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                                                                  Exhibit 10.112
THIS SECURITY INSTRUMENT WAS
PREPARED BY, AND UPON
RECORDING SHOULD BE RETURNED
TO:

Katherine L. Bishop, Esq.
Ballard Spahr Andrews & Ingersoll, LLP
601 13th Street, NW, Suite 1000 South
Washington, D.C. 20005-3807

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

STATE OF CALIFORNIA  )
COUNTY OF ORANGE     )
COUNTY OF VENTURA    )

              DEED OF TRUST, FIXTURE FILING AND SECURITY AGREEMENT

     THIS DEED OF TRUST AND SECURITY AGREEMENT (this "Security Instrument"), is
made as of the _____ day of July, 2002, by ARV HILLCREEK, LLC, a California
limited liability company ("Trustor"), whose address is 245 Fischer Avenue,
Suite D-1, Costa Mesa, California 92626-4539, to First American Title Company of
Los Angeles ("Trustee"), whose address is 520 North Central Avenue, Glendale,
California 91203, for the benefit of GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation (together with its successors and assigns,
"Beneficiary"), whose address is 200 Witmer Road, P.O. Box 1015, Horsham,
Pennsylvania 19044-8015.

                                    RECITALS

3)   Trustor is indebted to Beneficiary for money loaned in the principal sum of
Twenty-Four Million and 00/100 Dollars ($24,000,000.00) (the "Loan"), as is
evidenced by a certain Promissory Note of even date herewith from Trustor,
payable to the order of Beneficiary in installments of principal and/or interest
thereon, such final installment being due on August 1, 2004.

4)   As a condition precedent to making the Loan, Beneficiary has required that
Trustor execute this Security Instrument as security for the Loan and the other
Indebtedness (as hereinafter defined).

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                                GRANTING CLAUSES

     NOW, THEREFORE, for and in consideration of the Indebtedness, and to secure
the prompt payment thereof, Trustor does hereby irrevocably grant, bargain,
sell, convey, assign, transfer, mortgage, pledge and set over unto Trustee, its
successors and assigns, in trust with power of sale and right of entry and
possession, the Mortgaged Property (as hereinafter defined), for the benefit of
Beneficiary, and grants to Beneficiary a security interest in, and to the
Mortgaged Property,

     TO SECURE unto Beneficiary the repayment of the entire Indebtedness, at and
in the manner stipulated herein, in the Note (as hereinafter defined) and in the
other Loan Documents (as hereinafter defined), and the performance of the
covenants and agreements of Trustor contained in the Loan Documents, the
Mortgaged Property and all parts thereof unto the Beneficiary, its successors
and assigns forever, subject however to the terms and conditions herein;

     PROVIDED, HOWEVER, that if Trustor shall pay to Beneficiary the entire
Indebtedness described in the Note and in the other Loan Documents, all without
any deduction or credit for taxes or other similar charges paid by Trustor, and
shall cause all other obligated parties to, keep, perform, and observe all and
singular the covenants and promises herein, in the Note and in each of the other
Loan Documents to be kept, performed, and observed, all without fraud or delay,
then this Security Instrument , and all the properties, interests, and rights
hereby granted, bargained, and sold shall cease, terminate, and be void, but
shall otherwise remain in full force and effect.

                                    AGREEMENT

     FOR VALUABLE CONSIDERATION, Trustor agrees as follows:

     16. DEFINITIONS. The following terms, when used in this Security Instrument
(including when used in the above recitals), shall have the following meanings:

          16.1  "1933 Act" has the meaning given to that term in Section 13.

          16.2  "Accounts" has the meaning given such term in the UCC, and
includes, without limitation, any rights of Trustor arising from the operation
of the Facility to payment for goods sold or leased or for services rendered,
not evidenced by an Instrument , including, without limitation, (i) all accounts
arising from the operation of the Facility, (ii) all moneys and accounts, if
any, held by Beneficiary pursuant to this Security Instrument or any other Loan
Document, (iii) all rights to payment from Medicare or Medicaid programs or
similar state or federal programs, boards, bureaus or agencies, and rights to
payment from patients, residents, private insurers, and others arising from the
operation of the Facility, including rights to payment pursuant to Reimbursement
Contracts, (iv) receivables arising out of the use of a credit or charge card or
information contained on or for use with the card, (v) any and all "health-care
insurance receivables" (as defined in the UCC), (vi) Supporting Indebtedness,
letter-of-credit rights and letters of credit given by any Person with respect
to any of the foregoing, and (vii) all books and records in whatever media
(paper, electronic or otherwise) recorded or stored, with respect

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to any or all of the foregoing and all equipment and general intangibles
necessary or beneficial to retain, access and/or process the information
contained in those books and records. Accounts shall include the Proceeds
thereof.

          16.3  "Affiliate" means, with respect to any Person, (i) each Person
that controls, is controlled by or is under common control with such Person,
(ii) each Person that, directly or indirectly, owns or controls, whether
beneficially or as a trustee, guardian or other fiduciary, any of the Stock of
such Person, and (iii) each of such Person's officers, directors, members, joint
venturers and partners.

          16.4  "Appurtenant Rights" means all air rights, development rights,
zoning rights, easements, rights-of-way, strips and gores of land, vaults,
streets, roads, alleys, tenements, passages, sewer rights, waters, water
courses, water rights and powers, minerals, flowers, shrubs, crops, trees,
timber and other emblements now or hereafter appurtenant to, or used or useful
in connection with, or located on, under or above the Land, or any part or
parcel thereof, and all ground leases, estates, rights, titles, interests,
privileges, liberties, tenements, hereditaments and appurtenances, reversions,
and remainders whatsoever, in any way belonging, relating or appertaining to the
Land, or any part thereof, now or hereafter.

          16.5  "Assignment of Leases and Rents" means that certain Assignment
of Leases and Rents of even date herewith executed by Trustor for the benefit of
Beneficiary, together with all amendments and supplements thereto.

          16.6  "Assignment of Licenses" means that certain Assignment of
Licenses, Permits and Contracts of even date herewith executed by Trustor for
the benefit of Beneficiary, together with all amendments and supplements
thereto.

          16.7  "Beneficiary" means the entity identified as "Beneficiary" in
the first paragraph of this Security Instrument , or any subsequent holder of
the Note.

          16.8  "Business Day" means a day, other than Saturday, Sunday and
legal holidays, when Beneficiary is open for business.

          16.9  "Chattel Paper" has the meaning given such term in the UCC, and
includes, without limitation, a record or records (including, without
limitation, electronic chattel paper) which evidence both a monetary obligation
and a security interest in specific goods, a security interest in specific goods
and software used in the goods, or a lease of specific goods; all Supporting
Indebtedness with respect thereto; any returned, rejected or repossessed goods
and software covered by any such record or records and all proceeds (in any form
including, without limitation, accounts, contract rights, documents, chattel
paper, instruments and general intangibles) of such returned, rejected or
repossessed goods; and all proceeds (cash proceeds and noncash proceeds) of the
foregoing.

          16.10 "Collateral Agreements" means collectively, as applicable, the
Capital Improvements Fund Escrow and Security Agreement, and/or the Debt Service
Reserve Escrow and Security Agreement of even date herewith by and between
Trustor and Beneficiary.

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          16.11 "Condemnation" has the meaning given to that term in Section 12.

          16.12 "Contracts" means all license agreements, operating contracts,
and all management, service, employment, supply and maintenance contracts and
agreements, and any other agreements, licenses or contracts of any nature
whatsoever now or hereafter obtained or entered into by Trustor with respect to
the acquisition, construction, renovation, expansion, ownership, occupancy, use,
operation, maintenance and administration of the Facility and/or the Mortgaged
Property, including, without limitation, (i) any and all contracts,
authorizations, agreements and/or consents executed by, or on behalf of any
patient or other Person seeking services from Trustor pursuant to which Trustor
provides or furnishes services at the facility, including the consent to
treatment and assignment of payment of benefits by third party and (ii) any and
all contracts between Trustor and any resident of the Facility giving the
resident certain rights of occupancy in the Facility and providing for certain
services to such resident.

          16.13 "Default Rate" has the meaning given to that term in the Note.

          16.14 "Deposit Accounts" has the meaning given such term in the UCC.

          16.15 Equipment" has the meaning given such term in the UCC, and
includes, without limitation, all beds, linen, televisions, carpeting,
telephones, cash registers, computers, lamps, glassware, rehabilitation
equipment, restaurant and kitchen equipment, and other fixtures and equipment of
Trustor (including, without limitation, embedded software) located on, attached
to or used or useful in connection with any of the Mortgaged Property or the
Facility and all renewals and replacements thereof and substitutions therefor;
provided, however, that with respect to any items which are leased for the
benefit of the Facility and not owned by Trustor, the Equipment shall include
the leasehold interest only of Trustor together with any options to purchase any
of said items and any additional or greater rights with respect to such items
which Trustor may hereafter acquire, but the foregoing shall not be construed to
mean that such leasing shall be permitted hereunder and under the other Loan
Documents.

          16.16 "Event of Default" means the occurrence of any event listed in
Section 14.

          16.17 "Facility" means, individually or collectively as the context
requires, that certain assisted living facility known as "Golden Creek Inn,"
presently a 124-unit licensed assisted living facility located on that portion
of the Land described in Exhibit "A-1" hereto, and that certain assisted living
facility known as "Hillcrest Inn", a 138-unit assisted living facility located
on that portion of the Land described in Exhibit "A-2", as it may now or
hereafter exist, together with any other general or specialized care facilities,
if any (including any Alzheimer's care unit, subacute, and any skilled nursing
facility), now or hereafter operated on the Land.

          16.18 "Fixtures" means all property which is now or hereafter so
attached to the Land or the Improvements as to constitute a fixture under
applicable law and all renewals and replacements thereof and substitutions
therefor, including, without

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limitation: machinery, equipment, engines, boilers, incinerators, installed
building materials; systems and equipment for the purpose of supplying or
distributing heating, cooling, electricity, gas, water, air, or light; antennas,
cable, wiring and conduits used in connection with radio, television, security,
fire prevention, or fire detection or otherwise used to carry electronic
signals; telephone systems and equipment; elevators and related machinery and
equipment; fire detection, prevention and extinguishing systems and apparatus;
security and access control systems and apparatus; plumbing systems; water
heaters, ranges, stoves, microwave ovens, refrigerators, dishwashers, garbage
disposers, washers, dryers and other appliances; light fixtures, awnings, storm
windows and storm doors; pictures, screens, blinds, shades, curtains and curtain
rods; mirrors; cabinets, paneling, rugs and floor and wall coverings; fences,
trees and plants; and exercise equipment.

          16.19 "General Intangibles" has the meaning given such term in the
UCC, and includes, without limitation, all intangible personal property of
Trustor arising out of or connected with the Mortgaged Property or the Facility
and all renewals and replacements thereof and substitutions therefor (other than
Accounts, Rents, Instruments, Inventory, Money, Permits and Reimbursement
Contracts), including, without limitation, things in action, contract rights and
other rights to payments of Money, commercial tort claims, other claims
(including without limitation all claims for income tax and other refunds),
payment intangibles and Supporting Indebtedness.

          16.20 "Governmental Authority" means any board, commission, department
or body of any municipal, county, state or federal governmental unit, or any
subdivision of any of them, that has or acquires jurisdiction over the Mortgaged
Property and/or the Improvements or the use, operation or improvement of the
Mortgaged Property.

          16.21 "Guarantor" means ARV Assisted Living, Inc. a Delaware
corporation.

          16.22 "Guaranty Agreement" means that certain Payment and Performance
Guaranty Agreement of even date herewith, executed by Guarantor for the benefit
of Beneficiary.

          16.23 "Impositions" and "Imposition Deposits" have the meanings given
to those terms in Section 4.

          16.24 "Improvements" means all buildings, structures and improvements
of every nature whatsoever now or hereafter situated on the Land, including but
not limited to, all gas and electric fixtures, radiators, heaters, engines and
machinery, boilers, ranges, elevators and motors, plumbing and heating fixtures,
carpeting and other floor coverings, water heaters, awnings and storm sashes,
and cleaning apparatuses which are or shall be attached to the Land or said
buildings, structures or improvements.

          16.25 "Indebtedness" has the meaning given such term in the UCC, and
includes, without limitation, the aggregate of the principal of and interest on
the Note due and owing from time to time and all expenses, charges and other
amounts due and owing

                                        7

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from time to time under the Note, the Loan Agreement, this Security Instrument
or any other Loan Document, including, without limitation, prepayment premiums,
late charges, default interest and advances to protect the security of this
Security Instrument under Section 7, if any.

          16.26 "Instruments" has the meaning given such term in the UCC, and
includes, without limitation, all instruments, Chattel Paper, documents or other
writings obtained by Trustor from or in connection with the operation of the
Mortgaged Property or the construction and operation of the Facility (including
without limitation, all ledger sheets, computer records and printouts, data
bases, programs, books of account, software, trademarks or trade names, utility
contracts, maintenance and service contracts and files of Trustor relating
thereto).

          16.27 "Inventory" has the meaning given such term in the UCC, and
includes, without limitation, all inventories of food, beverages and other
comestibles owned and held by Trustor (including, without limitation, embedded
software) for sale or use at or from the Mortgaged Property or the Facility, and
soap, paper supplies, medical supplies, drugs and all other such goods, wares
and merchandise held by Trustor for sale to or for consumption by residents,
guests or patients of the Land or the Facility and all such other goods returned
to or repossessed by Trustor.

