Exhibit 10.46


 


RECORDING REQUESTED BY AND


WHEN RECORDED MAIL TO:


Kennedy Covington Lobdell & Hickman, L.L.P.


214 North Tryon Street, Ste 4700


Charlotte, North Carolina  28202


Attn.: 
Donnie E. Martin, Esq.


 


	
  [SPACE ABOVE LINE FOR RECORDER’S USE ONLY]

  



 


FIRST LIEN DEED OF TRUST,


ASSIGNMENT OF RENTS AND LEASES,


SECURITY AGREEMENT AND


FIXTURE FILING


 


THIS DOCUMENT
SERVES AS A FIXTURE FILING UNDER SECTION 9-502


OF THE
CALIFORNIA UNIFORM COMMERCIAL CODE.


 


Grantor’s
Organizational Identification Number:  CA-C2110057


 


Street Address
of Property:  14407 & 14433
Emelita Street (Sylmar Area), Los Angeles, California, 91401 and 5835 Sylmar
Avenue (Sylmar Area), Los Angeles, California 
91401


 


This FIRST LIEN DEED OF TRUST,
ASSIGNMENT OF RENTS AND LEASES, SECURITY AGREEMENT AND FIXTURE FILING (this
“Deed of Trust”) is made as of August 8, 2007, by ALTA HOLLYWOOD HOSPITALS, INC., a California corporation
(the “Grantor”), as trustor, in favor of PRLAP, INC.,
as trustee (“Trustee”), for the benefit of BANK OF
AMERICA, N.A., a national banking association, as beneficiary in its
capacity as administrative agent (“Administrative Agent”) for the
lenders (each, a “Lender” and collectively, “Lenders”) from time
to time party to that certain First Lien Credit Agreement of even date herewith
(the “Credit Agreement”) among Prospect Medical Group, Inc., a
California professional corporation, and Prospect Medical Holdings, Inc.,
a Delaware corporation (collectively, “Borrowers”), Lenders and
Administrative Agent.  Trustee is an
affiliate of Administrative Agent.  The
addresses for Grantor, Administrative Agent and Trustee are set forth at the
end of this Deed of Trust.


 


STATEMENT OF PURPOSE


 


This Deed of
Trust secures (i) (A) all “Guaranteed Obligations” of the Grantor
under and as defined in that certain Continuing Guaranty (First Lien) of even
date herewith made by the Grantor and certain other parties in favor of the
Administrative Agent (as further amended, modified, renewed, replaced,
restated, extended or reaffirmed from time to time, the “Guaranty”),
pursuant to which Guaranty the Grantor has guaranteed the obligations of
Borrowers (as defined herein) under the Credit Agreement and (B) all
obligations of the Grantor under all of the Loan Documents (as defined
herein); and (ii) the payment by the Grantor of all other sums, with
interest thereon, advanced by the Administrative Agent to protect the security
of this Deed of Trust.


 


 

















 


The
Administrative Agent and the Lenders are unwilling to enter into the Credit
Agreement, or to make available the Loan to the Borrowers pursuant thereto,
unless the Grantor agrees to execute and deliver this Deed of Trust, and to
grant the first priority lien and security interest created pursuant hereto, in
favor of the Administrative Agent, for its own benefit and for the benefit of
any other Lender(s), to secure the obligations of Grantor under the Loan
Documents and all other matters and indebtedness defined below as Secured
Indebtedness pursuant to the Guaranty and the other Loan Documents.  The Grantor is an indirect subsidiary of
Prospect Medical Holdings, Inc. and will receive a direct benefit from the
Loan under the Credit Agreement, and therefore the Grantor has agreed to
execute and deliver this Deed of Trust, and to grant the first priority lien and
security interest created pursuant hereto, in favor of the Administrative
Agent, for its own benefit and for the benefit of any other Lender(s), to
secure the obligations of Grantor under the Loan Documents and all other
matters and indebtedness defined below as Secured Indebtedness incurred
pursuant to the Guaranty and the other Loan Documents.


 


ARTICLE 1


Definitions; Granting Clauses; Secured Indebtedness


 


Section 1.1             Secured Indebtedness.  This Deed of Trust is made to secure the
obligations of Grantor under the Loan Documents and all other matters and
indebtedness defined below as Secured Indebtedness.  This Deed of Trust shall secure a maximum
principal amount of ONE HUNDRED FIVE MILLION AND NO/100 DOLLARS
($105,000,000.00) at any one time.


 


Section 1.2             Selected Definitions.


 


(a)           Defined
terms used herein, as indicated by the initial capitalization thereof, shall
have the meanings ascribed to such terms in the Credit Agreement or other
applicable Loan Document, unless otherwise provided herein.  Each of the following terms shall have the
meaning assigned to it, such definitions to be applicable equally to the
singular and the plural forms of such terms and to all genders:


 


“Administrative Agent”:  Bank of America, N.A, in its capacity as
first lien administrative agent for Lenders, or any successor administrative
agent.


 


“Borrowers”:  Unless the context clearly indicates
otherwise, the Borrowers named in the introductory paragraph hereof, together
with all heirs, devisees, representatives, successors and assigns of such
Borrowers pursuant to Section 6.18 below, or any of them.


 


“Collateral”:  All of the Property constituting personal
property or fixtures in which Grantor is granting Administrative Agent a first
priority security interest for the ratable benefit of Lenders under this Deed
of Trust, together with all proceeds and products thereof and all supporting
obligations ancillary thereto or arising in any way in connection therewith.


 


“Credit Agreement”:  The First Lien Credit Agreement dated of even
date herewith evidencing and governing the Loan, executed by and among
Borrowers, Administrative Agent and Lenders, as it may from time to time be
amended, modified, restated, replaced or supplemented.


 


2

















 


“Debtor Relief Law”:  Any federal, state or local law, domestic or
foreign, as now or hereafter in effect relating to bankruptcy, insolvency,
liquidation, receivership, reorganization, arrangement, composition, extension
or adjustment of debts, or any similar law affecting the rights of creditors.


 


“Default”:  Any of the events described in Section 4.1
of this Deed of Trust.


 


“Dispute”:  Any controversy, claim or dispute between
Grantor and Administrative Agent or any other Lender(s) or Holder,
including any such controversy, claim or dispute arising out of or relating to (i) this
Agreement, (ii) any other Loan Document, (iii) any related agreements
or instruments, or (iv) the transaction contemplated herein or therein
(including any claim based on or arising from an alleged personal injury or
business tort).


 


“Holder”:  Administrative Agent for the ratable benefit
of Lenders or the subsequent beneficiary at the time in question under this
Deed of Trust.


 


“Indemnified Matters”:  Any and all claims, demands, liabilities
(including strict liability), losses, damages (including consequential
damages), causes of action, judgments, penalties, fines, costs and expenses
(including reasonable fees and expenses of attorneys and other professional
consultants and experts, and of the investigation and defense of any claim,
whether or not such claim is ultimately defeated, and the settlement of any
claim or judgment including all value paid or given in settlement) of every
kind, known or unknown, foreseeable or unforeseeable, which may be imposed
upon, asserted against or incurred or paid by any Indemnified Party at any time
and from time to time, whenever imposed, asserted or incurred, because of,
resulting from, in connection with, or arising out of any transaction, act,
omission, event or circumstance in any way connected with the Property or with
this Deed of Trust or any other Loan Document, including any bodily injury or
death or property damage occurring in or upon or in the vicinity of the
Property through any cause whatsoever at any time, any act performed or omitted
to be performed hereunder or under any other Loan Document, any breach by
Borrowers or Grantor of any representation, warranty, covenant, agreement or
condition contained in this Deed of Trust or in any other Loan Document to
which Grantor is a party, any Default, or any claim under or with respect to
any Lease.


 


“Indemnified Party”:  Each of the following persons and
entities:  (i) Administrative Agent,
any Lender and any Holder; (ii) Trustee; (iii) any persons or
entities owned or controlled by, owning or controlling, or under common control
or affiliated with, Administrative Agent, any Lender, any Holder and/or
Trustee; (iv) any participants and future co-lenders in the Loan; (v) the
directors, officers, partners, employees, attorneys, agents and representatives
of each of the foregoing persons and entities; and (vi) the heirs,
personal representatives, successors and assigns of each of the foregoing
persons and entities.


 


“Law”: 
Any federal, state or local law, statute, ordinance, code, rule,
regulation, license, permit, authorization, decision, order, injunction or
decree, domestic or foreign.


 


“Lease”:  Each existing or future lease, sublease (to
the extent of Grantor’s rights thereunder) or other agreement under the terms
of which any person has or acquires any right to occupy or use the Property or
any part thereof or interest therein, and each existing or future 


 


3

















 


guaranty of payment or performance
thereunder, and any and all existing or future security therefor and
letter-of-credit-rights with respect thereto, whether or not the letter of
credit is evidenced by a writing.


 


“Legal Requirement”:  Any law, agreement, covenant, restriction,
easement or condition (including, without limitation of the foregoing, any
condition or requirement imposed by any insurance or surety company), as any of
the same now exists or may be changed or amended or come into effect in the
future.


 


“Lender”:  Each Lender from time to time party to the
Credit Agreement.


 


“Loan”:  Collectively, the extensions of credit to be
provided to the Borrowers by the Administrative Agent and the Lenders pursuant
to the terms of the Credit Agreement.


 


 “Loan
Documents”:  This Deed of Trust and
any other document now or hereafter evidencing, governing, securing or
otherwise executed in connection with the Loan, including the Credit Agreement,
the Notes, the Collateral Documents, the Guaranty, each Secured Hedge
Agreement, each Secured Cash Management Agreement, the Credit Succession
Agreement and each other document executed in connection with the Credit
Agreement, as each of them may have been or may be from time to time renewed,
extended, supplemented, increased or modified.


 


“Permitted Encumbrances”:  (i) Any matters set forth in any policy
of mortgagee title insurance issued to Administrative Agent for the benefit of
Lenders which are acceptable to Administrative Agent as of the date hereof, (ii) the
liens and security interests evidenced by this Deed of Trust, (iii) the
second priority liens and security interests evidenced by that certain Second
Lien Deed of Trust, Assignment of Rents and Leases, Security Agreement and
Fixture Filing made as of the date hereof by Alta Hollywood Hospitals, Inc.,
as trustor, in favor of PRLAP, Inc., as trustee, for the benefit of Bank
of America, N.A., a national banking association, as beneficiary in its
capacity as administrative agent for the lenders from time to time party to
that certain Second Lien Credit Agreement of even date herewith among the
Borrowers, the lenders party thereto and Bank of America, N.A., (iv) statutory
liens for real estate taxes and assessments on the Property which are not yet
delinquent, (v) other liens and security interests (if any) in favor of
Administrative Agent for the benefit of Lenders, (vi) the rights of
tenants in possession as of the date hereof, if any, pursuant to Leases
approved by Administrative Agent and the rights of future tenants under any
Leases made in accordance with the Loan Documents, and the assignment of such
Leases pursuant to this Deed of Trust, and (vii) any matters arising after
the date hereof which may be acceptable to Administrative Agent or any Holder
in its sole and absolute discretion, which Permitted Encumbrances in the
aggregate do not materially adversely affect the value or use of the Property
or Borrowers’ ability to repay the Secured Indebtedness.


 


“Rents”:  All of the rents, revenue, accounts, deposit
accounts, payment intangibles, commercial tort claims, income, profits and
proceeds derived and to be derived from the Property or arising from the use or
enjoyment of any portion thereof or from any Lease, including the proceeds from
any negotiated lease termination or buyout of such Lease, liquidated damages
following default under any such Lease, all proceeds payable under any policy
of insurance covering loss of rents resulting from untenantability caused by
damage to any part of 


 


4

















 


the Property, all of Grantor’s rights to
recover monetary amounts from any tenant in bankruptcy, including rights of
recovery for use and occupancy and damage claims arising out of Lease defaults,
including rejections, under any applicable Debtor Relief Law, together with any
sums of money that may now or at any time hereafter be or become due and
payable to Grantor by virtue of any and all royalties, overriding royalties,
bonuses, delay rentals and any other amount of any kind or character arising
under any and all present and future oil, gas, mineral and mining leases
covering the Property or any part thereof, and all proceeds and other amounts
paid or owing to Grantor under or pursuant to any and all contracts and bonds
relating to the construction or renovation of the Property.


 


“Secured Indebtedness”:  The following obligations, indebtedness,
duties and liabilities and all renewals, extensions, supplements, increases and
modifications thereof and thereto, in whole or in part, from time to time:


 


(i)            All indebtedness, liabilities, duties, covenants,
promises and other obligations owed by Borrowers, its Subsidiaries and
Affiliates, to Administrative Agent and/or Lenders pursuant to the Loan
Documents, but expressly excluding any guaranty executed by a third party,
whether now existing or hereafter arising, and whether joint or several, direct
or indirect, primary or secondary, fixed or contingent, liquidated or
unliquidated, and the cost of collection of all such amounts;


 


(ii)           All amounts that Administrative Agent, Lenders or any
other Holder may from time to time advance pursuant to the terms and conditions
of this Deed of Trust with respect to an obligation secured by a lien or
encumbrance prior to the lien of this Deed of Trust or for the protection of
this Deed of Trust, together with interest thereon; and


 


(iii)          If and only if evidenced by a writing reciting that it is
secured by this Deed of Trust, any other loan, future advance, debt, obligation
or liability owed by Borrowers of every kind or character, whether now existing
or hereafter arising, whether joint or several, direct or indirect, primary or
secondary, fixed or contingent, liquidated or unliquidated, and the cost of
collection of all such amounts, and whether or not originally payable to
Administrative Agent, Lenders or any other Holder, it being contemplated that
Borrowers may hereafter become indebted to Administrative Agent, Lenders or
another Holder for one or more of such further loans, future advances, debts,
obligations and liabilities.


 


“Transfer”:  Any sale, lease, conveyance, assignment,
pledge, encumbrance or transfer, whether voluntary, involuntary, by operation
of law or otherwise.


 


“Trustee”:  The trustee identified in the introductory
paragraph of this Deed of Trust, and any successor or substitute appointed and
designated as herein provided, from time to time acting hereunder.


 


(b)           Any
term used or defined in the California Uniform Commercial Code, as in effect
from time to time, which is not defined in this Deed of Trust has the meaning
given to that term in the California Uniform Commercial Code, as in effect from
time to time, when used in this Deed of Trust. 
However, if a term is defined in Division 9 of the California Uniform 


 


5

















 


Commercial Code differently than in another Division of the California
Uniform Commercial Code, the term has the meaning specified in Division 9.


