                  passing of title thereby.

         7.4      Reconveyance and Agreements. At any time, or from time to
                  time, without liability therefor and without notice, upon
                  written request of Lender and presentation of this Deed of
                  Trust and the Note or notes secured hereby for endorsement,
                  and without affecting the personal liability of any person for
                  the payment of the Secured Debt or the effect of this Deed of
                  Trust upon the remainder of the Property, Trustee may reconvey
                  any part of the Property, consent in writing to the making of
                  any map or plat thereof, join in granting any easement
                  thereon, or join in any extension agreement or any agreement
                  subordinating the lien or charge hereof.

         7.5      Release of Lien. Upon written request of Lender stating that
                  the Secured Debt has been paid and upon surrender to Trustee
                  of this Deed of Trust and the Note or notes secured hereby for
                  cancellation and retention and payment of its fees, Trustee
                  shall reconvey, without warranty, the Property then held
                  hereunder. The recitals in such reconveyance of any matters or
                  facts shall be conclusive proof of the truthfulness thereof.
                  The grantee in such reconveyance may be described as "the
                  person or persons legally entitled thereto."

         7.6      Exculpation and Indemnification of Trustee. Trustee shall not
                  be liable for any error of judgment or act done by Trustee in
                  good faith, or be otherwise responsible or accountable under
                  any circumstances whatsoever, except for Trustee's gross
                  negligence or willful misconduct. Trustee shall have the right
                  to rely on any instrument, document or signature authorizing
                  or supporting any action taken or proposed to be taken by it
                  hereunder, believed by Trustee in good faith to be genuine.
                  All monies received by Trustee shall, until used or applied as
                  herein provided, be held in trust for the purposes for which
                  they were received, but need not be segregated in any manner

                                       20
<PAGE>

                  from any other moneys (except to the extent required by law),
                  and Trustee shall be under no liability for interest on any
                  moneys received by it hereunder (except to the extent required
                  by Law). Borrower will reimburse Trustee for, and indemnify,
                  save harmless and defend Trustee against, any and all
                  liability and expenses (including, without limitation,
                  reasonable attorneys' fees and expenses) which Trustee may
                  incur in the performance of its duties under the Loan
                  Documents.

8.       LEGAL PROCEEDINGS. Whether or not an Event of Default (as defined in
         Paragraph 9.1) has occurred and exists, Lender shall have the right,
         but not the duty or obligation, to intervene or otherwise participate
         in, prosecute or defend at any time any legal or equitable proceedings
         including, without limitation, any eminent domain proceedings which
         affect the Property, the Leases or any of the rights created by the
         Loan Documents, but only after notice to Borrower and if permitted by
         Laws.

9.       DEFAULTS; REMEDIES OF LENDER.

         9.1      Events of Default. Any of the following shall constitute an
                  "Event of Default" hereunder:

                  (a)      Breach of Named Covenants. Any breach by Borrower of
                           the covenants in Paragraph 4.1(a) (Secured Debt),
                           Paragraph 4.1(b) (Property Taxes and Charges),
                           Paragraph 4.2(f) (Clean-Up) or Paragraph 4.3
                           (Insurance); provided, however, that a breach of the
                           covenant in Paragraph 4.1(a) to pay the Secured Debt
                           as and when due under the Note and the other Loan
                           Documents shall not constitute an Event of Default
                           unless it shall continue for 5 days after the date
                           such payment is due; provided further, however, that
                           such 5-day grace period shall not apply more than
                           twice in any one period of 12 consecutive months, the
                           third such breach in such 12-month period
                           constituting an Event of Default without expiration
                           of any grace period.

                  (b)      Breach of Other Covenants. Any breach by Borrower of
                           any other covenant, agreement, condition, term or
                           provision of any of the Loan Documents or any
                           certificate or side letter delivered in connection
                           with the Loan Documents, which continues for 30 days
                           after written notice thereof by Lender to Borrower;
                           provided, however, that if the nature of Borrower's
                           breach is such that more than 30 days is reasonably
                           required to cure the same, then Borrower shall not be
                           deemed to be in default if Borrower commences such
                           cure as promptly as reasonably possible within such
                           30-day period, diligently prosecutes such cure to
                           completion, and completes such cure with 60 days from
                           the date of Lender's aforesaid notice to Borrower.

                  (c)      Misrepresentations. Any representation or warranty
                           made by Borrower in the Loan Documents or any
                           certificate or side letter delivered in connection
                           with the Loan Documents proves to be untrue,
                           misleading or is not fulfilled, in any material way.