          16.28 "Investment Property" has the meaning given such term in the
UCC, and includes, without limitation, a security, whether certificated or
uncertificated, security entitlement, securities account, commodity contract, or
commodity account, and all proceeds (cash proceeds and noncash proceeds) of, and
Supporting Indebtedness with respect to, the foregoing.

          16.29 "Land" means the land described in Exhibits "A-1" and "A-2"
attached hereto and incorporated herein.

          16.30 "Leases" means all present and future leases, subleases,
licenses, concessions or grants or other possessory interests now or hereafter
in force, whether oral or written, covering or affecting the Mortgaged Property
and/or the Facility, or any portion of the Mortgaged Property and/or the
Facility and all modifications, extensions or renewals thereof.

          16.31 "Lien" means any voluntary or involuntary mortgage, security
deed, deed of trust, lien, pledge, assignment, security interest, title
retention agreement, financing lease, levy, execution, seizure, judgment,
attachment, garnishment, charge, lien or other encumbrance of any kind,
including those contemplated by or permitted in this Security Instrument , the
Loan Agreement and the other Loan Documents.

          16.32 "Loan" has the meaning given to that term in the recitals.

          16.33 "Loan Agreement" means that certain Loan Agreement of even date
herewith by and between Trustor and Beneficiary, together with all amendments
and supplements thereto.

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          16.34 "Loan Documents" means the Note, the Loan Agreement, this
Security Instrument , the Assignment of Leases and Rents, the Assignment of
Licenses, the Guaranty Agreement, all Collateral Agreements, O&M Programs, and
any other documents now or in the future executed by Trustor, any guarantor or
any other Person in connection with the Loan evidenced by the Note, as such
documents may be amended from time to time.

          16.35 "Managed Care Plans" means any health maintenance organization,
preferred provider organization, individual practice association, competitive
medical plan, or similar arrangement, entity, organization, or Person.

          16.36 "Medicaid" means that certain program of medical assistance,
funded jointly by the federal government and the States, for impoverished
individuals who are aged, blind and/or disabled, and/or members of families with
dependent children, which program is more fully described in Title XIX of the
Social Security Act (42 U.S.C. Sections 1396 et seq.) and the regulations
promulgated thereunder.

          16.37 "Medicare" means that certain federal program providing health
insurance for eligible elderly and other individuals, under which physicians,
hospitals, skilled nursing homes, home health care, and other providers are
reimbursed for certain covered services they provide to the beneficiaries of
such program, which program is more fully described in Title XVIII of the Social
Security Act (42 U.S.C. Sections 1395 et seq.) and the regulations promulgated
thereunder.

          16.38 "Money" means all monies, cash, rights to Deposit Accounts, or
other items of legal tender obtained from or for use in connection with the
operation of the Facility.

          16.39 "Mortgaged Property" means all of Trustor's present and future
right, title and interest in and to all of the following, provided that if any
of the following capitalized terms are defined in the UCC, each such term shall
have the meaning given such term in the UCC and shall include, without
limitation, the additional items set forth in this Security Instrument with
respect to such term:

                a. the Land;
                b. all Appurtenant Rights;
                c. all Equipment;
                d. all Improvements;
                e. all Fixtures;
                f. all Accounts;
                g. all Deposit Accounts;
                h. all Contracts;
                i. all General Intangibles;
                j. all Permits (to the extent assignable);
                k. all Money;
                l. all Instruments;
                m. all Inventory;

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                n. all Reimbursement Contracts;
                o. all Rents;
                p. all Personalty;
                q. all Leases;
                r. all Chattel Paper;
                s. all Supporting Indebtedness;
                t. all Investment Property;
                u. all Proceeds;

                v. all contracts, options and other agreements for the sale of
the Land, the Improvements, the Fixtures, the Personalty or any other part of
the Mortgaged Property entered into by Trustor now or in the future, including
cash or securities deposited to secure performance by parties of their
Indebtedness;

                w. all Imposition Deposits;

                x. all refunds or rebates of Impositions by any municipal, state
or federal authority or insurance company (other than refunds applicable to
periods before the real property tax year in which this Security Instrument is
dated);

                y. all names under or by which any of the above Mortgaged
Property may be operated or known, and all trademarks, trade names, and goodwill
relating to any of the Mortgaged Property; and

                z. all renewals, replacements and Proceeds of any of the
foregoing and any substitutions therefor.

          16.40 "Note" means the note evidencing the Loan, including all
schedules, riders, allonges, endorsements, addenda or amendments together with
any renewals, replacements, substitutions, or extensions thereof.

          16.41 "Notice" has the meaning given to that term in Section 24.

          16.42 "O&M Programs" has the meaning given to such term in the Loan
Agreement.

          16.43 "Opinion of Counsel" means an opinion or opinions in writing
signed by independent legal counsel to Trustor, designated by Trustor, and
reasonably satisfactory to Beneficiary.

          16.44 "Parent" means, with respect to a corporation, any other
corporation owning or controlling, directly or indirectly, fifty percent (50%)
or more of the voting stock of the corporation.

          16.45 "Permits" means all licenses, permits and certificates used or
necessary in connection with the construction, ownership, operation, use or
occupancy of the Mortgaged Property and/or the Facility, including, without
limitation, business licenses, state health department licenses, food service
licenses, licenses to conduct business,

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certificates of need and all such other permits, licenses and rights, obtained
from any governmental, quasi-governmental or private person or entity whatsoever
concerning ownership, operation, use or occupancy.

          16.46 "Permitted Encumbrances" has the meaning given to that term in
Section 5.2 of the Loan Agreement.

          16.47 "Person" means any natural person, firm, trust, corporation,
partnership, limited liability company and any other form of legal entity.

          16.48 "Personalty" means all Equipment, Inventory, General Intangibles
which are used now or in the future in connection with the ownership, management
or operation of the Land or the Improvements or are located on the Land or in
the Improvements, including furniture, furnishings, machinery, building
materials, appliances, goods, supplies, tools, books, records (whether in
written or electronic form), computer equipment (hardware and software) and
other tangible personal property (other than Fixtures) which are used now or in
the future in connection with the ownership, management or operation of the Land
or the Improvements or are located on the Land or in the Improvements, and any
operating agreements relating to the Land or the Improvements, and any surveys,
plans and specifications and contracts for architectural, engineering and
construction services relating to the Land or the Improvements and all other
intangible property and rights relating to the operation of, or used in
connection with, the Land or the Improvements, including all governmental
Permits relating to any activities on the Land.

          16.49 "Prior Lien" has the meaning given to that term in Section 26.

          16.50 "Proceeds" means all awards, payments, earnings, royalties,
issues, profits, liquidated claims and proceeds (including proceeds of insurance
and condemnation and any conveyance in lieu thereof), whether cash or noncash,
moveable or immoveable, tangible or intangible, from the sale, conversion
(whether voluntary or involuntary), exchange, transfer, collection, loss,
damage, condemnation, disposition, substitution or replacement of any of the
Mortgaged Property.

          16.51 "Property Jurisdiction" means the jurisdiction in which the
Mortgaged Property is located.

          16.52 "Reimbursement Contracts" means all third-party reimbursement
contracts for the Facility which are now or hereafter in effect with respect to
residents or patients qualifying for coverage under the same, including Medicare
and Medicaid, Managed Care Plans and private insurance agreements, and any
successor program or other similar reimbursement program and/or private
insurance agreements, now or hereafter existing.

          16.53 "Rents" means all rent and other payments of whatever nature
from time to time payable pursuant to the Leases (including, without limitation,
rights to payment earned under leases for space in the Improvements for the
operation of ongoing

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retail businesses such as newsstands, barbershops, beauty shops, physicians'
offices, pharmacies and specialty shops).

          16.54 "Single-Purpose Entity" means a Person which owns no interest or
property other than the Mortgaged Property or interests in Trustor.

          16.55 "Stock" means all shares, options, warrants, general or limited
partnership interests, membership interests, participations or other equivalents
(regardless of how designated) in a corporation, limited liability company,
partnership or any equivalent entity, whether voting or nonvoting, including,
without limitation, common stock, preferred stock, or any other "equity
security" (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended).

          16.56 "Supporting Obligation" has the meaning given such term in the
UCC, and includes, without limitation, a letter-of-credit right, secondary
obligation, or obligation of a secondary obligor, or secondary obligation that
supports the payment or performance of an Account, Chattel Paper, a document, a
General Intangible, an Instrument, or Investment Property.

          16.57 "Taxes" means all taxes, assessments, vault rentals and other
charges, if any, general, special or otherwise, including all assessments for
schools, public betterments and general or local improvements, which are levied,
assessed or imposed by any public authority or quasi-public authority, and
which, if not paid, will become a lien, on the Land or the Improvements.

          16.58 "Transfer" shall mean the conveyance, assignment, sale,
transfer, mortgaging, collateral assignment, encumbrance, pledging, alienation,
hypothecation, granting of a security interest in, granting of options with
respect to, or other disposition of (directly or indirectly, voluntarily or
involuntarily, by operation of law or otherwise, and whether or not for
consideration or of record) all or any portion of any legal or beneficial
interest (i) in all or any portion of the Mortgaged Property; (ii) in the Stock
of any corporation which is Trustor, a member of Trustor (if Trustor is a
limited liability company), a partner of Trustor or, if applicable, a partner of
a general partner of Trustor; and (iii) in Trustor (or any trust of which
Trustor is a trustee), or, if Trustor is a limited or general partnership,
limited liability company, joint venture, trust, nominee trust, tenancy in
common or other unincorporated form of business association or form of ownership
interest, in any Person having a direct or indirect legal or beneficial
ownership in Trustor, excluding any legal or beneficial interest in any
constituent limited partner or member of Trustor but including the interest of
such limited partner or member itself and further including any legal or
beneficial interest in any constituent general partner of Trustor, if
applicable, in any general partner of any constituent general partner of
Trustor, or, if Trustor is a limited liability company, in any constituent
corporate member of Trustor. The term "Transfer" shall also include, without
limitation, the following: an installment sales agreement wherein Trustor agrees
to sell the Mortgaged Property or any part thereof or any interest therein for a
price to be paid in installments; an agreement by Trustor leasing all or a
substantial part of the Mortgaged Property to one or more Persons

                                       12

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pursuant to a single transaction or related transactions, or a sale, assignment
or other transfer of, or the grant of a security interest in, Trustor's right,
title and interest in and to any Leases or any Rent; any instrument subjecting
the Mortgaged Property to a condominium regime or transferring ownership to a
cooperative corporation or other form of multiple ownership or governance; the
dissolution or termination of Trustor, any general partner of Trustor, any
general partner of any general partner of Trustor, if applicable, or, if Trustor
is a limited liability company, any corporate member of Trustor; the issuance of
new Stock in any corporation which is Trustor, a member of Trustor (if Trustor
is a limited liability company), a partner of Trustor or, if applicable, a
partner of a general partner of Trustor; and the merger or consolidation with
any other Person of Trustor, any general partner of Trustor, any general partner
of any general partner of Trustor, if applicable, or, if Trustor is a limited
liability company, any corporate member of Trustor.

          16.59 "Trustee" means all persons or entities identified as "Trustee"
in the first paragraph of this Security Instrument , together with their
successors and assigns.

          16.60 "Trustor" means all persons or entities identified as "Trustor"
in the first paragraph of this Security Instrument , together with their
successors and assigns.

          16.61 "UCC" has the meaning given to that term in Section 2.

          16.62 "UCC Collateral" has the meaning given to that term in
Section 2.

     17. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Security Instrument is
also a security agreement under the Uniform Commercial Code as in effect from
time to time in the State of California (the "UCC") for any of the Mortgaged
Property which, under applicable law, may be subject to a security interest
under the UCC, whether acquired now or in the future, and all products and cash
and non-cash Proceeds thereof (collectively, "UCC Collateral"), and Trustor
hereby grants to Beneficiary a security interest in the UCC Collateral. Trustor
hereby authorizes Beneficiary to file financing statements, continuation
statements and financing statement amendments, in such form as Beneficiary may
require to perfect or continue the perfection of this security interest and
Trustor agrees, if Beneficiary so requests, to execute and deliver to
Beneficiary such financing statements, continuation statements and amendments.
Trustor shall pay all filing costs and all costs and expenses of any record
searches for financing statements that Beneficiary may require. Without the
prior written consent of Beneficiary, Trustor shall not create or permit to
exist any other lien or security interest in any of the UCC Collateral. If an
Event of Default has occurred and is continuing, Beneficiary shall have the
remedies of a secured party under the UCC, in addition to all remedies provided
by this Security Instrument or existing under applicable law. In exercising any
remedies, Beneficiary may exercise its remedies against the UCC Collateral
separately or together and in any order, without in any way affecting the
availability of Beneficiary's other remedies hereunder and/or under applicable
law. The terms "sign," "signed" and signatures" shall have their ordinary
meanings except that, to limited extent Beneficiary in an authenticated record
expressly agrees otherwise from time to time in the exercise of its sole and
absolute discretion, the terms may also include other methods used to
authenticate. Without implying any limitation on the foregoing, with respect to
the UCC Collateral that may be perfected by control, Trustor shall take such
steps as

                                       13

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Beneficiary may require in order that Beneficiary may have such control. To the
extent that the proceeds of any of the Accounts are expected to become subject
to the control of, or in the possession of, a party other than Trustor or
Beneficiary, Trustor shall cause all such parties to execute and deliver on the
date of this Security Instrument and from time to time hereafter security
documents, financing statements or other documents as requested by Beneficiary
and as may be necessary to evidence and/or perfect the security interest of
Beneficiary in those proceeds. Trustor agrees that a copy of a fully executed
security agreement and/or financing statement shall be sufficient to satisfy for
all purposes the requirements of a financing statement as set forth in Article 9
of the UCC. Trustor hereby irrevocably appoints Beneficiary as Trustor's
attorney-in-fact, with power of substitution, in the name of Beneficiary or in
the name of Trustor or otherwise, for the use and benefit of Beneficiary, but at
the cost and expense of Trustor and without notice to Trustor, to execute and
deliver any and all of the instruments and other documents and take any action
which Beneficiary may require pursuant the foregoing provisions of this Section.
Further, to the extent permitted by applicable laws, Beneficiary may file,
without Trustor's signature, one or more financing statements or other notices
disclosing Beneficiary's liens and other security interests. All financing
statements and notices may describe Beneficiary's collateral as all assets or
all personal property of Trustor. Trustor hereby ratifies and confirms the
validity of any and all financing statements filed by Beneficiary prior to the
date of this Security Instrument.