 


Section 1.3             Granting Clause. 
For good and valuable consideration, the receipt and sufficiency of
which are acknowledged by Grantor, to secure the obligations of Borrowers under
the Loan Documents and all other matters and indebtedness constituting the
Secured Indebtedness, Grantor hereby GRANTS, TRANSFERS and ASSIGNS to Trustee,
in trust for the benefit of Administrative Agent for the ratable benefit of
Lenders, with power of sale and right of entry and possession, all estate,
right, title and interest which Grantor now has or may hereafter acquire in and
to the following Premises, Accessories (each as hereafter defined) and other
rights, interests and properties, and all rights, estates, powers and
privileges appurtenant thereto (collectively, the “Property”):


 


(a)           The
real property described in Exhibit A, which is attached hereto and
incorporated herein by reference (the “Land”), together with:  (i) any and all buildings, structures,
improvements, alterations or appurtenances now or hereafter situated or to be
situated on the Land (collectively, the “Improvements”); and (ii) all
right, title and interest of Grantor, now owned or hereafter acquired, in and
to (A) all streets, roads, alleys, easements, rights-of-way, licenses,
rights of ingress and egress, vehicle parking rights and public places,
existing or proposed, abutting, adjacent, used in connection with or pertaining
to the Land or the Improvements; (B) any strips or gores between the Land
and abutting or adjacent properties; (C) all options to purchase the Land
or the Improvements or any portion thereof or interest therein, and any greater
estate in the Land or the Improvements; (D) all water, water rights
(whether riparian, appropriative or otherwise, and whether or not appurtenant)
and water stock, timber, crops and mineral interests on or pertaining to the
Land; and (E) all development rights and credits and air rights (the Land,
Improvements and other rights, titles and interests referred to in this clause (a) being
herein sometimes collectively called the “Premises”);


 


(b)           All
fixtures, equipment, systems, machinery, furniture, furnishings, appliances,
inventory, goods, building and construction materials, supplies, and other
articles of personal property, of every kind and character, tangible and
intangible (including software embedded therein), now owned or hereafter
acquired by Grantor, which are now or hereafter attached to or situated in, on
or about the Land or the Improvements, or used in or necessary to the complete
and proper planning, development, use, occupancy or operation thereof, or
acquired (whether delivered to the Land or stored elsewhere) for use or
installation in or on the Land or the Improvements, and all renewals and
replacements of, substitutions for and additions to the foregoing (the
properties referred to in this clause (b) being herein sometimes
collectively called the “Accessories,” all of which are hereby declared
to be permanent accessions to the Land);


 


(c)           All
(i) plans and specifications for the Improvements, (ii) Grantor’s
rights, but not liability for any breach by Grantor, under all commitments
(including any commitments for financing to pay any of the Secured
Indebtedness), insurance policies (or additional or supplemental coverage
related thereto, including from an insurance provider meeting the requirements
of the Loan Documents or from or through any state or federal government-sponsored
program or entity), contracts and agreements for the design, construction,
operation or inspection of the Improvements and other contracts and general
intangibles (including payment intangibles and any trademarks, trade names,
goodwill, software and symbols) related to the 


 


6

















 


Premises or the Accessories or the operation thereof, (iii) deposits
and deposit accounts arising from or relating to any transactions related to
the Premises or the Accessories (including Grantor’s rights in tenants’
security deposits, deposits with respect to utility services to the Premises,
and any deposits, deposit accounts or reserves hereunder or under any other
Loan Documents for taxes, insurance or otherwise), (iv) rebates or refunds
of impact fees or other taxes, assessments or charges, money, accounts
(including deposit accounts), instruments, documents, promissory notes and
chattel paper (whether tangible or electronic) arising from or by virtue of any
transactions related to the Premises or the Accessories, (v) permits,
licenses, franchises, certificates, development rights, commitments and rights
for utilities, and other rights and privileges obtained in connection with the
Premises or the Accessories, (vi) Leases, Rents and other benefits of the
Premises and the Accessories (without derogation of Article 3
hereof), (vii) as-extracted collateral produced from or allocated to the
Land, including oil, gas and other hydrocarbons and other minerals and all
products processed or obtained therefrom and the proceeds thereof, and (viii) engineering,
accounting, title, legal, and other technical or business data concerning the
Property, including software, which are in the possession of Grantor or in
which Grantor can otherwise grant a security interest;


 


(d)           All
(i) accounts and proceeds (whether cash or non-cash and including payment
intangibles), of or arising from the properties, rights, titles and interests
referred to above in this Section 1.3, including the proceeds of
any sale, lease or other disposition thereof, proceeds of each policy of
insurance, present and future (or additional or supplemental coverage related
thereto, including from an insurance provider meeting the requirements of the
Loan Documents or from or through any state or federal government-sponsored
program or entity), payable because of loss sustained to all or part of the
Property (including premium refunds), whether or not such insurance policies
are required by Administrative Agent, proceeds of the taking thereof or of any
rights appurtenant thereto, including change of grade of streets, curb cuts or
other rights of access, by condemnation, eminent domain or transfer in lieu
thereof for public or quasi-public use under any law, proceeds arising out of
any damage thereto, including any and all commercial tort claims, (ii) all
letter-of-credit rights (whether or not the letter of credit is evidenced by a
writing) Grantor now has or hereafter acquires relating to the properties,
rights, titles and interests referred to in this Section 1.3, (iii) all
commercial tort claims Grantor now has or hereafter acquires relating to the
properties, rights, titles and interests referred to in this Section 1.3,
and (iv) other interests of every kind and character which Grantor now has
or hereafter acquires in, to or for the benefit of the properties, rights,
titles and interests referred to above in this Section 1.3 and all
property used or useful in connection therewith, including rights of ingress
and egress and remainders, reversions and reversionary rights or interests;


 


(e)           If
the estate of Grantor in any of the property referred to above in this Section 1.3
is a leasehold estate, this conveyance shall include, and the lien and security
interest created hereby shall encumber and extend to, all other or additional
title, estates, interests or rights which are now owned or may hereafter be
acquired by Grantor in or to the property demised under the lease creating the
leasehold estate; and


 


(f)            All
proceeds and products of, additions and accretions to, substitutions and
replacements for, and changes in any of the property referred to above in this Section 1.3.


 


7

















 


Section 1.4             Security Interest.  To secure the obligations of Borrowers, its
Subsidiaries and Affiliates under the Loan Documents and all other matters and
indebtedness constituting the Secured Indebtedness, Grantor hereby grants to
Administrative Agent for the ratable benefit of Lenders a first priority security
interest in all of the Collateral, including all proceeds and products thereof
and all supporting obligations ancillary thereto or arising in any way in
connection therewith.  In addition to its
rights hereunder or otherwise, Administrative Agent, on behalf of itself and
Lenders, and any Holder shall have all of the rights of a secured party under
the California Uniform Commercial Code, as in effect from time to time, or
under the Uniform Commercial Code in force from time to time in any other state
to the extent the same is applicable law.


 


Section 1.5             Intercreditor Agreement.  Notwithstanding anything herein to the
contrary, the lien and security interest granted to the Trustee, in trust for
the benefit of the Administrative Agent for the ratable benefits of the Lenders
pursuant to this Deed of Trust and the exercise of any right or remedy by the
Trustee hereunder are subject to the provisions of the Intercreditor
Agreement.  In the event of any conflict
between the terms of the Intercreditor Agreement and this Deed of Trust, the
terms of the Intercreditor Agreement shall govern.


 


ARTICLE 2

Representations, Warranties and Covenants


 


Section 2.1             Grantor represents, warrants and covenants as follows:


 


(a)           Payment
and Performance.  Grantor will timely
and properly perform and comply with all of the covenants, agreements and
conditions imposed upon it by this Deed of Trust and will not permit a Default
to occur hereunder or thereunder.  Time
shall be of the essence in this Deed of Trust.


 


(b)           Title
and Permitted Encumbrances.  Grantor
has in Grantor’s own right, and Grantor covenants to maintain lawful, good and
marketable title to the Property, is lawfully seized and possessed of the
Property and every part thereof, and has the right to convey the same, free and
clear of all liens, charges, claims, security interests, and encumbrances
except for the Permitted Encumbrances. 
Grantor will warrant generally and forever defend title to the Property,
subject as aforesaid to the Permitted Encumbrances, to Trustee and its
successors or substitutes and assigns, against the claims and demands of all
persons claiming or to claim the same or any part thereof.  Grantor will punctually pay, perform, observe
and keep all covenants, obligations and conditions in or pursuant to any
Permitted Encumbrance and will not modify or permit modification of any
Permitted Encumbrance without the prior written consent of Holder.  Inclusion of any matter as a Permitted
Encumbrance does not constitute approval or waiver by Holder or Lenders of any
existing or future violation or other breach thereof by Grantor, the Property
or otherwise.  If any right or interest
of Holder or any Lender in the Property or any part thereof shall be endangered
or questioned or shall be attacked directly or indirectly, Trustee, Holder and
Lenders, or any of them (whether or not named as parties to legal proceedings
with respect thereto), are hereby authorized and empowered to take such steps
as in their discretion may be proper for the defense of any such legal proceedings
or the protection of such right or interest of Holder and each Lender,
including the employment of independent counsel, the prosecution or defense of
litigation, and the compromise or discharge of adverse claims.  All 


 


8

















 


expenditures so made of every kind and character shall be a demand
obligation (which obligation Grantor hereby promises to pay) owing by Grantor
to Trustee or to Holder, for its own account or the account of Lenders (as the
case may be), and the party (Trustee, Holder or Lenders, as the case may be)
making such expenditures shall be subrogated to all rights of the person
receiving such payment.


 


(c)           Taxes
and Other Impositions.  Grantor will
pay or cause to be paid all taxes, assessments and other charges or levies
imposed upon or against or with respect to the Property or the ownership, use,
occupancy or enjoyment of any portion thereof, or any utility service thereto,
as the same become due and payable, including all real estate taxes assessed
against the Property or any part thereof, and shall deliver promptly to Holder
such evidence of the payment thereof as Holder may require.


 


(d)           Insurance
Coverage.  Grantor shall obtain and
maintain at Grantor’s sole expense:  (i) property
insurance with respect to all insurable Property, against loss or damage by
fire, lightning, windstorm, explosion, hail, tornado and such additional
hazards as are presently included in Special Form (also known as “all-risk”)
coverage and against any and all acts of terrorism and such other insurable
hazards as Holder may require, in an amount not less than 100% of the full
replacement cost, including the cost of debris removal, without deduction for
depreciation and sufficient to prevent Grantor, Holder and Lenders from
becoming a coinsurer, such insurance to be in “builder’s risk” completed value
(non-reporting) form during and with respect to any construction on the
Premises; (ii) if and to the extent any portion of the Improvements is,
under the Flood Disaster Protection Act of 1973 (“FDPA”), as it may be
amended from time to time, in a Special Flood Hazard Area, within a Flood Zone
designated A or V in a participating community, a flood insurance policy in an
amount required by Holder, but in no event less than the amount sufficient to
meet the requirements of applicable law and the FDPA, as such requirements may
from time to time be in effect; (iii) general liability insurance, on an “occurrence”
basis against claims for “personal injury” liability, including bodily injury,
death or property damage liability, for the benefit of Grantor as named insured
and Holder as additional insured on behalf of itself and Lenders; (iv) statutory
workers’ compensation insurance with respect to any work on or about the Premises
(including employer’s liability insurance, if required by Holder), covering all
employees of Grantor and any contractor; (v) if there is a general
contractor, commercial general liability insurance, including products and
completed operations coverage, and in other respects similar to that described
in clause (iii) above, for the benefit of the general contractor as named
insured and Grantor and Holder (on behalf of itself and Lenders) as additional
insureds, in addition to statutory workers’ compensation insurance with respect
to any work on or about the Premises (including employer’s liability insurance,
if required by Holder), covering all employees of the general contractor and
any contractor; and (vi) such other insurance on the Property and endorsements
as may from time to time be required by Holder (including soft cost coverage,
automobile liability insurance, business interruption insurance or delayed
rental income insurance, wind insurance, boiler and machinery insurance,
sinkhole coverage, and/or permit to occupy endorsement) and against other
insurable hazards or casualties which at the time are commonly insured against
in the case of premises similarly situated, due regard being given to the
height, type, construction, location, use and occupancy of buildings and
improvements.


 


9

















 


(e)           Insurance
Policy Requirements.  All insurance
policies shall be issued and maintained by insurers, in amounts, with
deductibles, limits and retentions and in forms satisfactory to Holder.  All insurance policies shall require at least
ten (10) days’ prior written notice to Holder of any cancellation for
nonpayment of premiums and at least thirty (30) days’ prior written notice to
Holder of any other cancellation or any change of coverage.  All insurance companies must be licensed to
do business in the state in which the Property is located and must have A. M.
Best Company financial and performance ratings of A-:IX or better.  All insurance policies maintained, or caused
to be maintained, by Grantor with respect to the Property, except for general
liability insurance, shall provide that each such policy shall be primary
without right of contribution from any other insurance that may be carried by
Grantor, Holder or any Lender and that all of the provisions thereof, except
the limits of liability, shall operate in the same manner as if there were a
separate policy covering each insured. 
If any insurer which has issued a policy of hazard, liability or other
insurance required pursuant to this Deed of Trust or any other Loan Document
becomes insolvent or the subject of any petition, case, proceeding or other
action pursuant to any Debtor Relief Law or if in Holder’s reasonable opinion
the financial responsibility of such insurer is or becomes inadequate, Grantor
shall, upon its discovery thereof or upon request by Holder therefor, promptly
obtain and deliver to Holder, at Grantor’s expense in each instance, a like
policy (or, if and to the extent permitted by Holder, acceptable evidence of
insurance) issued by another insurer, which insurer and policy meet the
requirements of this Deed of Trust or such other Loan Document, as the case may
be.  Without limiting the discretion of
Holder with respect to required endorsements to insurance policies, all such
policies for loss of or damage to the Property shall contain a standard
mortgagee clause (without contribution) naming Holder as mortgagee for the
benefit of itself and Lenders with loss proceeds payable to Holder on behalf of
itself and Lenders notwithstanding (i) any act, failure to act or
negligence of or violation of any warranty, declaration or condition contained
in any such policy by any named or additional insured, (ii) the occupation
or use of the Property for purposes more hazardous than permitted by the terms
of any such policy, (iii) any foreclosure or other action by Holder or
Lenders under the Loan Documents, or (iv) any change in title to or
ownership of the Property or any portion thereof, such proceeds to be held for
application as provided in the Loan Documents. 
The originals of each initial insurance policy (or to the extent
permitted by Holder, a copy of the original policy and such evidence of
insurance as may be acceptable to Holder) shall be delivered to Holder at the
time of execution of this Deed of Trust, with all premiums fully paid current,
and each renewal or substitute policy (or evidence of insurance) shall be
delivered to Holder, with all premiums fully paid current, at least ten (10) days
before the termination of the policy it renews or replaces.  Grantor shall pay all premiums on policies
required hereunder as they become due and payable and promptly deliver to
Holder evidence satisfactory to Holder of the timely payment thereof.


