EXHIBIT 10.5

DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,

SECURITY AGREEMENT AND FIXTURE FILING

made by

PHOTO RESEARCH, INC.

(Trustor)

in favor of

FIRST AMERICAN TITLE INSURANCE COMPANY

(Trustee)

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,

as Collateral Agent

(Beneficiary)

Property Location:

9731 Topanga Canyon Place

Los Angeles, California 91311

Dated as of July 23, 2010

This Deed of Trust Was Prepared By and When Recorded, Return to:

Schulte Roth & Zabel LLP

919 Third Avenue

New York, New York 10022

Attention: Gregory P. Pressman, Esq.

Ref. No.: 035064.0001

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TABLE OF CONTENTS

 

     Page ARTICLE I DEFINITIONS    2   Section 1.01    Terms Defined Above    2
  Section 1.02    Definitions    2   Section 1.03    Terminology; Other Defined
Terms    5 ARTICLE II GRANT OF LIEN AND SECURITY INTEREST    6   Section 2.01   
Grant of Lien    6   Section 2.02    Grant of Security Interest    6
  Section 2.03    No Obligation of Beneficiary    6   Section 2.04    Fixture
Filing    6   Section 2.05    Future Advances    7   Section 2.06    Advances
Secured by Deed of Trust    7 ARTICLE III ASSIGNMENT OF LEASES AND RENTS    7
  Section 3.01    Assignment    7   Section 3.02    Revocable License    8
  Section 3.03    Enforcement of Leases    8   Section 3.04    Direction to
Tenants    9   Section 3.05    Appointment of Attorney-in-Fact    9
  Section 3.06    No Liability of Beneficiary    10   Section 3.07    Trustor's
Indemnities    10   Section 3.08    No Modification of Trustor's Obligations   
11 ARTICLE IV REPRESENTATIONS AND WARRANTIES    11   Section 4.01    Title to
Trust Property and Lien of this Deed of Trust    11   Section 4.02    Taxes and
Other Payments    11   Section 4.03    Power to Create Lien and Security    12
  Section 4.04    Loan and Security Documents    12   Section 4.05    Compliance
with Laws    12   Section 4.06    No Condemnation    12   Section 4.07    Flood
Zone    12 ARTICLE V AFFIRMATIVE COVENANTS    13   Section 5.01    Lien Status
   13   Section 5.02    Payment of Impositions    13   Section 5.03    Repair   
14   Section 5.04    Insurance and Application of Insurance Proceeds    14
  Section 5.05    Condemnation and Application of Condemnation Proceeds    16
  Section 5.06    Maintenance of Rights-of-Way, Easements, Licenses and Other
Rights    17   Section 5.07    Payment and Performance of Obligations    17
  Section 5.08    Compliance with Permitted Liens and Other Obligations    18
  Section 5.09    Additional Affirmative Covenants    18 ARTICLE VI NEGATIVE
COVENANTS    18   Section 6.01    Use Violations    18   Section 6.02    Waste
   18   Section 6.03    Alterations    18   Section 6.04    No Further
Encumbrances    18   Section 6.05    Transfer Restrictions    19   Section 6.06
   Loan and Indentures; Additional Negative Covenants    19

 

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ARTICLE VII EVENTS OF DEFAULT AND REMEDIES

   19   Section 7.01    Event of Default    19   Section 7.02    Acceleration   
19   Section 7.03    Foreclosure and Sale    19   Section 7.04    Trustee's
Agents    20   Section 7.05    Judicial Foreclosure    21   Section 7.06   
Receiver    21   Section 7.07    Foreclosure for Installments    21   Section
7.08    Separate Sales    22   Section 7.09    Possession of Trust Property   
22   Section 7.10    Intentionally Omitted    22   Section 7.11    Remedies
Cumulative, Concurrent and Nonexclusive    22   Section 7.12    No Release of
Obligations    23   Section 7.13    Release of and Resort to Collateral    23
  Section 7.14    Waiver of Redemption, Notice and Marshalling of Assets    23
  Section 7.15    Discontinuance of Proceedings    24   Section 7.16   
Application of Proceeds    24   Section 7.17    Uniform Commercial Code Remedies
   24   Section 7.18    Indemnity    25

ARTICLE VIII

   25   Section 8.01    Duties, Rights, and Powers of Trustee    25   Section
8.02    Successor Trustee    26   Section 8.03    Retention of Moneys    26

ARTICLE IX MISCELLANEOUS

   26   Section 9.01    Instrument Construed as Mortgage, Etc    26   Section
9.02    Performance at Trustor's Expense    26   Section 9.03    Survival of
Obligations    27   Section 9.04    Further Assurances    27   Section 9.05   
Notices    27   Section 9.06    No Waiver    27   Section 9.07    Beneficiary’s
Right to Perform; Beneficiary’s Expenditures    27   Section 9.08    Successors
and Assigns    28   Section 9.09    Severability    28   Section 9.10   
Subrogation of Trustee    28   Section 9.11    Entire Agreement and Modification
   29   Section 9.12    Applicable Law    29   Section 9.13    Satisfaction of
Prior Encumbrance    29   Section 9.14    No Partnership    29   Section 9.15   
Headings    29   Section 9.16    Release of Deed of Trust    29   Section 9.17
   Limitation of Obligations with Respect to Trust Property    30   Section 9.18
   Inconsistency with Indenture    30   Section 9.19    Limitation on Interest
Payable    30   Section 9.20    Covenants To Run With the Land    31   Section
9.21    Amount Secured; Last Dollar    31   Section 9.22    Defense of Claims   
31   Section 9.23    Exculpation Provisions    32   Section 9.24    No Merger of
Estates    32

 

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ARTICLE X STATE SPECIFIC PROVISIONS

   32   Section 10.01    Power of Sale    32   Section 10.02    Trustor Notice
Address    33   Section 10.03    Co-Borrower Provision    33   Section 10.04   
Limitation of Obligations    35 EXHIBIT A - LEGAL DESCRIPTION

 

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DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,

SECURITY AGREEMENT AND FIXTURE FILING

THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND
FIXTURE FILING (hereinafter, together with any and all amendments, supplements,
modifications or restatements of any kind, referred to as this “Deed of Trust”),
is made as of July 23, 2010, by PHOTO RESEARCH, INC., a California corporation,
having its principal place of business at 9731 Topanga Canyon Place, Chatsworth,
California 91311-4135 (“Trustor”), to First American Title Insurance Company, a
California corporation, having its principal place of business at 1 First
American Way, Santa Ana, California 92705, Attention: Deed of Trust Department
(including any successor trustee at the time acting as such hereunder
“Trustee”), for the benefit of THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
a national banking association, having its principal place of business at 525
William Penn Place, 38th Floor, Pittsburgh, Pennsylvania 15259, Attention:
Leslie Lockhart, as Collateral Agent (in such capacity, together with its
successors and assigns, “Beneficiary”), for itself and for each of the financial
institutions and their respective successors and assigns which from time to time
shall be a “Holder” under the Indenture (as hereinafter defined).

R E C I T A L S:

WHEREAS, Trustor is the owner and holder of fee simple title in and to the Land
(as hereinafter defined) described on Exhibit A attached hereto and made a part
hereof;

WHEREAS, on the date hereof, GSI Group Corporation (“Issuer”), Trustor and the
other Guarantors (as hereinafter defined), entered into that certain Indenture,
dated of even date herewith (as the same may be amended, modified or otherwise
supplemented and in effect from time to time, the “Indenture”), with the Holders
(as defined in the Indenture), and Beneficiary, as Collateral Agent for the
Holders, pursuant to which the Holders agreed to extend to Issuer certain term
loan facilities in the aggregate original principal amount of up to One Hundred
Seven Million Forty Thousand and 00/100 Dollars ($107,040,000.00) (collectively,
the “Loan”);

WHEREAS, Trustor will derive indirect economic benefit from the Loan and, in
order to induce the Holders to make the Loan, the Trustor is executing this Deed
of Trust and the Guarantors have executed the Indenture;

WHEREAS, as a condition to Beneficiary executing the Indenture, Beneficiary is
requiring that Trustor grant to Beneficiary, as trustee and as collateral agent
for the Holders, a security interest in and a first mortgage lien upon the Trust
Property (as hereinafter defined), to secure (a) the payment of all of the
obligations of Trustor under the Indenture, this Deed of Trust and the other
Security Documents (as hereinafter defined), and (b) the performance of all
terms, covenants, conditions, provisions, agreements and liabilities contained
in the Indenture, this Deed of Trust and the other Security Documents.

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NOW, THEREFORE, in order to comply with the terms and conditions of the
Indenture and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Trustor hereby agrees with
Beneficiary as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Terms Defined Above. As used in this Deed of Trust, the terms
defined in the introductory paragraph to this Deed of Trust and in the Recitals
set forth above shall have the meanings respectively assigned to such terms in
such paragraph and Recitals.

Section 1.02 Definitions. As used herein, the following terms shall have the
following meanings:

“Agent” has the meaning assigned to such term in the Indenture.

“Applicable UCC” means the Uniform Commercial Code as presently in effect in the
State or Commonwealth where the Trust Property is located.

“Bankruptcy Code” means the United States Bankruptcy Code (11 U.S.C. § 101, et.
seq.), as amended, and any successor statute.

“Buildings” means any and all buildings, structures, garages, utility sheds,
workrooms, air conditioning towers, open parking areas and other improvements,
and any and all additions, alterations, betterments or appurtenances thereto,
now or at any time hereafter situated, placed or constructed upon the Land or
any part thereof.

“Default” has the meaning assigned to such term in the Indenture.

“Default Rate” has the meaning assigned to such term in the Indenture.

“Event of Default” has the meaning assigned to such term in Section 7.01 hereof.

“Fixtures” means all materials, supplies, equipment, apparatus and other items
of Personalty now or hereafter acquired by Trustor and incorporated into the
Trust Property so as to constitute fixtures under the Applicable UCC or
otherwise under the laws of the state or commonwealth in which such items are
located.

“Governmental Requirements” means any and all present and future judicial
decisions, statutes, rulings, rules, regulations, permits, certificates or
ordinances of any governmental authority in any way applicable to Trustor or the
Trust Property, including the ownership, use, occupancy, possession, operation,
maintenance, alteration, repair or reconstruction thereof.

“Guarantors” has the meaning assigned to such term in the Indenture. “Guarantor”
means any of the Guarantors.

 

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“Impositions” means any and all real estate and personal property taxes; water,
gas, sewer, electricity and other utility rates and charges; charges for any
easement, license or agreement maintained for the benefit of the Trust Property;
and any and all other taxes, charges and assessments, whether general or
special, ordinary or extraordinary, foreseen or unforeseen, of any kind and
nature whatsoever which at any time prior to or after the execution hereof may
be assessed, levied or imposed upon the Trust Property or the ownership, use,
occupancy, benefit or enjoyment thereof, together with any interest, costs or
penalties that may become payable in connection therewith.

“Indemnified Parties” means, with respect to any Person entitled to the benefit
of an indemnity, such Person and its officers, directors, shareholders,
partners, members, managers, employees, agents, representatives, attorneys,
accountants and experts. The term “Indemnified Party” means any one of such
Persons.

“Land” means the real property or interest therein described in Exhibit A
attached hereto, and all rights, titles and interests appurtenant thereto.

“Leases” means any and all leases, master leases, subleases, licenses,
concessions or other agreements (whether written or oral, and whether now or
hereafter in effect) which grant to third Persons a possessory interest in and
to, or the right to use, all or any part of the Trust Property, Land, the
Buildings, the Fixtures and/or the Personalty, together with all security and
other deposits made in connection therewith and any guarantee of the obligations
of the landlord or the tenant thereunder.

“License” has the meaning assigned to such term in Section 3.02(a) hereof.

“Lien” has the meaning assigned to such term in the Indenture.

“Losses” means all obligations, damages, claims, causes of action, costs, fines,
fees, charges, penalties, deficiencies, losses, diminutions in value, expenses
(including court costs, fees and expenses of attorneys, accountants, consultants
and other experts) and other liabilities, and, with respect to any indemnity,
includes all attorneys’ fees and expenses in connection with the enforcement and
collection of such indemnity. The term “Loss” means any one of such Losses.

“Obligation” has the meaning assigned to such term in the Indenture.

“Permitted Lien” has the meaning assigned to such term in the Indenture.

“Person” has the meaning assigned to such term in the Indenture.

“Personalty” means all of Trustor’s right, title and interest in and to all
furniture, furnishings, equipment, machinery, goods, general intangibles, money,
insurance proceeds, contract rights, option rights, inventory, together with all
refundable, returnable or reimbursable fees, deposits or other funds or
evidences of credit or indebtedness deposited by or on behalf of Trustor with
any governmental authority, boards, corporations, providers of utility services,

 

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public or private including all refundable, returnable or reimbursable tap fees,
utility deposits, commitment fees and development costs, and all other personal
property of any kind or character (other than Fixtures or the property of any
tenant), and including all such property that now or hereafter arise from or are
located or to be located upon, within or about the Land and the Buildings, or
which are or may be used in or related to the planning, development, financing
or operation of the Trust Property, together with all accessories, replacements
and substitutions thereto or therefor and the proceeds thereof.