                  (d)      Bankruptcy. Immediately upon the occurrence of any of
                           the following: (i) any one or more of the then legal
                           or beneficial owners of the Property, or any
                           individual or entity then personally liable on the
                           Secured Debt (including, without limitation, any
                           guarantor or indemnitor pursuant to any guaranty or
                           indemnity) or, if Borrower is a

                                       21
<PAGE>

                           partnership, any general partner or joint venturer
                           (collectively "Parties in Interest") becomes
                           insolvent, makes a transfer in fraud of, or an
                           assignment for the benefit of, creditors, or admits
                           in writing its inability, or is unable, to pay debts
                           as they become due; or (ii) a receiver, custodian,
                           liquidator or trustee is appointed for all or
                           substantially all of the assets of a Party in
                           Interest or for the Property in any proceeding
                           brought by a Party in Interest, or any such receiver
                           or trustee is appointed in any proceeding brought
                           against a Party in Interest or the Property and such
                           appointment is not promptly contested or is not
                           dismissed or discharged within 120 days after such
                           appointment, or a Party in Interest consents or
                           acquiesces in such appointment, or (iii) a Party in
                           Interest files a petition under the Bankruptcy Code,
                           as amended, or under any similar law or statute of
                           the United States or any state thereof; or (iv) a
                           petition against a Party in Interest is filed
                           commencing an involuntary case under any present or
                           future Federal or state bankruptcy or similar law and
                           such petition is not dismissed or discharged within
                           120 days after the filing thereof; or (v) any
                           composition, rearrangement, liquidation, extension,
                           reorganization or other relief of debtors now or
                           hereafter existing is requested by a Party in
                           Interest.

                  (e)      Adverse Court Action. A court of competent
                           jurisdiction enters a stay order with respect to,
                           assumes custody of or sequesters all or a substantial
                           part of the Property or the Property is taken on
                           execution or by other process of law.

         9.2      Remedies. In case of an Event of Default, Lender and, to the
                  extent authorized by Lender, Trustee may, at any time
                  thereafter, at its option, without notice, and without
                  bringing any legal action or proceeding unless expressly
                  required by law, exercise any or all of the following
                  remedies:

                  (a)      Acceleration. Declare the entire Secured Debt due and
                           payable, and it shall thereupon be immediately due
                           and payable.

                  (b)      Foreclosure. Should Lender elect to foreclose by
                           exercise of the power of sale herein contained,
                           Lender shall notify Trustee and shall deposit with
                           Trustee this Deed of Trust and the Note and such
                           receipts with evidence of expenditures made and
                           secured hereby as Trustee may require. Trustee shall
                           then have the following duties and powers:

                           (i) Upon receipt of such notice from Lender, Trustee
                                    shall cause to be recorded, published and
                                    delivered to Borrower such Notice of Default
                                    and Election to Sell as then required by law
                                    and by this Deed of Trust and the Note and
                                    after lapse of such time as may then be
                                    required by law and after recordation of
                                    such notice of default, Trustee without
                                    demand on Borrower, shall, after notice of
                                    sale having been given as required by law,
                                    sell the Property at the time and place of
                                    sale fixed by it in said notice of sale,
                                    either as a whole or in separate parcels or
                                    items and such order as Trustee may
                                    determine, at public auction to the highest
                                    bidder for cash in lawful money of the
                                    United States payable at the time of sale.
                                    Trustee shall deliver to such purchaser its
                                    deed conveying the Property so sold, but
                                    without any covenant or warranty, express or
                                    implied. The recitals in such deed of any
                                    matters or facts shall be conclusive proof
                                    of the

                                       22
<PAGE>

                                    truthfulness thereof. Any person, including,
                                    without limitation, Borrower, Trustee or
                                    Lender, may purchase at such sale.

                           (ii) After deducting all costs, fees and expenses of
                                    Trustee and of this trust, including costs
                                    of evidence of title in connection with
                                    sale, Trustee shall apply the proceeds of
                                    sale to payment of: all sums expended under
                                    the terms hereof, not then repaid, with
                                    accrued interest at the rate then applicable
                                    under the Note; all other sums then secured
                                    hereby; and the remainder, if any, to the
                                    person or persons legally entitled thereto.

                                    Trustee may postpone the sale of all or any
                                    portion of the Property by public
                                    announcement at the time and place first
                                    fixed for sale, and from time to time
                                    thereafter may postpone such sale by public
                                    announcement at the time and place fixed by
                                    the preceding postponement, and without
                                    further notice make such sale at the time
                                    fixed by the last postponement, or may, in
                                    its discretion, give new notice of sale.