 


(f)            Insurance
Proceeds.  If any loss occurs at any
time when Grantor has failed to perform Grantor’s covenants and agreements with
respect to any insurance payable because of loss sustained to any part of the
Property, whether or not such insurance is required by Holder, Holder, on
behalf of itself and Lenders, shall nevertheless be entitled to the benefit of
all insurance covering the loss and held by or for Grantor, to the same extent
as if it had been made payable to Holder for the benefit of itself and Lenders.  Upon any foreclosure hereof or transfer of
title to the Property in extinguishment of the whole or any part of the Secured
Indebtedness, all of Grantor’s right, title and interest in and to the
insurance policies referred to in this clause (f) (including unearned
premiums) and all proceeds payable thereunder shall thereupon vest in 


 


10

















 


the purchaser at foreclosure or other such transferee, to the extent
permissible under such policies.  Holder
shall have the right on behalf of Lenders (but not the obligation) to make
proof of loss for, settle and adjust any claim under, and receive the proceeds
of, all insurance for loss of or damage to the Property, regardless of whether
or not such insurance policies are required by Holder, and the expenses
incurred by Holder and Lenders in the adjustment and collection of insurance
proceeds shall be a part of the Secured Indebtedness and shall be due and
payable to Holder on demand (for its own account or for the account of Lenders,
as applicable).  Neither Holder nor
Lenders shall be, under any circumstances, liable or responsible for failure to
collect or exercise diligence in the collection of any of such proceeds or for
the obtaining, maintaining or adequacy of any insurance or for failure to see
to the proper application of any amount paid over to Grantor.  Grantor shall at all times comply with the
requirements of the insurance policies required hereunder and of the issuers of
such policies and of any board of fire underwriters or similar body as
applicable to or affecting the Property.


 


(g)           Reserve
for Insurance, Taxes and Assessments. 
Upon request of Holder and upon the occurrence of a Default, to secure
the payment and performance of the Secured Indebtedness, but not in lieu of
such payment and performance, Grantor will deposit with Holder for the benefit
of itself and Lenders a sum equal to real estate taxes, assessments and charges
(which charges for the purposes of this clause (g) shall include any
recurring charge which could result in a lien against the Property) against the
Property for the current year and the premiums for such policies of insurance
for the current year, all as estimated by Holder and prorated to the end of the
calendar month following the month during which Holder’s request is made, and
thereafter will deposit with Holder, on each date when an installment of
principal and/or interest is due pursuant to the Credit Agreement, sufficient
funds (as estimated from time to time by Holder) to permit Holder to pay at
least fifteen (15) days prior to the due date thereof, the next maturing real
estate taxes, assessments and charges and premiums for such policies of
insurance.  Holder shall have the right
to rely upon tax information furnished by applicable taxing authorities in the
payment of such taxes or assessments and shall have no obligation to make any
protest of any such taxes or assessments. 
Any excess over the amounts required for such purposes shall be held by
Holder for future use, applied to any Secured Indebtedness or refunded to
Grantor, at Holder’s option, and any deficiency in such funds so deposited
shall be made up by Grantor upon demand of Holder.  All such funds so deposited shall bear no
interest, may be commingled with the general funds of Holder and shall be
applied by Holder toward the payment of such taxes, assessments, charges and
premiums when statements therefor are presented to Holder by Grantor (which
statements shall be presented by Grantor to Holder a reasonable time before the
applicable amount is due); provided, however, that, if a Default shall have
occurred hereunder, such funds may at Holder’s option be applied to the payment
of the Secured Indebtedness in the order determined by Holder in its sole
discretion, and that Holder may (but shall have no obligation) at any time, in
its discretion, apply all or any part of such funds toward the payment of any
such taxes, assessments, charges or premiums which are past due, together with
any penalties or late charges with respect thereto.  The conveyance or transfer of Grantor’s
interest in the Property for any reason (including the foreclosure of a
subordinate lien or security interest or a transfer by operation of law) shall
constitute an assignment or transfer of Grantor’s interest in and rights to
such funds held by Holder under this clause (g) but subject to the rights
of Holder and Lenders hereunder.


 


11














 


(h)           Condemnation.  Grantor shall notify Holder immediately of
any threatened or pending proceeding for condemnation affecting the Property or
arising out of damage to the Property, and Grantor shall, at Grantor ‘s
expense, diligently prosecute any such proceedings.  Holder shall have the right (but not the
obligation) to participate in any such proceeding and to be represented by
counsel of its own choice.  Holder shall
be entitled to receive, on behalf of itself and Lenders, all sums which may be
awarded or become payable to Grantor for the condemnation of the Property, or
any part thereof, for public or quasi-public use, or by virtue of private sale
in lieu thereof, and any sums which may be awarded or become payable to Grantor
for injury or damage to the Property. 
Grantor shall, promptly upon request of Holder, execute such additional
assignments and other documents as may be necessary from time to time to permit
such participation and to enable Holder to collect and receipt for any such
sums.  Neither Holder nor Lenders shall
be, under any circumstances, liable or responsible for failure to collect or to
exercise diligence in the collection of any such sum or for failure to see to
the proper application of any amount paid over to Grantor.  Holder is hereby authorized, in its own name
on behalf of itself and Lenders or in Grantor’s name, to settle or compromise
any condemnation claim or cause of action, and to execute and deliver valid
acquittances for, and to appeal from, any award, judgment or decree arising
from any such claim or cause of action. 
All costs and expenses (including attorneys’ fees) incurred by Holder or
Lenders in connection with any condemnation shall be a demand obligation owing
by Grantor (which Grantor hereby promises to pay) to Holder (for its own
account or for the account of Lenders, as applicable) pursuant to this Deed of
Trust.


 


(i)            Damages
and Insurance and Condemnation Proceeds. 
Grantor hereby absolutely and irrevocably assigns to Administrative
Agent for the ratable benefit of itself and Lenders, and authorizes the payor
to pay to Administrative Agent or any other Holder, the following claims,
causes of action, awards, payments and rights to payment (collectively, “Claims”):  all awards of damages and all other
compensation payable directly or indirectly because of a condemnation, proposed
condemnation or taking which affects any part of the Property; all awards and
other Claims arising out of any warranty affecting any part of the Property or
for damage or injury to any part of the Property; all proceeds of any insurance
policies payable because of loss sustained to any part of the Property, whether
or not such insurance policies are required by Holder, and all interest that
may accrue on any of the foregoing.  All
proceeds of Claims described in this clause (i) shall be payable to Holder
and shall be applied first to reimburse Holder and Lenders for their costs and
expenses of recovering such proceeds, including attorneys’ fees.  Upon satisfaction of each of the following
conditions, provided that no Default exists, Grantor shall be permitted to use
the balance of the proceeds (“Net Claims Proceeds”) to pay the costs of
repairing or reconstructing the Property:


 


(i)            Holder
shall have approved the plans and specifications, construction budget,
construction schedule, contractor, architect, engineer and payment and
performance bond (if required by Holder);


 


(ii)           Grantor
shall have presented sufficient evidence to Holder that after the repair or
reconstruction, the Property will be completely restored to its use, value and
condition immediately prior to the occurrence of the damage or condemnation;


 


12

















 


(iii)          Holder
shall have determined that the Net Claims Proceeds are sufficient to pay the
total cost of the repair or reconstruction, including all development costs and
interest due on the Secured Indebtedness until the work is complete, or Grantor
must provide (or deposit with Holder) its own funds equal to the difference
between the Net Claims Proceeds and the total cost of the work, as estimated by
Grantor and approved by Holder;


 


(iv)          Grantor
shall have presented sufficient evidence that the Property’s operations and
income after the repair or reconstruction will be sufficient to pay the
operating expenses of the Property including evidence that a sufficient number
of existing Leases will continue in full force and effect (subject to rent
abatement as may be provided in the Leases) or if any have been terminated, a
sufficient number of terminated Leases shall have been replaced with Leases of
equal quality in the reasonable judgment of Holder.  Any tenant having the right to terminate its
Lease due to the damage or condemnation, which has not exercised that right,
shall have confirmed in writing to Holder its irrevocable waiver of such
termination right;


 


(v)           All
parties having operating, management or franchise interests in and arrangements
concerning the Property shall have agreed that they will continue their
interests and arrangements for the contract terms then in effect following the
repair or reconstruction;


 


(vi)          All
parties having commitments to provide financing with respect to the Property,
to purchase Grantor’s interest in full or in part in the Property or to
purchase the Loan shall have agreed in a manner satisfactory to Holder that
their commitments will continue in full force and effect and, if necessary, the
expiration of such commitments shall be extended by the time necessary to
complete the repair or reconstruction;


 


(vii)         Grantor
shall have presented sufficient evidence to Holder that all necessary
governmental approvals and permits can be obtained to allow the rebuilding and
reoccupancy of the Property;


 


(viii)        Grantor
shall have presented sufficient evidence to Holder that the reconstruction of
the Improvements will take no longer than twelve (12) months to reconstruct and
that such reconstruction will be completed prior to the stated maturity of the
Loan.


 


If the foregoing conditions are met to Holder’s
reasonable satisfaction, Holder shall hold the Net Claims Proceeds and any
funds that Grantor is required to provide in an interest-bearing account and
shall disburse them to Grantor to pay the costs of the work in accordance with
normal and customary construction draw terms and conditions.  Interest on the funds shall accrue at the
rate of interest then being paid by Holder to regular savings account customers
and shall be credited to Grantor. 
Grantor shall provide evidence acceptable to Holder that all work has
been completed lien-free, in a workmanlike manner and in accordance with all
Legal Requirements.  Grantor agrees that
the conditions described above are reasonable. 
If the foregoing conditions are not satisfied, or if a Default occurs
after Holder’s receipt of the Net Claims Proceeds, Holder may, at Holder’s
absolute discretion and regardless of whether the security of Holder and
Lenders is impaired, apply all or any of the Net Claims Proceeds to pay or
prepay the Secured Indebtedness in such order and in such amounts as Holder may
elect.  Following the application of any
Net Claims Proceeds as contemplated by this clause (i), the unpaid portion of
the Secured Indebtedness shall remain in full force and effect and the payment
thereof shall not be excused.  


 


13

















 


Notwithstanding the foregoing, the rights of Holder
and Lenders shall be subject to applicable law governing use of the Net Claims
Proceeds, if any.


 


(j)            Compliance
with Legal Requirements.  The
Property and the use, operation and maintenance thereof and all activities
thereon do and shall at all times comply with all applicable Legal
Requirements.  The Property is not, and
shall not be, dependent on any other property or premises or any interest
therein other than the Property to fulfill any requirement of any Legal
Requirement.  Grantor shall not, by act
or omission, permit any building or other improvement not subject to the lien
of this Deed of Trust to rely on the Property or any interest therein to fulfill
any requirement of any Legal Requirement. 
No improvement upon or use of any part of the Property constitutes a
nonconforming use under any zoning law or similar law or ordinance.  Grantor has obtained and shall preserve in
force all requisite zoning, utility, building, health, environmental and
operating permits from the governmental authorities having jurisdiction over
the Property.  If Grantor receives a
notice or claim from any person that the Property, or any use, activity,
operation or maintenance thereof or thereon, is not in compliance with any
Legal Requirement, Grantor will promptly furnish a copy of such notice or claim
to Holder.  Grantor has received no
notice and has no knowledge of any such noncompliance.


 


(k)           Maintenance,
Repair and Restoration.  Grantor will
keep the Property in first class order, repair, operating condition and
appearance, causing all necessary repairs, renewals, replacements, additions
and improvements to be promptly made, and will not allow any of the Property to
be misused, abused or wasted or to deteriorate. 
Notwithstanding the foregoing, Grantor will not, without the prior
written consent of Holder, (i) remove from the Property any fixtures or
personal property covered by this Deed of Trust except such as is replaced by
Grantor by an article of equal suitability and value, owned by Grantor, free
and clear of any lien or security interest (except that created by this Deed of
Trust), or (ii) make any structural alteration to the Property or any
other alteration thereto which impairs the value thereof. If any act or
occurrence of any kind or nature (including any condemnation or any casualty
for which insurance was not obtained or obtainable) shall result in damage to
or loss or destruction of the Property, Grantor shall give prompt notice
thereof to Holder and Grantor shall promptly, at Grantor’s sole cost and
expense and regardless of whether insurance or condemnation proceeds (if any)
shall be available or sufficient for the purpose, secure the Property as
necessary and commence and continue diligently to completion to restore,
repair, replace and rebuild the Property as nearly as possible to its value,
condition and character immediately prior to the damage, loss or destruction.


 


(l)            No
Other Liens.  Grantor will not, without
the prior written consent of Holder, 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 deed of trust, mortgage, voluntary or involuntary lien,
whether statutory, constitutional or contractual, security interest,
encumbrance or charge, or conditional sale or other title retention document,
against or covering the Property, or any part thereof, other than the Permitted
Encumbrances, regardless of whether the same are expressly or otherwise
subordinate to the lien or security interest created in this Deed of Trust, and
should any of the foregoing become attached hereafter in any manner to any part
of the Property without the prior written consent of Holder, Grantor will cause
the same to be promptly discharged and released.  Grantor will own all parts of the Property
and will not acquire any fixtures, equipment or other property (including
software embedded therein) forming a part of the Property pursuant 


 


14

















 


to a lease, license, security agreement or similar agreement, whereby
any party has or may obtain the right to repossess or remove same, without the
prior written consent of Holder.  If
Holder consents to the voluntary grant by Grantor of any deed of trust, lien,
security interest, or other encumbrance (hereinafter called “Subordinate
Lien”) covering any of the Property or if the foregoing prohibition is
determined by a court of competent jurisdiction to be unenforceable as to a
Subordinate Lien, any such Subordinate Lien shall contain express covenants to
the effect that:  (i) the
Subordinate Lien is unconditionally subordinate to this Deed of Trust and all
Leases; (ii) if any action (whether judicial or pursuant to a power of
sale) shall be instituted to foreclose or otherwise enforce the Subordinate
Lien, no tenant of any of the Leases shall be named as a party defendant, and
no action shall be taken that would terminate any occupancy or tenancy without
the prior written consent of Holder; (iii) Rents, if collected by or for
the holder of the Subordinate Lien, shall be applied first to the payment of
the Secured Indebtedness then due and expenses incurred in the ownership,
operation and maintenance of the Property in such order as Holder may
determine, prior to being applied to any indebtedness secured by the
Subordinate Lien; (iv) written notice of default under the Subordinate
Lien and written notice of the commencement of any action (whether judicial or
pursuant to a power of sale) to foreclose or otherwise enforce the Subordinate
Lien or to seek the appointment of a receiver for all or any part of the
Property shall be given to Holder with or immediately after the occurrence of
any such default or commencement; and (v) neither the holder of the
Subordinate Lien, nor any purchaser at foreclosure thereunder, nor anyone
claiming by, through or under any of them shall succeed to any of Grantor’s
rights hereunder without the prior written consent of Holder.


 


(m)          Operation
of Property.  Grantor will operate
the Property in a good and workmanlike manner and in accordance with all Legal
Requirements and will pay all fees or charges of any kind in connection
therewith.  Grantor will keep the
Property occupied so as not to impair the insurance carried thereon.  Grantor will not use or occupy or conduct any
activity on, or allow the use or occupancy of or the conduct of any activity
on, the Property in any manner which violates any Legal Requirement or which
constitutes a public or private nuisance or which makes void, voidable or
cancelable, or increases the premium of, any insurance then in force with
respect thereto.  Grantor will not
initiate or permit any zoning reclassification of the Property or seek any
variance under existing zoning ordinances applicable to the Property or use or
permit the use of the Property in such a manner which would result in such use
becoming a nonconforming use under applicable zoning ordinances or other Legal
Requirement.  Grantor will not impose any
easement, restrictive covenant or encumbrance upon the Property, execute or
file any subdivision plat or condominium declaration affecting the Property or
consent to the annexation of the Property to any municipality, without the
prior written consent of Holder.  Grantor
will not do or suffer to be done any act whereby the value of any part of the
Property may be lessened.  Grantor will
preserve, protect, renew, extend and retain all material rights and privileges
granted for or applicable to the Property. 
Without the prior written consent of Holder, there shall be no drilling
or exploration for or extraction, removal or production of any mineral,
hydrocarbon, gas, natural element, compound or substance (including sand and
gravel) from the surface or subsurface of the Land regardless of the depth
thereof or the method of mining or extraction thereof.  Grantor will cause all debts and liabilities
of any character (including all debts and liabilities for labor, material and
equipment (including software embedded therein) and all debts and charges for
utilities servicing the Property) incurred in the construction, maintenance,
operation and development of the Property to be promptly paid.