“Principal Balance” has the meaning assigned to such term in Section 7.02
hereof.

“Rents” means all of the rents, revenues, income, proceeds, issues, profits,
security and other types of deposits (after Trustor acquires title thereto), and
other benefits paid or payable by parties (other than Trustor) for using,
leasing, licensing, possessing, operating from, residing in, benefiting from or
otherwise enjoying all or any part of the Land, the Buildings, the Fixtures
and/or the Personalty.

“Security Documents” means, collectively, the Indenture, this Deed of Trust, and
all other instruments, security agreements, agreements and other documents
executed and delivered pursuant hereto or thereto or otherwise included in the
definition of the term “Security Documents” in the Indenture.

“Trust Property” means all of Trustor’s right, title, interest and estate,
whether now owned or hereafter acquired, in and to the Land, the Buildings, the
Fixtures and the Personalty, together with:

(i) all rights, privileges, tenements, hereditaments, rights-of-way, easements,
air rights, development rights or credits, zoning rights, appendages and
appurtenances in anywise appertaining thereto, and all right, title and interest
of Trustor in and to any streets, ways, alleys, strips or gores of land
adjoining the Land or any part thereof, and all right, title and interest of
Trustor, if any, in and to all rights, royalties and profits with respect to all
minerals, coal, oil, gas and other substances of any kind or character on or
underlying the Land, together with all right, title and interest of Trustor in
and to all water and water rights (whether riparian, appropriative or otherwise
and whether or not appurtenant);

(ii) all rights of Trustor (but not its obligations) under any contracts and
agreements, including, without limitation, construction contracts and
architectural agreements, relating to the Land, the Buildings, the Fixtures or
the Personalty;

(iii) all of Trustor’s right, title and interest in and to all permits,
licenses, franchises, certificates, authorizations, consents, approvals and
other rights and privileges (each, a “Permit”) obtained in connection with the
Land, the Buildings, the Fixtures or the Personalty or the use or operation
thereof;

 

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(iv) all of Trustor’s right, title and interest in and to all plans and
specifications, designs, schematics, drawings and other information, materials
and matters heretofore or hereafter prepared relating to the Land, the
Buildings, the Fixtures or the Personalty;

(v) all of Trustor’s right, title and interest in and to all proceeds arising
from or by virtue of the sale, lease or other disposition of the Land, the
Buildings, the Fixtures or the Personalty or any part thereof or any interest
therein or from the operation thereof;

(vi) all of Trustor’s right, title and interest in and to all Leases now or
hereafter in effect and all Rents, royalties, bonuses, issues, profits, revenues
or other benefits arising from or attributable to the Land, the Buildings, the
Fixtures or the Personalty;

(vii) all of Trustor’s right, title and interest in and to all betterments,
additions, alterations, appurtenances, substitutions, replacements and revisions
to the Land, the Buildings, the Fixtures or the Personalty and all reversions
and remainders relating thereto;

(viii) all of Trustor’s right, title and interest in and to any awards,
remuneration, settlements or compensation now or hereafter made by any
governmental authority pertaining to the Land, the Buildings, the Fixtures or
the Personalty, including those arising from or attributable to any vacation of,
or change of grade in, any streets affecting the Land or the Buildings;

(ix) all of Trustor’s right, title and interest in and to any and all other
security and collateral of any nature whatsoever, whether now or hereafter
given, for the repayment, performance and discharge of the Obligations (as
hereinafter defined);

(x) all of Trustor’s right, title and interest in and to all awards, payments,
and proceeds of conversion, whether voluntary or involuntary, of any of the
Land, the Buildings, the Fixtures, the Personalty or any of the property and
rights described in the foregoing clauses (i) through (ix), including without
limitation, all insurance, condemnation and tort claims, refunds of real estate
taxes and assessments, rent claims and other obligations dischargeable in cash
or cash equivalents; and

(xi) all other property and rights of Trustor of every kind and character
relating to and/or used or to be used in connection with the foregoing, and all
proceeds and products of any of the foregoing.

As used in this Deed of Trust, the term “Trust Property” shall be expressly
defined as meaning all or, where the context permits or requires, any portion of
the above, and all or, where the context permits or requires, any interest
therein.

Section 1.03 Terminology; Other Defined Terms. Any capitalized term used in this
Deed of Trust and not otherwise defined herein shall have the meaning assigned
to such term in the Indenture. The rules of construction set forth in
Section 1.04 of the Indenture shall apply hereto as if incorporated at length
herein.

 

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ARTICLE II

GRANT OF LIEN AND SECURITY INTEREST

Section 2.01 Grant of Lien. To secure the full and timely payment, performance
and discharge of all of the Obligations, Trustor hereby irrevocably GRANTS,
BARGAINS, SELLS, ASSIGNS, TRANSFERS, MORTGAGES, CONVEYS and CONFIRMS unto
Trustee and Trustee’s successors, assigns and substitutes in trust hereunder,
WITH POWER OF SALE and right of entry and possession, for the use and benefit of
Beneficiary, as trustee and as collateral agent for the Holders pursuant to the
Indenture, all right, title, interest and estate in, to and under the Trust
Property, subject, however, to the Permitted Liens; TO HAVE AND TO HOLD the
Trust Property unto Trustee and Trustee’s successors, assigns and substitutes in
trust hereunder, subject to the terms and conditions of this Deed of Trust, with
POWER OF SALE, forever, and Trustor does hereby bind itself, its successors and
assigns to WARRANT AND FOREVER DEFEND the title to the Trust Property unto
Beneficiary against every Person whomsoever lawfully claiming or to claim the
same or any part thereof, subject, however, to the Permitted Liens; provided,
however, that if Trustor shall pay (or cause to be paid) and perform and
discharge (or cause to be performed and discharged) all of the Obligations on or
before the date on which the same are to be paid, performed and discharged, then
the Liens, estates and rights granted by this Deed of Trust shall cease and
terminate.

Section 2.02 Grant of Security Interest. This Deed of Trust shall be construed
as a mortgage on the Land and the Buildings and it shall also constitute and
serve as a “security agreement” within the meaning of, and shall constitute a
first and prior security interest under, the Applicable UCC with respect to the
Personalty and the Fixtures. To this end, Trustor by these presents does GRANT,
BARGAIN, CONVEY, ASSIGN, SELL, TRANSFER and SET OVER unto Beneficiary, as
trustee and as collateral agent for the Holders pursuant to the Indenture, a
security interest in all of Trustor’s right, title and interest in, to and under
the Personalty and the Fixtures, to secure the full and timely payment,
performance and discharge of the Obligations. Trustor hereby consents to
Beneficiary filing and recording financing statements (and continuations
thereof) with the appropriate filing and recording offices in order to perfect
(and maintain the perfection of) the security interests granted herein. To the
extent the Indenture serves as a security agreement and in the event that there
is an inconsistency in the terms of this Section 2.02 and the terms of the
Indenture, the terms of the Indenture shall prevail pursuant to Section 8.17 of
this Deed of Trust.

Section 2.03 No Obligation of Beneficiary. The assignment and security interest
herein granted to Beneficiary shall not be deemed or construed to constitute
Beneficiary as a mortgagee-in-possession of the Trust Property, obligate
Beneficiary to lease the Trust Property or attempt to do the same, or to take
any action, incur any expense or perform or discharge any obligation, duty or
liability whatsoever.

Section 2.04 Fixture Filing. Without in any manner limiting the generality of
any of the other provisions of this Deed of Trust: (a) some portions of the
goods described or to which reference is made herein are or are to become
fixtures on the Land described or to which reference is made herein or on
Exhibit A attached to this Deed of Trust; (b) this Deed of Trust is

 

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to be filed of record in the real estate records as a financing statement and
shall constitute a “fixture filing” for purposes of the Applicable UCC; and
(c) Trustor is the record owner of the real estate or interests in the real
estate constituting the Trust Property hereunder. Information concerning the
security interest herein granted may be obtained at the addresses set forth on
the first page hereof. The addresses of the Secured Party (Beneficiary) and of
the Debtor (Trustor) are set forth on the first page hereof. In that regard, the
information required in connection with the fixture filing and by California
Civil Code Section 3097(j) is as follows:

(1) Name and Address of Secured Party: The Bank of New York Mellon Trust
Company, N.A., as Trustee and Collateral Agent for itself and for each of the
financial institutions and their respective successors and assigns which from
time to time shall be a “Holder” under the Indenture, 222 Berkeley Street, 2nd
Floor, Boston, Massachusetts 02116.

 

  Name of Debtor:    PHOTO RESEARCH, INC.   Address:    9731 Topanga Canyon
Place, Chatsworth, CA 91311-4135   Type of Organization:    Corporation   State:
   California

Section 2.05 Future Advances. It is the intention of Trustor and Beneficiary
that this Deed of Trust (as renewed and extended from time to time) shall secure
future advances and readavances, and the lien and security interest created by
this Deed of Trust shall attach upon execution and have priority from the time
of recording as to all advances, whether obligatory or discretionary, to the
fullest extent permitted by law, until this Deed of Trust is released of record.

Section 2.06 Advances Secured by Deed of Trust. Upon a Default of Trustor for
failure to comply with any covenants and agreements hereunder as to the payment
of taxes, assessments, insurance premiums, repairs, protection of the Trust
Property or Beneficiary’s lien thereon, and other charges and the costs of
procurement of title evidence and insurance as aforesaid, Beneficiary may, at
its option, pay the same in accordance with applicable provisions of the
Indenture, and any sums so paid by Beneficiary, together with the reasonable
fees of counsel employed by Beneficiary in consultation and in connection
therewith, shall be charged against Trustor, shall be due and payable (together
with interest at the applicable rate) by Trustor and shall be a lien upon the
Trust Property and be secured by the Deed of Trust in accordance with applicable
provisions of the Indenture.

ARTICLE III

ASSIGNMENT OF LEASES AND RENTS

Section 3.01 Assignment. For Ten Dollars ($10.00) and other good and valuable
consideration, including the indebtedness evidenced by the Indenture, the
receipt and sufficiency of which are hereby acknowledged and confessed, Trustor
has presently, absolutely

 

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and irrevocably GRANTED, BARGAINED, SOLD, ASSIGNED, TRANSFERRED, CONVEYED and
CONFIRM, and by these presents does presently, absolutely and irrevocably GRANT,
BARGAIN, SELL, ASSIGN, TRANSFER, CONVEY and CONFIRM, unto Beneficiary, as
Collateral Agent for the Holders pursuant to the Indenture, as security for the
payment, performance and discharge of the Obligations, all of the Leases and
Rents (if any), subject only to the Permitted Liens applicable thereto and the
License (as hereinafter defined); TO HAVE AND TO HOLD the Leases and the Rents
unto Beneficiary, forever, and Trustor does hereby bind itself, its successors
and assigns to warrant and forever defend the title to the Leases and the Rents
unto Beneficiary against every Person whomsoever lawfully claiming or to claim
the same or any part thereof; provided, however, that if Trustor shall pay (or
cause to be paid) and perform and discharge (or cause to be performed and
discharged) all of the Obligations on or before the date on which the same are
to be paid, performed and discharged, then this assignment shall terminate, and
all rights, titles and interests conveyed pursuant to this assignment shall
become vested in Trustor.

Section 3.02 Revocable License.

(a) Beneficiary hereby grants to Trustor a revocable license (the “License”),
nonexclusive with the rights of Beneficiary reserved in Sections 3.02(b), 3.04
and 3.05 hereof, to exercise and enjoy all incidences of the status of a lessor
under the Leases and the Rents, including, without limitation, the right to
collect, demand, sue for, attach, levy, recover and receive the Rents and to
give proper receipts, releases and acquittances therefor. During the pendency of
an Event of Default, Trustor hereby agrees to receive all Rents and hold the
same as a trust fund to be applied, and to apply the Rents so collected, except
to the extent otherwise provided in the Indenture, first to the payment,
performance and discharge of the Obligations and then to the payment of the
Impositions. Thereafter, Trustor may use the balance of the Rents collected in
any manner not inconsistent with the Security Documents.

(b) If an Event of Default shall occur and be continuing, the License shall
immediately and automatically terminate without the necessity of any action by
Beneficiary or any other Person, and Beneficiary shall have the right in such
event to exercise the rights and remedies provided under this Deed of Trust or
otherwise available to Beneficiary under applicable law. Upon demand by
Beneficiary at any time that an Event of Default shall have occurred and be
continuing, to the extent allowed by applicable law, Trustor shall promptly pay
to Beneficiary all security deposits under the Leases and all Rents allocable to
any period commencing from and after the occurrence of such Event of Default and
during the period such Default shall be continuing. Any Rents received hereunder
by Beneficiary shall be applied and disbursed to the payment, performance and
discharge of the Obligations, subject to the terms of the Indenture; provided,
however, that, subject to any applicable requirement of law, any security
deposits actually received by Beneficiary shall be held, applied and disbursed
as provided in the applicable Leases.