                  (c)      Offset Rights. Apply in satisfaction of the Secured
                           Debt or any amount at any time to become due or
                           payable in connection with the ownership occupancy,
                           use, restoration or repair of the Property, any
                           deposits or other sums credited by or due from Lender
                           to Borrower, including without limitation, Insurance
                           Proceeds, Taking Proceeds and funds held in the
                           escrow account referred to in Paragraph 4.1(c).

                  (d)      Cure Rights. Whether or not an Event of Default has
                           occurred and without releasing Borrower from any
                           obligation hereunder or under the Loan Documents,
                           perform any of Borrower's obligations. In connection
                           therewith, Lender may enter upon the Property and do
                           such acts and things as Lender deems necessary or
                           desirable to protect the Property or the Leases,
                           including, without limitation: (i) paying,
                           purchasing, contesting or compromising any
                           encumbrance (including, without limitation, any
                           junior debt outstanding), charge, lien, claim of
                           lien, Property Taxes and Charges or Property
                           Liabilities; (ii) paying any Insurance Premiums;
                           (iii) employing counsel, accountants, contractors and
                           other persons to assist Lender in the foregoing; and
                           (iv) undertaking the Clean-Up of any Contamination.

                  (e)      Possession of Property. Take physical possession of
                           the Property and of all books, records, and documents
                           and accounts relating thereto and exercise, without
                           interference from Borrower, any and all rights which
                           Borrower has with respect to the Property, including,
                           without limitation, the right at Borrower's expense
                           to rent and lease the Property, to hire a
                           professional property manager for the Property, to
                           Clean-Up any Contamination and to make from time to
                           time all alterations, renovations, repairs and
                           replacements to the Property as may seem proper to
                           Lender. Nothing in this Paragraph 9.2 shall impose
                           any duty, obligation or responsibility upon Lender
                           for the control, care, management, repair or Clean-Up
                           of the Property. If necessary to obtain possession as
                           provided for above, Lender may, without exposure to
                           liability from Borrower or other persons, invoke any
                           and all legal remedies to dispossess Borrower,
                           including, without limitation, one or more actions
                           for forcible entry and detainer, trespass and
                           restitution.

                                       23
<PAGE>

                  (f)      Receiver. Secure the appointment of a receiver or
                           receivers, as a matter of right for the Property
                           whether such receivership be incident to a proposed
                           sale of such Property or otherwise, and without
                           regard to the value of the Property or the solvency
                           of Borrower. Borrower hereby consents to the
                           appointment of such receiver or receivers, waives any
                           and all defenses to such appointment and agrees not
                           to oppose any application therefor by Lender. The
                           appointment of such receiver, trustee or other
                           appointee by virtue of any court order or Laws shall
                           not impair or in any manner prejudice the rights of
                           Lender to receive payment of the rents and income
                           pursuant to the Lease Assignment.

                  (g)      Uniform Commercial Code Remedies. Exercise any and
                           all rights of a secured party with respect to the
                           Personalty under the Uniform Commercial Code of the
                           State and in conjunction with, in addition to or in
                           substitution for, those rights and remedies:

                           (i)      take possession of, assemble and collect the
                                    Personalty or render it unusable by
                                    Borrower; and

                           (ii)     require Borrower to assemble the Personalty
                                    and make it available at any place Lender
                                    may designate so as to allow Lender to take
                                    possession of or dispose of the Personalty.

                           Written notice mailed to Borrower, as provided
                           herein, 15 days prior to the date of public sale of
                           the Personalty or prior to the date after which
                           private sale of the Personalty will be made, shall
                           constitute reasonable notice. Any sale made pursuant
                           to the provisions of this Paragraph 9.2(g) shall be
                           deemed to have been a public sale conducted in a
                           commercially reasonable manner, if held
                           contemporaneously with the sale of the Property as
                           provided in Paragraph 9.2(j) of this Deed of Trust.
                           In the event of a foreclosure sale, whether made by
                           Lender under the terms hereof, or under judgment of a
                           court, the Personalty and the other parts of the
                           Property may, at the option of Lender, be sold in
                           parts or as a whole. It shall not be necessary that
                           Lender take possession of the Personalty prior to the
                           time that any sale pursuant to the provisions of this
                           Paragraph 9.2(g) is conducted and it shall not be
                           necessary that the Personalty be present at the
                           location of such sale.