 


15

















 


(n)           Further
Assurances.  Grantor will, promptly
on request of Holder, (i) correct any defect, error or omission which may
be discovered in the contents, execution or acknowledgment of this Deed of
Trust or any other Loan Document; (ii) execute, acknowledge, deliver, procure
and record and/or file such further documents (including further deeds of
trust, security agreements, and assignments of rents or leases) and do such
further acts as may be necessary, desirable or proper to carry out more
effectively the purposes of this Deed of Trust and the other Loan Documents, to
more fully identify and subject to the liens and security interests hereof any
property intended to be covered hereby (including specifically, but without
limitation, any renewals, additions, substitutions, replacements, or
appurtenances to the Property) or as deemed advisable by Holder to protect the
lien or the security interest hereunder against the rights or interests of
third persons; and (iii) provide such certificates, documents, reports,
information, affidavits and other instruments and do such further acts as may
be necessary, desirable or proper in the reasonable determination of Holder to
enable Holder and Lenders to comply with the requirements or requests of any
agency having jurisdiction over Holder or any Lender or any examiners of such
agencies with respect to the indebtedness secured hereby, Grantor or the
Property.  Grantor shall pay all costs
connected with any of the foregoing, which shall be a demand obligation owing
by Grantor (which Grantor hereby promises to pay) to Holder (for its own
account or the account of Lenders, as applicable) pursuant to this Deed of
Trust.


 


(o)           Fees
and Expenses.  Without limitation of
any other provision of this Deed of Trust or of any other Loan Document and to
the extent not prohibited by applicable law, Borrowers will pay, and will
reimburse to Holder (for its own account or the account of Lenders, as
applicable) and/or Trustee on demand to the extent paid by Holder, Lenders
and/or Trustee:  (i) costs of appraisals
obtained in connection with the origination of the Loan and after the
occurrence of a Default; (ii) all filing, registration and recording fees,
recordation, transfer and other taxes, brokerage fees and commissions, abstract
fees, title search or examination fees, title policy and endorsement premiums
and fees, Uniform Commercial Code search fees, judgment and tax lien search
fees, escrow fees, attorneys’ fees, architect’s fees, engineering fees,
construction consultant fees, environmental inspection fees, survey fees, and
all other costs and expenses of every character incurred by Borrowers or
Holder, Lenders and/or Trustee in connection with the preparation of the Loan
Documents, the evaluation, closing and funding of the Loan, and any and all amendments
and supplements to this Deed of Trust or any other Loan Documents or any
approval, consent, waiver, release or other matter requested or required
hereunder or thereunder, or otherwise attributable or chargeable to Grantor as
owner of the Property; and (iii) all costs and expenses, including
attorneys’ fees and expenses (including the market value of services provided
by in-house counsel), incurred or expended in connection with the exercise of
any right or remedy, or the defense of any right or remedy or the enforcement
of any obligation of Borrowers or Grantor, hereunder or under any other Loan
Document.


 


(p)           Indemnification.  Grantor will indemnify and hold harmless each
and every Indemnified Party from and against, and reimburse them on demand for,
any and all Indemnified Matters.  Without
limitation, the foregoing indemnity shall apply to each Indemnified Party with
respect to matters which in whole or in part are caused by or arise out of the
negligence of such (and/or any other) Indemnified Party.  However, such indemnity shall not apply to a
particular Indemnified Party to the extent that the subject of the
indemnification is caused by or arises out of the gross negligence or willful
misconduct of that Indemnified Party. 
Any amount to be paid under this clause (p) by Grantor to any
Indemnified Party shall be a demand obligation owing by 


 


16

















 


Grantor (which Grantor hereby promises to pay) to such Indemnified
Party pursuant to this Deed of Trust.  The
indemnity in this clause (p) shall not terminate upon the release,
foreclosure or other termination of this Deed of Trust but will survive the
enforcement of any remedy provided in any Loan Document including the
foreclosure of this Deed of Trust or conveyance in lieu of foreclosure, the
repayment of the Secured Indebtedness, the discharge and release of this Deed
of Trust and the other Loan Documents, any bankruptcy or other proceeding under
any Debtor Relief Law, and any other event whatsoever.  The rights of Indemnified Parties under this
clause (p) shall be in addition to all other rights that Indemnified
Parties or any of them may have under this Deed of Trust or any other Loan
Document.  Nothing in this clause (p) or
elsewhere in this Deed of Trust shall limit or impair any rights or remedies
that any Indemnified Party may have (including any rights of contribution or
indemnification) against Grantor or any other person under any other provision
of this Deed of Trust, any other Loan Document, any other agreement or any
applicable Legal Requirement.


 


(q)           Taxes
on Deed of Trust.  Grantor will
promptly pay all income, franchise and other taxes owing by Grantor and any
stamp, documentary, recordation and transfer taxes or other taxes (unless such
payment by Grantor is prohibited by law) which may be required to be paid with
respect to any Note, this Deed of Trust or any other instrument evidencing or
securing any of the Secured Indebtedness. 
In the event of the enactment after this date of any law of any
governmental entity applicable to Holder, any Lender, the Property or this Deed
of Trust deducting from the value of property for the purpose of taxation any
lien or security interest thereon, or imposing upon Holder or any Lender the
payment of the whole or any part of the taxes or assessments or charges or
liens herein required to be paid by Grantor, or changing in any way the laws
relating to the taxation of deeds of trust or mortgages or security agreements
or debts secured by deeds of trust or mortgages or security agreements or the
interest of the mortgagee or secured party in the property covered thereby, or
the manner of collection of such taxes, so as to affect this Deed of Trust or
the Secured Indebtedness or Holder or any Lender, then, and in any such event,
Grantor, upon demand by Holder, shall pay such taxes, assessments, charges or
liens, or reimburse Holder therefor (for its own account or the account of the
affected Lender(s), as applicable); provided, however, that if in the opinion
of counsel for Holder (i) it might be unlawful to require Grantor to make
such payment or (ii) the making of such payment might result in the
imposition of interest beyond the maximum amount permitted by law, then and in
such event, Holder may elect, by notice in writing given to Grantor, to declare
all of the Secured Indebtedness to be and become due and payable sixty (60)
days from the giving of such notice.


 


(r)            Statement
Concerning the Loan or Deed of Trust. 
Grantor shall at any time and from time to time furnish within seven (7) days
of request by Holder a written statement in such form as may be required by
Holder stating (i) that this Deed of Trust and the other Loan Documents
are valid and binding obligations, and enforceable against Grantor in
accordance with their terms; (ii) the aggregate unpaid principal balance
of the Loan; (iii) the date to which interest on the Loan is paid; (iv) that
this Deed of Trust and the other Loan Documents have not been released,
subordinated or modified; and (v) that there are no offsets or defenses
against the enforcement of this Deed of Trust or any other Loan Document.  Alternatively, if any of the foregoing
statements in clauses (i), (iv) and (v) are untrue, Grantor shall
specify the reasons therefor.


 


17

















 


(s)           Letter-of-Credit
Rights.  If Grantor is at any time a
beneficiary under a letter of credit (whether or not the letter of credit is
evidenced by a writing) relating to the properties, rights, titles and
interests referred to in Section 1.3 of this Deed of Trust now or
hereafter issued in favor of Grantor, Grantor shall promptly notify Holder
thereof and, at the request and option of Holder, Grantor shall, pursuant to an
agreement in form and substance satisfactory to Holder, either (i) arrange
for the issuer and any confirmer of such letter of credit to consent to an
assignment to Holder of the proceeds of any drawings under the letter of
credit, or (ii) arrange for Holder to become the transferee beneficiary of
the letter of credit, with Holder agreeing, in each case, that the proceeds of
any drawing under the letter of credit are to be applied as provided in Section 5.2
of this Deed of Trust.


 


(t)            Status
of Grantor.  Grantor is and will
continue to be (i) duly organized, validly existing and in good standing
under the laws of its state of organization, (ii) authorized to do
business and in good standing in each state in which the Property is located,
and (iii) possessed of all requisite power and authority to carry on its business
and to own and operate the Property. 
Grantor’s exact legal name is correctly set forth at the end of this
Deed of Trust.  Grantor is an
organization of the type specified in the introductory paragraph of this Deed
of Trust.  If Grantor is a registered
entity, Grantor is incorporated in or organized under the laws of the state
specified in the introductory paragraph of this Deed of Trust.  If Grantor is an unregistered entity
(including a general partnership), it is organized under the laws of the state
specified in the introductory paragraph of this Deed of Trust.  Grantor will not cause or permit any change
to be made in its name, identity (including its trade name or names), or
corporate or partnership structure unless Grantor shall have notified Holder in
writing of such change at least 30 days prior to the effective date of such
change, and shall have first taken all action required by Holder for the
purpose of further perfecting or protecting the lien and security interest of
Holder in the Property.  In addition,
Grantor shall not change its corporate or partnership structure without first
obtaining the prior written consent of Holder. 
Grantor’s principal place of business and chief executive office, and
the place where Grantor keeps its books and records, including recorded data of
any kind or nature, regardless of the medium of recording, including software,
writings, plans, specifications and schematics concerning the Property, has
been for the preceding four months (or, if less, the entire period of the
existence of Grantor) and will continue to be the address of Grantor set forth
at the end of this Deed of Trust (unless Grantor notifies Holder of any change
in writing at least 30 days prior to the date of such change).  Grantor’s organizational identification
number, if any, assigned by the state of incorporation or organization is
correctly set forth on the first page of this Deed of Trust.  Grantor shall promptly notify Holder of any
change in its organizational identification number.  If Grantor does not now have an
organizational identification number and later obtains one, Grantor shall
promptly notify Holder of such organizational identification number.


 


Section 2.2             Performance
by Holder on Grantor’s Behalf. 
Grantor agrees that if Grantor fails to perform any act or to take any
action which under any Loan Document Grantor is required to perform or take, or
to pay any money which under any Loan Document Grantor is required to pay, and
whether or not the failure then constitutes a Default, and whether or not there
has occurred any Default or the Secured Indebtedness has been accelerated,
Holder, in Grantor’s name or its own name on behalf of itself and Lenders, may,
but shall not be obligated to, perform or cause to be performed such act or
take such action or pay such money, and any expenses so incurred by Holder or
Lenders and any money so paid by Holder or Lenders shall be 


 


18

















 


a
demand obligation owing by Grantor to Holder for its own account or the account
of Lenders, as applicable (which obligation Grantor hereby promises to pay),
shall be a part of the Secured Indebtedness, and Holder and/or Lenders, upon
making such payment, shall be subrogated to all of the rights of the person,
entity or body politic receiving such payment. 
Holder and its designees shall have the right to enter upon the Property
at any time and from time to time for any such purposes.  No such payment or performance by Holder or
Lenders shall waive or cure any Default or waive any right, remedy or recourse
of Holder or Lenders.  Any such payment
may be made by Holder or Lenders in reliance on any statement, invoice or claim
without inquiry into the validity or accuracy thereof.  Each amount due and owing by Grantor to Holder
or Lenders pursuant to this Deed of Trust shall bear interest, from the date
such amount becomes due until paid, at the rate per annum provided in the
Credit Agreement for interest on past-due principal owed on the Loan but never
in excess of the maximum nonusurious amount permitted by applicable law, which
interest shall be payable to Holder on demand for its own account or the
account of Lenders, as applicable; and all such amounts, together with such
interest thereon, shall automatically and without notice be a part of the
Secured Indebtedness.  The amount and
nature of any expense by Holder or Lenders hereunder and the time when paid
shall be fully established by the certificate of Holder or any of Holder’s
officers or agents.


 


Section 2.3             Absence
of Obligations of Holder and Lenders with Respect to Property.  Notwithstanding anything in this Deed of
Trust to the contrary, including the definition of “Property” and/or the
provisions of Article 3 hereof, (i) to the extent permitted by
applicable law, the Property is composed of Grantor’s rights, title and
interests therein but not Grantor’s obligations, duties or liabilities
pertaining thereto, (ii) Holder and Lenders neither assume nor shall have
any obligations, duties or liabilities in connection with any portion of the
items described in the definition of “Property” herein, either prior to or
after obtaining title to such Property, whether by foreclosure sale, the
granting of a deed in lieu of foreclosure or otherwise, and (iii) Holder
may, at any time prior to or after the acquisition of title to any portion of
the Property as above described, advise any party in writing as to the extent
of Holder’s and Lenders’ interest therein and/or expressly disaffirm in writing
any rights, interests, obligations, duties and/or liabilities with respect to
such Property or matters related thereto. 
Without limiting the generality of the foregoing, it is understood and
agreed that neither Holder nor Lenders shall have any obligations, duties or
liabilities prior to or after acquisition of title to any portion of the
Property, as lessee under any lease or purchaser or seller under any contract
or option unless Holder elects otherwise by written notification.


 


Section 2.4             Authorization
to File Financing Statements; Power of Attorney.  Grantor hereby authorizes Holder at any time
and from time to time to file any initial financing statements, amendments
thereto and continuation statements as authorized by applicable law, required
by Holder to establish or maintain the validity, perfection and priority of the
security interests granted by this Deed of Trust.  For purposes of such filings, Grantor agrees
to furnish any information requested by Holder promptly upon request by Holder.  Grantor also ratifies its authorization for
Holder to have filed any like initial financing statements, amendments thereto
or continuation statements if filed prior to the date of this Deed of
Trust.  Grantor hereby irrevocably
constitutes and appoints Holder and any officer or agent of Holder, with full
power of substitution, as its true and lawful attorneys-in-fact with full
irrevocable power and authority in the place and stead of Grantor or in Grantor’s
own name to execute in Grantor’s name any such documents and to otherwise carry
out the purposes of this Section 2.4, to the extent that 


 


19

















 


Grantor’s
authorization above is not sufficient. 
To the extent permitted by law, Grantor hereby ratifies all acts said
attorneys-in-fact have lawfully done in the past or shall lawfully do or cause
to be done in the future by virtue hereof. 
This power of attorney is a power coupled with an interest and shall be
irrevocable.