Section 3.03 Enforcement of Leases. Trustor shall (a) submit any and all
proposed material Leases that affect the Trustor’s operations on the Trust
Property (including subleases provided to Trustor for approval) to Beneficiary
for approval prior to the execution thereof or consent thereto, as applicable,
such consent not to be unreasonably conditioned,

 

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withheld or delayed; (b) duly and punctually perform and comply with any and all
representations, warranties, covenants and agreements expressed as binding upon
the lessor under any Lease; (c) except for a termination right granted to a
tenant pursuant to the terms of a Lease, maintain each Lease in full force and
effect during the term thereof; (d) provide Beneficiary with prompt notice of
each notice of default sent to a tenant under a Lease, provide Beneficiary with
prompt notice of each notice of default received from (or relating to) a tenant
under a Lease, and otherwise promptly reasonably indicate that a material
default or termination of a Lease may occur (other than by reason of the
expiration of the term of such Lease); (e) appear in and defend any action or
proceeding in any manner connected with any of the Leases; (f) deliver to
Beneficiary true and complete copies of all Leases; and (g) deliver to
Beneficiary all such further information, and execute and deliver to Beneficiary
such further assurances and assignments, with respect to the Leases as
Beneficiary may from time to time reasonably request. Without Beneficiary’s
prior written consent, which consent shall not be unreasonably withheld with
respect to clause (iv) below, Trustor shall not (i) do or knowingly permit to be
done anything to materially impair the value of any of the Leases; (ii) except
for security or similar deposits, collect any of the Rent more than one
(1) month in advance of the time when the same becomes due under the terms of
any Lease; (iii) discount any future accruing Rents; (iv) amend, modify, accept
the surrender of or terminate any of the Leases; or (v) assign or grant a
security interest in or to the License or any of the Leases or Rents.

Section 3.04 Direction to Tenants. Upon and at any time following the occurrence
and during the continuance of an Event of Default, Trustor hereby authorizes and
directs, and shall, at the direction of Beneficiary, further authorize and
direct, in writing, the tenant under each Lease to pay directly to, or as
directed by, Beneficiary all Rents accruing or due under its Lease, without
proof to the tenant of the occurrence and continuance of such Event of Default.
Trustor hereby authorizes the tenant under each Lease to rely upon and comply
with any notice or demand from Beneficiary for payment of Rents to Beneficiary,
and Trustor shall have no claim against any tenant for Rents paid by such tenant
to Beneficiary pursuant to such notice or demand. All Rents actually collected
by Beneficiary pursuant to this Section 3.04 shall be applied in accordance with
the Indenture.

Section 3.05 Appointment of Attorney-in-Fact.

(a) Trustor hereby constitutes and appoints Beneficiary the true and lawful
attorney-in-fact, coupled with an interest, of Trustor and Trustor hereby
confers upon Beneficiary the right, in the name, place and stead of Trustor, to,
upon the occurrence and during the continuance of an Event of Default, demand,
sue for, attach, levy, recover and receive any of the Rents and any premium or
penalty payable upon the exercise by any third Person under any Lease of a
privilege of cancellation originally provided in such Lease and to give proper
receipts, releases and acquittances therefor and, after deducting expenses of
collection, to apply the net proceeds as provided in the Indenture. Trustor
hereby authorizes and directs any such third Person to deliver such payment to
Beneficiary in accordance with this Article III, and Trustor hereby ratifies and
confirms all that its said attorney-in-fact, the Beneficiary, shall do or cause
to be done in accordance with this Deed of Trust and by virtue of the powers
granted hereby. The foregoing appointment is irrevocable and continuing, and
such rights, powers and privileges shall

 

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be exclusive in Beneficiary, and its successors and assigns, so long as any part
of the Obligations remains unpaid or unperformed and undischarged, and until the
commitments under the Indenture have been terminated.

(b) Trustor hereby constitutes and appoints Beneficiary the true and lawful
attorney-in-fact, coupled with an interest, of Trustor and Trustor hereby
confers upon Beneficiary the right, in the name, place and stead of Trustor, to
subject and subordinate at any time and from time to time any Lease or any part
thereof to the lien, assignment and security interest of this Deed of Trust and
to the terms hereof, or to any other mortgage, deed of trust, assignment or
security agreement, or to any ground lease or surface lease, with respect to all
or a portion of the Trust Property, or to request or require such subordination,
where such reservation, option or authority was reserved to Trustor under any
such Lease, or in any case where Trustor otherwise would have the right, power
or privilege so to do. The foregoing appointment is irrevocable and continuing,
and such rights, powers and privileges shall be exclusive in Beneficiary, and
its successors and assigns, so long as any part of the Obligations remains
unpaid or unperformed and undischarged and until the commitments under the
Indenture have been terminated. Trustor hereby represents and warrants that it
has not exercised, and no Person has the current right to exercise, any of the
rights described in this Section 3.05(b), and Trustor hereby covenants not to
exercise (or appoint any other Person as attorney-in-fact to exercise) any such
right, nor (except at Beneficiary’s written request) to subordinate any such
Lease to the lien of this Deed of Trust or to any other mortgage, deed of trust,
assignment or security agreement or to any ground lease or surface lease.

Section 3.06 No Liability of Beneficiary. Neither the acceptance hereof nor the
exercise of the rights and remedies hereunder nor any other action on the part
of Beneficiary or any Person exercising the rights of Beneficiary or any Holder
hereunder shall be construed to: (a) be an assumption by Beneficiary or any such
Person or to otherwise make Beneficiary or such Person liable or responsible for
the performance of any of the obligations of Trustor under or with respect to
the Leases or for any Rent, security deposit or other amount delivered to
Trustor, provided that Beneficiary or any such Person exercising the rights of
Beneficiary shall be accountable for any Rents, security deposits or other
amounts actually received by Beneficiary or such Person, as the case may be; or
(b) obligate Beneficiary or any such Person to take any action under or with
respect to the Leases or with respect to the Trust Property, to incur any
expense or perform or discharge any duty or obligation under or with respect to
the Leases or with respect to the Trust Property, to appear in or defend any
action or proceeding relating to the Leases or the Trust Property, to constitute
Beneficiary as a mortgagee-in-possession (unless Beneficiary actually enters and
takes possession of the Trust Property), or to be liable in any way for any
injury or damage to Persons or property sustained by any Person in or about the
Trust Property, other than to the extent caused by the bad faith, willful
misconduct or gross negligence of Beneficiary or any Person exercising the
rights of Beneficiary hereunder. In connection with its appointment and acting
hereunder, Beneficiary is otherwise entitled to all rights, privileges,
protections, benefits, immunities and indemnities provided to it as Trustee and
Collateral Agent under the Security Documents.

Section 3.07 Trustor’s Indemnities. Trustor hereby agrees to protect, indemnify
and hold harmless Beneficiary and of the Holders and each Indemnified Party
related to Beneficiary or such other Holders from and against any and all Losses
which Beneficiary or any such other Holders or Indemnified Party may incur under
or by reason of this Article III, or for

 

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any action taken by Beneficiary or any such other Holder or Indemnified Party
hereunder, or by reason or in defense of any and all claims and demands
whatsoever which may be asserted against Beneficiary or any such other Holders
or Indemnified Party arising out of the Leases, including, without limitation,
any claim by any third Person for credit on account of Rents paid to and
received by Trustor, but not delivered to Beneficiary or its agents,
representatives or employees, for any period under any Lease more than one
(1) month in advance of the due date thereof. The foregoing indemnity shall
include, in any case, such Loss as may result from the ordinary good faith
negligence of Beneficiary or such other Holders or Indemnified Party, but not
any such Loss that is caused by the bad faith, gross negligence or willful
misconduct of Beneficiary or any such other Holders or Indemnified Party. In the
event that Beneficiary or any of the other Holders or any Indemnified Party
incurs any Losses covered by the indemnity set forth in this Section 3.07, the
amount thereof, including reasonable attorneys’ fees, with interest thereon at
the Default Rate, shall be payable by Trustor to Beneficiary within ten
(10) days after demand therefor, and shall be secured hereby and by all other
security for the payment and performance of the Obligations, including, without
limitation, the lien and security interest of this Deed of Trust. The
liabilities of Trustor as set forth in this Section 3.07 shall survive the
termination of this Deed of Trust and the repayment of the Obligations.

Section 3.08 No Modification of Trustor’s Obligations. Nothing herein contained
shall modify or otherwise alter the obligation of Trustor to make prompt payment
of all Obligations as and when the same become due, regardless of whether the
Rents described in this Article III are sufficient to pay the Obligations, and
the security provided to Beneficiary pursuant to this Article III shall be
cumulative of all other security of any and every character now or hereafter
existing to secure payment of the Obligations.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

Trustor hereby unconditionally represents and warrants to Beneficiary as
follows:

Section 4.01 Title to Trust Property and Lien of this Deed of Trust. To the best
of its knowledge, Trustor has good, marketable and indefeasible fee simple title
to the Land and the Buildings, and, to the best of its knowledge, has good,
marketable and indefeasible title to the Fixtures, the Personalty and the other
Trust Property. The Trust Property is free and clear of any and all Liens,
charges, encumbrances, security interests and adverse claims whatsoever, except
for all Permitted Liens.

Section 4.02 Taxes and Other Payments. Trustor has filed all federal, state,
commonwealth, county, municipal and city income and other material tax returns
required to have been filed by it and has paid all taxes and other Impositions
which have become due pursuant to such returns or pursuant to any assessments or
charges received by it, and Trustor does not know of any basis for any
additional assessment or charge in respect of any such taxes or other
Impositions. Trustor has paid in full all sums owing or claimed for labor,
material, supplies, personal property (whether or not forming a Fixture
hereunder) and services of every

 

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kind and character used, furnished or installed in or on the Trust Property that
are now due and owing and no claim for same exists or will be permitted to be
created, except such claims as may arise in the ordinary course of business and
that are not yet past due.

Section 4.03 Power to Create Lien and Security. Trustor has full power and
lawful authority to grant, bargain, sell, assign, transfer, mortgage and convey
a Lien and security interest in all of the Trust Property in the manner and form
herein provided and without obtaining the authorization, approval, consent or
waiver of any grantor, lessor, sublessor, governmental authority or other Person
whomsoever.

Section 4.04 Loan and Security Documents. Trustor has received a copy of and is
fully familiar with the terms and provisions of the Indenture and the other
Security Documents. All representations and warranties made by Trustor in the
Indenture and the other Security Documents are incorporated herein by reference
and are hereby made by Trustor as to itself and the Trust Property as though
such representations and warranties were set forth at length herein as the
representations and warranties of Trustor.

Section 4.05 Compliance with Laws. To the actual knowledge of Trustor, all of
the improvements on the Land (i) comply with all material requirements of all
applicable laws and ordinances with respect to zoning, subdivision,
construction, building and land use, including, without limitation, requirements
with respect to parking, access and certificates of occupancy (and similar
certificates) and (ii) comply with, and shall remain in compliance with,
applicable health, fire and building codes. Except as set forth on any surveys
delivered by Trustor to Beneficiary, all of the Buildings lie wholly within the
boundaries and building restriction lines of the Land. Except as set forth on
any surveys delivered by Trustor to Beneficiary, to the actual knowledge of
Trustor, no improvements on adjoining properties encroach upon the Land, and no
easements or other encumbrances upon the Land encroach upon or under any of the
Buildings or any portion of the Trust Property. To the actual knowledge of
Trustor, all of the Buildings and the use of the Trust Property materially
comply with, and shall remain in material compliance with, all applicable
statutes, rules, regulations and private covenants now or hereafter relating to
the ownership, construction, use or operation of the Trust Property, including
all applicable statutes, rules and regulations pertaining to requirements for
equal opportunity, anti-discrimination, fair housing, environmental protection,
zoning and land use. All certifications, permits, licenses and approvals,
including, without limitation, certificates of completion and occupancy permits
required for the legal use, occupancy and operation of the Trust Property have
been obtained and are in full force and effect. Trustor has not received any
notice of, or other communication with respect to, an alleged violation with
respect to any of the foregoing.

Section 4.06 No Condemnation. With the exception of the Permitted Exceptions, no
part of any property subject to this Deed of Trust has been taken in
condemnation or other like proceeding nor is any proceeding pending, threatened
or known to be contemplated for the partial or total condemnation or taking of
the Trust Property.

Section 4.07 Flood Zone. To the best of Trustor’s knowledge, the Trust Property
is not located in an area identified by the Federal Emergency Management Agency

 

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(“FEMA”) as having special flood hazards or if the Land or any part thereof is
identified by the Federal Emergency Management Agency as an area having special
flood hazards (including, without limitation, those areas designated as Zone A
or Zone V), then Trustor has obtained the insurance required under
Section 5.04(a)(v) of this Deed of Trust.