                           A CARBON, PHOTOGRAPHIC OR OTHER REPRODUCTION OF THIS
                           DEED OF TRUST OR ANY FINANCING STATEMENT RELATING TO
                           THIS DEED OF TRUST SHALL BE SUFFICIENT AS A FINANCING
                           STATEMENT. THIS DEED OF TRUST IS EFFECTIVE AND SHALL
                           BE EFFECTIVE AS A FINANCING STATEMENT FILED AS A
                           FIXTURE FILING WITH RESPECT TO ALL GOODS WHICH ARE OR
                           ARE TO BECOME FIXTURES INCLUDED WITHIN THE PROPERTY
                           AND IS TO BE FILED FOR RECORD IN THE REAL ESTATE
                           RECORDS OF THE LOCATION IN THE STATE WHERE THE
                           PROPERTY IS SITUATED. THE MAILING ADDRESS OF LENDER
                           AND THE ADDRESS OF BORROWER FROM WHICH INFORMATION
                           CONCERNING THE SECURITY INTEREST MAY BE OBTAINED, ARE
                           SET FORTH ON THE COVER SHEET HEREOF.

                                       24
<PAGE>

                  (h)      Judicial Actions. Commence and maintain an action or
                           actions in any court of competent jurisdiction to
                           foreclose this Deed of Trust pursuant to the Laws of
                           the State or to obtain specific enforcement of the
                           covenants of Borrower hereunder. Borrower agrees that
                           such covenants shall be specifically enforceable by
                           injunction or any other appropriate equitable remedy.

                  (i)      Subrogation. Have and exercise all rights and
                           remedies of any person, entity or body politic to
                           whom Lender renders payment or performance in
                           connection with the exercise of its rights and
                           remedies under the Loan Documents, including, without
                           limitation, any rights or remedies under any
                           mechanic's or vendor's lien or liens, superior
                           titles, mortgages, deeds of trust liens encumbrances,
                           rights, equities and charges of all kinds heretofore
                           or hereafter existing on the Property to the extent
                           that the same are paid or discharged from the
                           proceeds of the Note whether or not released of
                           record.

                  (j)      Sale. Sell the Property in accordance with Laws.

                  (k)      Other. Take such other actions or commence such other
                           proceedings as Lender deems necessary or advisable to
                           protect its interest in the Property and its ability
                           to collect the Secured Debt as are available under
                           Laws.

                  Any sums advanced by Lender under this Paragraph 9.2 shall
                  bear interest at the lesser of (i) the Default Rate specified
                  in the Note or (ii) the maximum nonusurious interest rate
                  permitted by applicable law, and shall be payable by Borrower
                  on demand. Such sums together with such interest shall
                  constitute a part of the Secured Debt.

                  All sums realized by Lender under this Paragraph 9.2, less all
                  costs and expenses incurred by Lender under this Paragraph
                  9.2, including, without limitation, reasonable attorneys fees
                  and disbursements, property management fees, costs of title
                  commitments, inspections, environmental site assessments and
                  testing, engineering reports, alterations, renovations,
                  repairs and replacements made or authorized by Lender and all
                  expenses incident to Lender taking possession of the Property,
                  and such sums as Lender deems appropriate as a reserve to meet
                  future expenses of the Property, shall be applied to the
                  Secured Debt in such order as Lender shall determine.
                  Thereafter, any balance shall be paid to the person or persons
                  legally entitled thereto.

         9.3      Holding Over. Should Borrower, after Lender has obtained title
                  to the Property, continue in possession of any part of the
                  Property, either lawfully or unlawfully, Borrower shall be a
                  tenant from day to day, terminable at the will of either
                  Borrower or Lender, at a reasonable rental per diem, such
                  rental to be due and payable daily to Lender.

         9.4      General Provisions.

                  (a)      Multiple Sales. Several sales may be made pursuant to
                           Paragraph 9.2 exhausting Lender's right to such
                           remedy for any unsatisfied part of the Secured Debt
                           and without exhausting the power to exercise such
                           remedy for any other part of the

                                       25
<PAGE>

                           Secured Debt, whether matured at the time or
                           subsequently maturing. If a part of the Property is
                           sold pursuant to Paragraph 9.2, and the proceeds
                           thereof do not fully pay and satisfy the Secured
                           Debt, such sale, if so made, shall not in any manner
                           affect the unpaid and unsatisfied part of the Secured
                           Debt, but as to such unpaid and unsatisfied part, the
                           Loan Documents shall remain in full force and effect
                           as though no such sale had been made.

                  (b)      Cumulative Remedies. All of the rights, remedies and
                           options set forth in Paragraph 9.2 or otherwise
                           available at law or in equity, are cumulative and may
                           be exercised without regard to the adequacy of or
                           exclusion of any other right, remedy, option or
                           security held by Lender.