 


ARTICLE
3


Assignment
of Rents and Leases


 


Section 3.1             Assignment.  To secure the obligations of Borrowers under
the Loan Documents and all matters and indebtedness constituting the Secured
Indebtedness, Grantor hereby assigns to Administrative Agent for the ratable
benefit of itself and Lenders all Rents and all of Grantor’s rights in and
under all Leases.  Upon the occurrence
and during the continuation of any Default, Administrative Agent and any other
Holder shall have the right, power and authority to collect any and all Rents
on behalf of itself and Lenders.  While
any Default is continuing, all Rents shall be paid directly to Holder and not
through Grantor, all without the necessity of any further action by Holder,
including any action to obtain possession of the Land, Improvements or any
other portion of the Property or any action for the appointment of a
receiver.  Grantor hereby authorizes and
directs the tenants under the Leases to pay Rents to Holder upon written demand
by Holder, without further consent of Grantor, without any obligation of such
tenants to determine whether a Default has in fact occurred and regardless of
whether Holder has taken possession of any portion of the Property, and the
tenants may rely upon any written statement delivered by Holder to the
tenants.  Any such payments to Holder
shall constitute payments to Grantor under the Leases, and Grantor hereby
irrevocably appoints Holder as its attorney-in-fact, which power of attorney is
with full power of substitution and coupled with an interest, to do all things
during the continuance of a Default, which Grantor might otherwise do with
respect to the Property and the Leases thereon, including:  (a) demanding, receiving and enforcing
payment of any and all Rents; (b) giving receipts, releases and
satisfactions for any and all Rents; (c) suing either in the name of
Grantor or in Holder’s own name on behalf of itself and Lenders for any and all
Rents; (d) applying the net proceeds of any and all Rents collected by
Holder, after deducting all expenses of collection, including attorneys’ fees
and expenses, to the Secured Indebtedness in such order and manner as Holder
may elect and/or to the operation and management of the Property, including the
payment of management, brokerage and attorneys’ fees and expenses (including
reasonable reserves for anticipated expenses), or at the option of Holder,
holding the same as security for the payment of the Secured Indebtedness; (e) leasing,
in the name of Grantor, the whole or any part of the Property which may become
vacant; (f) employing agents for such leasing and paying such agents
reasonable compensation for their services; and (g) requiring Grantor to
deliver to Holder all security deposits and executed originals of all Leases
and copies of all records relating thereto. 
Holder may take any or all of the foregoing actions with or without
taking possession of any portion of the Property or taking any action with
respect to such possession.  The
assignment contained in this Section 3.1 shall become null and void
upon the reconveyance of this Deed of Trust.


 


Section 3.2             Covenants,
Representations and Warranties Concerning Leases and Rents.


 


Grantor covenants, represents and warrants that:


 


20

















 


(a)           Grantor
has good title to, and is the owner of the entire landlord’s interest in, the
Leases and Rents hereby assigned and has authority to assign them;


 


(b)           All
Leases are valid and enforceable, and in full force and effect, and are
unmodified except as stated therein;


 


(c)           Grantor
is not in default under any Lease (and no event has occurred which with the
passage of time or notice or both would result in a default under any Lease)
and is not the subject of any petition, case, proceeding or other action
pursuant to any Debtor Relief Law;


 


(d)           To
Grantor’s knowledge, no tenant in the Property is in default under its Lease
(and no event has occurred which with the passage of time or notice or both
would result in a default under its Lease) or is the subject of any petition,
case, proceeding or other action pursuant to any Debtor Relief Law;


 


(e)           Unless
otherwise stated in a Permitted Encumbrance, no Rents or Leases have been or
will be assigned, mortgaged, pledged or otherwise encumbered and no other
person has acquired or will acquire any right, title or interest in such Rents
or Leases;


 


(f)            No
Rents have been waived, released, discounted, set off or compromised;


 


(g)           Except
as stated in the Leases, Grantor has not received any funds or deposits from
any tenant for which credit has not already been made on account of accrued
Rents;


 


(h)           Grantor
shall perform all of its obligations under the Leases and enforce the tenants’
obligations under the Leases to the extent enforcement is prudent under the
circumstances;


 


(i)            Grantor
will not, without the prior written consent of Holder, waive, release,
discount, set off, compromise, reduce or defer any Rent, receive or collect
Rents more than one (1) month in advance, grant any rent-free period to
any tenant, reduce any Lease term or waive, release or otherwise modify any
other material obligation under any Lease, renew or extend any Lease except in
accordance with a right of the tenant thereto in such Lease, approve or consent
to an assignment of a Lease or a subletting of any part of the premises covered
by a Lease, or settle or compromise any claim against a tenant under a Lease in
bankruptcy, in any other proceeding pursuant to any Debtor Relief Law or
otherwise;


 


(j)            Grantor
will not, without the prior written consent of Holder, terminate or consent to
the cancellation or surrender of any Lease having an unexpired term of one (1) year
or more;


 


(k)           Grantor
will not execute any Lease except in accordance with the Loan Documents and for
actual occupancy by the tenant thereunder;


 


(l)            Grantor
shall give prompt notice to Holder, as soon as Grantor first obtains notice, of
any claim, or the commencement of any action, by any tenant or subtenant under
or with respect to a Lease regarding any claimed damage, default, diminution of
or offset against Rent, cancellation of the Lease, or constructive eviction,
and Grantor shall defend, at Grantor’s 


 


21

















 


expense, any proceeding pertaining to any Lease, including, if Holder
so requests, any such proceeding if Holder and/or Lenders are parties thereto;


 


(m)          Promptly
upon request by Holder and upon the occurrence of a Default, Grantor shall
deliver to Holder all security deposits and executed originals of all Leases
and copies of all records relating thereto;


 


(n)           There
shall be no merger of the leasehold estates created by the Leases, with the fee
estate of the Land without the prior written consent of Holder; and


 


(o)           Holder,
on behalf of itself and Lenders, may at any time and from time to time by
specific written instrument intended for the purpose, unilaterally subordinate
the lien of this Deed of Trust to any Lease, without joinder or consent of or
notice to Grantor, any tenant or any other person, and notice is hereby given
to each tenant under a Lease of such right to subordinate.  No such subordination shall constitute a
subordination to any lien or other encumbrance, whenever arising, or improve
the right of any junior lienholder, and nothing herein shall be construed as
subordinating this Deed of Trust to any Lease.


 


Section 3.3             No
Liability of Holder or Lenders. 
Holder and Lenders neither have nor assume any obligations as lessor or
landlord with respect to any Lease. 
Administrative Agent’s acceptance of this assignment on behalf of itself
and Lenders shall not be deemed to constitute any Holder or any Lender a “mortgagee
in possession,” nor shall such acceptance obligate Holder or any Lender to
appear in or defend any proceeding relating to any Lease or to the Property, or
to take any action hereunder, expend any money, incur any expenses, perform any
obligation or liability under any Lease, or assume any obligation for any
deposit delivered to Grantor by any tenant and not as such delivered to and
accepted by Holder.  Neither Holder nor
Lenders shall be liable for any injury or damage to person or property in or
about the Property, or for Holder’s failure to collect or to exercise diligence
in collecting Rents, but Holder and Lenders shall be accountable only for Rents
that they shall actually receive. 
Neither the assignment of Leases and Rents, nor enforcement of the
rights of Holder and Lenders regarding Leases and Rents (including collection
of Rents), nor possession of the Property by Holder or Lenders, nor Holder’s
consent to or approval of any Lease (nor all of the same), shall render Holder
or any Lender liable on any obligation under or with respect to any Lease or
constitute affirmation of, or any subordination to, any Lease, occupancy, use
or option.


 


Section 3.4             Rights
Cumulative.  The powers and rights of
Holder and Lenders under this Article 3 shall be cumulative of all
other powers and rights of Holder and Lenders under the Loan Documents or
otherwise.  Such powers and rights
granted in this Article 3 shall be in addition to the other
remedies provided for in this Deed of Trust upon the occurrence of a Default
and may be exercised independently of or concurrently with any of said
remedies.  If Holder or Lenders seek or
obtain any judicial relief regarding Rents or Leases, the same shall in no way
prevent the concurrent or subsequent employment of any other appropriate rights
or remedies nor shall the same constitute an election of judicial relief for
any foreclosure or any other purpose.


 


22














 


ARTICLE
4

Default


 


Section 4.1        Events of Default.  The occurrence of any one of the following
shall be a default under this Deed of Trust (“Default”):


 


(a)           Nonperformance
of Covenants.  Any covenant,
agreement or condition of this Deed of Trust (other than covenants otherwise
addressed in another clause of this Section 4.1) is not fully and
timely performed, observed or kept, and such failure is not cured within the
applicable notice and cure period (if any) provided for herein.


 


(b)           Default
under other Loan Documents / Cross-Default. 
A Default occurs under any other Loan Document, specifically including
any default pursuant to any of the following deeds of trust granted to Trustee,
in favor of the Administrative Agent, for its own benefit and for the benefit
of any other Lender(s):


 


·                  That certain First Lien Deed of Trust,
Assignment of Rents and Leases, Security Agreement and Fixture Filing dated of
even date herewith and granted by Alta Hollywood Hospitals, Inc., as
grantor thereunder, encumbering properties located at 6245 De Longpre Avenue
and 6228 Leland Way;


 


·                  That certain First Lien Deed of Trust,
Assignment of Rents and Leases, Security Agreement and Fixture Filing dated of
even date herewith and granted by Alta Los Angeles Hospitals, Inc., as
grantor thereunder, encumbering properties located at 13222 Bloomfield Avenue;


 


·                  That certain First Lien Deed of Trust,
Assignment of Rents and Leases, Security Agreement and Fixture Filing dated of
even date herewith and granted by Alta Los Angeles Hospitals, Inc., as
grantor thereunder, encumbering properties located at 4081, 4059 and 4125 East
Olympic Boulevard;


 


(c)           Transfer
of the Property.  Any Transfer occurs
with respect to all or any part of the Property or any interest therein, except
for:  (i) sales or transfers of
items of the Accessories which have become obsolete or worn beyond practical
use and which have been replaced by adequate substitutes owned by Grantor,
having a value equal to or greater than the replaced items when new; and (ii) the
grant, in the ordinary course of business, of a leasehold interest in a part of
the Improvements to a tenant for occupancy, not containing a right or option to
purchase and not in contravention of any provision of this Deed of Trust or of
any other Loan Document.  Holder may, in
its sole discretion, waive a Default under this clause (c), but it shall have
no obligation to do so.  Any waiver will
be conditioned upon the grantee’s integrity, reputation, character,
creditworthiness and management ability being satisfactory to Holder in its sole
judgment, and may also be conditioned upon such one or more of the following,
if any, that Holder may require:  the
execution by the grantee of a written assumption agreement prior to such
Transfer containing such terms as Holder may require; the receipt by Holder and
Lenders of a principal paydown on the Loan; the receipt by Holder and Lenders
of an assumption fee; the reimbursement of all of the expenses incurred by
Holder and Lenders in connection with such Transfer, including attorneys’ fees;
and any modification of the Loan Documents as Holder may require, including an
increase in the rate of interest payable under the Loan and/or a modification
of the terms of the Loan.  NOTICE - THE
SECURED INDEBTEDNESS IS SUBJECT TO 


 


23

















 


ACCELERATION IN THE EVENT OF A TRANSFER WHICH IS PROHIBITED UNDER THIS
CLAUSE (c).


 


(d)           Transfer
of Interests in Grantor.  (i) If
Grantor is a corporation, a Transfer occurs with respect to shares possessing,
in the aggregate, more than fifty percent (50%) of the voting power without the
prior written consent of Holder; (ii) if Grantor is a partnership or joint
venture, a Transfer occurs with respect to more than fifty percent (50%) of the
partnership or joint venture interests in the aggregate, or any general partner
or joint venturer withdraws or is removed or admitted without the prior written
consent of Holder; or (iii) if Grantor is a limited liability company, a
Transfer occurs with respect to more than fifty percent (50%) of the voting
power or ownership interests, in either case in the aggregate, or any managing
member withdraws or is removed or admitted without the prior written consent of
Holder.  NOTICE - THE SECURED
INDEBTEDNESS IS SUBJECT TO ACCELERATION IN THE EVENT OF A TRANSFER WHICH IS
PROHIBITED UNDER THIS CLAUSE (d).


 


(e)           Grant
of Easement, Etc.  Without the prior
written consent of Holder, Grantor grants any easement or dedication, or files
any plat, condominium declaration or restriction, or otherwise encumbers the
Property, or seeks or permits any zoning reclassification or variance, unless
such action is expressly permitted by the Loan Documents or does not affect the
Property.


 


(f)            Abandonment.  The owner of the Property abandons any of the
Property.


 


(g)           Default
Under Other Lien.  A default or event
of default occurs under any lien, security interest or assignment covering the
Property or any part thereof (whether or not Holder and Lenders have consented,
and without hereby implying any consent by Holder or Lenders, to any such lien,
security interest or assignment not created hereunder), or the holder of any
such lien, security interest or assignment declares a default or institutes
foreclosure or other proceedings for the enforcement of its remedies thereunder.


 


(h)           Destruction.  The Property is so demolished, destroyed or
damaged that in the reasonable opinion of Holder, it cannot be restored or
rebuilt with available funds to a profitable condition within a reasonable
period of time and in any event prior to the final maturity date of the Loan.


 


(i)            Condemnation.  (i) Any governmental authority requires
or commences any proceeding for the demolition of any building or structure
comprising a part of the Premises, or (ii) there is commenced any
proceeding to condemn or otherwise take pursuant to the power of eminent
domain, or a contract for sale or a conveyance in lieu of such a taking is
executed which provides for the transfer of, a material portion of the
Premises, including the taking (or transfer in lieu thereof) of any portion
which would result in the blockage or substantial impairment of access or
utility service to the Improvements or which would cause the Premises to fail
to comply with any Legal Requirement.


 


Section 4.2             Notice
and Cure.  If any provision of this
Deed of Trust or any other Loan Document provides for Holder to give to Grantor
any notice regarding a default or incipient default, then if Holder shall fail
to give such notice to Grantor as provided, the sole and exclusive remedy of
Grantor for such failure shall be to seek appropriate equitable relief to
enforce the 


 


24

















 


agreement
to give such notice and to have any acceleration of the maturity of the Loan
and the Secured Indebtedness postponed or revoked and foreclosure proceedings
in connection therewith delayed or terminated pending or upon the curing of
such default in the manner and during the period of time permitted by such
agreement, if any, and Grantor shall have no right to damages or any other type
of relief not herein specifically set out against Holder or Lenders, all of
which damages or other relief are hereby waived by Grantor.  Nothing herein or in any other Loan Document
shall operate or be construed to add on or make cumulative any cure or grace
periods specified in any of the Loan Documents.


 


ARTICLE
5

Remedies


 


Section 5.1        Certain Remedies.  If a Default shall occur, Holder may (but
shall have no obligation to) exercise any one or more of the following
remedies, without notice (unless notice is required by applicable statute):


 


(a)           Acceleration.  Holder may at any time and from time to time
declare any or all of the Secured Indebtedness immediately due and payable and
such Secured Indebtedness shall thereupon be immediately due and payable,
without presentment, demand, protest, notice of protest, notice of acceleration
or of intention to accelerate or any other notice or declaration of any kind,
all of which are hereby expressly waived by Borrowers, which waiver is hereby
acknowledged by Grantor.


 


(b)           Enforcement
of Assignment of Rents.  Holder may
take any of the actions described in Article 3 with or without
taking possession of any portion of the Property or taking any action with
respect to such possession.


 


(c)           Trustee’s
Sale.