ARTICLE V

AFFIRMATIVE COVENANTS

Trustor hereby unconditionally covenants and agrees with Beneficiary as follows:

Section 5.01 Lien Status. Except as otherwise expressly provided in the
Indenture, Trustor shall not place, or permit to be placed, or otherwise
mortgage, hypothecate or encumber the Trust Property, or any portion thereof or
interest therein, with any other Lien or security interest of any nature
whatsoever (statutory, constitutional or contractual), other than Permitted
Liens, regardless of whether such Lien or security interest is inferior to the
Lien and security interest created by this Deed of Trust, and, if any such Lien
or security interest is asserted against the Trust Property, Trustor shall
promptly, at its own cost and expense, (a) pay the underlying claim in full
(except for so long as such claim is being contested by Trustor in good faith
and as and to the extent permitted in accordance with the terms of the
Indenture) or take such other action as may be necessary to cause the same to be
released of record and otherwise, and (b) within five (5) days after the date on
which such Lien or security interest is so asserted, give Beneficiary notice of
such Lien or security interest. Such notice shall specify who is asserting such
Lien or security interest and shall detail the origin and nature of the
underlying claim giving rise to such asserted Lien or security interest.

Section 5.02 Payment of Impositions. Trustor shall duly pay and discharge, or
cause to be paid and discharged, all Impositions not later than the due date
thereof, or the day on which any fine, penalty, interest or cost may be added
thereto or imposed, or the day on which any Lien may be filed for the nonpayment
thereof (if such day is used to determine the due date of the respective item);
provided, however, that Trustor may, if permitted by applicable law and if such
installment payment would not create or permit the filing of a Lien against the
Trust Property, pay the Impositions in installments. Notwithstanding the
foregoing, Trustor may in good faith, by appropriate proceedings and upon notice
to Beneficiary, contest the validity, applicability or amount of any asserted
tax or assessment, subject to any more restrictive provisions applicable to any
such contest contained in the Indenture and (without limiting the foregoing) so
long as (a) such contest is properly contested in accordance with applicable
provisions of the Indenture, and (b) Beneficiary determines, in its opinion
reasonably exercised, that such contest suspends the obligation to pay the tax
and that nonpayment of such tax or assessment will not result in the sale, loss,
forfeiture or diminution of the Trust Property or any part thereof or any
interest of Beneficiary therein, and (c) unless expressly provided to the
contrary in the Indenture, prior to the earlier of the commencement of such
contest or the delinquency date of the asserted tax or assessment, Trustor
deposits with Beneficiary an amount reasonably determined by Beneficiary to be
adequate to cover the payment of such tax or assessment and a reasonable
additional sum to cover possible interest, costs and penalties;

 

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provided, however, that Trustor shall promptly cause to be paid any amount
adjudged by a court of competent jurisdiction to be due, with all interest,
costs and penalties thereon, promptly after such judgment becomes final (and,
subject to Beneficiary’s rights and remedies during an Event of Default,
Beneficiary shall make any sum deposited pursuant to clause (c) above available
for such payment); and provided, further, that in any event each such contest
shall be concluded, the taxes, assessments, interest, costs and penalties shall
be paid prior to the date any writ or order is issued under which the Trust
Property may be sold, lost or forfeited.

Section 5.03 Repair. Trustor shall keep the Trust Property in good order and
condition (reasonable wear and tear excepted) and shall make all repairs,
replacements and improvements thereof and thereto, interior and exterior,
structural and non-structural, ordinary and extraordinary, which are necessary
to keep the same in such order and condition. Trustor shall also use reasonable
efforts to prevent any act or occurrence which might impair the value or
usefulness of the Trust Property for its intended usage.

Section 5.04 Insurance and Application of Insurance Proceeds.

(a) During the term of this Deed of Trust, Trustor, at its sole cost and
expense, shall maintain, or cause to be maintained all insurance on the Trust
Property that is required to be maintained under the Indenture. In addition,
Trustor, at its sole cost and expense, shall maintain or cause to be maintained
such other insurance as may, from time to time, reasonably be required by
Beneficiary in order to protect its interests in the Trust Property.
Notwithstanding any insurance requirements under the Indenture, Trustor, at its
sole cost and expense, shall maintain, or cause to be maintained the following
policies of insurance, with respect to the Trust Property:

(i) Casualty (property) insurance against loss or damage by fire, lightning and
such other perils as are included in a standard “special form” policy (formerly
known as an “all-risk” endorsement policy), and against loss or damage by all
other risks and hazards covered by a standard extended coverage insurance policy
including, without limitation, riot and civil commotion, terrorist actions,
vandalism, malicious mischief, burglary and theft, in an amount equal to the
greater of (A) the then full replacement cost of the improvements, without
deduction for physical depreciation and (B) such amount that the insurer would
not deem Trustor a co-insurer under said policies. The policies of insurance
required under this Section 5.04 shall contain a “Replacement Cost” endorsement
with a waiver of depreciation and an “Agreed Amount” or “No Coinsurance”
endorsement and shall otherwise comply with the Indenture.

(ii) Commercial General Liability insurance, including a broad form
comprehensive general liability endorsement and coverages for broad form
property damage, contractual damages and personal injuries (including death
resulting therefrom) and containing minimum limits per occurrence of
$1,000,000.00 and $2,000,000.00 in the aggregate for any policy year with no
deductible.

(iii) Rental loss and/or business interruption insurance in an amount equal to
the estimated gross revenues from the operations of the Trust Property for a
period of twelve (12) months.

 

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(iv) Insurance against loss or damage from (A) leakage of sprinkler systems and
(B) explosion of steam boilers, air conditioning equipment, high pressure
piping, machinery and equipment, pressure vessels or similar apparatus now or
hereafter installed on the improvements (without exclusion for explosions).

(v) Flood insurance if all or any portion of the Trust Property is located in an
area now or hereafter designated by the Federal Emergency Management Agency as
an area having special flood hazards (including, without limitation, those areas
designated as Zone A or Zone V), and in which flood insurance has been made
available under the U.S. National Flood Insurance Program, in an amount equal to
the full replacement cost of the Buildings, Fixtures and Personalty now or
hereafter located on the Trust Property or such other amount as may be agreed to
by Beneficiary in writing.

(vi) If the Trust Property is or ever becomes non-conforming with respect to
zoning, ordinance or law coverage to compensate for loss of value or property
resulting from operation of law and the cost of demolition and the increased
cost of construction in such amounts as may be requested by Beneficiary if
available at a commercially reasonable cost.

(vii) Any other insurance with respect to the Trust Property that may be
required under the Indenture.

(viii) Such other insurance as may from time to time be reasonably required by
Beneficiary in order to protect its interests.

All such insurance policies with respect to the Trust Property shall contain a
standard, non-contributory mortgagee clause naming Beneficiary, and its
successors and assigns, as an additional insured under all liability insurance
policies, as the first mortgagee and loss payee on all property insurance
policies, and as the sole loss payee on all rental loss or business interruption
insurance policies. Trustor shall not take out separate insurance with respect
to the Trust Property concurrent in form or contributing in the event of loss
with that required to be maintained hereunder or under the Indenture unless
Beneficiary is named as an additional insured thereon under a standard mortgagee
clause acceptable to Beneficiary and each such policy is otherwise in form and
substance acceptable to Beneficiary.

(b) In the event of the foreclosure of this Deed of Trust, or in the event of
any transfer of title to the Trust Property, or any part thereof, by foreclosure
sale or by power of sale or deed in lieu of foreclosure, the purchaser of the
Trust Property, or such part thereof, shall succeed to all of Trustor’s rights
with respect to the Trust Property, including any rights to unexpired, unearned
or returnable insurance premiums, subject to limitations on the assignment of
blanket policies, but limited to such rights as relate to the Trust Property or
such part thereof. If Beneficiary acquires title to the Trust Property, or any
part thereof, in any manner, Beneficiary shall thereupon (as between Trustor and
Beneficiary) become the sole and absolute owner of the insurance policies with
respect to the Trust Property, provided, however that Trustor’s rights and
coverage under any such policies shall not be affected by such transfer of
title, and all insurance proceeds payable thereunder with respect to the Trust
Property, with the sole right to collect and retain all unearned or returnable
premiums thereon with respect to the Trust Property, or such part thereof, if
any.

 

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(c) If any damage to, destruction or loss of or other casualty with respect to
any of the Trust Property shall occur, Trustor shall file and prosecute its
claim or claims for any insurance proceeds in good faith and with due diligence
and cause the same to be collected and paid over to Beneficiary, and Trustor
hereby irrevocably authorizes and empowers Beneficiary, in the name of Trustor
or otherwise, to collect and receipt for any such insurance proceeds and to
adjust any insurance claims and to file and prosecute such claim or claims, and
although it is hereby expressly agreed that the same shall not be necessary in
any event, Trustor shall, upon demand of Beneficiary, make, execute and deliver
any and all assignments and other instruments sufficient for the purpose of
assigning any such insurance proceeds to Beneficiary, free and clear of any
Liens whatsoever. Trustor hereby irrevocably appoints Beneficiary as Trustor’s
attorney-in-fact for each such purpose (which appointment is coupled with an
interest) and authorizes any Person to act upon the foregoing appointment.

(d) Following any damage to, destruction or loss of or other casualty with
respect to any of the Trust Property, Trustor shall, in its sole and absolute
discretion, apply the entire amount thereof to (i) the restoration of the Trust
Property in accordance with customary construction loan practices provided that
such restoration can be completed within 270 days of the occurrence of any
casualty loss affecting the Trust Property or (ii) in the event that restoration
cannot be completed within 270 days of the occurrence of a casualty loss
affecting the Trust Property or if Trustor so elects, the payment of the
Obligations, whether or not then due and payable, in such manner and order as
Beneficiary may elect. In the event that Trustor elects to restore the Trust
Property in accordance with the terms of the previous sentence, Trustor hereby
covenants and agrees to promptly commence and to diligently prosecute the
restoration of the Trust Property upon the occurrence of any casualty loss
affecting the Trust Property, without regard to the availability or adequacy of
insurance proceeds, but in all events in a manner approved by Beneficiary.
Notwithstanding any damage to, destruction or loss of or other casualty with
respect to any of the Trust Property, Trustor shall continue to pay the
Obligations at the time and in the manner provided for in the Indenture and the
other Security Documents until the Obligations have been paid in full. If the
Trust Property is sold, through foreclosure or otherwise, prior to the receipt
by Beneficiary of such insurance proceeds, Beneficiary shall have the right,
whether or not a deficiency judgment on any Security Document shall have been
sought, recovered or denied, to receive such insurance proceeds, or a portion
thereof sufficient to pay the then unpaid Obligations, whichever is less.

Section 5.05 Condemnation and Application of Condemnation Proceeds.

(a) Promptly upon its obtaining knowledge of the institution or the threatened
institution of any proceeding for the condemnation or other taking of the Trust
Property, or any portion thereof or interest therein, Trustor shall notify
Beneficiary of such proceeding. Trustor shall then, if reasonably requested by
Beneficiary, file or defend its claim thereunder and prosecute same with due
diligence to its final disposition and shall, subject to the terms of the
Indenture, cause any awards or settlements to be paid over to Beneficiary for
disposition pursuant to the terms of this Deed of Trust. Beneficiary shall be
entitled to participate in any

 

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such proceeding and Trustor shall deliver or cause to be delivered to
Beneficiary such instruments as may be requested by Beneficiary from time to
time to permit such participation and Trustor shall pay all reasonable costs and
expenses of Beneficiary in connection with Beneficiary’s participation in such
proceedings and delivery of documents in connection therewith.

(b) If the Trust Property or any part thereof is taken (the loss of which shall
have a material impact on Trustor’s ability to use and operate the Trust
Property), or if a consent settlement is entered by or under threat of such
proceeding, then Trustor shall, in its sole an absolute discretion, apply the
entire amount thereof to (i) the restoration of the Trust Property provided that
such restoration can be completed within 270 days of the occurrence of
condemnation or other taking affecting the Trust Property or (ii) in the event
that restoration cannot be completed within 270 days of the occurrence of a
condemnation or other taking affecting the Trust Property or if Trustor so
elects, the payment of the Obligations, whether or not then due and payable, in
such manner and order as Beneficiary may elect. In the event that Trustor elects
to restore the Trust Property in accordance with the terms of the previous
sentence, Trustor hereby covenants and agrees to promptly commence and to
diligently prosecute the restoration of the Trust Property upon the occurrence
of any condemnation or other taking affecting the Trust Property, without regard
to the availability or adequacy of any award or settlement, but in all events in
a manner approved by Beneficiary. Notwithstanding any condemnation or other
taking of any of the Trust Property, Trustor shall continue to pay the
Obligations at the time and in the manner provided for in the Indenture and the
other Security Documents, and the Obligations shall not be reduced until, and
then only to the extent that, any condemnation award or settlement shall have
been actually received and applied by Beneficiary to the discharge of the
Obligations. If the Trust Property is sold, through foreclosure or otherwise,
prior to the receipt by Beneficiary of such condemnation award or settlement,
Beneficiary shall have the right, whether or not a deficiency judgment on any
Security Document shall have been sought, recovered or denied, to receive such
condemnation award or settlement, or a portion thereof sufficient to pay the
Obligations, whichever is less.

Section 5.06 Maintenance of Rights-of-Way, Easements, Licenses and Other Rights.
Trustor shall maintain, preserve and renew all rights-of-way, easements,
tenements, hereditaments, development rights and credits, zoning rights, grants,
privileges, appurtenances, licenses, franchises and other rights reasonably
necessary for the use or operation of the Trust Property from time to time, or
otherwise relevant to the value thereof, and Trustor shall not, without the
prior written consent of Beneficiary, which consent shall not be unreasonably
withheld, initiate, join in or consent to any private restrictive covenant or
other public or private restriction as to the present or future use or operation
of the Trust Property. Trustor shall, however, comply with all restrictive
covenants which may at any time affect the Trust Property, all applicable zoning
ordinances and all other public or private restrictions relating to the use of
the Trust Property.