     The UCC Collateral in which Beneficiary has a security interest under this
Section 2 includes goods which are or may become Fixtures on the Mortgaged
Property. This Deed of Trust constitutes a fixture filing pursuant to the terms
of Sections 9313, 9401 and 9402 of the California Code of Civil Procedure which
shall be recorded in the real estate records of the county in which the Property
is located.

In that regard, the following information is provided:

     Name of Debtor:

     ARV Hillcreek, LLC

     Address of Debtor:

     245 Fischer Avenue
     Suite D-1
     Costa Mesa, California 92626

     Name of Secured Party:

     GMAC Commercial Mortgage Corporation, its successors and assigns

     Address of Secured Party:

     200 Witmer Road
     P.O. Box 1015
     Horsham, Pennsylvania 19044-8015

     Debtor's trade name or style, if any:

                                       14

<PAGE>

     Golden Creek Inn
     Hillcrest Inn

     18. LEASES. Trustor shall not, without the prior written consent and
approval of Beneficiary, enter into any Lease (except for admission of Facility
patients or residents), or enter into or permit any management agreement of or
affecting any part of the Mortgaged Property.

     19. DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES.

                                       15

<PAGE>

          19.1  Trustor shall deposit with Beneficiary on the day monthly
installments of principal and/or interest, or both, are due under the Note (or
on another day designated in writing by Beneficiary), until the Indebtedness is
paid in full, an additional amount sufficient to accumulate with Beneficiary the
entire sum required to pay, when due (i) to the extent applicable, the yearly
water and sewer charges which may be levied on all or any part of the Mortgaged
Property, (ii) the premiums for fire and other hazard insurance, business
interruption insurance and such other insurance as Beneficiary may require under
the Loan Agreement, (iii) the yearly Taxes, and (iv) amounts for other charges
and expenses which Beneficiary at any time reasonably deems necessary to protect
the Mortgaged Property, to prevent the imposition of liens on the Mortgaged
Property, or otherwise to protect Beneficiary's interests, all as reasonably
estimated from time to time by Beneficiary, plus one-sixth of such estimate. The
amounts deposited under the preceding sentence are collectively referred to in
this Security Instrument as the "Imposition Deposits". The Indebtedness of
Trustor for which the Imposition Deposits are required are collectively referred
to in this Security Instrument as "Impositions". The amount of the Imposition
Deposits shall be sufficient to enable Beneficiary to pay each Imposition before
the last date upon which such payment may be made without any penalty or
interest charge being added plus one-sixth of such estimate. Beneficiary shall
maintain records indicating how much of the monthly Imposition Deposits and how
much of the aggregate Imposition Deposits held by Beneficiary are held for the
purpose of paying property taxes, insurance premiums and each other obligation
of Trustor for which Imposition Deposits are required. Any waiver by Beneficiary
of the requirement that Trustor remit Imposition Deposits to Beneficiary may be
revoked by Beneficiary, in Beneficiary's discretion, at any time upon notice to
Trustor.

          19.2  Imposition Deposits shall be held in an institution (which may
be Beneficiary, if Beneficiary is such an institution) whose deposits or
accounts are insured or guaranteed by a federal agency. Beneficiary shall not be
obligated to open additional accounts or deposit Imposition Deposits in
additional institutions when the amount of the Imposition Deposits exceeds the
maximum amount of the federal deposit insurance or guaranty. Beneficiary shall
apply the Imposition Deposits to pay Impositions so long as no Event of Default
has occurred and is continuing. Unless applicable law requires, Beneficiary
shall not be required to pay Trustor any interest, earnings or profits on the
Imposition Deposits. Trustor hereby pledges and grants to Beneficiary a security
interest in the Imposition Deposits as additional security for all of Trustor's
Indebtedness under this Security Instrument and the other Loan Documents. Any
amounts deposited with Beneficiary under this Section 4 shall not be trust
funds, nor shall they operate to reduce the Indebtedness, unless applied by
Beneficiary for that purpose under Section 4(e).

          19.3  Trustor shall direct the applicable Governmental Authority to
deliver the invoices and bills for all Impositions to Beneficiary. If
Beneficiary receives a bill or invoice for an Imposition, Beneficiary shall pay
the Imposition from the Imposition Deposits held by Beneficiary. Beneficiary
shall have no obligation to pay any Imposition to the extent it exceeds
Imposition Deposits then held by Beneficiary. Beneficiary may pay an Imposition
according to any bill, statement or estimate from the appropriate public office
or insurance company without inquiring into the accuracy of the bill, statement
or estimate or into the validity of the Imposition.

                                       16

<PAGE>

          19.4  If at any time the amount of the Imposition Deposits held by
Beneficiary for payment of a specific Imposition exceeds the amount reasonably
deemed necessary by Beneficiary plus one-sixth of such estimate, the excess
shall be credited against future installments of Imposition Deposits. If at any
time the amount of the Imposition Deposits held by Beneficiary for payment of a
specific Imposition is less than the amount reasonably estimated by Beneficiary
to be necessary plus one-sixth of such estimate, Trustor shall pay to
Beneficiary the amount of the deficiency within fifteen (15) days after notice
from Beneficiary.

          19.5  If an Event of Default has occurred and is continuing,
Beneficiary may apply any Imposition Deposits, in any amounts and in any order
as Beneficiary determines, in Beneficiary's discretion, to pay any Impositions
or as a credit against the Indebtedness. Upon payment in full of the
Indebtedness, Beneficiary shall refund to Trustor any Imposition Deposits held
by Beneficiary.

     20. APPLICATION OF PAYMENTS. If at any time Beneficiary receives, from
Trustor or otherwise, any amount applicable to the Indebtedness which is less
than all amounts due and payable at such time, then Beneficiary may apply that
payment to amounts then due and payable in the manner set forth in the Note.
Neither Beneficiary's acceptance of an amount which is less than all amounts
then due and payable nor Beneficiary's application of such payment in the manner
authorized in the immediately preceding sentence shall constitute or be deemed
to constitute either a waiver of the unpaid amounts or an accord and
satisfaction. Notwithstanding the application of any such amount to the
Indebtedness, Trustor's Indebtedness under this Security Instrument and the Note
shall remain unchanged.

     21. USE OF PROPERTY. Unless required by applicable law, Trustor shall not
(a) except for any change in use approved by Beneficiary, allow changes in the
use for which all or any part of the Mortgaged Property is being used at the
time this Security Instrument was executed, (b) convert any part of the Facility
to commercial use, or (c) initiate or acquiesce in a change in the zoning
classification of the Land and/or the Facility.

     22. PROTECTION OF BENEFICIARY'S SECURITY.

                                       17

<PAGE>

          22.1  If Trustor fails to perform any of its Indebtedness under this
Security Instrument or any other Loan Document, or if any action or proceeding
is commenced which purports to affect the Mortgaged Property, Beneficiary's
security or Beneficiary's rights under this Security Instrument , including
eminent domain, insolvency, code enforcement, civil or criminal forfeiture,
enforcement of Hazardous Materials Laws, fraudulent conveyance or
reorganizations or proceedings involving a bankrupt or decedent, then
Beneficiary at Beneficiary's option and upon notice to Trustor may make such
appearances, disburse such sums and take such actions as Beneficiary reasonably
deems necessary to perform such Indebtedness of Trustor and to protect
Beneficiary's interest, including (i) disbursement of fees and out of pocket
expenses of attorneys, accountants, inspectors and consultants, (ii) entry upon
the Mortgaged Property to make repairs or secure the Mortgaged Property, (iii)
procurement of the insurance coverages required under the Loan Agreement, and
(iv) payment of amounts which Trustor has failed to pay under Section 9.

          22.2  Any amounts disbursed by Beneficiary under this Section 7, or
under any other provision of this Security Instrument , or under any of the
other Loan Documents, that treats such disbursement as being made under this
Section 7, shall be added to, and become part of the Indebtedness, shall be
immediately due and payable and shall bear interest from the date of
disbursement until paid at the Default Rate.

          22.3  Nothing in this Section 7 shall require Beneficiary to incur any
expense or take any action.

     23. INSPECTION. Beneficiary, its agents, representatives, and designees may
make or cause to be made entries upon and inspections of the Mortgaged Property
(including environmental inspections and tests) during normal business hours, or
at any other reasonable time, upon reasonable advance notice to Trustor (which
may be oral) except in an emergency or during the continuance of an Event of
Default.

     24. TAXES; OPERATING EXPENSES.

          24.1  Subject to the provisions of Section 9(c) and Section 9(d),
Trustor shall pay, or cause to be paid, all Taxes when due and before the
addition of any interest, fine, penalty or cost for nonpayment.

          24.2  Subject to the provisions of Section 9(c), Trustor shall pay or
cause to be paid the expenses of operating, managing, maintaining and repairing
the Mortgaged Property (including insurance premiums, utilities, repairs and
replacements) before the last date upon which each such payment may be made
without any penalty or interest charge being added or lien imposed.

          24.3  As long as no Event of Default has occurred and is continuing,
Trustor shall not be obligated to pay Taxes, insurance premiums or any other
individual Imposition to the extent that Imposition Deposits are held by
Beneficiary for the purpose of paying that specific Imposition. If an Event of
Default exists, Beneficiary may exercise any

                                       18

<PAGE>

rights Beneficiary may have with respect to Imposition Deposits without regard
to whether Impositions are then due and payable.

          24.4  Trustor, at its own expense, may contest by appropriate legal
proceedings, conducted diligently and in good faith, the amount or validity of
any Imposition other than insurance premiums, if (i) Trustor notifies
Beneficiary of the commencement or expected commencement of such proceedings,
(ii) the Mortgaged Property is not in danger of being sold or forfeited, as
determined by Beneficiary, (iii) if requested by Beneficiary, Trustor deposits
with Beneficiary cash reserves or other collateral sufficient to pay the
contested Imposition, (iv) Trustor furnishes whatever security is required in
the proceedings or is reasonably requested by Beneficiary, which may include the
delivery to Beneficiary of the reserves established by Trustor to pay the
contested Imposition, as additional security, and (v) such contest operates to
suspend enforcement of such Imposition.

          24.5  Trustor shall promptly deliver to Beneficiary a copy of all
notices of, and invoices for, Impositions, and if Trustor pays any Imposition
directly, Trustor shall promptly furnish to Beneficiary receipts evidencing such
payments.

          24.6  In the event of the passage of any law subsequent to the date of
this Security Instrument in any manner changing or modifying the laws now in
force governing the taxation of deeds of trust or mortgages or debts secured by
deeds of trust or mortgages or the manner of collecting any such taxes so as to
adversely affect Beneficiary (including, without limitation, a requirement that
internal revenue stamps be affixed to this Security Instrument or any of the
other Loan Documents), Trustor will promptly pay any such tax. If Trustor fails
to make such prompt payment, or if any law prohibits Trustor from making such
payment or would penalize Beneficiary if Trustor makes such payment, then the
entire unpaid balance of the Indebtedness shall, without notice, immediately
become due and payable at the sole option of Beneficiary. In no event, however,
shall any income taxes of Beneficiary or franchise taxes of Beneficiary measured
by income, or taxes in lieu of such income taxes or franchise taxes, be required
to be paid by Trustor.

     25. LIENS; ENCUMBRANCES. Trustor acknowledges that the existence of any
Lien on the Mortgaged Property, other than Permitted Encumbrances, whether
voluntary, involuntary or by operation of law, is a "Transfer" which constitutes
an Event of Default as provided under Section 14, and will subject Trustor to
personal liability under the Note.

     26. PRESERVATION, MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY. Trustor
(a) shall not commit waste or permit impairment or deterioration of the
Mortgaged Property, (b) shall not abandon the Facility, (c) shall restore or
repair promptly, in a good and workmanlike manner, any damaged part of the
Mortgaged Property to the equivalent of its original condition, or such other
condition as Beneficiary may approve in writing, whether or not insurance
proceeds or condemnation awards are available to cover any costs of such
restoration or repair, except to the extent Beneficiary applies such insurance
proceeds or condemnation awards to reduce the Indebtedness, (d) shall keep the
Mortgaged Property in good repair, including the replacement of Personalty and
Fixtures with items of equal or better function and quality, (e) shall provide
for professional management of

                                       19

<PAGE>

the Mortgaged Property by a manager satisfactory to Beneficiary, in its sole
discretion, under a contract approved by Beneficiary in writing, and (f) shall
give notice to Beneficiary of and, unless otherwise directed in writing by
Beneficiary, shall appear in and defend any action or proceeding purporting to
affect the Mortgaged Property, Beneficiary's security or Beneficiary's rights
under this Security Instrument . Trustor shall not (and shall not permit any
other person to) remove, demolish or alter the Mortgaged Property or any part of
the Mortgaged Property except in connection with the replacement of tangible
Personalty.