                  (c)      Right to Purchase. At any sale of the Property
                           pursuant to Paragraph 9.2, Lender shall have the
                           right to purchase the Property being sold, and in
                           such case the right to credit against the amount of
                           the bid made therefor (to the extent necessary) all
                           or any of the Secured Debt then due.

                  (d)      Right to Terminate Proceedings. Lender may, in its
                           sole unfettered discretion, at any time before
                           conclusion of any proceeding or other action brought
                           in connection with its exercise of the remedies
                           provided for in Paragraph 9.2, terminate, without
                           prejudice to Lender, such proceedings or actions.

                  (e)      No Waiver or Release. Lender may resort to any
                           remedies and the security given by the Loan Documents
                           in whole or in part, and in such portions and in such
                           order as may seem best to Lender in its sole
                           unfettered discretion, and any such action shall not
                           in any way be considered as a waiver of any of the
                           rights, benefits or remedies evidenced by the Loan
                           Documents. The failure of Lender to exercise any
                           right, remedy or option provided for in the Loan
                           Documents shall not be deemed to be a waiver of any
                           of the covenants or obligations secured by the Loan
                           Documents. No sale of all or any of the Property, no
                           forbearance on the part of Lender and no extension of
                           the time for the payment of the whole or any part of
                           the Secured Debt or any other indulgence given by
                           Lender to Borrower or any other person or entity,
                           shall operate to release or in any manner affect
                           Lender's interest in the Property, or the liability
                           of Borrower to pay the Secured Debt, except to the
                           extent that such liability shall be reduced by
                           proceeds of sale of all or any of the Property
                           received by Lender.

                  (f)      Waivers and Agreements Regarding Remedies. To the
                           full extent Borrower may do so and with respect to
                           Lender's exercise of its remedies hereunder, Borrower
                           hereby:

                           (i)      agrees that Borrower will not at any time
                                    insist upon, plead, claim or take the
                                    benefit or advantage of any Laws now or
                                    hereafter in force providing for any
                                    appraisal or appraisement, valuation, stay,
                                    extension or redemption, and waives and
                                    releases all rights of redemption,
                                    valuation, appraisal or appraisement, stay
                                    of execution, extension and notice of
                                    election to mature or declare due the whole
                                    of the Secured Debt;

                                       26
<PAGE>

                           (ii)     waives all rights to marshalling of the
                                    assets of Borrower, Borrower's partners,
                                    members and shareholders, and others with
                                    interests in Borrower, including the
                                    Property, or to a sale in inverse order of
                                    alienation in the event of foreclosure of
                                    the interests hereby created, and agrees not
                                    to assert any right under any Laws
                                    pertaining to the marshalling of assets, the
                                    sale in inverse order of alienation, the
                                    exemption of homestead, the administration
                                    of estates of decedents, or other matters
                                    whatsoever to defeat, reduce or affect the
                                    right of Lender under the terms of the Loan
                                    Documents to sale of the Property for the
                                    collection of the Secured Debt without any
                                    prior or different resort for collection, or
                                    the right of Lender to the payment of the
                                    Secured Debt out of the proceeds of sale of
                                    the Property in preference to every other
                                    claimant whatsoever;

                           (iii)    waives any right to bring or utilize any
                                    defense, counterclaim or setoff, other than
                                    one in good faith which denies the existence
                                    or sufficiency of the facts upon which the
                                    foreclosure action is grounded or which is
                                    based on Lender's wrongful actions. If any
                                    defense, counterclaim or setoff (other than
                                    one permitted by the preceding sentence) is
                                    timely raised in such foreclosure action,
                                    such defense, counterclaim or setoff shall
                                    be dismissed. If such defense, counterclaim
                                    or setoff is based on a claim which could be
                                    tried in an action for money damages, the
                                    foregoing waiver shall not bar a separate
                                    action for such damages (unless such claim
                                    is required by Laws or applicable rules of
                                    procedure to be pleaded in or consolidated
                                    with the action initiated by Lender) but
                                    such separate action shall not thereafter be
                                    consolidated with Lender's foreclosure
                                    action. The bringing of such separate action
                                    for money damages shall not be deemed to
                                    afford any grounds for staying Lender's
                                    foreclosure action;

                           (iv)     waives and relinquishes any and all rights
                                    and remedies which Borrower may have or be
                                    able to assert by reason of the provisions
                                    of any Laws pertaining to the rights and
                                    remedies of sureties; and

                           (v)      waives the defense of laches and any
                                    applicable statutes of limitation.

                  (g)      WAIVER OF JURY TRIAL. BORROWER AND LENDER HEREBY
                           WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
                           COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO
                           AGAINST THE OTHER, ON OR IN RESPECT OF ANY MATTER
                           WHATSOEVER ARISING OUT OF, OR IN ANY WAY CONNECTED
                           WITH, THIS DEED OF TRUST OR ANY OF THE OTHER LOAN
                           DOCUMENTS, OR THE RELATIONSHIP OF BORROWER AND LENDER
                           HEREUNDER OR THEREUNDER.

                  (h)      Lender's Discretion. Unless specifically stated
                           otherwise, Lender may exercise its options and
                           remedies under any of the Loan Documents in its sole
                           unfettered discretion.

                  (i)      Sales. In the event of the sale or other disposition
                           of the Property pursuant to Paragraph 9.2 and the
                           execution of a deed or other conveyance pursuant
                           thereto, the recitals therein of facts (such as
                           default, the giving of notice of default and

                                       27
<PAGE>

                           notice of sale, demand that such sale should be made,
                           postponement of sale, terms of sale, sale, purchase,
                           payment of purchase money and other facts affecting
                           the regularity or validity of such sale or
                           disposition) shall be conclusive proof of the truth
                           of such facts. Any such deed or conveyance shall be
                           conclusive against all persons as to such facts
                           recited therein.

                           The acknowledgment of the receipt of the purchase
                           money, contained in any deed or conveyance executed
                           as aforesaid, shall be sufficient to discharge the
                           grantee of all obligations to see to the proper
                           application of the consideration therefor as herein
                           provided. The purchaser at any trustee's or
                           foreclosure sale hereunder may disaffirm any easement
                           granted or rental agreement or Lease made in
                           violation of any provision of the Loan Documents, and
                           may take immediate possession of the Property free
                           from, and despite the terms of, such grant of
                           easement, rental agreement or Lease.

10.      POSSESSION AND DEFEASANCE.

         10.1     Possession. Until the occurrence of an Event of Default and
                  except as otherwise expressly provided to the contrary in any
                  of the Loan Documents, Borrower shall retain full possession
                  of the Property with full right to use the Property and to
                  collect the rents, issues and profits therefrom, subject,
                  however, to all of the terms and provisions of the Loan
                  Documents.

         10.2     Defeasance. If the Secured Debt is paid in full and if all of
                  the covenants, warranties, conditions, undertakings and
                  agreements made in the Loan Documents are kept and performed,
                  then, in that event only, all rights under the Loan Documents
                  shall terminate and the Property shall become wholly clear of
                  the liens, grants, security interests, conveyances and
                  assignments evidenced hereby, and Lender shall release or
                  cause to be released, such liens, grants, assignments,
                  conveyances and security interests in due form at Borrower's
                  cost, and this Deed of Trust shall be void.

                  To the extent permitted by Laws such an instrument may
                  describe the grantee as "the person or persons legally
                  entitled thereto." Lender shall not have any duty to determine
                  the rights of persons claiming to be rightful grantees of any
                  of the Property. When the Property has been fully released,
                  such release shall operate as a reassignment of all future
                  rents, issues and profits of the Property to the person or
                  persons legally entitled thereto, unless such release
                  expressly provides to the contrary.

                  Notwithstanding the foregoing, Borrower's obligation under
                  Paragraph 4.6(c) hereof (environmental indemnity) shall not
                  terminate and shall survive the discharge of the Loan
                  Documents, whether through full payment of the Secured Debt,
                  foreclosure, deed in lieu of foreclosure or otherwise, for the
                  benefit of Lender and its successors and assigns, including
                  without limitation, any purchaser at a foreclosure sale.

11.      GENERAL.

         11.1     Lender's Right to Waive, Consent or Release. Lender may at any
                  time and from time to time, in writing: (a) waive compliance
                  by Borrower with any covenant herein made

                                       28
<PAGE>

                  by Borrower to the extent and in the manner specified in such
                  writing; (b) consent to Borrower doing any act which Borrower
                  is prohibited hereunder from doing, or consent to Borrower's
                  failing to do any act which Borrower is required hereunder to
                  do, to the extent and in the manner specified in such writing;
                  or (c) release any part of the Property, or any interest
                  therein from this Deed of Trust and the lien of the Loan
                  Documents. No such act shall in any way impair the rights
                  hereunder of Lender except to the extent specifically agreed
                  to by Lender in such writing.