Section 5.07 Payment and Performance of Obligations. Trustor shall duly and
punctually pay and perform all of the Obligations.

 

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Section 5.08 Compliance with Permitted Liens and Other Obligations. Trustor
shall comply in all material respects with any and all obligations, restrictions
and requirements that may be set forth in each and every document constituting a
Permitted Lien. In addition, Trustor shall comply in all material respects with
each and every obligation legally imposed upon it and/or relating to the Trust
Property pursuant to applicable law (including, without limitation, all matters
described in Section 4.05 hereof), contract or other agreement. It is hereby
acknowledged that Beneficiary’s consent to a Permitted Lien as of the date
hereof shall in no way be deemed to constitute approval of any future Lien which
may be imposed upon any portion of the Trust Property, or any other enforcement
action affecting Trustor or the Trust Property, as a result of Trustor’s failure
to perform or comply with its obligations under any document constituting a
Permitted Lien as of the date hereof.

Section 5.09 Additional Affirmative Covenants. All affirmative covenants made by
the Guarantors or any of them in the Indenture are incorporated herein by
reference and are hereby also made by Trustor as to itself and the Trust
Property as though such covenants were set forth at length herein as the
covenants of Trustor.

ARTICLE VI

NEGATIVE COVENANTS

Trustor hereby covenants and agrees with Beneficiary that, until all of the
Obligations shall have been paid or performed in full and discharged, and the
commitments under the Indenture:

Section 6.01 Use Violations. Trustor shall not use, maintain, operate or occupy,
or allow the use, maintenance, operation or occupancy of, the Trust Property in
any manner which (a) violates in any material respect any Governmental
Requirement, (b) may be dangerous unless safeguarded as required by applicable
law, (c) constitutes a public or private nuisance, or (d) makes void, voidable
or cancelable, or increases, substantially in excess of commercially reasonably
rates, the premium of, any insurance then in force with respect thereto.

Section 6.02 Waste. Trustor shall not commit or permit any waste with respect to
the Trust Property.

Section 6.03 Alterations. Trustor shall notify Beneficiary, in writing and in
advance, with respect to all proposed alterations, improvements or additions to
the Trust Property which are of a material nature, and, unless and to the extent
otherwise expressly provided in the Indenture, Trustor shall not effect any
material alteration, improvement or addition to the Trust Property without the
prior written consent of Beneficiary.

Section 6.04 No Further Encumbrances. Trustor shall not, except either as
provided in the Indenture or without the prior written consent of Beneficiary,
create, place or permit to be created or placed, or through any act or failure
to act, acquiesce in the placing of, or allow to remain, any mortgage, pledge,
Lien (statutory, constitutional or contractual), security

 

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interest, encumbrance or charge on, or conditional sale or other title retention
agreement with respect to, the Trust Property, or any portion thereof or
interest therein, other than the Permitted Liens, regardless of whether the same
are subordinate to the Lien(s) and security interest(s) created by this Deed of
Trust.

Section 6.05 Transfer Restrictions. Trustor shall not sell, lease, assign,
transfer or otherwise dispose of or abandon all or any part of the Trust
Property (or any interest therein), except as expressly permitted by, and in
accordance with the terms of, the Indenture.

Section 6.06 Loan and Indentures; Additional Negative Covenants. Trustor has
received a copy of and is fully familiar with the terms and provisions of the
Indenture and the other Security Documents. All negative covenants made by the
Guarantors or any of them in the Indenture and the other Security Documents are
incorporated herein by reference and are hereby also made by Trustor as to
itself and the Trust Property as though such negative covenants were set forth
at length herein as the negative covenants of Trustor.

ARTICLE VII

EVENTS OF DEFAULT AND REMEDIES

Section 7.01 Event of Default. The “Events of Default” set forth in Article Six
of the Indenture are hereby incorporated herein as if fully set forth herein,
and, without limiting the generality of the foregoing, the occurrence of an
“Event of Default” or a “Default” under the Indenture or any other Security
Document shall constitute an “Event of Default” hereunder.

Section 7.02 Acceleration. Unless otherwise provided in the Indenture, upon the
occurrence and during the continuance of any Event of Default, in addition to
any other rights, powers or remedies conferred herein or by operation of law,
Beneficiary, in its sole judgment and discretion, may declare the then unpaid
principal balance of the Loan (the “Principal Balance”), the accrued interest
thereon and any other accrued but unpaid portion of the Obligations to be, and
they shall thereupon forthwith become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by Trustor.

Section 7.03 Foreclosure and Sale. If an Event of Default shall occur and be
continuing, Beneficiary shall have the right and option to take possession of
the Trust Property and/or proceed with foreclosure by directing Trustee, or
Trustee’s successors or substitutes in trust, and to sell, to the extent and in
the manner permitted by applicable law, all or any portion of the Trust Property
at one or more sales, as an entirety or in parcels, at such place or places, in
such manner and upon such notice as may be required by applicable law, or, in
the absence of any such requirement, as Beneficiary may deem appropriate, and to
make conveyance to the purchaser or purchasers. Where the Trust Property is
situated in more than one county, notice as above provided shall be posted and
filed in all such counties (if such notices are required by applicable law), and
all such Trust Property may be sold in any such county and any such notice shall
designate the county where such Trust Property is to be sold. Nothing contained
in this

 

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Section 7.03 shall be construed so as to limit in any way Beneficiary’s rights
to sell the Trust Property, or any portion thereof, by private sale if, and to
the extent that, such private sale is permitted under the laws of the applicable
jurisdiction or by public or private sale after entry of a judgment by any court
of competent jurisdiction so ordering. Trustor hereby irrevocably appoints
Beneficiary to be the attorney-in-fact of Trustor (coupled with an interest) and
in the name and on behalf of Trustor to execute and deliver any deeds,
transfers, conveyances, assignments, assurances and notices which Trustor ought
to execute and deliver, and to do and perform any other acts or things which
Trustor ought to do and perform under the covenants herein contained and,
generally, to use the name of Trustor in the exercise of any of the powers
hereby conferred on Beneficiary. At any such sale: (a) whether made under the
power herein contained or any other legal enactment, or by virtue of any
judicial proceedings or any other legal right, remedy or recourse, it shall not
be necessary for Beneficiary to have physically present, or to have constructive
possession of, the Trust Property (Trustor hereby covenanting and agreeing to
deliver to Beneficiary any portion of the Trust Property not actually or
constructively possessed by Beneficiary immediately upon demand by Beneficiary)
and the title to and right of possession of any such property shall pass to the
purchaser thereof as completely as if the same had been actually present and
delivered to purchaser at such sale; (b) each instrument of conveyance executed
by Beneficiary shall contain a general warranty of title, binding upon Trustor
and its successors and assigns; (c) each and every recital contained in any
instrument of conveyance made by Beneficiary shall conclusively establish the
truth and accuracy of the matters recited therein, including, without
limitation, nonpayment and/or nonperformance of the Obligations and
advertisement and conduct of such sale in the manner provided herein and
otherwise required by applicable law; (d) any and all prerequisites to the
validity thereof shall be conclusively presumed to have been performed; (e) the
receipt of Beneficiary, or of such other Person or officer making the sale,
shall be a sufficient discharge to the purchaser for its purchase money and
neither such purchaser nor its assigns or personal representatives shall
thereafter be obligated to see to the application of such purchase money, or be
in any way answerable for any loss, misapplication or non-application thereof;
(f) to the fullest extent permitted by applicable law, Trustor shall be
completely and irrevocably divested of all of its right, title, interest,
estate, claim and demand whatsoever, either at law or in equity (including any
statutory or common law right of redemption, which is hereby waived to the
fullest extent permitted by applicable law), in and to the property sold in any
such event, and such sale shall be a perpetual bar, both at law and in equity,
against Trustor and any and all other Persons claiming by, through or under
Trustor; and (g) to the extent and under such circumstances as are permitted by
applicable law, Beneficiary may be a purchaser at any such sale, and shall have
the right, after paying or accounting for all costs of said sale or sales, to
credit the amount of the then unpaid Obligations to the amount of its bid (in
the order of priority set forth in Section 7.16 hereof) in lieu of cash payment.
Each remedy provided in this instrument is distinct from and cumulative with all
other rights and remedies provided hereunder or afforded by applicable law or
equity, and may be exercised concurrently, independently or successively, in any
order whatsoever.

Section 7.04 Trustee’s Agents. Trustee or any successor to or substitute for
Trustee may appoint or delegate any one or more Persons as agent to perform any
act or acts necessary or incident to any sale held by Trustee, including the
posting of notices and the

 

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conduct of sale, but in the name and on behalf of Beneficiary. If Trustee or any
successor to or substitute for Trustee shall have given notice of sale
hereunder, any successor or substitute trustee thereafter appointed may complete
the sale and the conveyance of the Trust Property pursuant thereto as if such
notice had been given by the successor to or substitute for Trustee conducting
the sale.

Section 7.05 Judicial Foreclosure. If any Event of Default shall occur and be
continuing, Trustee or Beneficiary shall have the right and power to proceed by
a suit or suits in equity or at law, whether for the specific performance of any
covenant or agreement herein contained or in aid of the execution of any power
herein granted, or for any foreclosure hereunder or for the sale of the Trust
Property under the judgment or decree of any court or courts of competent
jurisdiction, or for the appointment of a receiver pending any foreclosure
hereunder or the sale of the Trust Property under the order of a court or courts
of competent jurisdiction or under executory or other legal process, or for the
enforcement of any other appropriate legal or equitable remedy. Any money
advanced by Trustee and/or Beneficiary in connection with any such receivership
shall be a demand obligation (which obligation Trustor hereby expressly promises
to pay) owing by Trustor to Trustee and/or Beneficiary and shall bear interest
from the date of such advance by Trustee and/or Beneficiary until paid at the
Default Rate.

Section 7.06 Receiver. If any Event of Default shall occur and be continuing,
Beneficiary shall have the right and power to proceed by a suit or suits in
equity or at law, whether for the specific performance of Beneficiary which
Trustee may apply for and obtain as a matter of right and without notice to
Trustor, which notice is hereby expressly waived by Trustor, the appointment of
a receiver to collect the Rents of the Trust Property and to preserve the
security hereof, either before or after any foreclosure sale or the sale of the
Trust Property under the order of a court or courts of competent jurisdiction or
under executory or other legal process, without regard to the value of the Trust
Property as security for the amount then due to Beneficiary, or the solvency of
any entity or entities, person or persons primarily or secondarily liable for
the payment of such amounts; the Rents of the Trust Property, in any such event,
having heretofore been assigned to Beneficiary pursuant to Section 3.01 hereof
as additional security for the payment of the Obligations secured hereby. Any
money advanced by Beneficiary in connection with any such receivership shall be
a demand obligation (which obligation Trustor hereby expressly promises to pay)
owing by Trustor to Beneficiary and shall be subject to the provisions of
Section 9.07(b) hereof.

Section 7.07 Foreclosure for Installments. To the extent allowed by applicable
law and in accordance with the Indenture, during the pendency of an Event of
Default, Beneficiary shall also have the option to proceed with foreclosure in
satisfaction of any installments of the Obligations which have not been paid
when due, either through the courts or otherwise, by non-judicial power of sale,
by directing Trustee or any successors in trust to Trustee to proceed with
foreclosure, in satisfaction of the matured but unpaid portion of the
Obligations as if under a full foreclosure, conducting the sale as herein
provided and without declaring the entire principal balance and accrued interest
due. Such sale may be made subject to the unmatured portion of the Obligations,
and any such sale shall not in any manner affect the

 

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unmatured portion of the Obligations, but as to such unmatured portion of the
Obligations this Deed of Trust shall remain in full force and effect just as
though no sale had been made hereunder. It is further agreed that several sales
may be made hereunder without exhausting the right of sale for any unmatured
part of the Obligations, it being the intent and purpose hereof to provide for a
foreclosure and sale of the security for any matured portion of the Obligations
without exhausting the power to foreclose and sell the Trust Property for any
subsequently maturing portion of the Obligations.

Section 7.08 Separate Sales. To the extent allowed by applicable law, the Trust
Property may be sold in one or more parcels and in such manner and order as
Beneficiary, in its sole discretion, may elect, it being expressly understood
and agreed that the right of sale arising out of any Event of Default shall not
be exhausted by any one or more sales.