     27. CONDEMNATION.

          27.1  Trustor shall promptly notify Beneficiary of any action or
proceeding relating to any condemnation or other taking, or conveyance in lieu
thereof, of all or any part of the Mortgaged Property, whether direct or
indirect (a "Condemnation"). Trustor shall appear in and prosecute or defend any
proceeding relating to any Condemnation unless otherwise directed by Beneficiary
in writing. Trustor authorizes and appoints Beneficiary as attorney-in-fact for
Trustor to commence, appear in and prosecute, in Beneficiary's or Trustor's
name, any action or proceeding relating to any Condemnation and to settle or
compromise any claim in connection with any Condemnation. This power of attorney
is coupled with an interest and therefore is irrevocable. However, nothing
contained in this Section 12 shall require Beneficiary to incur any expense or
take any action. Trustor hereby transfers and assigns to Beneficiary all right,
title and interest of Trustor in and to any award or payment with respect to (i)
any Condemnation, or any conveyance in lieu of Condemnation, and (ii) any damage
to the Mortgaged Property caused by governmental action that does not result in
a Condemnation.

          27.2  Subject to the provisions of Section 4.5 of the Loan Agreement,
Beneficiary, in its sole discretion, may apply such awards or proceeds, after
the deduction of Beneficiary's expenses incurred in the collection of such
amounts, at Beneficiary's option, to the restoration or repair of the Mortgaged
Property or to the payment of the Indebtedness, with the balance, if any, to
Trustor. Unless Beneficiary otherwise agrees in writing, any application of any
awards or proceeds to the Indebtedness shall not extend or postpone the due date
of any monthly installments referred to in the Note, Section 4 of this Security
Instrument or any Collateral Agreement, or change the amount of such
installments. Trustor agrees to execute such further evidence of assignment of
any awards or proceeds as Beneficiary may require.

     28. TRANSFERS OF THE MORTGAGED PROPERTY OR BENEFICIAL INTERESTS IN TRUSTOR:

                                       20

<PAGE>

          28.1  Except as otherwise permitted under this Section 13, Transfers
shall not be permitted. Any Transfer made in violation of this Section shall
constitute an Event of Default. Notwithstanding any provision of this Section to
the contrary, in no event shall a Transfer resulting in a change in control of
Trustor or the Mortgaged Property be permitted without Beneficiary's prior
written consent, which may be granted or denied in Beneficiary's sole, absolute
and unreviewable discretion.

          28.2  Notwithstanding any provision herein to the contrary, no
Transfer otherwise permitted under this Section 13 shall occur unless Trustor
shall have given Beneficiary not less than ten (10) Business Days prior notice
of the intended Transfer together with a certificate of the financial officer of
Trustor stating (i) the nature and size of the interest to be the subject of the
Transfer, (ii) the name and address of the Person to which such interest shall
be conveyed, sold or transferred unless such interest is to be conveyed, sold or
transferred pursuant to a registered public sale pursuant to applicable
securities laws, (iii) that the proposed transaction is a bona fide sale,
transfer or conveyance solely for cash or equivalent consideration, if
applicable, and (iv) enclosing a $7,500.00 non-refundable review fee.
Beneficiary reserves the right to condition any consent required pursuant to
this Section 13 with respect to a Transfer upon (A) the payment of all expenses
incurred by Beneficiary as set forth below, and, in connection with the Transfer
of any fee interest in the Mortgaged Property, an assumption fee equal to one
percent (1%) of the outstanding principal balance of the Loan, (B) Beneficiary's
approval of the financial condition, managerial capabilities and ownership
structure of the proposed transferee, including requiring that the transferee of
any fee interest in the Mortgaged Property be a Single-Purpose Entity, (C) the
approval by a Rating Agency of the proposed transferee, (D) assumption of the
Loan, as modified by Beneficiary, by the proposed transferee, (E) the Loan being
in good standing and free from any default, (F) modification of the Loan
Documents, (G) if required by Beneficiary, receipt of an Opinion of Counsel
reasonably satisfactory to Beneficiary stating that, if effected, the proposed
Transfer would have no effect on the enforceability of this Security Instrument
or the other Loan Documents, and would not result in the dissolution or
termination of Trustor, the managing member of Trustor, if applicable, any
general partner of Trustor or any general partner of any general partner of
Trustor, if applicable, and (H) such other conditions as Beneficiary may
reasonably require at the time such consent is sought. Trustor agrees to pay on
demand all expenses (including, without limitation, all attorneys' fees and
disbursements, title search costs and title insurance endorsement premiums)
incurred by Beneficiary in connection with the review, approval and
documentation of any Transfer. In no event shall any Transfer otherwise
permitted under this Section occur if such Transfer is required to be registered
under the Securities Act of 1933, as amended (the "1933 Act"), or any state
securities or Blue Sky laws, or offered pursuant to Rule 144A under the 1933
Act.

     29. EVENTS OF DEFAULT. The occurrence of any one or more of the following
shall constitute an Event of Default under this Security Instrument :

                                       21

<PAGE>

          29.1  any failure by Trustor to pay or deposit within ten (10) days
after the same becomes due any amount required by the Note, this Security
Instrument or any other Loan Document;

          29.2  any failure by Trustor to maintain the insurance coverage
required under the Loan Agreement;

          29.3  any failure by Trustor to comply with the provisions of Section
25;

          29.4  fraud or material misrepresentation or material omission by
Trustor, any of its officers, directors, trustees, general partners or managers
or any guarantor in connection with (i) the application for or creation of the
Indebtedness, (ii) any financial statement, financial report, certification, or
other report or information required under the Loan Agreement required to be
provided to Beneficiary during the term of the Indebtedness, or (iii) any
request for Beneficiary's consent to any proposed action, including a request
for disbursement of funds under any Collateral Agreement;

          29.5  a failure of Trustor to comply with the provisions of
Section 13;

          29.6  the commencement of a forfeiture action or proceeding, whether
civil or criminal, which, in Beneficiary's reasonable judgment, could result in
a forfeiture of the Mortgaged Property or otherwise materially impair the lien
created by this Security Instrument or Beneficiary's interest in the Mortgaged
Property;

          29.7  any failure by Trustor to perform any of its Indebtedness under
this Security Instrument (other than those specified in Sections 14 (a) through
(f)) hereof and other than those specified in Sections 7.1(a), (b) and (c) of
the Loan Agreement, as and when required, which continues for a period of thirty
(30) days after notice of such failure by Beneficiary to Trustor; provided,
however, that if such default cannot be cured within such thirty (30) day
period, then such cure period shall be extended for an additional sixty (60)
days as long as Trustor is diligently and in good faith prosecuting such cure to
completion. However, no such notice or grace period shall apply in the case of
any such failure which could, in Beneficiary's judgment, absent immediate
exercise by Beneficiary of a right or remedy under this Security Instrument ,
result in harm to Beneficiary, impairment of the Note or this Security
Instrument or any other security given under any other Loan Document;

          29.8  any failure by Trustor to perform any of its Indebtedness as and
when required under any Loan Document other than this Security Instrument which
continues beyond the applicable cure period, if any, specified in that Loan
Document;

          29.9  any exercise by the holder of any debt instrument secured by a
mortgage, deed of trust or deed to secure debt on the Mortgaged Property of a
right to declare all amounts due under that debt instrument immediately due and
payable;

          29.10 the Mortgaged Property becomes part of a bankrupt debtor's
estate pursuant to any chapter of the Federal Bankruptcy Code or the Mortgaged
Property otherwise becomes subject to any reorganization, receivership (other
than a receivership

                                       22

<PAGE>

proceeding instituted by Beneficiary) or insolvency proceeding or any similar
proceeding pursuant to any federal, state or foreign law affecting debtor and
creditor rights; or

          29.11 if any representation or warranty made by Trustor in that
certain Loan Closing Certification executed in connection with the Loan is not
true and correct.

     30. REMEDIES.

          30.1  Acceleration of Maturity. If an Event of Default shall have
occurred, then the entire Indebtedness shall, at the option of Beneficiary,
immediately become due and payable without notice or demand, time being of the
essence of this Security Instrument , and no omission on the part of Beneficiary
to exercise such option when entitled to do so shall be construed as a waiver of
such right.

          30.2  Uniform Commercial Code. Beneficiary shall have all of the
rights and remedies of a secured party under the UCC. Upon demand by
Beneficiary, Trustor shall assemble the UCC Collateral and make it available to
Beneficiary, at a place designated by Beneficiary. Beneficiary or its agents may
without notice from time to time enter upon Trustor's premises to take
possession of the UCC Collateral, to remove it, to render it unusable, to
process it or otherwise prepare it for sale, or to sell or otherwise dispose of
it.

                Any written notice of the sale, disposition or other intended
action by Beneficiary with respect to the UCC Collateral which is sent by
regular mail, postage prepaid, to Trustor at the address of Trustor which may
from time to time be shown on Beneficiary's records, at least ten (10) days
prior to such sale, disposition or other action, shall constitute commercially
reasonable notice to Trustor. Beneficiary may alternatively or additionally give
such notice in any other commercially reasonable manner. Nothing in this
Security Instrument shall require Beneficiary to give any notice not required by
applicable laws.

                If any consent, approval, or authorization of any state,
municipal or other governmental department, agency or authority or of any
person, or any person, corporation, partnership or other entity having any
interest therein, should be necessary to effectuate any sale or other
disposition of the UCC Collateral, Trustor agrees to execute all such
applications and other instruments, and to take all other action, as may be
required in connection with securing any such consent, approval or
authorization.

Trustor recognizes that Beneficiary may be unable to effect a public sale of all
or a part of the UCC Collateral consisting of securities by reason of certain
prohibitions contained in the Securities Act of 1933, as amended, and other
applicable federal and state laws. Beneficiary may, therefore, in its
discretion, take such steps as it may deem appropriate to comply with such laws
and may, for example, at any sale of the UCC Collateral consisting of securities
restrict the prospective bidders or purchasers as to their number, nature of
business and investment intention, including, without limitation, a requirement
that the Persons making such purchases represent and agree to the satisfaction
of Beneficiary that they are purchasing such securities for their account, for
investment, and not with a view to the distribution or resale of any thereof.
Trustor covenants and agrees to do or cause to be done promptly all such acts
and things as

                                       23

<PAGE>

Beneficiary may request from time to time and as may be necessary to offer
and/or sell the securities or any part thereof in a manner which is valid and
binding and in conformance with all applicable laws. Upon any such sale or
disposition, Beneficiary shall have the right to deliver, assign and transfer to
the purchaser thereof the UCC Collateral consisting of securities so sold.

          30.3  Right to Enter and Take Possession.

                a. If an Event of Default shall have occurred and is continuing,
Trustor, upon demand of Beneficiary, shall forthwith surrender to Beneficiary
the actual possession of the Mortgaged Property and, if and to the extent
permitted by law, Beneficiary itself, or by such officers or agents as it may
appoint, may enter and take possession of all or any part of the Mortgaged
Property without the appointment of a receiver or an application therefor, and
may exclude Trustor and its agents and employees wholly therefrom, and take
possession of the books, papers and accounts of Trustor relating thereto;

                b. If Trustor shall for any reason fail to surrender or deliver
the Mortgaged Property or any part thereof after such demand by Beneficiary,
Beneficiary may obtain a judgment or decree conferring upon Beneficiary the
right to immediate possession or requiring Trustor to deliver immediate
possession of the Mortgaged Property to Beneficiary. Trustor will pay to
Beneficiary, upon demand, all expenses of obtaining such judgment or decree,
including costs and expense incurred by Beneficiary, its attorneys and agents,
and all such expenses and costs shall, until paid, become part of the
Indebtedness and shall be secured by this Security Instrument ;

                c. Upon every such entering or taking of possession, Beneficiary
may hold, store, use, operate, manage and control the Mortgaged Property and
conduct the business thereof, and, from time to time (A) make all necessary and
proper maintenance, repairs, renewals, replacements, additions, betterments and
improvements thereto and thereon and purchase or otherwise acquire additional
Fixtures, Personalty and Equipment; (B) insure or keep the Mortgaged Property
insured; (C) manage and operate the Mortgaged Property and exercise all of the
rights and powers of Trustor to the same extent as Trustor could in its own
name; and/or (D) enter into any and all agreements with respect to the exercise
by others of any of the powers herein granted to Beneficiary, all as Beneficiary
from time to time may determine to be in its best interest. Beneficiary may
collect and receive all the Rents, including those past due as well as those
accruing thereafter, and, after deducting (1) all expenses of taking, holding,
managing and operating the Mortgaged Property (including compensation for the
services of all persons employed for such purposes); (2) the cost of all such
maintenance, repairs, renewals, replacements, additions, betterments,
improvements, purchases and acquisitions; (3) the cost of such insurance deemed
necessary by Beneficiary; (4) such taxes, assessments and other similar charges
as Beneficiary may at its option pay; (5) other proper charges upon the
Mortgaged Property or any part thereof; and (6) the actual fees, expenses and
disbursements of the attorneys and agents of Beneficiary, Beneficiary shall
apply the remainder of the monies and proceeds so received by Beneficiary,
first, to the payment of accrued interest; second, to the payment of Imposition
Deposits and to other sums required to be paid hereunder; and third, to the
payment of overdue installments of principal and any other unpaid Indebtedness
then due. Anything in this Section to the contrary notwithstanding, Beneficiary
shall not incur any liability as a result of