         11.2     No Impairment. The interests and rights of Lender under the
                  Loan Documents shall not be impaired by any indulgence,
                  including, without limitation: (a) any renewal, extension or
                  modification which Lender may grant with respect to any of the
                  Secured Debt; (b) any surrender, compromise, release, renewal,
                  extension,. exchange or substitution which Lender may grant in
                  respect of the Property or any interest therein; or (c) any
                  release or indulgence granted to any maker, endorser,
                  guarantor, indemnitor or surety of any of the Secured Debt.

         11.3     Amendments. The Loan Documents may not be waived, changed or
                  discharged orally, but only by an agreement in writing and
                  signed by Lender, and any oral waiver, change or discharge of
                  any provision of the Loan Documents shall be without authority
                  and of no force and effect. Any waiver, change or discharge
                  shall be effective only in the specific instances and for the
                  purposes for which given and to the extent therein specified.

         11.4     No Usury. Any provision contained in any of the Loan Documents
                  notwithstanding, Lender shall not be entitled to receive or
                  collect, nor shall Borrower be obligated to pay interest on
                  any of the Secured Debt in excess of the maximum rate of
                  interest permitted by Laws, and if any provisions of the Loan
                  Documents shall ever be construed or held to permit the
                  collection or to require the payment of any amount of interest
                  in excess of that permitted by such Laws, the provisions of
                  this Paragraph 11.4 shall control unless contrary or
                  inconsistent with any provisions of the Note, in which case
                  the provisions of the Note shall control. Borrower and Lender
                  intend to conform strictly to the usury Laws now in force, and
                  the Loan Documents evidencing or relating to any of the
                  Secured Debt shall be held subject to modification to conform
                  to said Laws as now or hereafter construed.

         11.5     Notices. Any notice, request, demand or other communication
                  required or permitted under the Loan Documents (unless
                  otherwise expressly provided therein) shall be given in
                  writing by delivering the same in person to the intended
                  addressee, by overnight courier service with guaranteed next
                  day delivery or by certified United States Mail postage
                  prepaid sent to the intended addressee at the applicable
                  Notice Address or to such different address as either Borrower
                  or Lender shall have designated by written notice to the other
                  sent in accordance herewith. Such notices shall be deemed
                  given when received or, if earlier, in the case of delivery by
                  courier service with guaranteed next day delivery, the next
                  day or the day designated for delivery, or in the case of
                  delivery by certified United States Mail, 2 days after deposit
                  therein. No notice to or demand on Borrower in any case shall
                  of itself entitle Borrower to any other or further notice or
                  demand in similar or other circumstances.

                                       29
<PAGE>

         11.6     Successors and Assigns. The terms, provisions, covenants and
                  conditions hereof shall be binding upon Borrower, and any
                  permitted successors and assigns of Borrower, and shall inure
                  to the benefit of Lender and its successors, substitutes and
                  assigns, and shall constitute covenants running with the Land.
                  All references in this Deed of Trust to Borrower, Lender or
                  Trustee shall be deemed to include all such successors,
                  substitutes and assigns.

                  If in contravention of the provisions of this Deed of Trust or
                  otherwise, ownership of the Property or any portion thereof
                  becomes vested in a person other than Borrower, Lender may,
                  without notice to Borrower, whether or not Lender has given
                  written consent to such change in ownership, deal with such
                  successor or successors in interest with reference to the Loan
                  Documents and the Secured Debt in the same manner as with
                  Borrower, without in any way vitiating or discharging Lender's
                  remedies or Borrower's liability under the Loan Documents or
                  on the Secured Debt.

         11.7     Severability. A determination that any provision of the Loan
                  Documents is unenforceable or invalid shall not affect the
                  enforceability or validity of any other provision, and any
                  determination that the application of any provision of the
                  Loan Documents to any person or circumstances is illegal or
                  unenforceable shall not affect the enforceability or validity
                  of such provision as it may apply to any other persons or
                  circumstances.

         11.8     Gender and Construction. Within this Deed of Trust, words of
                  any gender shall be held and construed to include any other
                  gender, and words in the singular number shall be held and
                  construed to include the plural, unless the context otherwise
                  requires. References in this Deed of Trust to "herein",
                  "hereunder" or "hereby" shall refer to this entire Deed of
                  Trust, unless the context otherwise requires. When the phrase
                  "in its sole unfettered discretion" is used in the Loan
                  Documents with respect to Lender, it shall permit Lender to
                  evaluate such criteria (without allowance for reasonableness)
                  as it chooses in approving or disapproving the requested or
                  pending action.

         11.9     Joint and Several Liability. If Borrower is composed of more
                  than one party, the obligations, covenants, agreements,
                  representations and warranties contained in the Loan
                  Documents, as well as the obligations arising thereunder, are
                  and shall be joint and several as to each such party.

         11.10    Modifications. References to any of the Loan Documents in this
                  Deed of Trust shall include all amendments, modifications,
                  extensions and renewals thereof.

         11.11    Governing Law. This Deed of Trust shall be construed according
                  to and governed by the laws of the State.

         11.12    Captions. All paragraph and subparagraph captions are for
                  convenience of reference only and shall not affect the
                  construction of any provision herein.

         11.13    N/A

         11.14    Sale, Assignment or Conversion of Secured Debt. Borrower
                  hereby agrees that Lender may (i) sell all or any portion of
                  the Secured Debt or securitize all or a portion

                                       30
<PAGE>

                  of the Secured Debt in one or more transactions through the
                  issuance of passthrough certificates or other securities
                  evidencing ownership of a portion of the Secured Debt or
                  beneficial interest therein, in one or more rated or unrated
                  public or private transactions; (ii) assign servicing rights
                  with respect to the Secured Debt; or (iii) convert the Note
                  and this Deed of Trust to registered form (each such
                  transaction as described in the preceding clauses (i), (ii)
                  and (iii) being referred to as a "Covered Transaction"),
                  without the consent of or notice to Borrower. Borrower hereby
                  agrees that, if requested, it will, at Lender's expense,
                  reasonably cooperate with Lender and use its best efforts to
                  facilitate the consummation of a Covered Transaction,
                  including, without limitation, by: (a) delivering estoppels,
                  opinions, tax certificates or any other documents, each in
                  form and substance reasonably acceptable to Lender or any
                  rating agency; (b) providing such additional information as
                  may reasonably be required by Lender, or granting reasonable
                  access to Lender in order to obtain such information,
                  including, without limitation, updated environmental
                  information and appraisals; and (c) appointing as its agent a
                  registrar and transfer agent, which agent shall maintain,
                  subject to such reasonable regulations as such agent shall
                  provide, such books and records as may be necessary for the
                  registration and transfer of the Note and this Deed of Trust,
                  all in a manner acceptable to Lender in its sole unfettered
                  discretion. Borrower hereby agrees that Lender may forward to
                  each potential purchaser, transferee, assignee, service,
                  trustee, participant or investor in any Covered Transaction,
                  or to any rating agency, all documents and information which
                  Lender now has or may hereafter acquire relating to the
                  Secured Debt, the Property, Borrower or any guarantor or
                  indemnitor of the Secured Debt that has been furnished by
                  Borrower or any other party in connection with the Secured
                  Debt, as Lender may, in its sole unfettered discretion,
                  determine is necessary or desirable.

         11.15    Acknowledgment of Receipt. Borrower hereby acknowledges
                  receipt, without charge, of a true and complete copy of this
                  Deed of Trust.

         11.16.   Time of the Essence. Time is of the essence of each and every
                  payment and/or performance obligation of Borrower and the
                  Guarantor(s) under this Deed of Trust or any of the other Loan
                  Documents.

         11.17    Exhibits. The following are the Exhibits referred to in this
                  Deed of Trust, which are hereby incorporated by reference
                  herein:

                  Exhibit A - Property Description

                                       31
<PAGE>

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

                                               Micro Linear Corporation, A
                                               Delaware Corporation

                                               By:  /s/ J. Philip Russell
                                                    ---------------------

                                               Its: CFO

                               [ACKNOWLEDGEMENTS]

<PAGE>

STATE OF CALIFORNIA
                           SS.
COUNTY OF SANTA CLARA

         On October 1, 1999 before me, Corinne D. Ledbetter, personally appeared
J. Philip Russell personally known to me (or proved to me on the basis of
satisfactory evidence) to be the persons whose names are subscribed to the
within instrument and acknowledged to me that they executed the same in their
authorized capacities, and that by their signatures on the instrument the
persons, or the entity upon behalf of which the persons acted, executed the
instrument.

         WITNESS my hand and official seal.

Signature Corinne D. Ledbetter                                            (Seal)
          ------------------------------

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

<PAGE>

                                    EXHIBIT A

                              Property Description

All of Parcel 44, as shown on that certain Map entitled, "Parcel Map of
International Business Park," which Map was filed for record in the office of
the Recorder of the County of Santa Clara, State of California on January 28,
1977, in Book 388 of Maps page(s) 16 through 27.

</TEXT>
</DOCUMENT>