Section 7.09 Possession of Trust Property. Trustor agrees to the full extent
that it lawfully may, that, in case one or more of the Events of Default shall
have occurred and be continuing, then, and in every such case, Trustee or
Beneficiary shall have the right and power to enter into and upon and take
possession of all or any part of the Trust Property in the possession of
Trustor, its successors or assigns, or its or their agents or servants, and may
exclude Trustor, its successors or assigns, and all Persons claiming by, through
or under Trustor, and its or their agents or servants wholly or partly
therefrom; and, holding the same, Trustee or Beneficiary may use, administer,
manage, operate and control the Trust Property and conduct the business thereof
to the same extent as Trustor, its successors or assigns, might at the time do
and may exercise all rights and powers of Trustor, in the name, place and stead
of Trustor, or otherwise as Trustee or Beneficiary shall deem best. All costs,
expenses and liabilities of every character incurred by Trustee and/or
Beneficiary in administering, managing, operating and controlling the Trust
Property shall constitute a demand obligation (which obligation Trustor hereby
expressly promises to pay) owing by Trustor to Trustee and/or Beneficiary and
shall be subject to the provisions of Section 9.07(b) hereof. Trustor hereby
irrevocably constitutes and appoints Beneficiary as Trustor’s attorney-in-fact
(coupled with an interest) to perform such acts and execute such documents as
Beneficiary, in its sole discretion, shall deem appropriate, including
endorsement of Trustor’s name on any instruments. Regardless of any provision of
this Deed of Trust, the Financing Agreement or any other Security Document,
Beneficiary shall not be considered to have accepted any property other than
cash or immediately available funds in satisfaction of any obligation of Trustor
to Beneficiary, unless Beneficiary shall have given express written notice of
Beneficiary’s election to the contrary.

Section 7.10 Intentionally Omitted.

Section 7.11 Remedies Cumulative, Concurrent and Nonexclusive. Every right,
power and remedy herein given to Trustee or Beneficiary shall be cumulative and
in addition to every other right, power and remedy herein specifically given or
now or hereafter existing in equity, at law or by statute (including
specifically those granted by the Applicable UCC). Each such right, power and
remedy, whether specifically herein given or otherwise existing, may be
exercised from time to time and so often and in such order as may be deemed
expedient by Trustee or Beneficiary, and the exercise, or the beginning of the
exercise, of any such right, power or remedy shall not be deemed a waiver of the
right to exercise, at the same time or

 

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thereafter, any other right, power or remedy. Beneficiary shall be entitled to
collect all reasonable costs and expenses incurred in pursuing such remedies. No
delay or omission by Trustee or Beneficiary in the exercise of any such right,
power or remedy shall impair any such right, power or remedy or operate as a
waiver thereof or of any other right, power or remedy then or thereafter
existing.

Section 7.12 No Release of Obligations. To the extent permitted by law, neither
Trustor, any Guarantor, nor any other Person now or hereafter obligated for the
payment or performance of all or any part of the Obligations shall be relieved
of any such obligation by reason of (a) the failure of Trustee or Beneficiary to
comply with any request of Trustor, Beneficiary, any Guarantors or any other
Person so obligated to foreclose the Lien of this Deed of Trust to enforce any
provision hereunder or under the Financing Agreement; (b) the release,
regardless of consideration, of the Trust Property or any portion thereof or
interest therein or the addition of any other property to the Trust Property;
(c) any agreement or stipulation between any subsequent owner of the Trust
Property and Beneficiary extending, renewing, rearranging or in any other way
modifying the terms of this Deed of Trust without first having obtained the
consent of, given notice to or paid any consideration to Trustor, Beneficiary,
any Guarantor, or any other Person, and in any such event Trustor, Beneficiary,
all Guarantors, and all such other Persons shall continue to be liable to make
payment according to the terms of any such extension or modification agreement
unless expressly released and discharged in writing by Beneficiary; or (d) any
other act or occurrence save and except the complete payment and performance of
all of the Obligations.

Section 7.13 Release of and Resort to Collateral. Beneficiary may release,
regardless of consideration, any part of the Trust Property without, as to the
remainder, in any way impairing, affecting, subordinating or releasing the Lien
or security interest created in or evidenced by this Deed of Trust or its
stature as a first and prior Lien and security interest in and to the Trust
Property, and without in any way releasing or diminishing the liability of any
Person liable for the payment or performance of the Obligations. Beneficiary may
resort to any other security for the Obligations held by Trustee or Beneficiary
in such manner and order as Beneficiary may elect. Upon satisfaction of all of
the Obligations, Beneficiary shall promptly comply with its obligations under
California Civil Code Section 2941 and cause this Deed of Trust to be
reconveyed.

Section 7.14 Waiver of Redemption, Notice and Marshalling of Assets. To the
fullest extent permitted by applicable law, Trustor hereby irrevocably and
unconditionally waives and releases (a) all benefits that might accrue to
Trustor by virtue of any present or future moratorium law or other law exempting
the Trust Property from attachment, levy or sale on execution or providing for
any appraisement, valuation, stay of execution, exemption from civil process,
redemption or extension of time for payment; (b) except for notices expressly
provided for herein or in the Indenture, all notices of any Event of Default or
of Beneficiary’s intention to accelerate maturity of the Obligations or of
Trustee’s or Beneficiary’s election to exercise or actual exercise of any right,
remedy or recourse provided for hereunder or under the Indenture; and (c) any
right to a marshalling of assets or a sale in inverse order of alienation; and
(d) any and all conflicts with any provisions of any of the Security Documents.
If any law referred to in

 

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this Deed of Trust and now in force, of which Trustor or its successor or
successors might take advantage despite the provisions hereof, shall hereafter
be repealed or cease to be in force, such law shall thereafter be deemed not to
constitute any part of the contract herein contained or to preclude the
operation or application of the provisions hereof.

Section 7.15 Discontinuance of Proceedings. In case Beneficiary shall have
proceeded to invoke any right, remedy or recourse permitted hereunder or under
the Indenture and shall thereafter elect to discontinue or abandon same for any
reason, Beneficiary shall have the unqualified right so to do and, in such an
event, Trustor and Beneficiary shall be restored to their former positions with
respect to the Obligations, this Deed of Trust, the Indenture, the Trust
Property and otherwise, and the rights, remedies, recourses and powers of
Beneficiary shall continue as if same had never been invoked.

Section 7.16 Application of Proceeds. After the occurrence and during the
continuance of an Event of Default, the proceeds of any sale of and any other
amounts generated by the holding, leasing, operating or other use of the Trust
Property shall be applied by Beneficiary (or the receiver, if one is appointed),
to the extent that funds are so available therefrom, in accordance with the
provisions of the Indenture or, if not so provided, then in the following order
of priority, except to the extent otherwise required by applicable law:

(a) first, to the payment of the reasonable and necessary costs and expenses of
taking possession of the Trust Property and of holding, using, leasing,
repairing, improving the same, including reasonable (i) receivers’ fees,
(ii) court costs, (iii) attorneys’ and accountants’ fees, (iv) costs of
advertisement and title search fees, and (v) the payment of any and all
Impositions, Liens, security interests or other rights, titles or interests
equal or superior to the Lien and security interest of this Deed of Trust
(except those to which the Trust Property has been sold subject to and without
in any way implying Beneficiary’s prior consent to the creation thereof);

(b) second, to the payment of all amounts other than the Principal Balance and
accrued but unpaid interest which may be due to Beneficiary hereunder or under
the other Security Documents, together with interest thereon as provided herein;

(c) third, to the payment of the Obligations in such order and manner as
Beneficiary may elect in accordance with the Indenture; and

(d) fourth, to Trustor or as otherwise required by any Governmental Requirement.

Trustor shall be liable for any deficiency remaining.

Section 7.17 Uniform Commercial Code Remedies. Beneficiary shall have all of the
rights, remedies and recourses with respect to the Personalty and the Fixtures
afforded to it by the Applicable UCC, including, without limitation, the right
to take possession of the Personalty and the Fixtures or any part thereof, and
to take such other measures as Beneficiary may deem necessary for the care,
protection and preservation of the Personalty and the Fixtures, in addition to,
and not in limitation of, the other rights, remedies and recourses afforded by
this Deed of Trust and the other Security Documents.

 

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Section 7.18 Indemnity. In connection with any action taken by Trustee,
Beneficiary and/or any Holder pursuant to this Deed of Trust, Trustee,
Beneficiary and/or any such Holder and their respective Indemnified Parties
shall not be liable for any Loss sustained by Trustor, including those resulting
from (a) any assertion that Beneficiary, or any such Holder or/and such
Indemnified Party has received funds from the operations of the Trust Property
claimed by third Party, or (b) any act or omission of Trustee, Beneficiary, or
any such Holder or any such Indemnified Party in administering, managing,
operating or controlling the Trust Property, including in either case such Loss
as may result from the ordinary negligence of Trustee and/or Beneficiary or any
other Holder or an Indemnified Party or which may result from strict liability,
whether under applicable law or otherwise, unless such Loss is caused by the
gross negligence, willful misconduct or bad faith of Trustee and/or Beneficiary
and/or such other Holder or such Indemnified Party, nor shall Trustee,
Beneficiary and/or any other Holder or an Indemnified Party be obligated to
perform or discharge any obligation, duty or liability of Trustor. Trustor shall
and does hereby agree to indemnify Trustee and/or Beneficiary and each of the
other Holders and their respective Indemnified Parties for, and to hold Trustee,
Beneficiary and each such other Holder and each Indemnified Party harmless from,
any and all Losses which may or might be incurred by Trustee and/or Beneficiary
or any of such other Holders or such Indemnified Parties by reason of this Deed
of Trust or the exercise of rights or remedies hereunder, including such Losses
as may result from the ordinary negligence of Trustee, Beneficiary or any other
Holder or an Indemnified Party, or which may result from strict liability,
whether under applicable law or otherwise, unless such Loss is caused by the
gross negligence, willful misconduct or bad faith Trustee, Beneficiary or such
other Holder or such Indemnified Party. Should Trustee, Beneficiary and/or any
other Holder or an Indemnified Party make any expenditure on account of any such
Losses, the amount thereof, including costs, expenses and reasonable attorneys’
fees, shall be a demand obligation (which obligation Trustor hereby expressly
promises to pay) owing by Trustor to Trustee and/or Beneficiary and shall be
subject to the provisions of Section 9.07(b) hereof. Trustor hereby assents to,
ratifies and confirms any and all actions of Trustee and/or Beneficiary with
respect to the Trust Property taken under this Deed of Trust. The liabilities of
Trustor, as set forth in this Section 7.18, shall survive the termination of
this Deed of Trust and the payment and performance of the Obligations.

ARTICLE VIII

TRUSTEE

Section 8.01 Duties, Rights, and Powers of Trustee. It shall be no part of the
duty of Trustee to see to any recording, filing or registration of this Deed of
Trust or any other instrument in addition or supplemental thereto, or to give
any notice thereof, or to see to the payment of or be under any duty in respect
of any tax or assessment or other governmental charge which may be levied or
assessed on the Trust Property, or any part thereof, or against Trustee, or to
see to the performance or observance by Trustee of any of the covenants and
agreements contained herein. Trustee shall not be responsible for the execution,
acknowledgment or validity of this Deed of Trust or of any instrument in
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security purported to be created hereby, and makes no representation in respect
thereof or in respect of the rights of Beneficiary. Trustee shall have the right
to confer with counsel upon any matters arising hereunder and shall be fully
protected in relying as to legal matters on the advice of counsel. Trustee shall
not incur any personal liability hereunder except for Trustee’s own gross
negligence or willful misconduct, and 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 Trustee hereunder, believed by Trustee in good faith
to be genuine.

Section 8.02 Successor Trustee. Trustee may resign by written notice addressed
to Beneficiary or be removed at any time with or without cause by an instrument
in writing duly executed on behalf of Beneficiary. In case of the death,
resignation or removal of Trustee, a successor trustee may be appointed by
Beneficiary by instrument of substitution complying with any applicable
requirements of law, or, in the absence of any such requirement, without other
formality than appointment and designation in writing. Written notice of such
appointment and designation shall be given by Beneficiary to Trustee, but the
validity of any such appointment shall not be impaired or affected by failure to
give such notice or by any defect therein. Such appointment and designation
shall be full evidence of the right and authority to make the same and of all
the facts therein recited, and, upon the making of any such appointment and
designation, this Deed of Trust shall vest in the successor trustee all the
estate and title in and to all of the Trust Property, and the successor trustee
shall thereupon succeed to all of the rights, powers, privileges, immunities and
duties hereby conferred upon Trustee named herein, and one such appointment and
designation shall not exhaust the right to appoint and designate a successor
trustee hereunder but such right may be exercised repeatedly as long as any
Obligations remain unpaid hereunder. To facilitate the administration of the
duties hereunder, Beneficiary may appoint multiple trustees to serve in such
capacity or in such jurisdictions as Beneficiary may designate.

Section 8.03 Retention of Moneys. All moneys received by Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for which
they were received, but need not be segregated in any manner from any other
moneys (except to the extent required by law), and Trustee shall be under no
liability for interest on any moneys received by Trustee hereunder.

ARTICLE IX

MISCELLANEOUS

Section 9.01 Instrument Construed as Mortgage, Etc. This Deed of Trust may be
construed as a mortgage, deed of trust, chattel mortgage, conveyance,
assignment, security agreement, pledge, financing statement, hypothecation or
contract, or any one or more of them, in order to fully effectuate the liens and
security interests created hereby and the purposes and agreements set forth
herein.

Section 9.02 Performance at Trustor’s Expense. The cost and expense of
performing or complying with any and all of the Obligations shall be borne
solely by Trustor, and no portion of such cost and expense shall be, in any way
or to any extent, credited against any installment on or portion of the
Obligations.

 

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Section 9.03 Survival of Obligations. Each and all of the Obligations shall
survive the execution and delivery of this Deed of Trust and shall continue in
full force and effect until all of the Obligations shall have been fully
satisfied.

Section 9.04 Further Assurances. Trustor, upon the request of Beneficiary, shall
execute, acknowledge, deliver and record and/or file such further reasonable
instruments, including financing statements, and do such further acts as may be
reasonably necessary, desirable or proper to carry out more effectively the
purpose of this Deed of Trust and to subject to the Liens and security interests
hereof any property intended by the terms hereof to be covered hereby, including
any renewals, additions, substitutions, replacements, betterments or
appurtenances to the then Trust Property.

Section 9.05 Notices. All notices or other communications required or permitted
to be given pursuant to this Deed of Trust shall be in writing and shall be
considered properly given if given in the manner and to the addresses prescribed
by Section 12.02 of the Indenture to the parties and at the addresses set forth
in the first paragraph hereof, and to each of the parties and at the addresses
set forth in Section 12.02 of the Indenture; provided, however, that (a) service
of notice as required by the laws of any State or Commonwealth in which portions
of the Trust Property may be situated shall for all purposes be deemed
appropriate and sufficient with the giving of such notice thereunder, and
(b) any party shall have the right to change its address for notice hereunder to
any other location within the continental United States by the giving of ten
(10) days’ notice to the other party in the manner set forth above.

Section 9.06 No Waiver. Any failure by Beneficiary to insist, or any election by
Beneficiary not to insist, upon strict performance by Trustor of any of the
terms, provisions or conditions of this Deed of Trust shall not be deemed to be
a waiver of the same or of any other terms, provision or condition hereof, and
Beneficiary shall have the right, at any time or times thereafter, to insist
upon strict performance by Trustor of any and all of such terms, provisions and
conditions. Subject to the terms and conditions of the Indenture, Beneficiary
may, in Beneficiary’s sole and absolute discretion, (i) in the case of a
Default, determine whether such Default has been cured, and (ii) in the case of
an Event of Default, accept or reject any proposed cure of an Event of Default.
In no event shall any provision of this Deed of Trust or any other Security
Document which provides that Beneficiary shall have certain rights and/or
remedies only during the continuance of an Event of Default be construed so as
to require Beneficiary to accept a cure of any such Event of Default. Unless and
until Beneficiary accepts any proposed cure of an Event of Default, such Event
of Default shall be deemed to be continuing for purposes of this Deed of Trust
and the other Security Documents.

Section 9.07 Beneficiary’s Right to Perform; Beneficiary’s Expenditures.

(a) Trustor agrees that if Trustor fails to perform any act or take any action
which Trustor is required to perform or take hereunder or under the Indenture or
to pay any money which Trustor is required to pay hereunder or under the
Indenture, Beneficiary may, upon prior notice to Trustor, but shall not be
obligated to, perform or cause to be performed such act or take such action or
pay such money.

 

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(b) All reasonable costs and expenses incurred by Beneficiary (or any
Indemnified Party), including, without limitation, reasonable attorneys fees and
expenses, all monies paid by (or on behalf of) Beneficiary and the monetary
value of all services performed by (or on behalf of Beneficiary) in connection
with a Default or Event of Default hereunder or under any other Security
Document, including, without limitation, the (i) the enforcement of any term or
provision of this Deed of Trust or any other Security Document, (ii) the
performance by Beneficiary of any obligation of Trustor under this Deed of Trust
or any other Security Document if Beneficiary elects to so perform, in its sole
and absolute discretion, and (iii) any action Beneficiary elects to take, in its
sole and absolute discretion, to protect its interest in or the value of the
Trust Property, shall be a demand obligation owing by Trustor to Beneficiary, as
the case may be, and to the extent any payment is made to a third Person,
Beneficiary, upon making such payment, shall be subrogated to all of the rights
of the Person receiving such payment. Provided that an Event of Default shall
have occurred and be continuing, all such costs and expenses, monies and the
monetary value of such services performed shall (x) bear interest at the Default
Rate from the date of such incurrence, payment or performance, as applicable,
until paid, and (y) constitute (together with such interest) a portion of the
Obligations and shall be secured by this Deed of Trust and all of the other
Security Documents. If Beneficiary shall elect to pay any Imposition or other
sums due with reference to the Trust Property, Beneficiary may do so in reliance
on any bill, statement or assessment procured from the appropriate governmental
authority or other issuer thereof.

Section 9.08 Successors and Assigns. All of the terms hereof shall apply to, be
binding upon and inure to the benefit of the parties hereto, their successors,
assigns, heirs and legal representatives, and all other Persons claiming by,
through or under them; provided, however, that nothing herein shall be deemed to
imply any right on behalf of Trustor to assign its interest in any of the Trust
Property except as may be expressly set forth in the Indenture.

Section 9.09 Severability. This Deed of Trust is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws and
regulations of applicable Governmental Authorities and the provisions hereof are
intended to be limited to the extent necessary that they will not render this
Deed of Trust invalid, unenforceable or not entitled to be recorded, registered
or filed under the provisions of any applicable law. If any provision hereof or
the application thereof to any Person or circumstance shall, for any reason and
to any extent, be invalid or unenforceable, neither the remainder of this Deed
of Trust nor the application of such provision to other Persons or circumstances
shall be affected thereby, but rather shall be enforced to the greatest extent
permitted by applicable law.

Section 9.10 Subrogation of Trustee. This Deed of Trust is made with full
substitution and subrogation of Trustee and successors in this trust to Trustee
and Trustee and such successors assigns in and to all covenants and warranties
by others heretofore given or made in respect of the Trust Property or any part
thereof.

 

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Section 9.11 Entire Agreement and Modification. This Deed of Trust may not be
amended, revised, waived, discharged, released or terminated orally, but only by
a written instrument or instruments executed by the party against which
enforcement of the amendment, revision, waiver, discharge, release or
termination is asserted. Any alleged amendment, revision, waiver, discharge,
release or termination which is not so documented shall not be effective as to
any party.

Section 9.12 Applicable Law. THIS DEED OF TRUST SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE IN WHICH THE TRUST
PROPERTY IS LOCATED; PROVIDED, HOWEVER, THAT THE INDENTURE IS, BY ITS TERMS,
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK AS PROVIDED THEREIN, AND,
IN THE EVENT THAT IT BECOMES NECESSARY, IN CONNECTION WITH THE ENFORCEMENT OF
THIS DEED OF TRUST OR OTHERWISE, TO CONSTRUE OR ENFORCE THE OBLIGATIONS (WHICH
OBLIGATIONS ARE SECURED BY THIS DEED OF TRUST), THE INDENTURE SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.

Section 9.13 Satisfaction of Prior Encumbrance. To the extent that proceeds
advanced pursuant to the Indenture are used to pay indebtedness secured by any
outstanding Lien, security interest, charge or prior encumbrance against the
Trust Property, such proceeds shall be deemed to have been advanced by
Beneficiary at Trustor’s request, and, provided such advances were made in
accordance with applicable provisions of the Indenture, Beneficiary shall be
subrogated to any and all rights, security interests and Liens owned by any
owner or holder of such outstanding Liens, security interests, charges or
encumbrances, irrespective of whether said Liens, security interests, charges or
encumbrances are released, and it is expressly understood that, in consideration
of the payment of such other indebtedness by Beneficiary, Trustor hereby waives
and releases all demands and causes of action for offsets and payments to, upon
and in connection with the said indebtedness.

Section 9.14 No Partnership. Nothing contained in this Deed of Trust is intended
to, or shall be construed to, create to any extent and in any manner whatsoever
any partnership, joint venture, or association between Trustor and Beneficiary,
or in any way make Beneficiary a co-principal with Trustor with reference to the
Trust Property, and any inferences to the contrary are hereby expressly negated.

Section 9.15 Headings. The Article, Section and Subsection headings hereof are
inserted for convenience of reference only and shall in no way alter, modify or
define, or be used in construing, the text of such Articles, Sections or
Subsections.

Section 9.16 Release of Deed of Trust. If all of the Obligations shall be paid,
performed and discharged and the Indenture (and the commitments thereunder) is
terminated, Beneficiary shall forthwith cause satisfaction and discharge of this
Deed of Trust to be entered upon the record, and shall execute and deliver (or
cause to be executed and delivered) such instruments of satisfaction and
discharge as may be appropriate, such instruments to be duly

 

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acknowledged and in form for recording. Trustor shall pay the reasonable
out-of-pocket costs incurred by Beneficiary in discharging, releasing and/or
terminating this Deed of Trust and any other instruments related hereto,
including, but not limited to, any financing statements.

Section 9.17 Limitation of Obligations with Respect to Trust Property.

(a) Neither Trustee, Beneficiary nor any Holder shall have any duty to protect
or preserve, or any liability with respect to the protection or preservation of,
any Trust Property or to preserve rights pertaining thereto other than the duty
to use reasonable care in the custody and preservation of any Trust Property in
its actual possession. Beneficiary shall be deemed to have exercised reasonable
care in the custody and preservation of any Trust Property in its possession if
such Trust Property is accorded treatment substantially equal to that which
Beneficiary accords its own like property. Beneficiary shall be relieved of all
responsibility for any Trust Property in its possession upon surrendering it, or
tendering surrender of it, to Trustor or to such other Person entitled thereto
by applicable law.

(b) Nothing contained in this Deed of Trust shall be construed as requiring or
obligating Trustee, Beneficiary or any Holder, and neither Trustee, Beneficiary
nor any Holder shall be required or obligated, to (i) make any demand or inquiry
as to the nature or sufficiency of any payment received by it, or present or
file any claim or notice or take any action with respect to any Trust Property
or the monies due or to become due thereunder in connection therewith,
(ii) ascertain or take action with respect to calls, conversions, exchanges,
maturities, tenders, offers or other matters relating to any Trust Property,
whether or not Beneficiary or any of the other Holders has or is deemed to have
knowledge or notice thereof, (iii) take any necessary steps to preserve rights
against any prior parties with respect to any Trust Property, or (iv) notify
Trustor or any other Person of any decline in the value of any Trust Property.

Section 9.18 Inconsistency with Indenture. To the fullest extent possible, the
terms and provisions of the Indenture shall be read together with the terms and
provisions of this Deed of Trust such that the terms and provisions of this Deed
of Trust shall supplement, rather than conflict with, the terms and provisions
of the Indenture; provided, however, that, notwithstanding the foregoing, in the
event any of the terms or provisions of this Deed of Trust conflict with any of
the terms or provisions of the Indenture, such that it is impractical for such
terms or provisions to coexist, the terms or provisions of the Indenture shall
govern and control for all purposes; and, provided further, that the inclusion
in this Deed of Trust of terms and provisions, supplemental rights or remedies
in favor of a secured party but which are not addressed in the Indenture shall
not be deemed to be a conflict with the Indenture and all such additional terms,
provisions, supplemental rights or remedies contained herein shall be given full
force and effect.

Section 9.19 Limitation on Interest Payable. It is the intention of the parties
to conform strictly to the usury laws, whether state or federal, that are
applicable to the transaction of which this Deed of Trust is a part. All
agreements between Trustor and Beneficiary, or any Holder, whether now existing
or hereafter arising and whether oral or written, are hereby expressly limited
so that in no contingency or event whatsoever shall the amount paid or agreed to
be paid by Trustor for the use, forbearance or detention of the money to be
loaned under the

 

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Indenture or any other Security Document, or for the payment or performance of
any covenant or obligation contained herein or in the Indenture or any other
Security Document, exceed the maximum amount permissible under applicable
federal or state usury laws. If, under any circumstances, fulfillment of any
such provision, at the time performance of such provision shall be due, shall
involve exceeding the limit of validity prescribed by applicable law, then the
obligation to be fulfilled shall be reduced to the limit of such validity. If,
under any circumstances, Trustor shall have paid an amount of money which is
deemed to be interest and such interest would exceed the highest lawful rate,
such amount that would be excessive interest under applicable usury laws shall
be applied to the reduction of the principal amount owing in respect of the
Obligations and not to the payment of interest, or if such excessive interest
exceeds the unpaid balance of principal and any other amounts due hereunder, the
excess shall be refunded to Trustor. All sums paid or agreed to be paid for the
use, forbearance or detention of the principal under any extension of credit by
Beneficiary (or any Holder) shall, to the extent permitted by applicable law,
and to the extent necessary to preclude exceeding the limit of validity
prescribed by applicable law, be amortized, prorated, allocated and spread from
the date of this Deed of Trust until payment in full of the Obligations so that
the actual rate of interest on account of such principal amounts is uniform
throughout the term hereof.

Section 9.20 Covenants To Run With the Land. All of the grants, representations,
warranties, undertakings, covenants, terms, provisions and conditions in this
Deed of Trust shall run with the Land and shall apply to and bind the successors
and assigns of Trustor. If there shall be more than one trustor, the covenants,
representations and warranties made herein shall be deemed to be joint and
several.

Section 9.21 Amount Secured; Last Dollar. So long as the balance of the
Obligations exceeds the portion of the Obligations secured by this Deed of
Trust, no payment on account of the Obligations shall be deemed to be applied
against or to reduce the portion of the Obligations secured by this Deed of
Trust, but shall, instead, be deemed to be applied against only such portions of
the Obligations that are not secured by this Deed of Trust.

Section 9.22 Defense of Claims. Trustor shall promptly notify Beneficiary in
writing of the commencement of any legal proceedings materially affecting
Trustor’s title to the Trust Property or Beneficiary’s Lien on or security
interest in the Trust Property, or any part thereof, and shall take all such
action, employing attorneys reasonably agreeable to Beneficiary, as may be
necessary to preserve Trustor’s and Beneficiary’s rights affected thereby. If
Trustor fails or refuses to adequately or vigorously, in the reasonable judgment
of Beneficiary, defend Trustor’s or Beneficiary’s rights to the Trust Property,
Beneficiary may take such action on behalf of and in the name of Trustor and at
Trustor’s expense. Moreover, Beneficiary may take (or cause its agents to take)
such independent action in connection therewith as they may in their discretion
deem proper, including, without limitation, the right to employ independent
counsel and to intervene in any suit affecting the Trust Property. All costs,
expenses and reasonable out-of-pocket attorneys’ fees incurred by Beneficiary
(or its agents) pursuant to this Section 8.21 or in connection with the defense
by Beneficiary of any claims, demands or litigation relating to Trustor, the
Trust Property or the transactions contemplated in this Deed of Trust shall be
paid by Trustor on demand, plus interest thereon from the date of the advance by
Beneficiary until reimbursement of Beneficiary at the Default Rate.

 

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Section 9.23 Exculpation Provisions. EACH OF THE PARTIES HERETO SPECIFICALLY
AGREES THAT IT HAS A DUTY TO READ THIS DEED OF TRUST; AND AGREES THAT IT IS
CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS DEED OF TRUST; THAT IT
HAS IN FACT READ THIS DEED OF TRUST AND IS FULLY INFORMED AND HAS FULL NOTICE
AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS DEED OF TRUST; THAT
IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT
THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS DEED OF TRUST AND HAS RECEIVED
THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS DEED OF TRUST; AND THAT IT
RECOGNIZES THAT CERTAIN TERMS OF THIS DEED OF TRUST RESULT IN ONE PARTY ASSUMING
THE LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE
OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES
AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY
EXCULPATORY PROVISION OF THIS DEED OF TRUST ON THE BASIS THAT THE PARTY HAD NO
NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT
“CONSPICUOUS.”

Section 9.24 No Merger of Estates. So long as any part of the Obligations remain
unpaid, unperformed or undischarged, and the commitments under the Indenture
have not been terminated, the fee, easement and leasehold estates to the Trust
Property shall not merge but rather shall remain separate and distinct,
notwithstanding the union of such estates either in Trustor, Beneficiary, any
lessee, any third-party purchaser or otherwise.

ARTICLE X

STATE SPECIFIC PROVISIONS

Section 10.01 Power of Sale. Beneficiary may elect to foreclose by exercise of
the power of sale contained herein, in which event Beneficiary shall notify
Trustee and shall, if required, deposit with Trustee the Indenture, the original
or a certified copy of this Deed of Trust, and such other documents, receipts
and evidences of expenditures made and secured hereby as Trustee may require.
Upon receipt of such notice from Beneficiary, Trustee shall cause to be recorded
and delivered to Trustor such notice as may then be required by law and this
Deed of Trust. Trustee shall, without demand on Trustor, after lapse of such
time as may then be required by law and after recordation of such notice of
default and after notice of sale has been given as required by law, sell any of
the Trust Property at the time and place of sale fixed by it in said notice of
sale, either as a whole or in separate lots of parcel or items as Trustee shall
deem expedient, and in such order as it 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 the purchaser or purchasers at such sale its
good and sufficient deed or deeds conveying the Trust

 

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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
truthfulness thereof. Any person, including, without limitation, Trustor,
Trustee or Beneficiary, may purchase at such sale, and Trustor hereby covenants
to warrant and defend the title to the Trust Property on behalf of such
purchaser or purchasers. Trustee may postpone the sale of all or any portion of
the Trust Property from time to time in accordance with the laws of the State of
California. Beneficiary may from time to time rescind any notice of default or
notice of sale before any Trustee’s sale as provided above in accordance with
the laws of the State of California.

Section 10.02 Trustor Notice Address. Trustor hereby requests that a copy of any
notice of default or notice of sale as may be required by law, which affects any
of the Trust Property, be mailed to Trustor at the address referenced in
Section 2.04 hereof. Otherwise, neither Trustee nor beneficiary is under any
obligation to notify any person or entity of any action or proceeding of any
kind in which Trustor, Beneficiary and/or Trustee shall be a party, unless
brought by Trustee, or of any pending sale under any other deed of trust, except
as may otherwise be required by law or required hereunder.

Section 10.03 Co-Borrower Provision.

(a) As used in this Section 10.03, the term “Co-Borrower” shall mean any one of
the following: Pierce Hardy Limited Partnership, a Pennsylvania limited
partnership, and Hardy Management Company, Inc., a Nevada corporation; and the
term “Co-Borrowers” shall mean any two or more of such Co-Borrowers,
collectively. If only one Co-Borrower holds title to the Trust Property, the
representations, warranties, covenants and agreements set forth in this Section
shall be interpreted as being made by only that Co-Borrower.

(b) Each Co-Borrower agrees that it is jointly and severally liable to
Beneficiary for the payment of all obligations arising under this Deed of Trust
and the other Security Documents, and that such liability is independent of the
obligations of the other Co-Borrower. Beneficiary may bring an action against
any Co-Borrower, whether or not an action is brought against the other
Co-Borrower.

(c) Each Co-Borrower agrees that any release which may be given by Beneficiary
to the other Co-Borrower will not release such Co-Borrower from its obligations
under this Deed of Trust or any of the other Security Documents.

(d) Each Co-Borrower waives any right to assert against Beneficiary any defense,
setoff, counterclaim or claim that such Co-Borrower may have against the other
Co-Borrower or any other party liable to Beneficiary for the obligations of the
Co-Borrower under this Deed of Trust or any of the other Security Documents.

(e) Each Co-Borrower agrees that it is solely responsible for keeping itself
informed as to the financial condition of the other Co-Borrower and of all
circumstances which bear upon the risk of nonpayment. Each Co-Borrower waives
any right it may have to require Beneficiary to disclose to such Co-Borrower any
information that Beneficiary may now or hereafter acquire concerning the
financial condition of the other Co-Borrower.

 

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(f) Each Co-Borrower waives all rights to notices of default or nonperformance
by the other Co-Borrower under this Deed of Trust and the other Security
Documents. Each Co-Borrower further waives all rights to notices of the
existence or the creation of new indebtedness by the other Co-Borrower.

(g) Each Co-Borrower represents and warrants to Beneficiary that each will
derive benefit, directly and indirectly, from the collective administration and
availability of the Loan under this Deed of Trust and the other Security
Documents. Each Co-Borrower agrees that Beneficiary will not be required to
inquire as to the disposition by the other Co-Borrower of funds disbursed in
accordance with the terms of the Security Documents.

(h) Until all obligations of Co-Borrowers to Beneficiary under the Security
Documents have been paid in full, each Co-Borrower waives any right of
subrogation, reimbursement, indemnification and contribution (contractual,
statutory or otherwise), including any claim or right of subrogation under the
Bankruptcy Code (Title 11, United States Code) or any successor statute, that
such Co-Borrower may now or hereafter have against the other Co-Borrower with
respect to the indebtedness incurred under the Security Documents. Each
Co-Borrower waives any and all rights and defenses that are or may become
available to such Co-Borrower by reason of California Civil Code Sections 2787
to 2855, inclusive. Each Co-Borrower waives any right to enforce any remedy
which Beneficiary now has or may hereafter have against the other Co-Borrower,
and waives any benefit of, and any right to participate in, any security now or
hereafter held by Beneficiary.

(i) Each Co-Borrower waives all rights and defenses arising out of an election
of remedies by Beneficiary, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for a guaranteed obligation,
has destroyed such Co-Borrower’s rights of subrogation and reimbursement against
the other Co-Borrower by the operation of Section 580d of the California Code of
Civil Procedure or otherwise.

(j) Each Co-Borrower waives all rights and defenses that such Co-Borrower may
have because the Obligations are secured by real property. This means, among
other things:

(i) Beneficiary may collect from each Co-Borrower (including enforcing one or
more Deeds of Trust against such Co-Borrower’s interest in the Trust Property)
without first foreclosing on any real or personal property collateral pledged by
the other Co-Borrower.

(ii) If Beneficiary forecloses on any real property collateral pledged by any
Co-Borrower:

(A) If Beneficiary forecloses on any real property collateral pledged by any
Co-Borrower:

(B) Beneficiary may collect from each Co-Borrower (including enforcing one or
both of the Deed of Trust against such Co-Borrower’s

 

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interest) even if Beneficiary, by foreclosing on the real property collateral
pledged by the other Co-Borrower, has destroyed any right such Co-Borrower may
have to collect from the other Co-Borrower.

This clause (j) is an unconditional and irrevocable waiver of any rights and
defenses each Co-Borrower may have because Obligations are secured by real
property. These rights and defenses include, but are not limited to, any rights
or defenses based upon Section 580a, 580b, 580d, or 726 of the California Code
of Civil Procedure.

(k) Each Co-Borrower hereby waives any election of remedies by Beneficiary that
impairs any subrogation or other right of such Co-Borrower to proceed against
the other Co-Borrower or other person, including any loss of rights resulting
from any applicable anti deficiency laws relating to nonjudicial foreclosures of
real property or other laws limiting, qualifying or discharging obligations or
remedies, including the defense to enforcement of this Deed of Trust (the so
called “Gradsky” defense) which, absent this waiver, each Co-Borrower might have
by virtue of an election by Beneficiary to conduct a nonjudicial foreclosure
sale under this Deed of Trust, it being understood by each Co-Borrower that any
such nonjudicial foreclosure sale could destroy, by operation of California Code
of Civil Procedure Section 580d, all rights of any party to a deficiency
judgment against each Co-Borrower, and, as a consequence, could destroy all
rights which each Co-Borrower might otherwise have (including the rights of
subrogation, reimbursement, indemnity and contribution) to proceed against the
other Co-Borrower.

Section 10.04 Limitation of Obligations. Notwithstanding anything contained
herein, for purposes of this Deed of Trust, the “Obligations” shall not include
any indebtedness, obligations, and liabilities of any Guarantor.

[No Further Text On This Page; Signature Page Follows]

 

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IN WITNESS WHEREOF, the undersigned, by its member, pursuant to proper authority
of its operating agreement and/or bylaws, has duly executed, sealed,
acknowledged and delivered this instrument as of the day and year first above
written.

 

PHOTO RESEARCH, INC., a Delaware corporation By:  

/s/ Anthoni Bellantuoni

  Name: Anthoni Bellantuoni   Title: Director, Assistant Secretary

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STATE OF  MASSACHUSETTS

  

)

  

)    ss:

COUNTY OF  MIDDLESEX

  

)

On July 16, 2010 before me, Paula Pluta (here insert name of the officer),
Notary Public, personally appeared Anthony Bellantuoni, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

WITNESS my hand and official seal.

 

/s/ Paula A. Pluta

Notary Public Signature

(Seal)

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EXHIBIT A

LEGAL DESCRIPTION

Lot 1 of Tract Number 44645, in the city of Los Angeles, state of California, as
per map recorded in Book 1130 Pages 9 and 10 of Maps, in the Office of the
County Recorder of said county.

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AFTER RECORDING RETURN TO:

Gregory P. Pressman, Esq.

Schulte Roth & Zabel LLP

919 Third Avenue

New York, New York 10022

 

 

 

Document Title(s): (or transactions contained therein)

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

2.                                          
                                         
                                                                       

3.                                          
                                         
                                                                       

4.                                          
                                         
                                                                       

Reference Number(s) of Documents assigned or released:

                                         
                                         
                                                                           

¨ Additional numbers on page                      of document

Grantor(s): (Last name first, then first name and initials)

1. SYNRAD, INC.

2.                                         
                                         
                                                                        

3.                                         
                                         
                                                                        

¨ Additional names on page                      of document

Grantee(s): (Last name first, then first name and initials)

1. THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.

2.                                         
                                         
                                                                        

3.                                         
                                         
                                                                        

¨ Additional names on page                      of document

Abbreviated Legal Description as follows: Lot 4 of Binding Site Plan, recorded
in the records of Snohomish County, Washington, under Recording Number
200008295004, being a portion of Lot 26, Harbour Pointe Business Center-North
Campus.

¨ Complete legal description is on page A-1 of document

Assessor’s Property Tax Parcel/Account Number(s): Tax Account Number
00-7884-000-026-03

NOTE: The auditor/recorder will rely on the information on the form. The staff
will not read the document to verify the accuracy or completeness of the
indexing information provided herein.