                                       24

<PAGE>

any exercise by Beneficiary of its rights under this Security Instrument , and
Beneficiary shall be liable to account only for the Rents actually received by
Beneficiary;

                d. If an Event of Default shall exist, Beneficiary may require
that Trustor cause all of its Accounts to be paid to one or more deposit
accounts with Beneficiary, or at Beneficiary's option, with another financial
institution approved by Beneficiary. Trustor assigns and grants to Beneficiary a
security interest in, pledge of and right of setoff against all moneys from time
to time held in such deposit accounts, to the extent permitted by applicable
law. Trustor agrees to promptly notify all of its account debtors, including the
Medicaid and Medicare agencies and other account debtors pursuant to all
Reimbursement Contracts, to the extent permitted under applicable law and to the
extent Trustor maintains such Accounts, to make payments to one or more such
deposit accounts upon Beneficiary's request and as designated by Beneficiary,
and Trustor agrees to provide any necessary endorsements to checks, drafts and
other forms of payment so that such payments will be properly deposited in such
accounts. Beneficiary may require that the deposit accounts be established so as
to comply with any applicable Medicaid, Medicare and other requirements
applicable to payments of any accounts receivable. Beneficiary may cause moneys
to be withdrawn from such deposit accounts and applied to the Indebtedness in
such order as Beneficiary may elect, whether or not then due. Trustor appoints
Beneficiary as Trustor's attorney-in-fact, which appointment is coupled with an
interest and is irrevocable, to provide any notice, endorse any check, draft or
other payment for deposit, or take any other action which Trustor agrees to
undertake in accordance with this Section. Beneficiary shall not be liable for
failure to collect or to enforce any Accounts or for any action or omission on
the part of Beneficiary, its officers, agents and employees in collecting or
enforcing such Accounts; The provisions of this subsection (iv) are subject to
the rights of any holder of a lien on Accounts that is expressly permitted by
Section 6.2 of the Loan Agreement;

                e. Whenever all the Indebtedness shall have been paid and all
Events of Default shall have been cured, Beneficiary shall surrender possession
of the Mortgaged Property to Trustor, its successors and/or assigns. The same
right of taking possession, however, shall exist if any subsequent Event of
Default shall occur and be continuing.

          30.4  Performance by Beneficiary. Upon the occurrence of an Event of
Default, Beneficiary may, at its sole option, pay, perform or observe the same,
and all payments made or costs or expenses incurred by Beneficiary in connection
therewith, with interest thereon at the Default Rate (as defined in the Note) or
at the maximum rate from time to time allowed by applicable law, whichever is
less, shall be secured hereby and shall be, without demand, immediately repaid
by Trustor to Beneficiary. Notwithstanding anything to the contrary herein,
Beneficiary shall have no obligation, explicit or implied to pay, perform, or
observe any term, covenant, or condition.

          30.5  Receiver. If any Event of Default shall have occurred and be
continuing, Beneficiary, upon application to a court of competent jurisdiction,
shall be entitled as a matter of strict right, without notice and without regard
to the sufficiency or value of any security for the Indebtedness or the solvency
of any party bound for its payment, to the appointment of a receiver to take
possession of and to operate the Mortgaged Property and the Facility and to
collect and apply the Rents. The receiver shall

                                       25

<PAGE>

have all the rights and powers permitted under the laws of the Property
Jurisdiction. Trustor will pay unto Beneficiary upon demand all expenses,
including receiver's fees, actual attorney's fees, costs and agent's
compensation, incurred pursuant to the provisions of this Section, and upon any
Trustor's failure to pay the same, any such amounts shall be added to the
Indebtedness and shall be secured by this Security Instrument.

          30.6  Beneficiary's Power of Enforcement. If an Event of Default shall
have occurred and be continuing, Beneficiary may, either with or without entry
or taking possession as hereinabove provided or otherwise, proceed by suit or
suits at law in equity or any other appropriate proceeding or remedy (i) to
enforce payment of the Note or the performance of any term thereof or any other
right, (ii) to foreclose this Security Instrument and to sell, as an entirety or
in separate lots or parcels, the Mortgaged Property, as provided by applicable
California law, and (iii) to pursue any other remedy available to it, all as
Beneficiary shall deem most effectual for such purposes. Beneficiary shall take
action either by such proceedings or by the exercise of its powers with respect
to entry or taking possession, as Beneficiary may determine.

          30.7  Foreclosure by Power of Sale.

                a. Declaration and Notice of Default. Beneficiary shall have the
right (i) to cause the Mortgaged Property to be sold under the power of sale
contained in this Deed of Trust in any manner permitted by applicable law; and
(ii) to deliver to Trustee a written declaration of default and demand for sale
and a written notice of default and election to cause the Mortgaged Property to
be sold, which notice the Trustee or Beneficiary shall cause to be recorded as
required by law. Upon the expiration of such period of time after the
recordation of such notice of default and election to sell and the giving of
such notice of sale as may then be required by law, and without the necessity of
any demand on Trustor, Trustee, at the time and place specified in the notice of
sale, shall sell the Mortgaged Property at public auction to the highest bidder
for cash in lawful money of the United States payable at the time of sale.

                b. Postponements; Multiple Parcels. To the extent permitted by
law, Trustee may, and upon request of Beneficiary shall, from time to time,
postpone any sale hereunder by public announcement at the time and place noticed
for such sale or may, in its discretion, give a new notice of sale. If the
Mortgaged Property consists of several lots, parcels or items or property,
Beneficiary shall have the exclusive right (i) to designate the order in which
such lots, parcels or items shall be offered for sale or sold; and (ii) to elect
to sell such lots, parcels or items through a single sale, through two or more
successive sales, or in any other manner Beneficiary determines to be in its
best interest. Any Person, including Trustor, Trustee and Beneficiary, may
purchase at any sale under this Deed of Trust, and Beneficiary shall have the
right to purchase at any such sale by crediting upon the bid price the amount of
all or any part of the Indebtedness. If Beneficiary determines to sell the
Property in more than one sale, Beneficiary may, at its option, cause such sales
of the Mortgaged Property to be conducted simultaneously or successively, on the
same day or on such different days or times and in such order as Beneficiary may
determine, and no such sale shall terminate or otherwise affect the lien of this
Deed of Trust on any part of the Mortgaged Property that has not been sold until
all Indebtedness have been paid in full.

                                       26

<PAGE>

                c. Costs of Sale; Deed of Purchaser. Trustor shall pay all
costs, fees, and expenses of all sale of the Mortgaged Property under this Deed
of Trust, including the costs, fees and expenses (including attorneys' fees) of
Trustee and Beneficiary, together with interest thereon at the interest rate
applicable to principal under the Note or, with respect to Trustee, the maximum
rate permitted by law to be charged by Trustee. Upon any sale under the power of
sale contained in this Deed of Trust, Trustee shall execute and deliver to the
purchaser or purchasers a deed or deeds conveying the Mortgaged Property so
sold, but without any covenant or warrant whatsoever, express or implied. The
recitals in any such deed or deeds of any matter o facts, including the
existence of any default by Trustor, the giving of notice of default and notice
of sale and other facts affecting the regularity or validity of such sale or
sale, shall be conclusive proof of the truth of such facts and matters, and any
such deed or deeds shall be conclusive against all Persons as to such facts and
matters recited therein. A sale of less than all of the Mortgaged Property or
any defective or irregular sale under this Deed of Trust shall not exhaust,
impair or otherwise affect the power of sale contained in this Deed of Trust,
and subsequent sales of the property may be made under this Deed of Trust until
all Indebtedness have been satisfied or until the entire Mortgaged Property has
been sold without defect or irregularity. If Beneficiary elects to cause the
Mortgaged Property to be sold under the power of sale contained in this Deed of
Trust, Beneficiary shall deposit with the Trustee this Deed of Trust, the Note,
and such receipts and evidence of such other Indebtedness as Trustee may
reasonably require.

          30.8  Purchase by Beneficiary. Upon any foreclosure sale, Beneficiary
may bid for and purchase the Mortgaged Property and shall be entitled to apply
all or any part of the Indebtedness as a credit to the purchase price.

          30.9  Application of Proceeds of Sale. In the event of a foreclosure
or other sale of all or any portion of the Mortgaged Property, the proceeds of
said sale shall be applied, first, to the expenses of such sale and of all
proceedings in connection therewith, including actual attorney's fees and
expenses (and attorney's fees and expenses shall become absolutely due and
payable whenever foreclosure is commenced); then to insurance premiums, liens,
assessments, Impositions and charges, including utility charges and any other
amounts advanced by Beneficiary hereunder, and interest thereon; then to payment
of the Indebtedness in such order of priority as Beneficiary shall determine, in
its sole discretion; and finally the remainder, if any, shall be paid to
Trustor, or to the person or entity lawfully entitled thereto.

          30.10 Trustor as Tenant Holding Over. In the event of any such
foreclosure sale, Trustor (if Trustor shall remain in possession) shall be
deemed a tenant holding over and shall forthwith deliver possession to the
purchaser or purchasers at such sale or be summarily dispossessed according to
provisions of law applicable thereto.

          30.11 Waiver of Appraisement, Valuation, Etc. Trustor agrees, to the
full extent permitted by law, that in case of an Event of Default on the part of
Trustor hereunder, neither Trustor nor anyone claiming through or under Trustor
will assert, claim or seek to take advantage of any appraisement, redemption,
valuation, stay, homestead, extension, exemption or laws now or hereafter in
force, in order to prevent or hinder the enforcement of foreclosure of this
Security Instrument , or the absolute sale of

                                       27

<PAGE>

the Mortgaged Property, or the delivery of possession thereof immediately after
such sale to the purchaser at such sale.

          30.12 Discontinuance of Proceedings. In case Beneficiary shall have
proceeded to enforce any right, power or remedy under this Security Instrument
by foreclosure, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason, or shall have been determined
adversely to Beneficiary, then in every such case, Trustor and Beneficiary shall
be restored to their former positions and rights hereunder, and all rights,
powers and remedies of Beneficiary shall continue as if no such proceedings had
occurred.

          30.13 Waiver.

                a. No delay or omission by Beneficiary or by any holder of the
Note to exercise any right, power or remedy accruing upon any default shall
exhaust or impair any such right, power or remedy or shall be construed to be a
waiver of any such default, or acquiescence therein, and every right, power and
remedy given by this Security Instrument to Beneficiary may be exercised from
time to time and as often as may be deemed expedient by Beneficiary. No consent
or waiver expressed or implied by Beneficiary to or of any breach or default by
Trustor in the performance of the Indebtedness of Trustor hereunder shall be
deemed or construed to be a consent or waiver to or of any other breach or
default in the performance of the same or any other Indebtedness of Trustor
hereunder. Failure on the part of Beneficiary to complain of any act or failure
to act or failure to declare an Event of Default, irrespective of how long such
failure continues, shall not constitute a waiver by Beneficiary of its rights
hereunder or impair any rights, powers or remedies of Beneficiary hereunder.

                b. No act or omission by Beneficiary shall release, discharge,
modify, change or otherwise affect the original liability under the Note, this
Security Instrument , other Loan Documents or any other obligation of Trustor or
any subsequent purchaser of the Mortgaged Property or any part thereof, or any
maker, co-signer, endorser, surety or guarantor, nor preclude Beneficiary from
exercising any right, power or privilege herein granted or intended to be
granted in any Event of Default then existing or of any subsequent default, nor
alter the lien of this Security Instrument , except as expressly provided in an
instrument or instruments executed by Beneficiary. Without limiting the
generality of the foregoing, Beneficiary may (A) grant forbearance or an
extension of time for the payment of all or any portion of the Indebtedness; (B)
take other or additional security for the payment of any of the Indebtedness;
(C) waive or fail to exercise any right granted herein, in the Note or in other
Loan Documents; (D) release any part of the Mortgaged Property from the security
interest or lien of this Security Instrument or otherwise change any of the
terms, covenants, conditions or agreements of the Note, this Security Instrument
or other Loan Documents; (E) consent to the filing of any map, plat or replat
affecting the Land; (F) consent to the granting of any easement or other right
affecting the Mortgaged Property; (G) make or consent to any agreement
subordinating the security title or lien hereof, or (H) take or omit to take any
action whatsoever with respect to the Note, this Security Instrument , the other
Loan Documents, the Mortgaged Property or any document or instrument evidencing,
securing or in any way related to the Security Instrument , all without
releasing, discharging, modifying, changing or affecting any such liability, or
precluding Beneficiary from exercising any such right, power or privilege with
respect to the lien

                                       28

<PAGE>

of this Security Instrument . In the event of the sale or transfer by operation
of law or otherwise of all or any part of the Mortgaged Property, Beneficiary,
without notice, is hereby authorized and empowered to deal with any such vendee
or transferee with respect to the Mortgaged Property or the Indebtedness, or
with reference to any of the terms, covenants, conditions or agreements hereof,
as fully and to the same extent as it might deal with the original parties
hereto and without in any way releasing or discharging any liabilities,
Indebtedness or undertakings of Trustor, any guarantor of the Indebtedness or
others.

                c. Trustor waives and relinquishes any and all rights it may
have, whether at law or equity, to require Beneficiary to proceed to enforce or
exercise any rights, powers and remedies it may have under the Loan Documents in
any particular manner, in any particular order, or in any particular state or
other jurisdiction. Trustor expressly waives and relinquishes any and all rights
and remedies that Trustor may have or be able to assert by reason of the laws of
the state of jurisdiction pertaining to the rights and remedies of sureties.