 


(i)            Holder
may execute and deliver to Trustee written declaration of default and demand
for sale and written notice of default and of election to cause all or any part
of the Property to be sold, which notice Trustee shall cause to be filed for
record; and after the lapse of such time as may then be required by law
following the recordation of such notice of default, and notice of sale having
been given as then required by law, Trustee, without demand on Borrowers or
Grantor, shall sell such Property at the time and place fixed by Trustee in
such notice of sale, either as a whole or in separate parcels and in such order
as Holder may direct (Borrowers and Grantor each waiving any right to direct
the order of sale), at public auction to the highest bidder for cash in lawful
money of the United States (or cash equivalents acceptable to Trustee to the
extent permitted by applicable law), payable at the time of sale.  Trustee may postpone the sale of all or any
part of the Property by public announcement at the time fixed by the preceding
postponement.  Trustee shall deliver to
the purchaser at such sale its deed conveying the property so sold, but without
any covenant or warranty, express or implied, and the recitals in such deed of
any matters or facts shall be conclusive proof of the truthfulness
thereof.  Any person, including Trustee,
Holder or any Lender, may purchase at such sale, and any bid by Holder or any
Lender may be, in whole or in part, in the form of cancellation of all or any
part of the Secured Indebtedness.


 


25

















 


(ii)           The
sale by Trustee of less than the whole of the Property shall not exhaust the
power of sale herein granted, and Trustee is specifically empowered to make
successive sales under such power until the whole of the Property shall be
sold.  In the event any sale hereunder is
not completed or is defective in the opinion of Holder, such sale shall not
exhaust the power of sale hereunder and Holder shall have the right to cause a
subsequent sale or sales to be made hereunder. 
If the proceeds of any sale of less than the whole of the Property shall
be less than the aggregate of the Secured Indebtedness and the expense of
executing this trust as provided herein, this Deed of Trust and the lien hereof
shall remain in full force and effect as to the unsold portion of the Property
just as though no sale had been made; provided, however, that neither Borrowers
nor Grantor shall have any right to require the sale of less than the whole of
the Property but Holder shall have the right, at its sole election, to request
Trustee to sell less than the whole of the Property.


 


(iii)          Trustee
may, after any request or direction by Holder, sell not only the real property
but also the Collateral and other interests which are a part of the Property,
or any part thereof, as a unit and as a part of a single sale, or may sell any
part of the Property separately from the remainder of the Property.  It shall not be necessary for Trustee to have
taken possession of any part of the Property or to have present or to exhibit
at any sale any of the Collateral.


 


(iv)          After
each sale, Trustee shall receive the proceeds of said sale and apply the same
as herein provided.  Payment of the
purchase price to Trustee shall satisfy the obligation of purchaser at such
sale therefor, and such purchaser shall not be responsible for the application
thereof.


 


(v)           Trustee
or its successor or substitute 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 conduct of sale, but in the
name and on behalf of Trustee, its successor or substitute.  If Trustee or its successor or substitute
shall have given notice of sale hereunder, any successor or substitute Trustee
thereafter appointed may complete the sale and the conveyance of the property
pursuant thereto as if such notice had been given by the successor or
substitute Trustee conducting the sale.


 


(d)           Uniform
Commercial Code.  Without limitation
of any rights of enforcement of Holder and Lenders with respect to the
Collateral or any part thereof in accordance with the procedures for
foreclosure of real estate, Holder may exercise its rights of enforcement with
respect to the Collateral or any part thereof under the California Uniform
Commercial Code, as in effect from time to time (or under the Uniform
Commercial Code in force, from time to time, in any other state to the extent
the same is applicable law) and in conjunction with, in addition to or in
substitution for those rights and remedies: 
(i) Holder may enter upon Grantor’s premises to take possession of,
assemble and collect the Collateral or, to the extent and for those items of
the Collateral permitted under applicable law, to render it unusable; (ii) Holder
may require Grantor to assemble the Collateral and make it available at a place
Holder designates which is mutually convenient to allow Holder to take
possession or dispose of the Collateral; (iii) written notice mailed to
Grantor as provided herein at least five (5) days prior to the date of
public sale of the Collateral or prior to the date on which private sale of the
Collateral will be made shall constitute reasonable notice; provided that, if
Holder fails to comply with this clause (iii) in any respect, the 


 


26

















 


liability
of Holder and Lenders for such failure shall be limited to the liability (if
any) imposed on them as a matter of law under the California Uniform Commercial
Code, as in effect from time to time (or under the Uniform Commercial Code, in
force from time to time, in any other state to the extent the same is
applicable law); (iv) any sale made pursuant to the provisions of this
clause (d) shall be deemed to have been a public sale conducted in a
commercially reasonable manner if held contemporaneously with and upon the same
notice as required for the sale of the Property under power of sale as provided
in clause (c) above in this Section 5.1; (v) in the event
of a foreclosure sale, whether made by Trustee under the terms hereof, or under
judgment of a court, the Collateral and the other Property may, at the option
of Holder, be sold as a whole; (vi) it shall not be necessary for Holder
to take possession of the Collateral or any part thereof prior to the time that
any sale pursuant to the provisions of this clause (d) is conducted and it
shall not be necessary for the Collateral or any part thereof to be present at
the location of such sale; (vii) with respect to application of proceeds
from disposition of the Collateral under Section 5.2 hereof, the
costs and expenses incident to disposition shall include the reasonable
expenses of retaking, holding, preparing for sale or lease, selling, leasing
and the like and the reasonable attorneys’ fees and legal expenses incurred by
Holder and Lenders (including the market value of services provided by in-house
counsel); (viii) any and all statements of fact or other recitals made in
any bill of sale or assignment or other instrument evidencing any foreclosure
sale hereunder as to nonpayment of the Secured Indebtedness or as to the
occurrence of any Default, or as to Holder having declared all of such
indebtedness to be due and payable, or as to notice of time, place and terms of
sale and of the properties to be sold having been duly given, or as to any
other act or thing having been duly done by Holder or Lenders, shall be taken
as prima facie evidence of the truth of the facts so stated and recited; (ix) Holder
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 Holder, including the sending of
notices and the conduct of the sale, but in the name of Holder on behalf of
itself and Lenders; (x) Holder may comply with any applicable state or
federal law or regulatory requirements in connection with a disposition of the
Collateral, and such compliance will not be considered to affect adversely the
commercial reasonableness of any sale of the Collateral; (xi) Holder may sell
the Collateral without giving any warranties as to the Collateral, and may
specifically disclaim all disposition warranties, including warranties relating
to title, possession, quiet enjoyment and the like, and all warranties of
quality, merchantability and fitness for a specific purpose, and this procedure
will not be considered to affect adversely the commercial reasonableness of any
sale of the Collateral; (xii) Grantor acknowledges that a private sale of the
Collateral may result in less proceeds than a public sale; and (xiii) Grantor
acknowledges that the Collateral may be sold at a loss to Grantor, and that in
such event neither Holder nor Lenders shall have any liability or
responsibility to Grantor for such loss.


 


(e)           Judicial
Action.  Subject to any provision of
the Credit Agreement regarding reference and arbitration, Holder may bring an
action on behalf of itself and Lenders in any court of competent jurisdiction
to foreclose this instrument or to obtain specific performance of any of the
covenants or agreements of this Deed of Trust.


 


(f)            Entry
on Property.  Holder is authorized on
behalf of itself and Lenders, prior or subsequent to the institution of any
foreclosure proceedings, to the fullest extent permitted by applicable law, to
enter upon the Property or any part thereof, and to take possession of the
Property and all books and records, and all recorded data of any kind or
nature, regardless of the medium of recording, including all software,
writings, plans, specifications and schematics 


 


27

















 


relating
thereto, and to exercise without interference from Grantor any and all rights
which Grantor has with respect to the management, possession, operation,
protection or preservation of the Property. 
Holder shall not be deemed to have taken possession of the Property or
any part thereof except upon the exercise of its right to do so, and then only
to the extent evidenced by its demand and overt act specifically for such purpose.  All costs, expenses and liabilities of every
character incurred by Holder and Lenders in managing, operating, maintaining,
protecting or preserving the Property shall constitute a demand obligation of
Grantor (which obligation Grantor hereby promises to pay) to Holder (for its
own account or the account of Lenders, as applicable) pursuant to this Deed of
Trust.  If necessary to obtain the
possession provided for above, Holder may invoke any and all legal remedies to
dispossess Grantor.  In connection with
any action taken by Holder pursuant to this clause (f), neither Holder nor
Lenders shall be liable for any loss sustained by Grantor resulting from any
failure to let the Property or any part thereof, or from any act or omission of
Holder in managing the Property unless such loss is caused by the willful
misconduct and bad faith of Holder, nor shall Holder or Lenders be obligated to
perform or discharge any obligation, duty or liability of Grantor arising under
any lease or other agreement relating to the Property or arising under any
Permitted Encumbrance or otherwise arising. 
Grantor hereby assents to, ratifies and confirms any and all actions of
Holder with respect to the Property taken under this clause (f).


 


(g)           Receiver.  Holder, on behalf of itself and Lenders,
shall as a matter of right be entitled to the appointment of a receiver or
receivers for all or any part of the Property, whether such receivership is
incident to a proposed sale (or sales) of such property or otherwise, and
without regard to the value of the Property or the solvency of any person or
persons liable for the payment of the Secured Indebtedness, and Grantor does
hereby irrevocably consent to the appointment of such receiver or receivers,
waives notice of such appointment, of any request therefor or hearing in
connection therewith, and any and all defenses to such appointment, agrees not
to oppose any application therefor by Holder, and agrees that such appointment
shall in no manner impair, prejudice or otherwise affect the rights of Holder
and Lenders to application of Rents as provided in this Deed of Trust.  Nothing herein is to be construed to deprive
Holder or Lenders of any other right, remedy or privilege they may have under
the law to have a receiver appointed. 
Any money advanced by Holder or Lenders in connection with any such
receivership shall be a demand obligation (which obligation Grantor hereby
promises to pay) owing by Grantor to Holder (for its own account or the account
of Lenders, as applicable) pursuant to this Deed of Trust.


 


(h)           Powers
of Holder.  Holder may, on behalf of
itself and Lenders, either directly or through an agent or court-appointed
receiver, and without regard to the adequacy of any security for the Secured
Indebtedness:


 


(i)            enter,
take possession of, manage, operate, protect, preserve and maintain, and
exercise any other rights of an owner of, the Property, and use any other
properties or facilities of Grantor relating to the Property, all without
payment of rent or other compensation to Grantor;


 


(ii)           enter
into such contracts and take such other action as Holder deems appropriate to
complete all or any part of the Improvements or any other construction on the 


 


28

















 


Land,
subject to such modifications and other changes in the Improvements or the plan
of development as Holder may deem appropriate;


 


(iii)          make,
cancel, enforce or modify leases, obtain and evict tenants, fix or modify rents
and, in its own name or in the name of Grantor, otherwise conduct any business
of Grantor in relation to the Property and deal with Grantor’s creditors,
debtors, tenants, agents and employees and any other persons having any
relationship with Grantor in relation to the Property, and amend any contracts
between them, in any manner Holder may determine;


 


(iv)          either
with or without taking possession of the Property, notify obligors on any
contracts that all payments and other performance are to be made and rendered
directly and exclusively to Holder, and in its own name on behalf of itself and
Lenders supplement, modify, amend, renew, extend, accelerate, accept partial
payments or performance on, make allowances and adjustments and issue credits
with respect to, give approvals, waivers and consents under, release, settle,
compromise, compound, sue for, collect or otherwise liquidate, enforce or deal
with any contracts or other rights, including collection of amounts past due
and unpaid (Grantor agreeing not to take any such action after the occurrence
of a Default without prior written authorization from Holder);


 


(v)           endorse,
in the name of Grantor, all checks, drafts and other evidences of payment
relating to the Property, and receive, open and dispose of all mail addressed
to Grantor and notify the postal authorities to change the address for delivery
of such mail to such address as Holder may designate; and


 


(vi)          take
such other action as Holder deems appropriate to protect the security of this
Deed of Trust.


 


(i)            Other
Rights and Remedies.  Holder and
Lenders may exercise any and all other rights and remedies which Holder and
Lenders may have under the Loan Documents, or at law or in equity or otherwise.


 


Section 5.2        Proceeds of Foreclosure.  The proceeds of any sale held by Trustee or
Holder or any receiver or public officer in foreclosure of the liens and
security interests evidenced hereby shall be applied in accordance with the
requirements of applicable laws and to the extent consistent therewith, FIRST,
to the payment of all necessary costs and expenses incident to such foreclosure
sale, including all attorneys’ fees and legal expenses (including the market
value of services provided by in-house counsel), advertising costs, auctioneer’s
fees, costs of title rundowns, lien searches, trustee’s sale guaranties, foreclosure
sale guaranties, litigation guaranties and/or other title policies and
endorsements, inspection fees, appraisal costs, fees for professional services,
environmental assessment and remediation fees, all court costs and charges of
every character, and the maximum fee legally permitted, or a reasonable fee
when the law provides no maximum limit, to Trustee acting under the provisions
of clause (c) of Section 5.1 hereof if foreclosed by power of
sale as provided in said clause (c), and to the payment of the other Secured
Indebtedness, including specifically without limitation the principal, accrued
interest and attorneys’ fees due and unpaid on the Loan and the amounts due and
unpaid and owed to Holder and Lenders under this Deed of Trust, the order and manner
of application to the items in this clause FIRST to be in Holder’s sole
discretion; and SECOND, the remainder, if any, 


 


29

















 


shall
be paid to Grantor, or to Grantor’s representatives, successors or assigns, or
such other persons (including the holder or beneficiary of any inferior lien)
as may be entitled thereto by law; provided, however, that if Holder is
uncertain which person or persons are so entitled, Holder, on behalf of itself
and Lenders, may interplead such remainder in any court of competent
jurisdiction, and the amount of any attorneys’ fees, court costs and expenses
incurred in such action shall be a part of the Secured Indebtedness and shall
be reimbursable (without limitation) from such remainder.


 


Section 5.3        Holder or Lender as Purchaser.  Holder and any Lender shall have the right to
become the purchaser at any sale held by Trustee or its substitute or successor
or by any receiver or public officer or at any public sale.  Holder shall have the right to credit upon
the amount of Holder’s successful bid, to the extent necessary to satisfy such
bid, all or any part of the Secured Indebtedness in such manner and order as
Holder may elect.  Any Lender shall have
the right to credit upon the amount of the Lender’s successful bid, all or any
part of the Secured Indebtedness payable to the Lender in such manner and order
as the Lender may elect.


 


Section 5.4        Remedies Cumulative.  All rights and remedies provided for herein
and in any other Loan Document are cumulative of each other and of any and all
other rights and remedies existing at law or in equity, and Trustee, Holder and
Lenders shall, in addition to the rights and remedies provided herein or in any
other Loan Document, be entitled to avail themselves of all such other rights
and remedies as may now or hereafter exist at law or in equity for the
collection of the Secured Indebtedness and the enforcement of the covenants
herein and the foreclosure of the liens and security interests evidenced hereby,
and the resort to any right or remedy provided for hereunder or under any such
other Loan Document or provided for by law or in equity shall not prevent the
concurrent or subsequent employment of any other appropriate right or rights or
remedy or remedies.


 


Section 5.5        Discretion as to Security.  Holder, on behalf of itself and Lenders, may
resort to any security given by this Deed of Trust or to any other security now
existing or hereafter given to secure the payment of the Secured Indebtedness,
in whole or in part, and in such portions and in such order as may seem best to
Holder in its sole and uncontrolled discretion, and any such action shall not
in anywise be considered as a waiver of any of the rights, benefits, liens or
security interests evidenced by this Deed of Trust.


 


Section 5.6        Grantor’s Waiver of Certain Rights.  To the full extent Grantor may do so, Grantor
agrees that Grantor will not at any time insist upon, plead, claim or take the
benefit or advantage of any law now or hereafter in force providing for any
appraisement, valuation, stay, extension or redemption, homestead, moratorium,
reinstatement, marshaling or forbearance, and Grantor, for Grantor, Grantor’s
representatives, successors and assigns, and for any and all persons ever claiming
any interest in the Property, to the extent permitted by applicable law, hereby
waives and releases all rights of redemption, valuation, appraisement, stay of
execution and all rights to a marshaling of assets of Grantor, including the
Property, or to a sale in inverse order of alienation in the event of
foreclosure of the liens and/or security interests hereby created.  Grantor shall not have or assert any right
under any statute or rule of law pertaining to the marshaling of assets,
sale in inverse order of alienation, the exemption of homestead, the
administration of estates of decedents, or other matters whatsoever to defeat,
reduce or affect the right of Holder and Lenders under the terms of this Deed
of Trust to a sale of the Property for the 


 


30

















 


collection
of the Secured Indebtedness without any prior or different resort for
collection, or the right of Holder and Lenders under the terms of this Deed of
Trust to the payment of the Secured Indebtedness out of the proceeds of sale of
the Property in preference to every other claimant whatsoever.


 


Section 5.7        Delivery of Possession After
Foreclosure.  In the event there is a
foreclosure sale hereunder and at the time of such sale, Grantor or Grantor’s
representatives, or successors as owners of the Property are occupying or using
the Property, or any part thereof, each and all shall immediately become the
tenant of the purchaser at such sale, which tenancy shall be a tenancy from day
to day, terminable at the will of purchaser, at a reasonable rental per day
based upon the value of the property occupied, such rental to be due daily to
the purchaser; and to the extent permitted by applicable law, the purchaser at
such sale shall, notwithstanding any language herein apparently to the
contrary, have the sole option to demand immediate possession following the
sale or to permit the occupants to remain as tenants at will.


 


ARTICLE
6

Miscellaneous


 


Section 6.1        Scope of Deed of Trust.  This Deed of Trust is a deed of trust with
respect to that portion of the Property which is real property, a security
agreement with respect to that portion of the Property which is personal
property (it being agreed that, whenever possible, components of the Property
shall be deemed to be real property rather than personal property), an
assignment of rents and leases, a financing statement and fixture filing and a
collateral assignment.  In addition to
the foregoing, this Deed of Trust covers all proceeds.


 


Section 6.2        Effective as a Financing Statement
and Fixture Filing.  This Deed of
Trust shall be effective as a financing statement filed as a fixture filing
with respect to all fixtures included within the Property and is to be filed
for record in the real estate records of each county where any part of the
Property (including said fixtures) is situated. 
This Deed of Trust shall also be effective as a financing statement
covering as-extracted collateral (including oil and gas), accounts and general
intangibles under the California Uniform Commercial Code, as in effect from
time to time, and the Uniform Commercial Code, as in effect from time to time,
in any other state where the Property is situated which will be financed at the
wellhead or minehead of the wells or mines located on the Property and is to be
filed for record in the real estate records of each county where any part of
the Property is situated.  This Deed of
Trust shall also be effective as a financing statement covering any other
Property and may be filed in any other appropriate filing or recording office.  The respective mailing addresses of Grantor
and Administrative Agent are set forth at the end of this Deed of Trust.  A carbon, photographic or other reproduction
of this Deed of Trust or of any financing statement relating to this Deed of
Trust shall be sufficient as a financing statement for any of the purposes
referred to in this Section 6.2.


 


Section 6.3        Notice to Account Debtors.  In addition to the rights granted elsewhere
in this Deed of Trust, Holder may at any time notify the account debtors or
obligors of any accounts, chattel paper, general intangibles, negotiable
instruments or other evidences of indebtedness included in the Collateral to
pay Holder directly.


 


31














 


Section 6.4        Waiver by Holder.  Holder may at any time and from time to time
by a specific writing intended for the purpose: 
(a) waive any Default without waiving any other prior or subsequent
Default; (b) waive compliance by Borrowers or Grantor with any covenant
herein made by Borrowers or Grantor to the extent and in the manner specified
in such writing; (c) consent to Borrowers or Grantor doing any act which
hereunder Borrowers or Grantor are prohibited from doing, or to Borrowers or
Grantor failing to do any act which hereunder Borrowers or Grantor are required
to do, to the extent and in the manner specified in such writing; (d) release
any part of the Property or any interest therein from the lien and security
interest of this Deed of Trust, without the joinder of Trustee; or (e) release
any party liable, either directly or indirectly, for the Secured Indebtedness
or for any covenant herein or in any other Loan Document without impairing or
releasing the liability of any other party. 
In addition to the foregoing, Holder may remedy any Default without
waiving the Default remedied.  No such
act shall in any way affect the rights or powers of Holder, Lenders or Trustee
hereunder except to the extent specifically agreed to by Holder in such
writing.  Neither failure by Holder or
Lenders to exercise, nor delay by Holder or Lenders in exercising, nor
discontinuance of the exercise of any right, power or remedy (including the
right to accelerate the maturity of the Secured Indebtedness or any part
thereof) upon or after any Default shall be construed as a waiver of such
Default or as a waiver of the right to exercise any such right, power or remedy
at a later date.  No single or partial
exercise by Holder or Lenders of any right, power or remedy hereunder shall
exhaust the same or shall preclude any other or further exercise thereof, and
every such right, power or remedy hereunder may be exercised at any time and
from time to time.  No waiver of any
provision hereof or consent to any departure by Borrowers or Grantor therefrom
shall in any event be effective unless the same shall be in writing and signed
by Holder and then such waiver or consent shall be effective only in the
specific instance, for the purpose for which given and to the extent therein
specified.  No notice to or demand on
Grantor in any case shall of itself entitle Grantor to any other or further
notice or demand in similar or other circumstances.


 


Section 6.5        No Impairment of Security.  The lien, security interest and other
security rights of Holder and Lenders hereunder or under any other Loan
Document shall not be impaired by any indulgence, moratorium or release granted
by Holder including any renewal, extension or modification which Holder may
grant with respect to any Secured Indebtedness, or any surrender, compromise,
release, renewal, extension, exchange or substitution which Holder may grant in
respect of the Property, or any part thereof or any interest therein, or any
release or indulgence granted to any endorser, guarantor or surety of any
Secured Indebtedness.  The taking of
additional security by Holder and Lenders shall not release or impair the lien,
security interest or other security rights of Holder and Lenders hereunder or
affect the liability of Borrowers or the Grantor or of any endorser, guarantor
or surety, or improve the right of any junior lienholder in the Property
(without implying hereby any consent to any junior lien by Holder or Lenders).


 


Section 6.6        Grantor’s Successors.  If the ownership of the Property or any part
thereof becomes vested in a person other than Grantor, Holder may, on behalf of
itself and Lenders, without notice to Grantor, deal with such successor or
successors in interest with reference to this Deed of Trust and to the Secured
Indebtedness in the same manner as with Grantor, without in any way vitiating
or discharging Grantor’s liability hereunder or its liability for the payment
of the Secured Indebtedness or performance of the obligations secured
hereby.  No transfer of the Property, no
forbearance on the part of Holder, and no extension of the time for the payment
of the Secured Indebtedness given by Holder shall operate to release,
discharge, modify, change or 


 


32

















 


affect,
in whole or in part, the liability of Grantor hereunder for the payment of the
Secured Indebtedness or performance of the obligations secured hereby or the
liability of any other person hereunder for the payment of the Secured
Indebtedness.  Grantor agrees that it
shall be bound by any modification of this Deed of Trust or any of the other
Loan Documents made by Holder on behalf of itself and Lenders and any
subsequent owner of the Property, with or without notice to such Grantor, and
no such modifications shall impair the obligations of such Grantor under this
Deed of Trust or any other Loan Document. 
Nothing in this Section or elsewhere in this Deed of Trust shall be
construed to imply any consent by Holder or Lenders to any transfer of the
Property.


 


Section 6.7        Place of Payment; Forum.  All Secured Indebtedness which may be owing
hereunder at any time by Borrowers or Grantor shall be payable at the place
designated in the Credit Agreement (or if no such designation is made, at the
address of Holder indicated at the end of this Deed of Trust).  Grantor hereby irrevocably submits generally
and unconditionally for itself and in respect of its property to the
non-exclusive jurisdiction of any California state court or any United States
federal court sitting in the county in which the Secured Indebtedness is
payable, and to the non-exclusive jurisdiction of any state or United States
federal court sitting in the state in which any of the Property is located,
over any suit, action or proceeding arising out of or relating to this Deed of
Trust or the Secured Indebtedness. 
Grantor hereby irrevocably waives, to the fullest extent permitted by
law, any objection that Grantor may now or hereafter have to the laying of
venue in any such court and to any claim that any such court is an inconvenient
forum.  Grantor hereby agrees and
consents that, in addition to any methods of service of process provided for
under applicable law, all service of process in any such suit, action or
proceeding in any California state court or any United States federal court
sitting in the state in which the Secured Indebtedness is payable may be made
by certified or registered mail, return receipt requested, directed to Grantor
at its address stated at the end of this Deed of Trust or at a subsequent
address of Grantor of which Holder received actual notice from Grantor in
accordance with this Deed of Trust, and service so made shall be complete five (5) days
after the same shall have been so mailed. 
Nothing herein shall affect the right of Holder to serve process in any
manner permitted by law or limit the right of Holder to bring proceedings
against Grantor in any other court or jurisdiction; provided, however, that in
the event of any inconsistency between the terms and conditions of this Section 6.7
and those of any provision in the Credit Agreement regarding reference and
arbitration, the terms and conditions of the reference and arbitration
provision of the Credit Agreement shall prevail.


 


Section 6.8        WAIVER
OF JURY TRIAL.  WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’
AGREEMENT TO SUBMIT TO JUDICIAL REFERENCE OR ARBITRATION ANY “DISPUTE” (AS
DEFINED IN SECTION 1.2(a)) AS SET FORTH IN THE CREDIT AGREEMENT,
GRANTOR, HOLDER AND LENDERS WAIVE TRIAL BY JURY IN RESPECT OF ANY AND ALL “DISPUTES”
AND ANY ACTION ON ANY “DISPUTE.”  THIS
WAIVER SHALL APPLY TO THE EXTENT ANY “DISPUTE” IS NOT SUBMITTED TO JUDICIAL
REFERENCE OR ARBITRATION, OR IS DEEMED BY THE ARBITRATOR, REFEREE OR ANY COURT
WITH JURISDICTION TO BE NOT REQUIRED TO BE DETERMINED BY JUDICIAL REFERENCE OR
ARBITRATION, OR NOT SUSCEPTIBLE OF BEING SO DETERMINED.  THIS WAIVER IS KNOWINGLY, WILLINGLY AND
VOLUNTARILY MADE BY GRANTOR, HOLDER AND LENDERS, AND GRANTOR, 


 


33

















 


HOLDER AND LENDERS HEREBY REPRESENT THAT NO REPRESENTATIONS
OF FACT OR OPINION HAVE BEEN MADE BY ANY PERSON OR ENTITY TO INDUCE THIS WAIVER
OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR
THE PARTIES ENTERING INTO THE LOAN DOCUMENTS. 
GRANTOR, HOLDER AND LENDERS ARE EACH HEREBY AUTHORIZED TO FILE A COPY OF
THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER OF
JURY TRIAL.  GRANTOR FURTHER REPRESENTS
AND WARRANTS THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS DEED OF TRUST
AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, OR HAS HAD THE
OPPORTUNITY TO BE REPRESENTED BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN
FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH
COUNSEL.


 


Section 6.9        Subrogation to Existing Liens; Vendor’s
Lien.  To the extent that proceeds of
the Loan are used to pay indebtedness secured by any outstanding lien, security
interest, charge or prior encumbrance against the Property, such proceeds have
been advanced by Holder and Lenders at Borrowers’ request, and Holder and
Lenders 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, however remote, regardless of whether said liens,
security interests, charges or encumbrances are released, and all of the same
are recognized as valid and subsisting and are renewed and continued and merged
herein to secure the Secured Indebtedness, but the terms and provisions of this
Deed of Trust shall govern and control the manner and terms of enforcement of
the liens, security interests, charges and encumbrances to which Holder and
Lenders are subrogated hereunder.  It is
expressly understood that, in consideration of the payment of such indebtedness
by Holder and Lenders, Grantor hereby waives and releases all demands and
causes of action for offsets and payments in connection with said
indebtedness.  If all or any portion of the
proceeds of the Loan or of any other Secured Indebtedness has been advanced for
the purpose of paying the purchase price for all or a part of the Property, no
vendor’s lien is waived; and Holder shall have, and is hereby granted, for the
ratable benefit of itself and Lenders, a vendor’s lien on the Property as
cumulative additional security for the Secured Indebtedness.  Holder, on behalf of itself and Lenders, may
foreclose under this Deed of Trust or under the vendor’s lien without waiving
the other or may foreclose under both.


 


Section 6.10      Application of Payments to Certain
Indebtedness.  If any part of
the Secured Indebtedness cannot be lawfully secured by this Deed of Trust or if
any part of the Property cannot be lawfully subject to the lien and security
interest hereof to the full extent of such indebtedness, then all payments made
shall be applied on said indebtedness first in discharge of that portion
thereof which is not secured by this Deed of Trust.


 


Section 6.11      Nature of Loan; Compliance with Usury
Laws.  The Loan is being made
solely for the purpose of carrying on or acquiring a business or commercial
enterprise.  It is the intent of Grantor,
Holder and Lenders and all other parties to the Loan Documents to conform to
and contract in strict compliance with applicable usury law from time to time
in effect.  All agreements among Holder,
Lenders and Grantor (or any other party liable with respect to any indebtedness
under the Loan Documents) are hereby limited by the provisions of this Section 6.11,



 


34

















 


which
shall override and control all such agreements, whether now existing or
hereafter arising.  In no event or
contingency (including prepayment, default, demand for payment or acceleration
of the maturity of any obligation), shall the interest taken, reserved,
contracted for, charged, chargeable or received under this Deed of Trust or any
other Loan Document or otherwise, exceed the maximum nonusurious amount
permitted by applicable law (the “Maximum Amount”).  If from any possible construction of any
document, interest would otherwise be payable in excess of the Maximum Amount,
any such construction shall be subject to the provisions of this Section 6.11
and such document shall ipso facto be automatically reformed and the interest
payable shall be automatically reduced to the Maximum Amount, without the
necessity of execution of any amendment or new document.  If Holder and Lenders shall ever receive
anything of value which is characterized as interest under applicable law and
which would apart from this provision be in excess of the Maximum Amount, an
amount equal to the amount which would have been excessive interest shall,
without penalty, be applied to the reduction of the principal amount owing on
the Secured Indebtedness in the inverse order of its maturity and not to the
payment of interest, or refunded to Grantor or the other payor thereof if and
to the extent such amount which would have been excessive exceeds such unpaid
principal.  The right to accelerate the
maturity of the Loan or any other Secured Indebtedness does not include the
right to accelerate any interest which has not otherwise accrued on the date of
such acceleration, and Holder and Lenders do not intend to charge or receive
any unearned interest in the event of acceleration.  All interest paid or agreed to be paid to
Holder and Lenders shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full stated term
(including any renewal or extension) of the Secured Indebtedness so that the
amount of interest on account of such indebtedness does not exceed the Maximum
Amount.  As used in this Section, the
term “applicable law” shall mean the laws of the State of California or
the federal laws of the United States applicable to this transaction, whichever
laws allow the greater interest, as such laws now exist or may be changed or
amended or come into effect in the future.


 


Section 6.12      Substitute Trustee.  Trustee may resign by an instrument in
writing addressed to Holder or Trustee may be removed at any time with or
without cause by an instrument in writing executed by Holder.  In case of the resignation, removal or
disqualification of Trustee, or if for any reason Holder shall deem it
desirable to appoint a substitute or successor trustee to act instead of the
herein-named trustee or any substitute or successor trustee, then Holder shall
have the right and is hereby authorized and empowered to appoint a successor
trustee(s) or a substitute trustee(s) without any formality other
than appointment and designation in writing executed by Holder and the
authority hereby conferred shall extend to the appointment of other successor
and substitute trustees successively until the Secured Indebtedness has been
paid in full or until the Property is fully and finally sold hereunder.  If Holder is a corporation or association and
such appointment is executed on its behalf by an officer of such corporation or
association, such appointment shall be conclusively presumed to be executed
with authority and shall be valid and sufficient without proof of any action by
the board of directors or any superior officer of the corporation or
association.  Upon the making of any such
appointment and designation, all of the estate and title of Trustee in the
Property shall vest in the named successor or substitute Trustee(s) and it
shall thereupon succeed to, and shall hold, possess and execute, all of the
rights, powers, privileges, immunities and duties herein conferred upon
Trustee.


 


35

















 


Section 6.13      No Liability of Trustee.  Trustee shall not be liable for any error of
judgment or act done by Trustee in good faith, or be otherwise responsible or
accountable under any circumstances whatsoever (including Trustee’s
negligence), except for Trustee’s gross negligence or willful misconduct.  Trustee shall have the right to rely on any
instrument, document or signature authorizing or supporting any action taken or
proposed to be taken by it hereunder, believed by it in good faith to be
genuine.  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 it hereunder.  Grantor hereby ratifies and confirms any and
all acts which the herein-named Trustee or its successor or successors,
substitute or substitutes, in this trust, shall do lawfully by virtue
hereof.  Grantor will reimburse Trustee
for, and save Trustee harmless against, any and all liability and expenses
which may be incurred by Trustee in the performance of its duties.  The foregoing indemnity shall not terminate
upon discharge of the Secured Indebtedness or foreclosure, release or other
termination of this Deed of Trust.


 


Section 6.14      Reconveyances.


 


(a)       Reconveyance from Deed of Trust.  If all of the Secured Indebtedness shall have
been paid in full, and all of the covenants, warranties, undertakings and
agreements made in this Deed of Trust shall have been kept and performed, and
all obligations, if any, of Holder and Lenders for further advances shall have
been terminated, then, and in that event only, all rights under this Deed of
Trust shall terminate (except to the extent expressly provided herein with
respect to indemnifications, representations and warranties and other rights
which are to continue following the reconveyance hereof) and the Property shall
become wholly clear of the liens, security interests, conveyances and
assignments evidenced hereby, and the Property shall be reconveyed by Holder in
due form at Grantor’s cost.  Without
limitation, all provisions herein for indemnity of Holder, Lenders and/or
Trustee shall survive discharge of the Secured Indebtedness and any
foreclosure, reconveyance or termination of this Deed of Trust.


 


(b)      Partial Reconveyance; No Reconveyance in Default.  Holder may, regardless of consideration, cause
the reconveyance of any part of the Property from the lien of this Deed of
Trust without in any manner affecting or impairing the lien or priority of this
Deed of Trust as to the remainder of the Property.  No partial reconveyance shall be sought,
requested or required if any Default has occurred which has not been cured.


 


(c)       Reconveyance Fee. 
Grantor agrees to pay fees in the maximum amounts legally permitted, or
reasonable fees when the law provides no maximum limit, for Trustee’s rendering
of services in connection with each partial or complete reconveyance of the
Property from the lien of this Deed of Trust.


 


Section 6.15      Notices.  All notices, requests, consents,
demands and other communications required or which any party desires to give
hereunder or under any other Loan Document shall be in writing and, unless
otherwise specifically provided in such other Loan Document, shall be deemed
sufficiently given or furnished if delivered by personal delivery, by
nationally recognized overnight courier service, or by registered or certified
United States mail, postage prepaid, addressed to the party to whom directed at
the addresses specified at the end of 


 


36

















 


this
Deed of Trust (unless changed by similar notice in writing given by the
particular party whose address is to be changed) or by facsimile.  Any such notice or communication shall be
deemed to have been given either at the time of personal delivery or, in the case
of courier or mail, as of the date of first attempted delivery at the address
and in the manner provided herein, or, in the case of facsimile, upon receipt;
provided, that service of a notice required by the California Civil Code shall
be considered complete when the requirements of that statute are met.  Notwithstanding the foregoing, no notice of
change of address shall be effective except upon receipt.  Any party whose address is set forth at the
end of this Deed of Trust hereby requests that a copy of notice of default and
notice of sale be mailed to it at that address. 
If any Grantor fails to insert an address, that failure shall constitute
a designation of such Grantor’s last known address as the address for such
notice.  This Section shall not be
construed in any way to affect or impair any waiver of notice or demand
provided in any Loan Document or to require giving of notice or demand to or
upon any person in any situation or for any reason.


 


Section 6.16      Invalidity of Certain Provisions.  A determination that any provision of this
Deed of Trust is unenforceable or invalid shall not affect the enforceability
or validity of any other provisions, and the determination that the application
of any provision of this Deed of Trust to any person or circumstance is illegal
or unenforceable shall not affect the enforceability or validity of such
provision as it may apply to other persons or circumstances.


 


Section 6.17      Interpretation.  References to Articles, Sections and Exhibit(s) are,
unless specified otherwise, references to articles, sections and exhibit(s) of
this Deed of Trust.  Words of any gender
shall include each other gender.  Words
in the singular shall include the plural and words in the plural shall include
the singular.  The words “herein,”
“hereof,” “hereunder” and other similar compounds of the word “here”
shall refer to this entire Deed of Trust and not to any particular Article,
Section, paragraph or provision.  The
words “include” and “including” shall be interpreted as if
followed by the words “without limitation.”  Captions and headings in this Deed of Trust
are for convenience only and shall not affect the construction of this Deed of
Trust.  The term “person” and
words importing persons as used in this Deed of Trust shall include firms,
associations, partnerships (including limited partnerships and limited
liability partnerships), joint ventures, trusts, corporations, limited
liability companies and other legal entities, including public or governmental
bodies, agencies or instrumentalities, as well as natural persons.


 


Section 6.18      Binding Effect; Grantor.  The terms, provisions, covenants and
conditions hereof shall be binding upon Borrowers and Grantor and the
representatives, successors and assigns of Borrowers and Grantor; provided,
however, that Grantor may not assign this Deed of Trust, or assign or delegate
any of its rights or obligations under this Deed of Trust, without the prior
written consent of each Lender in each instance (and any attempted assignment
or delegation by Grantor without such consent shall be null and void).  If any Grantor or any signatory who signs on
behalf of any Grantor is a corporation, partnership or other legal entity,
Grantor and any such signatory, and the person or persons signing for it,
represent and warrant to Holder and Lenders that this instrument is executed,
acknowledged and delivered by Grantor’s duly authorized representatives.


 


Section 6.19      Trustee, Holder and Lender Assigns;
Covenants Running with the Land.  The
terms, provisions, covenants and conditions hereof shall inure to the benefit
of Trustee, Holder, any Lender and any of their successors and assigns and
shall constitute covenants 


 


37

















 


running
with the Land.  Holder and any Lender
may, from time to time, sell, transfer or assign all or a portion of its
respective interest in the Secured Indebtedness and the Loan Documents, on and
subject to the terms and conditions of the Credit Agreement.  In the event of any such sale, transfer or
assignment, the corresponding whole or part of the rights and benefits under
this Deed of Trust and the corresponding interest herein may be transferred
with such Secured Indebtedness.  Except
as provided in the Credit Agreement, Borrowers and Grantor waive notice of any
sale, transfer or assignment of the Secured Indebtedness or any part thereof or
any interest therein.  Borrowers and
Grantor agree that failure by Holder, Lenders or any other party to give notice
of any such sale, transfer or assignment will not affect the liability of
Borrowers and Grantor hereunder.


 


Section 6.20      Execution; Recording.  This Deed of Trust may be executed in several
counterparts, all of which counterparts together shall constitute one and the
same instrument.  The date or dates
reflected in the acknowledgments hereto indicate the date or dates of actual
execution of this Deed of Trust, but such execution is as of the date shown on
the first page hereof, and for purposes of identification and reference
the date of this Deed of Trust shall be deemed to be the date reflected on the
first page hereof.  Grantor will
cause this Deed of Trust and all amendments and supplements thereto and
substitutions therefor and all financing statements and continuation statements
relating thereto to be recorded, filed, re-recorded and refiled in such manner
and in such places as Trustee or Holder shall reasonably request and will pay
all such recording, filing, re-recording and refiling taxes, fees and other
charges.


 


Section 6.21      Modification or Termination.  The Loan Documents may be modified or
terminated only by a written instrument or instruments intended for that
purpose and executed by the party against which enforcement of the modification
or termination is asserted.  Any alleged
modification or termination which is not so documented shall not be effective
as to any party.


 


Section 6.22      No Partnership, Etc.  The relationship between Grantor on the one
hand and Holder and Lenders on the other is solely that of grantor and
lender.  Holder and Lenders have no
fiduciary or other special relationship with Grantor.  Nothing contained in the Loan Documents is
intended to create any partnership, joint venture, association or special
relationship between Grantor and Holder and Lenders or in any way to make
Holder or any Lender a co-principal with Grantor with reference to the
Property. All agreed contractual duties between or among Holder, Lenders,
Grantor and Trustee are set forth herein and in the other Loan Documents, and
any additional implied covenants or duties are hereby disclaimed.  Any inferences to the contrary of any of the
foregoing are hereby expressly negated.


 


Section 6.23      Applicable Law.  THIS DEED OF TRUST, AND ITS VALIDITY,
ENFORCEMENT AND INTERPRETATION SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED
AND ENFORCED IN ACCORDANCE WITH AND PURSUANT TO THE LAWS OF THE STATE OF NEW
YORK (WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES) AND APPLICABLE UNITED
STATES FEDERAL LAW, EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF LAW
AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF ANY JURISDICTION
OTHER THAN THE STATE OF NEW YORK ARE GOVERNED BY THE LAWS OF SUCH OTHER
JURISDICTION; PROVIDED, HOWEVER, THAT WITH RESPECT TO THE CREATION, PERFECTION,
PRIORITY AND ENFORCEMENT OF THE 


 


38

















 


LIENS OR INTERESTS OF THIS DEED OF TRUST, THE LAWS OF CALIFORNIA SHALL
APPLY.


 


Section 6.24      Entire Agreement.  The Loan Documents constitute the entire
understanding and agreement among Borrowers, Grantor, Holder and Lenders with
respect to the transactions arising hereunder in connection with the Secured
Indebtedness and supersede all prior written or oral understandings and
agreements among Grantor, Holder and Lenders with respect to the matters
addressed in the Loan Documents. 
Borrowers and Grantor hereby acknowledge that, except as incorporated in
writing in the Loan Documents, there are not and were not, and no persons are
or were authorized by Holder or Lenders to make, any representations,
understandings, stipulations, agreements or promises, oral or written, with
respect to the matters addressed in the Loan Documents.


 


39

















 


IN WITNESS WHEREOF, Borrowers and Grantor have
executed this instrument as of the date first written on page 1 hereof.


 


	
  The address of Grantor is:
  

  	
   

  	
  GRANTOR:

  
	
   

  	
   

  	
   

  
	
  400 Corporate Point,
  Suite 525

  Culver City, California 90230

  	
   

  	
  ALTA HOLLYWOOD HOSPITALS,

  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
  Name: 

  	
   

  
	
   

  	
   

  	
  Title: 

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  The address of Borrower
  is: 

  	
   

  	
  BORROWER:

  
	
   

  	
   

  	
   

  
	
  400 Corporate Point, Suite 525

  Culver City, California 90230

  	
   

  	
  PROSPECT MEDICAL HOLDINGS,

  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
  Name: 

  	
   

  
	
   

  	
   

  	
  Title: 

  	
   

  
	
  The address of Borrower
  is:

  	
   

  	
  BORROWER: 

  
	
   

  	
   

  	
   

  
	
  400 Corporate Point,
  Suite 525

  	
   

  	
  PROSPECT MEDICAL GROUP,
  INC.

  
	
  Culver City, California
  90230

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
  Name: 

  	
   

  
	
   

  	
   

  	
  Title: 

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  The address of
  Administrative Agent/Holder is:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Bank of America, N.A.

  800 Fifth Avenue, 32nd Floor

  Mail Code WA1-501-32-37

  Seattle, Washington 98104

  	
   

  	
   

  
						



 


 


The address of Trustee is:


 


PRLAP, Inc.


P.O. Box 2240


Brea, California 
92822


 


 

















 


STATE OF CALIFORNIA


 


COUNTY OF


 


On
                                        ,
before me,
                                            ,
a notary public, personally appeared
                                          ,
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.


 


	
   

  	
   

  
	
  Notary Public

  



 


[Notarial Seal]


 


My commission expires:


 


 


STATE OF CALIFORNIA


 


COUNTY OF


 


On
                                         ,
before me,
                                           ,
a notary public, personally appeared
                                         ,
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.


 


	
   

  	
   

  
	
  Notary Public

  



 


[Notarial Seal]


 


My commission expires:


 


 

















 


STATE OF CALIFORNIA


 


COUNTY OF


 


On
                                         ,
before me,
                                           ,
a notary public, personally appeared
                                         ,
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.


 


	
   

  	
   

  
	
  Notary Public

  



 


[Notarial Seal]


 


My commission expires:


 


 

















 


EXHIBIT A


 


LAND


 


All that parcel or parcels of real property located
in the City of Los Angeles, County of Los Angeles, State of California, and
more particularly described as follows:


 


Lots 21 to 24 inclusive, and
Lots 53 to 60 inclusive, of Tract No. 7909, in the City of Los Angeles,
County of Los Angeles, State of California, as per map recorded in Book 96 Page 81
of Maps, in the Office of the County Recorder of said county.


 


A-1