Trustor makes these arrangements, waivers and relinquishments knowingly and as a
material inducement to Beneficiary in making the Loan, after consulting with and
considering the advice of independent legal counsel selected by Trustor.

          30.14 Suits to Protect the Mortgaged Property. Beneficiary shall have
power to institute and maintain such suits and proceedings as it may deem
expedient (i) to prevent any impairment of the Mortgaged Property by any acts
which may be unlawful or constitute an Event of Default under this Security
Instrument ; (ii) to preserve or protect its interest in the Mortgaged Property
and in the Rents arising therefrom; and (iii) to restrain the enforcement of or
compliance with any legislation or other governmental enactment, rule or order
that may be unconstitutional or otherwise invalid, if the enforcement of or
compliance with such enactment, rule or order would materially impair the
security hereunder or be prejudicial to the interest of Beneficiary.

          30.15 Proofs of Claim. In the case of any receivership, insolvency,
bankruptcy, reorganization, arrangement, adjustment, composition or other
proceedings affecting Trustor, its creditors or its properties, Beneficiary, to
the extent permitted by law, shall be entitled to file such proofs of claim and
other documents as may be necessary or advisable in order to have the claims of
Beneficiary allowed in such proceedings for the entire amount due and payable by
Trustor under this Security Instrument at the date of the institution of such
proceedings and for any additional amount which may become due and payable by
Trustor hereunder after such date.

          30.16 Actions Without Trustor's Consent. Trustor agrees that
Beneficiary may do any one or all of the following without notice to or the
consent of Trustor and without affecting Beneficiary's rights or remedies
against Trustor: (i) accept partial payment of, compromise, settle, renew,
extend the time for payment or performance of, or refuse to enforce any of
Trustor's Indebtedness to Beneficiary under or in connection with this Security
Instrument or any of the other Loan Documents; (ii) grant any indulgence or
forbearance to Guarantor or any other Person under or in connection with any or
all of the Loan Documents; (iii) release, waive, substitute or add any or all
collateral securing payment of any or all of the Indebtedness; (iv) release,
substitute or add any one or more

                                       29

<PAGE>

endorsers or guarantors of any or all of the Indebtedness; and (v) exercise any
right or remedy with respect to the Indebtedness or any collateral securing the
Indebtedness, notwithstanding any effect on or impairment of Trustor's
subrogation, reimbursement or other rights against Guarantor or any other Person
under or in connection with any or all of the Loan Documents.

     31. REMEDIES CUMULATIVE. Each right and remedy provided in this Security
Instrument is distinct from all other rights or remedies under this Security
Instrument or any other Loan Document or afforded by applicable law, and each
shall be cumulative and may be exercised concurrently, independently, or
successively, in any order.

     32. FORBEARANCE.

          32.1  Beneficiary may agree with Trustor, from time to time, at
Beneficiary's option and without giving notice to, or obtaining the consent of,
or having any effect upon the Indebtedness of any guarantor or other third party
obligor, extend the time for payment of all or any part of the Indebtedness,
reduce the payments due under this Security Instrument , the Note, or any other
Loan Document, release anyone liable for the payment of any amounts under this
Security Instrument , the Note, or any other Loan Document, accept a renewal of
the Note, modify the terms and time of payment of the Indebtedness, join in any
extension or subordination agreement, release any Mortgaged Property, take or
release other or additional security, modify the rate of interest or period of
amortization of the Note or change the amount of the monthly installments
payable under the Note, or otherwise modify this Security Instrument, the Note,
or any other Loan Document.

          32.2  Any forbearance by Beneficiary in exercising any right or remedy
under the Note, this Security Instrument , the Guaranty Agreement, or any other
Loan Document or otherwise afforded by applicable law, shall not be a waiver of
or preclude the exercise of any right or remedy. The acceptance by Beneficiary
of payment of all or any part of the Indebtedness after the due date of such
payment, or in an amount which is less than the required payment, shall not be a
waiver of Beneficiary's right to require prompt payment when due of all other
payments on account of the Indebtedness or to exercise any remedies for any
failure to make prompt payment. Enforcement by Beneficiary of any security for
the Indebtedness shall not constitute an election by Beneficiary of remedies so
as to preclude the exercise of any other right available to Beneficiary.
Beneficiary's receipt of any insurance and/or condemnation proceeds shall not
operate to cure or waive any Event of Default.

     33. LOAN CHARGES. If any applicable law limiting the amount of interest or
other charges permitted to be collected from Trustor is interpreted so that any
charge provided for in any Loan Document, whether considered separately or
together with other charges levied in connection with any other Loan Document,
violates that law, and Trustor is entitled to the benefit of that law, that
charge is hereby reduced to the extent necessary to eliminate that violation.
The amounts, if any, previously paid to Beneficiary in excess of the permitted
amounts shall be applied by Beneficiary to reduce the principal of the
Indebtedness. For the purpose of determining whether any applicable law limiting
the amount of interest or other

                                       30

<PAGE>

charges permitted to be collected from Trustor has been violated, all
Indebtedness which constitutes interest, as well as all other charges levied in
connection with the Indebtedness which constitute interest, shall be deemed to
be allocated and spread over the stated term of the Note. Unless otherwise
required by applicable law, such allocation and spreading shall be effected in
such a manner that the rate of interest so computed is uniform throughout the
stated term of the Note.

     34. WAIVER OF STATUTE OF LIMITATIONS. Trustor hereby waives the right to
assert any statute of limitations as a bar to the enforcement of the lien of
this Security Instrument or to any action brought to enforce any Loan Document.

     35. WAIVER OF MARSHALLING. Notwithstanding the existence of any other
security interests in the Mortgaged Property held by Beneficiary or by any other
party, Beneficiary shall have the right to determine the order in which any or
all of the Mortgaged Property shall be subjected to the remedies provided in
this Security Instrument , the Note, the Loan Agreement, any other Loan Document
or under applicable law. Beneficiary shall have the right to determine the order
in which any or all portions of the Indebtedness are satisfied from the proceeds
realized upon the exercise of such remedies. Trustor and any party who now or in
the future acquires a security interest in the Mortgaged Property and who has
actual or constructive notice of this Security Instrument waives any and all
right to require the marshalling of assets or to require that any of the
Mortgaged Property be sold in the inverse order of alienation or that any of the
Mortgaged Property be sold in parcels or as an entirety in connection with the
exercise of any of the remedies permitted by applicable law or provided in this
Security Instrument.

     36. FURTHER ASSURANCES. Trustor shall execute, acknowledge, and deliver, at
its sole cost and expense, all further acts, deeds, conveyances, assignments,
estoppel certificates, financing statements, transfers and assurances as
Beneficiary may require from time to time in order to better assure, grant, and
convey to Beneficiary the rights intended to be granted, now or in the future,
to Beneficiary under this Security Instrument and the Loan Documents.

     37. ESTOPPEL CERTIFICATE. Within ten (10) days after a request from
Beneficiary, Trustor shall deliver to Beneficiary a written statement, signed
and acknowledged by Trustor, certifying to Beneficiary or any person designated
by Beneficiary, as of the date of such statement, (a) that the Loan Documents
are unmodified and in full force and effect (or, if there have been
modifications, that the Loan Documents are in full force and effect as modified
and setting forth such modifications); (b) the unpaid principal balance of the
Note; (c) the date to which interest under the Note has been paid; (d) that
Trustor is not in default in paying the Indebtedness or in performing or
observing any of the covenants or agreements contained in this Security
Instrument or any of the other Loan Documents (or, if Trustor is in default,
describing such default in reasonable detail); (e) whether or not there are then
existing any setoffs or defenses known to Trustor against the enforcement of any
right or remedy of Beneficiary under the Loan Documents; and (f) any additional
facts requested by Beneficiary.

     38. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.

                                       31

<PAGE>

          38.1  This Security Instrument , and any Loan Document which does not
itself expressly identify the law that is to apply to it, shall be governed by
the laws of Property Jurisdiction.

          38.2  Each of Trustor and Beneficiary consents to the exclusive
jurisdiction of any and all state and federal courts with jurisdiction in the
Property Jurisdiction over Trustor and Trustor's assets. Trustor agrees that its
assets shall be used first to satisfy all claims of creditors organized or
domiciled in the United States and that no assets of Trustor in the United
States shall be considered part of any foreign bankruptcy estate.

          38.3  Each of Trustor and Beneficiary agrees that any controversy
arising under or in relation to the Note, this Security Instrument , or any
other Loan Document shall be litigated exclusively in the Property Jurisdiction.
The state and federal courts and authorities with jurisdiction in the Property
Jurisdiction shall have exclusive jurisdiction over all controversies which
shall arise under or in relation to the Note, any security for the Indebtedness,
or any other Loan Document. Trustor irrevocably consents to service,
jurisdiction, and venue of such courts for any such litigation and waives any
other venue to which it might be entitled by virtue of domicile, habitual
residence or otherwise.

     39. NOTICE.

          39.1  All notices, demands and other communications ("Notice") under
or concerning this Security Instrument shall be in writing. Each Notice shall be
addressed to the intended recipient at its address set forth in this Security
Instrument , and shall be deemed given on the earliest to occur of (i) the date
when the Notice is received by the addressee; (ii) the first Business Day after
the Notice is delivered to a recognized overnight courier service, with
arrangements made for payment of charges for next Business Day delivery; or
(iii) the third Business Day after the Notice is deposited in the United States
mail with postage prepaid, certified mail, return receipt requested.

          39.2  Any party to this Security Instrument may change the address to
which Notices intended for it are to be directed by means of Notice given to the
other party in accordance with this Section 24. Each party agrees that it will
not refuse or reject delivery of any Notice given in accordance with this
Section 24, that it will acknowledge, in writing, the receipt of any Notice upon
request by the other party and that any Notice rejected or refused by it shall
be deemed for purposes of this Section 24 to have been received by the rejecting
party on the date so refused or rejected, as conclusively established by the
records of the U.S. Postal Service or the courier service.

          39.3  Any Notice under the Note and any other Loan Document which does
not specify how Notices are to be given shall be given in accordance with this
Section 24.

          39.4  A copy of any Notice sent to Beneficiary pursuant to this
Section 24 shall be sent to:

                Katherine L. Bishop, Esquire
                Ballard, Spahr, Andrews & Ingersoll
                601 13th Street, NW, Suite 1000 South

                                       32

<PAGE>

                Washington, DC  20005-3807

                A copy of any Notice sent to Trustor pursuant to this Section 24
shall be sent to:

                Douglas Armstrong, Esquire
                ARV Assisted Living, Inc.
                245 Fisher Avenue, Suite D-1
                Costa Mesa, CA  92626

     40. SINGLE-PURPOSE ENTITY. Until the Indebtedness is paid in full, Trustor
shall maintain its status as a Single-Purpose Entity and comply with all those
covenants with respect to its status as a Single-Purpose Entity as set forth in
Section 5.5 of the Loan Agreement.

     41. SUBROGATION. If, and to the extent that, the proceeds of the Loan are
used to pay, satisfy or discharge any obligation of Trustor for the payment of
money that is secured by a pre-existing mortgage, deed of trust or other lien
encumbering the Mortgaged Property (a "Prior Lien"), such loan proceeds shall be
deemed to have been advanced by Beneficiary at Trustor's request, and
Beneficiary shall automatically, and without further action on its part, be
subrogated to the rights, including lien priority, of the owner or holder of the
obligation secured by the Prior Lien, whether or not the Prior Lien is released.

     42. BENEFICIARY STATEMENT; CERTAIN CHARGES. With respect to (a) any
statement, accounting, or similar information requested by Trustor or any other
Person pursuant to California Civil Code Section 2943 or 2954 or any other
provision of applicable law; or (b) any other document furnished to Trustor or
any other Person by Beneficiary at Trustor's request, Beneficiary shall have the
right to charge the maximum amount then permitted by law or, if there is no such
maximum, Beneficiary's customary charge for providing such statement,
accounting, or other information. Trustor shall pay Beneficiary its customary
charge for any other service rendered by Beneficiary in connection with the Loan
or the Mortgaged Property, including the issuance of a request for full or
partial reconveyance of this Security Instrument , transmitting Loan proceeds to
an escrow holder and changing Beneficiary's records relating to the
Indebtedness.

     43. DISCLOSURE OF INFORMATION. Beneficiary may furnish financial
information regarding Trustor or the Mortgaged Property to third parties with an
existing or prospective interest in the enforcement, evaluation, performance,
purchase or securitization of the Indebtedness, including but not limited to
credit rating agencies. Trustor irrevocably waives any and all rights it may
have under applicable law to prohibit such disclosure, including but not limited
to any right of privacy.

     44. FULL RECONVEYANCE. Upon (a) Beneficiary's written request stating that
(i) all Indebtedness secured by this Security Instrument has been paid or
performed in full (other than contingent Indebtedness which by their terms
survive the release hereof and as to which no event giving rise to the
incurrence of any such Indebtedness shall have occurred), and (ii) all fees due
Beneficiary in connection with release of this Security Instrument have been
paid, and (b) payment of Trustee's fees and expenses of this trust, Trustee
shall reconvey the Mortgaged

                                       33

<PAGE>

Property then held under this Security Instrument without warranty of any kind.
Upon the payment and performance in full of all Indebtedness (other than
contingent Indebtedness which survive the release hereof and as to which no
event giving rise to the incurrence of any such obligation shall have occurred),
and upon request of Trustor, Beneficiary shall request Trustee to reconvey the
Mortgaged Property and shall surrender or request the Trustee to surrender to
Trustor the Note and all other documents evidencing the Indebtedness secured by
this Security Instrument . The recitals in the reconveyance of any matters or
facts shall be conclusive proof of their truthfulness. The grantee in such
reconveyance may be described as the "person or persons legally entitled
thereto". Such reconveyance shall operate as a reassignment of the Rents and
profits assigned to Beneficiary under the Assignment of Leases and Rents.
Trustee shall deliver this Security Instrument and the Note after full
reconveyance to the Person or Persons legally entitled thereto.

     45. SUBSTITUTION OF TRUSTEE. Beneficiary, at its option, shall have the
right from time to time to appoint a successor trustee to any trustee appointed
under this Security Instrument by Beneficiary's execution and acknowledgment of
a written instrument which is recorded in the office of the recorder of each
county in which the Mortgaged Property is located. The recordation of such an
instrument in accordance with this Section shall constitute conclusive proof of
the proper substitution of a successor trustee under this Security Instrument.
Upon recordation of such an instrument, the successor trustee shall succeed to
all the title, power and duties granted to the Trustee under this Security
Instrument and by applicable law without conveyance of the Mortgaged Property.
Such instrument shall contain the name of the original Beneficiary, Trustee and
Trustor named in this Security Instrument , the book and page or other recording
information for this Security Instrument , and the name and address of the
successor trustee. If a notice of default has been recorded prior to the
recordation of a substitution of trustee, the power of substitution shall not be
exercised by Beneficiary until the costs, fees and expenses of the acting
trustee have been paid in full and the acting trustee has endorsed
acknowledgment of receipt of such amounts on the instrument substituting the
successor trustee. Without limiting the terms of this Section, Beneficiary shall
have the right from time to time to substitute a successor to any trustee
appointed under this Security Instrument in accordance with any statutory or
other procedure allowed by law for such substitution.

     46. EXECUTION OF DOCUMENTS BY BENEFICIARY AND TRUSTEE. Without notice to or
affecting the liability of Trustor or any other Person for the payment or
performance of the Indebtedness, without affecting the lien or priority of this
Security Instrument or Beneficiary's rights and remedies under the Loan
Documents, and without liability to Trustor or any other Person, Beneficiary and
Trustee (if Trustee is so requested in writing by Beneficiary) shall have the
right, at any time and from time to time, to do any one or more of the
following: (a) reconvey any part of the Mortgaged Property and (b) execute any
extension agreement relating to any or all of the Indebtedness, any document
subordinating the lien of this Security Instrument to any other lien or
document, or any other document relating to the Mortgaged Property,
Indebtedness, or Loan Documents.

     47. TRUST IRREVOCABLE; ACCEPTANCE BY TRUSTEE. The trust created by this
Security Instrument is irrevocable by Trustor. Trustee accepts this trust when
this Security Instrument , duly executed and acknowledged, is recorded in the
county in which the Mortgaged Property is located as provided by law. Trustee is
not obligated to notify any party of a pending

                                       34

<PAGE>

sale under any other deed of trust or of any action or proceeding in which
Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee.

     48. TRANSFERS BY TRUSTOR; NO RELEASE OF TRUSTOR. The following provisions
shall apply if Trustor sells, conveys, transfers or alienates the Mortgaged
Property or any interest in the Mortgaged Property with or without Beneficiary's
consent:

          48.1  No Release of Trustor. Except as set forth in Section 13 above,
no such action by Trustor nor any assumption of any or all of the Indebtedness
by any transferee of the Mortgaged Property ("Transferee") shall be deemed to
release Trustor or any other Person from any liability under the terms of the
Loan Documents, and Trustor and such Personas shall remain liable to Beneficiary
for the payment and performance of all of their respective Indebtedness under
the Loan Documents.

          48.2  Actions Without Trustor's Consent. Trustor agrees that
Beneficiary may do any one or all of the following without notice to or the
consent of Trustor and without affecting Beneficiary's rights or remedies
against Trustor: (i) accelerate, accept partial payment of, compromise, settle,
renew, extend the time for payment or performance of, or refuse to enforce any
of Trustor's Indebtedness to Beneficiary under or in connection with this
Instrument or any of the other Loan Documents; (ii) grant any indulgence or
forbearance to the Transferee or any other Person under or in connection with
any or all of the Loan Documents; (iii) release, waive, substitute or add ay or
all collateral securing payment of any or all of the Indebtedness; (iv) release,
substitute or add any one or more endorsers or guarantors of any or all of the
Indebtedness; (v) amend, supplement, alter or change in any respect whatsoever
any term or provision of the Loan Documents or any other agreement relating to
the Indebtedness; and (vi) exercise any right or remedy with respect to the
Indebtedness or any collateral securing the Indebtedness, notwithstanding any
effect on or impairment of Trustor's subrogation, reimbursement or other rights
against the Transferee, whether by operation of California Code of Civil
Procedure 580d or otherwise.

          48.3  Waivers. Trustor waives all rights which it may have (i) to
require Beneficiary to exhaust its rights and remedies against the Transferee,
any other Person, or any collateral securing any or all of the Indebtedness
before pursuing its rights and remedies against Trustor; (ii) to require
Beneficiary to exercise any right or power or to pursue any remedy which
Beneficiary may have under the Loan Documents or applicable law before pursuing
its rights and remedies against Trustor; and (iii) to assert any defense to
Beneficiary's enforcements of its rights and remedies against Trustor based on
an election of remedies by Beneficiary or the manner in which Beneficiary
exercise any remedy which destroys, diminishes or interferes with any or all of
Trustor's subrogation, reimbursement or other rights against the Transferee,
whether by operation of California Code of Civil Procedure Section 580d or
otherwise.

     49. JOINT AND SEVERAL LIABILITY. If more than one Person or entity signs
this Security Instrument as Trustor, the Indebtedness of such Persons shall be
joint and several.

                                       35

<PAGE>

     50. RELEASE.  Notwithstanding any other provision of this Security
Instrument, Trustee, at the direction of Beneficiary, shall release a portion of
the Mortgaged Property after receipt by Beneficiary of a release amount (the
"Release Amount") equal to an amount that results in a loan-to-value ratio of
the remaining Facility, after the release of the Facility being refinanced,
which is less than or equal to eighty percent (80%), as determined by
Beneficiary in its sole discretion, after application of the Release Amount to
the outstanding principal balance of the Loan; but only if, in addition, (a) the
remaining Facility currently has a Debt Service Coverage Ratio (as defined in
the Loan Agreement) of 1.40 to 1.0 and (b) the remaining amount of the Loan (the
outstanding principal balance of the Note after payment and application of the
Release Amount) qualifies for refinancing with a Department of Housing and Urban
Development loan, as determined by Beneficiary in its sole discretion. Payment
of the Release Amount will be subject to an additional payment of the prepayment
premium specified in Section 5 of the Note.

     51. RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY. The relationship
between Beneficiary and Trustor shall be solely that of creditor and debtor,
respectively, and nothing contained in this Security Instrument shall create any
other relationship between Beneficiary and Trustor. No creditor of any party to
this Security Instrument and no other person shall be a third party beneficiary
of this Security Instrument or any other Loan Document.

     52. SEVERABILITY; AMENDMENTS. The invalidity or unenforceability of any
provision of this Security Instrument shall not affect the validity or
enforceability of any other provision, and all other provisions shall remain in
full force and effect. This Security Instrument contains the entire agreement
among the parties as to the rights granted and the Indebtedness assumed in this
Security Instrument . This Security Instrument may not be amended or modified
except by a writing signed by the party against whom enforcement is sought.

     53. MISCELLANEOUS PROVISIONS. The captions and headings of the sections of
this Security Instrument are for convenience only and shall be disregarded in
construing this Security Instrument . Any reference in this Security Instrument
to an "Exhibit" or a "Section" shall, unless otherwise explicitly provided, be
construed as referring, respectively, to an Exhibit attached to this Security
Instrument or to a section of this Security Instrument . All Exhibits attached
to or referred to in this Security Instrument are incorporated by reference into
this Security Instrument . Any reference in this Security Instrument to a
statute or regulation shall be construed as referring to that statute or
regulation as amended from time to time. Use of the singular in this Agreement
includes the plural and use of the plural includes the singular. As used in this
Security Instrument , the term "including" means "including, but not limited
to."

     54. WAIVER OF TRIAL BY JURY. EACH OF TRUSTOR AND BENEFICIARY (A) COVENANTS
AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE THAT IS
TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY TO THE
EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO
TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH
THE BENEFIT OF COMPETENT LEGAL COUNSEL, AND THIS WAIVER IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE

                                       36

<PAGE>

AND EACH ISSUE AS TO WHICH THE RIGHT TO A JURY TRIAL WOULD OTHERWISE EXIST.
TRUSTOR AND BENEFICIARY ARE AUTHORIZED TO SUBMIT THIS SECURITY INSTRUMENT TO ANY
COURT HAVING JURISDICTION OVER THE SUBJECT MATTER AND THE PARTIES TO ANY LOAN
DOCUMENT, SO AS TO SERVE AS CONCLUSIVE EVIDENCE OF TRUSTOR'S AND BENEFICIARY'S
WAIVER OF THE RIGHT TO JURY TRIAL. FURTHER, EACH OF TRUSTOR AND BENEFICIARY
CERTIFIES THAT NEITHER TRUSTOR'S NOR BENEFICIARY'S REPRESENTATIVES OR AGENTS
HAVE REPRESENTED, EXPRESSLY OR OTHERWISE, THAT ENFORCEMENT OF THIS WAIVER WILL
NOT BE SOUGHT.

     55. WAIVER OF AUTOMATIC STAY. TO THE EXTENT PERMITTED UNDER APPLICABLE LAW,
TRUSTOR HEREBY AGREES THAT, IN CONSIDERATION OF BENEFICIARY'S AGREEMENT TO MAKE
THE LOAN AND IN RECOGNITION THAT THE FOLLOWING COVENANT IS A MATERIAL INDUCEMENT
FOR BENEFICIARY TO MAKE THE LOAN, IN THE EVENT THAT TRUSTOR SHALL (A) FILE WITH
ANY BANKRUPTCY COURT OF COMPETENT JURISDICTION OR BE THE SUBJECT OF ANY PETITION
UNDER ANY SECTION OR CHAPTER OF TITLE 11 OF THE UNITED STATES CODE, AS AMENDED
("BANKRUPTCY CODE"), OR SIMILAR LAW OR STATUTE; (B) BE THE SUBJECT OF ANY ORDER
FOR RELIEF ISSUED UNDER THE BANKRUPTCY CODE OR SIMILAR LAW OR STATUTE; (C) FILE
OR BE THE SUBJECT OF ANY PETITION SEEKING ANY REORGANIZATION, ARRANGEMENT,
COMPOSITION, READJUSTMENT, LIQUIDATION, DISSOLUTION, OR SIMILAR RELIEF UNDER ANY
PRESENT OR FUTURE FEDERAL OR STATE ACT OR LAW RELATING TO BANKRUPTCY,
INSOLVENCY, OR OTHER RELIEF FOR DEBTORS; (D) HAVE SOUGHT OR CONSENTED TO OR
ACQUIESCED IN THE APPOINTMENT OF ANY TRUSTEE, RECEIVER, CONSERVATOR, OR
LIQUIDATOR; OR (E) BE THE SUBJECT OF AN ORDER, JUDGEMENT OR DECREE ENTERED BY
ANY COURT OF COMPETENT JURISDICTION APPROVING A PETITION FILED AGAINST TRUSTOR
FOR ANY REORGANIZATION, ARRANGEMENT, COMPOSITION, READJUSTMENT, LIQUIDATION,
DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT OR FUTURE FEDERAL OR STATE ACT
OR LAW RELATING TO BANKRUPTCY, INSOLVENCY OR RELIEF FOR DEBTORS, THEN, SUBJECT
TO COURT APPROVAL, BENEFICIARY SHALL THEREUPON BE ENTITLED AND TRUSTOR HEREBY
IRREVOCABLY CONSENTS TO, AND WILL NOT CONTEST, AND AGREES TO STIPULATE TO RELIEF
FROM ANY AUTOMATIC STAY OR OTHER INJUNCTION IMPOSED BY SECTION 362 OF THE
BANKRUPTCY CODE, OR SIMILAR LAW OR STATUTE (INCLUDING, WITHOUT LIMITATION,
RELIEF FROM ANY EXCLUSIVE PERIOD SET FORTH IN SECTION 1121 OF THE BANKRUPTCY
CODE) OR OTHERWISE, ON OR AGAINST THE EXERCISE OF THE RIGHTS AND REMEDIES
OTHERWISE AVAILABLE TO BENEFICIARY AS PROVIDED IN THE LOAN DOCUMENTS, AND AS
OTHERWISE PROVIDED BY LAW, AND TRUSTOR HEREBY IRREVOCABLY WAIVES ITS RIGHTS TO
OBJECT TO SUCH RELIEF.

                                       37

<PAGE>

     56. SUCCESSORS AND ASSIGNS BOUND. This Security Instrument shall bind, and
the rights granted by this Security Instrument shall inure to, the respective
successors and assigns of Beneficiary and Trustor.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                       38

<PAGE>

     IN WITNESS WHEREOF, Trustor has caused this Security Instrument to be
properly executed as of the date first above written.


WITNESS:                                TRUSTOR:

                                        ARV HILLCREEK, LLC, a California
                                        limited liability company


                                        By:                               (Seal)
-----------------------------------         ------------------------------
Print Name:                                 Abdo H. Khoury
            -----------------------         Manager

                                       39

<PAGE>

State of California         )
                            )  ss:
County of Orange            )

     On July, 2002, before me,
                               -------------------------------------------
                                       (name, title of officer,
                                    e.g., "Jane Doe, Notary Public")

personally appeared Abdo H. Khoury
                    ------------------------------------------------------
                                         (name(s) of signer(s))

     ( ) 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 person(s) acted,
executed the instrument.

     Witness my hand and official seal.

                                        ----------------------------------
                                              (Signature of Notary)

                                       40

<PAGE>

                                  EXHIBIT "A-1"

                                LEGAL DESCRIPTION

PARCEL 1: (PROPERTY IN IRVINE, CALIFORNIA)

PARCEL 1A:

THAT PORTION OF PARCELS 1 AND A OF PARCEL MAP 81-610, IN THE CITY OF IRVINE,
COUNTY OF ORANGE, STATE OF CALIFORNIA, FILED IN BOOK 178, PAGES 6 TO 9 OF PARCEL
MAPS, SHOWN AS:

PARCEL X, AS SHOWN ON EXHIBIT "A" ATTACHED TO THAT CERTAIN APPLICATION FOR LOT
LINE ADJUSTMENT 85-LL-0029 RECORDED MAY 10, 1985 AS INSTRUMENT NO. 85-170864,
OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA.

PARCEL 1B:

AN UNDIVIDED 50% INTEREST IN THAT PORTION OF PARCELS A AND 1 OF PARCEL MAP
81-610, IN THE CITY OF IRVINE, COUNTY OF ORANGE, STATE OF CALIFORNIA, FILED IN
BOOK 178, PAGES 6 TO 9 OF PARCEL MAPS, SHOWN AS:

PARCEL Y, AS SHOWN ON EXHIBIT "A" ATTACHED TO THAT CERTAIN APPLICATION FOR LOT
LINE ADJUSTMENT 85-LL-0029, RECORDED MAY 10, 1985 AS INSTRUMENT NO. 85-170864,
OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA.

EXCEPTING THEREFROM ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS, NATURAL GAS
RIGHTS, AND OTHER HYDROCARBONS BY WHATSOEVER NAME KNOWN THAT MAY BE WITHIN OR
UNDER THE PARCEL OF LAND HEREINABOVE DESCRIBED, TOGETHER WITH THE PERPETUAL
RIGHTS OF DRILLING, MINING, EXPLORING AND OPERATING THEREFOR, AND STORING IN AND
REMOVING THE SAME FROM SAID LAND OR ANY OTHER LAND, INCLUDING THE RIGHT TO
WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FORM LAND OTHER THAN THOSE HEREINABOVE
DESCRIBED, OIL OR GAS WELLS, TUNNELS AND SHAFTS INTO, THROUGH OR ACROSS THE
SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED, AND TO BOTTOM SUCH WHIPSTOCKED OR
DIRECTIONALLY DRILLED THEREOF, AND TO REDRILL, RETUNNEL, EQUIP, MAINTAIN,
REPAIR, DEEPEN AND OPERATE ANY WELLS OR MINES, WITHOUT, HOWEVER, THE RIGHT TO
DRILL, MINE, STORE, EXPLORE AND OPERATE THROUGH THE SURFACE OF THE UPPER 500
FEET OF THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED, AS RESERVED IN DEED BY
THE IRVINE COMPANY, RECORDED DECEMBER 12, 1991 AS INSTRUMENT NO. 91-683710,
OFFICIAL RECORDS.

ALSO EXCEPTING THEREFROM ANY AND ALL WATER, WATER RIGHTS OF INTERESTS, WHETHER
SUCH WATER RIGHTS SHALL BE RIPARIAN, OVERLYING, APPROPRIATIVE, LITTORAL,
PERCOLATING, PRESCRIPTIVE, ADJUDICATED, STATUTORY OR CONTRACTUAL, TOGETHER WITH
THE RIGHT AND POWER TO EXPLORE, DRILL, REDRILL, REMOVE AND STORE THE SAME FROM
OR IN THE LAND HEREINABOVE DESCRIBED OR TO DIVERT OR OTHERWISE UTILIZE SUCH
WATER, RIGHTS OR INTERESTS ON ANY OTHER PROPERTY, BUT WITHOUT, HOWEVER, ANY
RIGHT TO ENTER UPON THE SURFACE OF THE PROPERTY DESCRIBED HEREIN IN THE EXERCISE
OF SUCH RIGHTS, AS RESERVED IN DEED BY THE IRVINE COMPANY, RECORDED DECEMBER 12,
1991 AS INSTRUMENT NO. 91-683710, OFFICIAL RECORDS.

Assessor's Parcel No: 452-031-23

<PAGE>

                                  EXHIBIT "A-2"

                                LEGAL DESCRIPTION

PARCEL 2: (PROPERTY IN THOUSAND OAKS, CALIFORNIA)

PARCEL 2A:

PARCEL 3 OF LD 520, IN THE CITY OF THOUSAND OAKS, COUNTY OF VENTURA, STATE OF
CALIFORNIA, AS PER MAP RECORDED IN BOOK 42, PAGE 22-23, OF PARCEL MAP, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, SHOWN AS PARCEL 3A ON THE LOT LINE
ADJUSTMENT NO. 90-209 RECORDED JULY 29, 1994 AS DOCUMENT NO. 94-126409 OFFICIAL
RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

EXCEPT FROM THAT PORTION OF SAID LAND THAT LIES WITHIN THE FOLLOWING DESCRIBED
LAND, ALL MINERALS AND ALL OIL, GAS, ASPHALTUM AND OTHER HYDROCARBON SUBSTANCES
LYING BELOW A DEPTH OF 550 FEET FRO THE SURFACE OF SAID LAND, BUT WITHOUT THE
RIGHT TO ENTER UPON SAID LAND OR USE THE SURFACE FOR ANY PURPOSE:

THAT PORTION OF LOT 4, OF SUBDIVISION NO. 1, RANCHO CONEJO, IN THE CITY OF
THOUSAND OAKS, COUNTY OF VENTURA, STATE OF CALIFORNIA, AS PER MAP RECORDED IN
BOOK 8, PAGE 55 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY,
DESCRIBED AS FOLLOWS:

BEGINNING AT THE MOST SOUTHERLY CORNER OF SAID LOT 4; THENCE ALONG THE
SOUTHWESTERLY LINE OF SAID LOT 4,

1ST: NORTH 26 DEG. 53' 30" WEST 31.45 FEET TO THE BEGINNING OF A NON-TANGENT
CURVE CONCAVE SOUTHEASTERLY HAVING A RADIUS OF 790 FEET AND A RADIAL LINE TO
SAID CURVE BEARS NORTH 47 DEG. 42' 48" WEST; THENCE,

2ND: NORTHEASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 6 DEG. 11' 34"
AN ARC DISTANCE OF 85.39 FEET; THENCE TANGENT TO SAID CURVE,

3RD: NORTH 48 DEG. 28' 46" EAST 350.03 FEET; THENCE AT RIGHT ANGLES,

4TH: SOUTH 41 DEG. 31' 14" EAST 38.62 FEET TO THE SOUTHEASTERLY LINE OF SAID
LOT 4; THENCE ALONG SAID SOUTHEASTERLY LINE.

5TH: SOUTH 48 DEG. 56' 30" EAST 443.21 FEET TO THE POINT OF BEGINNING.

                                       A-2

<PAGE>

PARCEL 2B:

AN EASEMENT FOR ACCESS AND INCIDENTAL PURPOSES OVER THAT PORTION OF PARCEL 2 OF
LD 520 IN THE CITY OF THOUSAND OAKS, COUNTY OF VENTURA, STATE OF CALIFORNIA, AS
PER MAP RECORDED IN BOOK 42, PAGE 22-23, OF PARCEL MAP, DESCRIBED AS FOLLOWS:

BEGINNING AT THE NORTHEAST CORNER OF PARCEL 2 OF SAID MAP:

1ST: SOUTH 0 DEG. 14' 46" WEST, 56.88 FEET; THENCE,

2ND: SOUTH 77 DEG. 45' 47" WEST, 174.21 FEET; THENCE,

3RD: SOUTH 85 DEG. 17' 37" WEST, 185.01 FEET; MORE OR LESS TO A POINT ON THE
EASTERLY BOUNDARY LINE OF PARCEL 3 OF SAID MAP; THENCE ALONG SAID BOUNDARY LINE,

                                       A-3

<PAGE>

4TH: NORTH 0 DEG. 00' 00" EAST, 63.67 FEET TO A POINT ON A CURVE CONCAVE
SOUTHEASTERLY HAVING A RADIUS OF 1100.00 FEET, SAID CURVE BEING THE NORTHERLY
BOUNDARY OF PARCEL 2 OF SAID MAP; THENCE,

5TH: NORTHEASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 16 DEG. 46'
46", AN ARC DISTANCE OF 322.14 FEET; THENCE,

6TH: SOUTH 89 DEG. 45' 14" EAST, 37.13 FEET TO THE TRUE POINT OF BEGINNING.

PARCEL 2C:

AN EASEMENT FOR UTILITY INCIDENTAL PURPOSES OVER PARCEL 1 OF LD 520 IN THE CITY
OF THOUSAND OAKS, COUNTY OF VENTURA, STATE OF CALIFORNIA, AS PER MAP RECORDED IN
BOOK 42, PAGE 22-23 OF PARCEL MAPS DESCRIBED AS FOLLOWS:

BEGINNING AT THE INTERSECTION OF PROPERTY LINES N 00 DEG. 14' 46" E AND N
87 DEG. 01' 14" E, BEING THE MOST SOUTHEASTERLY POINT AS SHOWN ON PARCEL MAP
L.D.-520 RECORDED IN BOOK 42, PAGE 22 AND 23; THENCE S 87 DEG. 01' 14" W,
362.28 FEET TO A POINT ON A TANGENT CURVE CONCAVE TO THE NORTH, A RADIAL TO SAID
CURVE BEARS N 02 DEG. 58' 46" W, 2453.00 FEET; THENCE WESTERLY THROUGH A
CENTRAL ANGLE OF 6 DEG. 41' 31", 286.50 FEET; THENCE 220.71 FEET AT N
86 DEG. 17' 15" W TO THE TRUE POINT OF BEGINNING.

FROM THE TRUE POINT OF BEGINNING, A CENTER LINE WITH SIDE LINES OF SEVEN AND ONE
HALF FEET ON EITHER SIDE DESCRIBED AS: N 00 DEG. 14' 46" E, 54.92 FEET TO THE
BEGINNING OF A TANGENT CURVE CONCAVE EASTERLY, THE RADIAL TO SAID CURVE BEARS S
89 DEG. 45' 14" E, 195.97 FEET; THENCE NORTHEASTERLY THROUGH A CENTRAL ANGLE
OF 31 DEG. 41' 16" AN ARC LENGTH OF 108.38; THENCE N 31 DEG. 56' 02" E,
129.97 FEET TO AN ANGLE POINT; THENCE N 34 DEG. 39' 34" E, 59.44 FEET TO THE
BEGINNING OF A TANGENT CURVE CONCAVE WESTERLY A RADIAL TO SAID CURVE, BEARS N
55 DEG. 20' 26" W, 367.50 FEET; THENCE NORTHERLY THROUGH A CENTRAL ANGLE OF
15 DEG. 00' 00", AN ARC LENGTH OF 96.21 FEET; THENCE N 19 DEG. 39' 34" E,
90.93 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE WESTERLY, A RADIAL TO
SAID CURVE BEARS 70 DEG. 20' 26" W, 187.50 FEET; THENCE NORTHERLY THROUGH A
CENTRAL ANGLE OF 41 DEG. 37' 27" AN ARC LENGTH OF 136.22 FEET; THENCE S
70 DEG. 00' 59" W. 17.73 FEET; THENCE N 19 DEG. 59' 01" W, 8.84 FEET TO A
POINT ON A TANGENT CURVE CONCAVE EASTERLY, A RADIAL TO SAID CURVE BEARS N
70 DEG. 00' 59" E; THENCE NORTHERLY THROUGH A CENTRAL ANGLE OF 17 DEG. 03'
35" AN ARC LENGTH OF 56.57 FEET TO THE POINT OF INTERSECTION MADE BY SAID CENTER
LINE AND THE PROPERTY LINE OF PARCEL 3 GIVEN AS N 60 DEG. 00' 00" E, SAID
SIDE LINES BEING LENGTHENED OR SHORTENED TO MATCH SAID PROPERTY LINES.

PARCEL 2D:

AN EASEMENT FOR EMERGENCY ACCESS AND INCIDENTAL PURPOSES OVER PARCEL 1 OF LD 520
IN THE CITY OF THOUSAND OAKS, COUNTY OF VENTURA, STATE OF CALIFORNIA, AS PER MAP
RECORDED IN BOOK 42 PAGE 22 AND 23 OF PARCEL MAP, DESCRIBED AS FOLLOWS: