Document:

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                                                                   EXHIBIT 10.45

                     AMENDED AND RESTATED GUARANTY AGREEMENT

        THIS AMENDED AND RESTATED GUARANTY AGREEMENT (the "Guaranty") is made as
of the 11th day of August, 2000, by SPACELABS MEDICAL, INC., a Delaware
corporation (the "Guarantor"), in favor of BANK OF AMERICA, N.A., a national
banking association ("Bank of America"), U.S. BANK NATIONAL ASSOCIATION, a
national banking association ("U.S.Bank" and together with Bank of America,
together, the "Lenders" and each individually a "Lender") and Bank of America,
as agent for Lenders (the "Agent").

                                    RECITALS

        A. Spacelabs Medical, Inc., a California corporation (the "Borrower"),
Bank of America and Guarantor entered into that certain Loan Agreement dated as
of December 7, 1995 (as amended, restated, supplemented or otherwise modified,
the "Original Agreement"), pursuant to which Bank of America made a term loan to
Borrower in the principal amount of $15,000,000 (the "Term Loan") and agreed,
subject to the terms therein contained to make revolving loans to Borrower in an
aggregate principal amount of up to $10,000,000 (the "Original Commitment").

        B. In connection with the Original Agreement, Borrower and Bank of
America entered into that certain ISDA Master Agreement dated as of October 12,
1995 (such master agreement together with all schedules thereto, confirmations
of transactions thereunder, and documents relating thereto, as any thereof may
be amended, restated, supplemented or otherwise modified from time to time, the
"Swap Agreement").

        C. Under a Guaranty Agreement dated as of December 7, 1995 (the
"Original Guaranty") Guarantor guaranteed the indebtedness, liabilities and
obligations of Borrower to Bank of America arising under the Original Agreement
and the Swap Agreement.

        D. Borrower, Bank of America, Agent and Guarantor entered into that
certain Amended and Restated Loan Agreement dated as of July 16, 1997 (as
amended, restated, supplemented or otherwise modified, the "Existing Agreement")
which agreement amended and restated the Original Agreement, and pursuant to
which Bank of America agreed to make available a revolving loan facility
converting to term in the aggregate principal amount of up to $30,000,000 for
the purpose of financing Borrower's acquisition of Burdick, Inc. (the "Burdick
Commitment") and agreed to make available a revolving loan facility converting
to term in the aggregate principal amount of up to $35,000,000 for general
corporate purposes (the "Revolving Commitment"), and in connection therewith,
Bank of America and Borrower agreed to cancel the Original Commitment.

        E. Under a Guaranty Agreement dated as of July 16, 1997 (the "Existing
Guaranty") Guarantor guaranteed the indebtedness, liabilities and obligations of
Borrower to Lenders arising under the Existing Agreement and the Swap Agreement.

        F. Under an Assignment and Assumption Agreement dated as of January 8,
1998, Bank of America assigned to U.S. Bank an undivided portion of Bank of
America's rights and obligations under the Existing Agreement with respect to
the Burdick Commitment and the Revolving Commitment and U.S. Bank accepted such
assignment.

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        G. Borrower, Lenders, Agent and Guarantor have entered into an Amended
and Restated Loan Agreement dated as of the date hereof (the "Loan Agreement")
which agreement amends and restates the Existing Agreement and, among other
things, extends the maturity Date of the Term Loan, the Burdick Commitment and
the Revolving Commitment.

        H. Pursuant to the terms of the Loan Agreement, the execution and
delivery of this Guaranty is a material condition precedent to the Lenders'
obligation to make revolving loans to Borrower. This Guaranty amends and
restates the Existing Guaranty.

        I. Guarantor is the sole legal, equitable, and beneficial owner of all
of the capital stock of Borrower. The proceeds of the term loan made, and the
revolving loans to be made by Lenders to Borrower will result in material
economic benefit to Guarantor.

        NOW THEREFORE, in consideration of the Lenders' and Agent's execution
and delivery of the Loan Agreement and for other good and valuable consideration
receipt of which Guarantor hereby acknowledges, Guarantor agrees to amend and
restate the Existing Guaranty in its entirety as follows:

                                    AGREEMENT

        1. DEFINITIONS. Capitalized terms not otherwise defined herein shall
have the meanings used in the Loan Agreement. As used herein, "Lender" or
"Lenders" shall mean and include Lenders and any assignee of any Lender pursuant
to Section 9.7 of the Loan Agreement, and any Successors thereof.

        2. GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor hereby
represents and warrants to Lenders and Agent as follows:

            (a) Guarantor is a corporation duly incorporated, validly existing
and in good standing under the laws of the state of Delaware. Guarantor has full
corporate power, authority and legal right to carry on its business as presently
conducted, to own and operate its properties and assets, and to execute, deliver
and perform this Guaranty.

            (b) The execution, delivery and performance by Guarantor of this
Guaranty have been duly authorized by all necessary corporate action of
Guarantor, have received all necessary governmental approvals and do not
contravene any law, any provision of the Certificate of Incorporation or Bylaws
of Guarantor or any contractual restrictions binding on Guarantor.

            (c) This Guaranty constitutes the legal, valid and binding
obligation of Guarantor enforceable in accordance with its terms.

            (d) There are no actions, proceedings, investigations, or claims
against or affecting Guarantor now pending before any court, arbitrator or
Governmental Authority (nor to the knowledge of Guarantor has any thereof been
threatened nor to the knowledge of Guarantor does any basis exist therefor)
which if determined adversely to Guarantor would be likely to have a material
adverse effect on the consolidated financial condition of Guarantor, Borrower
and the Subsidiaries or on the ability of Guarantor to perform its obligations
under this Guaranty.

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            (e) Borrower is a wholly-owned subsidiary of Guarantor and Guarantor
has no other direct or indirect wholly-owned subsidiaries other than entities
that are also Wholly-owned Subsidiaries as defined in the Loan Agreement.

        3. GUARANTEED OBLIGATIONS. Guarantor absolutely and unconditionally
guarantees payment to each Lender and Agent when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) without
set-off, counterclaim, recoupment or deduction of any amounts owing or alleged
to be owing by any Lender or Agent to Borrower the following indebtedness,
liabilities and obligations (collectively, the "Obligations"):

            (a) all indebtedness, liabilities and obligations of Borrower to
Lenders and Agent (or any of them) now or hereafter existing, whether joint or
several, direct or indirect, absolute or contingent or due or to become due,
howsoever evidenced, created, incurred or owing and whether or not evidenced by
promissory notes or other evidences of indebtedness, and all modifications,
renewals, extensions and rearrangements thereof and substitutions and
replacements therefor arising under or in connection with the Loan Agreement and
the other Loan Documents or any of the transactions contemplated thereby;

            (b) all indebtedness, liabilities and obligations of Borrower to
Bank of America or any affiliate of Bank of America now or hereafter existing,
whether joint or several, direct or indirect, absolute or contingent or due or
to become due, arising under or in connection with the Swap Agreement or any
other agreement (including any master agreement and any agreement relating to
any single transaction) that is an interest rate swap agreement or equivalent
interest rate risk management agreement, basis swap, forward rate agreement,
interest rate option, rate cap, collar or floor agreement or any other, similar
agreement, including all schedules thereto, confirmations of transactions
thereunder, and documents, definitions, and agreements incorporated therein by
reference or relating thereto and including, without limitation, any interest
due thereon, all fees, costs, and expenses incurred by Bank of America in
connection therewith, and termination payments and indemnifications relating
thereto;

            (c) all indebtedness, liabilities and obligations of Borrower to
Bank of America or any affiliate of Bank of America now or hereafter existing,
whether joint or several, direct or indirect, absolute or contingent or due or
to become due, arising under or in connection with any agreement (including any
master agreement and any agreement relating to any single transaction) that is a
foreign currency exchange agreement or equivalent forward currency agreement,
currency swap, cross-currency rate swap or currency option agreement or any
other, similar agreement, including all schedules thereto, confirmations of
transactions thereunder, and documents, definitions, and agreements incorporated
therein by reference or relating thereto and including, without limitation, any
interest due thereon, all fees, costs, and expenses incurred by Bank of America
in connection therewith, and termination payments and indemnifications relating
thereto;

            (d) all indebtedness, liabilities and obligations of Borrower or any
Subsidiary to Bank of America or any affiliate of Bank of America now or
hereafter existing, whether joint or several, direct or indirect, absolute or
contingent or due or to become due, arising under or in connection with any
agreement (including all schedules thereto, confirmations of transactions
thereunder, and documents, definitions, and agreements incorporated therein by
reference or relating thereto) pursuant to which Bank of America has agreed to
permit daylight overdrafts to

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occur on accounts maintained by Borrower or any Subsidiary with Bank of America,
provide remote disbursement services for Borrower or any Subsidiary, process
automated clearing house (ACH) transactions for the account of Borrower or
extend credit to Borrower or any Subsidiary , in the form of credit card
accounts, including, without limitation, any interest due thereon, all fees,
costs, and expenses incurred by Bank of America in connection therewith, and
termination payments and indemnifications relating thereto; and

            (e) all accrued interest on any of the foregoing indebtedness,
liabilities and obligations, whether accruing prior to or subsequent to the
commencement of a bankruptcy or similar proceeding.

        Without limiting the foregoing, Guarantor specifically guarantees
payment of any judgment entered against Borrower and any damages that may be
awarded in any action brought against Borrower by Agent or any Lender. This
Guaranty is a guaranty of payment and not merely of collection.

        4. GUARANTOR'S CONSENT. Guarantor hereby consents that Agent and Lenders
may without further consent or disclosure and without affecting or releasing the
obligations of Guarantor hereunder: (a) waive or delay the exercise of any
rights or remedies of Agent or Lenders against Borrower; or (b) renew, extend,
waive or modify the terms of any Obligation or the obligations of any surety or
guarantor, or any instrument or agreement evidencing the same.

        5. GUARANTOR'S WAIVER. Guarantor waives any right to require Agent or
any Lender to take any action on delinquency in respect of the Obligations or
any part thereof, including any right to require Agent or any Lender to sue
Borrower. Guarantor further waives notice of (a) any default by Borrower; (b)
any change in Borrower's business or financial condition; (c) any renewal,
extension or modification of the terms of any Obligation or any instruments or
agreements evidencing the same; and (d) any other demands or notices whatsoever
with respect to the Obligations or this Guaranty. Guarantor further waives
notice of presentment, demand, protest, notice of nonpayment and notice of
protest in relation to any instrument or agreement evidencing any Obligation.

        6. UNCONDITIONAL GUARANTY. The obligations of Guarantor under this
Guaranty are absolute and unconditional without regard to the obligations of any
other party or person. The obligations of Guarantor hereunder shall not be in
any way limited or effected by any circumstance whatsoever including, without
limitation: (a) any failure by Borrower to perform or comply with the
Obligations or the terms of any instrument or agreement relating thereto; (b)
any change in the name, purpose, capital stock or constitution of Borrower or
any other guarantor or surety; (c) any irregularity, defect or unauthorized
action by Agent, any Lender, Borrower or any of their respective officers,
directors or other agents in executing and delivering any instrument or
agreements relating to the Obligations or in carrying out or attempting to carry
out the terms of any such agreements; (d) any insolvency, bankruptcy,
reorganization or similar proceeding by or against Borrower, Agent, any Lender
or Guarantor; (e) any setoff, counterclaim, recoupment, deduction, defense or
other right which Guarantor may have against Agent or any Lender, Borrower or
any other person for any reason whatsoever whether related to the Obligations or
otherwise; or (f) any other circumstance which might constitute a legal or
equitable discharge or defense, in whole or in part, of a surety or guarantor.
Guarantor hereby waives all defenses of a surety to which it may be entitled by
statute or otherwise.

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        7. WAIVER OF SUBROGATION. If now or hereafter Borrower shall be or
become insolvent, then Guarantor waives and relinquishes any claim or right to
payment Guarantor has or may acquire against Borrower in respect of the
Obligations, by subrogation or otherwise, so that Guarantor shall not become a
"creditor" of Borrower within the meaning of 11 U.S.C. 547(b).

        8. CONCERNING ADVANCES AND LOANS. Guarantor agrees that any loan or
advance from Borrower or any Subsidiary to Guarantor shall result in a fully
enforceable obligation of Guarantor to repay the amount of such loan or advance
and Guarantor acknowledges that Borrower and the Subsidiaries are prohibited by
the Loan Agreement from forgiving Guarantor's repayment obligation for any such
loan or advance.

        9. LENDERS' REMEDIES. No delay in making demand on Guarantor for
satisfaction of the obligations of Guarantor hereunder shall prejudice Agent's
or any Lender's right to enforce such satisfaction. All of Agent's and Lenders'
rights and remedies shall be cumulative, and any failure of Agent or any Lender
to exercise any right hereunder shall not be construed as a waiver of the right
to exercise the same or any other right at any time and from time to time
hereafter.

        10. GOVERNING LAW. This Guaranty shall be governed by and construed in
accordance with the laws of the State of Washington (excluding its conflict of
laws rules).

        11. CONSENT TO JURISDICTION, WAIVER OF IMMUNITIES. Guarantor hereby
irrevocably submits to the jurisdiction of any State or federal court sitting in
Seattle, King County, Washington, in any action or proceeding brought to enforce
or otherwise arising out of or relating to this Guaranty and agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in any other jurisdiction by suit on the judgment or in any other
manner provided by law. Nothing herein shall impair the right of any party to
bring any action or proceeding hereunder in the courts of any other
jurisdiction.

        12. ASSIGNMENT. The provisions of this Guaranty shall be binding upon
and inure to the benefit of the parties hereto and their respective Successors
and assigns, except that Guarantor may not assign or otherwise transfer any of
its rights or obligations under this Guaranty without the prior written consent
of all Lenders.

        13. SEVERABILITY. Any provision of this Guaranty which is prohibited or
unenforceable in any jurisdiction shall as to such jurisdiction be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.

        IN WITNESS WHEREOF, Guarantor has caused its duly authorized officers to
execute and deliver this Guaranty as of the date first above written.

        GUARANTOR:              SPACELABS MEDICAL, INC., a Delaware corporation

                                By
                                   Its

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                                                                   EXHIBIT 10.46

Return Address:
DAVIS WRIGHT TREMAINE LLP
2600 Century Square
1501 Fourth Avenue
Seattle, Washington
Attn:  Ward E. Buringrud

<TABLE>
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<S>                                                                           <C>
Please print or type information WASHINGTON STATE RECORDER'S Cover Sheet (RCW 65.01)
-----------------------------------------------------------------------------------------------
DOCUMENT TITLE(S) (or transactions contained therein: (all areas applicable to
your document MUST be filled in)

1.  Deed of Trust
2.  Security Agreement
3.  Fixture Filing
4.  Assignment of Leases and Rents
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REFERENCE NUMBER(S) OF DOCUMENTS ASSIGNED OR RELEASED:

Additional reference #'s on page ________ of document
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GRANTOR(S) (Last name first, then first name and initials)
1.  Spacelabs Medical, Inc., formerly known as Spacelabs, Inc., a California corporation
2. Spacelabs Medical, Inc., a Delaware corporation
3.
4.
[ ] Additional names on page ________ of document.
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GRANTEE(S) (Last name first, then first name and initials)
1. Bank of America, N.A., a national banking association, as agent
2.
3.
4.
[ ] Additional names on page _______ of document.
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LEGAL DESCRIPTION (abbreviated: i.e. lot, block, plat or section, township, range)

Pnt of the SW 1/4 SW 1/4 and SE 1/4 SW 1/4 of Sec. 14, Twn 25 N, Rg 5 E

[ ] Additional legal is on page _______ of document.
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ASSESSOR'S PROPERTY TAX PARCEL/ACCOUNT NUMBER

142505-9014-05
142505-9100-00
142505-9054-06
142505-9010-09

[ ] Assessor Tax # not yet assigned
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The Auditor/Recorder will rely on the information provided on the form.  The staff will not
read the document to verify the accuracy or completeness of the indexing information provided
herein.
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</TABLE>

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

        THIS DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING WITH
ASSIGNMENT OF LEASES AND RENTS (this "Deed of Trust") is made as of August 11,
2000 by SPACELABS MEDICAL, INC., formerly known as Spacelabs, Inc., a California
corporation (the "Borrower") and SPACELABS MEDICAL, INC., a Delaware corporation
(the "Guarantor" and together with Borrower, the "Grantors" and each a
"Grantor"), each of whose address is 15220 N.E. 40th Street, P.O. Box 97013,
Redmond, WA 98073-9713; to PRLAP, Inc., (the "Trustee") whose address is
WA1-501-19-36, 800 Fifth Avenue, Floor 19, Seattle, WA 98104 (the "Trustee"),
for the benefit of BANK OF AMERICA, N.A., a national banking association, as
agent (in such capacity, together with any successors or assigns in such
capacity, the "Beneficiary") for the benefit of BANK OF AMERICA, N.A., a
national banking association ("Bank of America"), and U.S. BANK NATIONAL
ASSOCIATION, a national banking association (each a "Lender" and collectively
the "Lenders"), whose address is WA1-102-16-20, 701 Fifth Avenue, Floor 16,
Seattle, WA 98104.

                                    RECITALS

        A. Grantors, Lenders and Beneficiary are parties to that certain Amended
and Restated Loan Agreement dated as of July 16, 1997 (as amended, restated,
supplemented or otherwise modified, the "Existing Agreement"), pursuant to which
Lenders have made loans to Borrower.

        B. Grantors, Lenders and Beneficiary are parties to that certain Amended
and Restated Loan Agreement dated as of August 11, 2000 (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the
"Loan Agreement") pursuant to which Grantors, Lenders and Beneficiary have
agreed to amend and restate the Existing Agreement in its entirety, Lenders have
agreed to continue existing loans and to make additional loans to Borrower
thereunder in the maximum principal amount of Ninety Million Dollars
($90,000,000).

        C. In connection with the Loan Agreement, Guarantor entered into that
certain Amended and Restated Guaranty Agreement dated as of August 11, 2000 (as
the same may be amended, restated, supplemented or otherwise modified from time
to time, the "Guaranty Agreement"), pursuant to which Guarantor guaranteed the
indebtedness, liabilities and obligations of Borrower arising under the Loan
Agreement.

        D. Pursuant to the terms of the Loan Agreement, the execution and
delivery of this Deed of Trust is a material condition precedent to the
agreement of Lenders to continue to
<PAGE>   3

make loans to Borrower under the Loan Agreement.

        NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration receipt of which Grantors hereby acknowledge,
Grantors agree as follows:

                                    ARTICLE 1

        1. GRANTING CLAUSE. Grantors irrevocably grant, bargain, sell and convey
to Trustee and its successors and assigns in trust, with power of sale and with
right of entry and possession as provided herein, all Grantors' estate, right,
title, interest, claim and demand, now owned or hereafter acquired, including
leaseholds, in and to the following (collectively, the "Property"):

            (a) the real property in King County, State of Washington, described
in Schedule A attached and any and all improvements now or hereafter located
thereon (the "Real Property");

            (b) all land lying in streets and roads adjoining the Real Property,
and all access rights and easements pertaining to the Real Property;

            (c) all the lands, tenements, privileges, reversions, remainders,
irrigation and water rights and stock, oil and gas rights, royalties, minerals
and mineral rights, all development rights and credits, air rights,
hereditaments and appurtenances belonging or in any way pertaining to the Real
Property;

            (d) all buildings, structures, improvements, fixtures, equipment and
machinery and property now or hereafter attached to or used in connection with
the use, occupancy or operation of the Real Property including, but not limited
to, heating and incinerating apparatus and equipment, boilers, engines, motors,
generating equipment, telephone and other communication systems, piping and
plumbing fixtures, ranges, cooking apparatus and mechanical kitchen equipment,
refrigerators, cooling, ventilating, sprinkling and vacuum cleaning systems,
fire extinguishing apparatus, gas and electric fixtures, irrigation equipment,
carpeting, underpadding, elevators, escalators, partitions, mantles, built-in
mirrors, window shades, blinds, screens, storm sash, awnings, furnishings of
public spaces, halls and lobbies, and shrubbery and plants. All property
mentioned in this subsection (d) shall be deemed part of the realty and not
severable wholly or in part without material injury to the Real Property;

            (e) all rents, issues and profits of the Real Property, all existing
and future leases of the Real Property (including extensions, renewals and
subleases), all agreements for use and occupancy of the Real Property (all such
leases and agreements whether written or oral, are hereafter referred to as the
"Leases"), and all guaranties of lessees' performance under the Leases, together
with the immediate and continuing right to collect and receive all of the rents,
income, receipts, revenues, issues, profits and other income of any nature now
or hereafter due (including any income of any nature coming due during any
redemption period)

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under the Leases or from or arising out of the Real Property including minimum
rents, additional rents, percentage rents, parking or common area maintenance
contributions, tax and insurance contributions, deficiency rents, liquidated
damages following default in any Lease, all proceeds payable under any policy of
insurance covering loss of rents resulting from untenantability caused by
destruction or damage to the Real Property, all proceeds payable as a result of
exercise of an option to purchase the Real Property, all proceeds derived from
the termination or rejection of any Lease in a bankruptcy or other insolvency
proceeding, all security deposits or other deposits for the performance of any
lessee's obligations under the Leases, and all proceeds from any rights and
claims of any kind which Grantors (or either of them) may have against any
lessee under the Leases or any occupants of the Real Property (all of the above
are hereafter collectively referred to as the "Rents"). This subsection (e) is
subject to the right, power and authority given to the Beneficiary in the Loan
Documents (as defined below) to collect and apply the Rents; and

            (f) all of Grantor's rights to further encumber said Real Property
for debt and all Grantor's rights to enter into any lease agreement which would
create a tenancy that is or may become subordinate in any respect to any
mortgage or deed of trust other than this Deed of Trust.

        2. COLLATERAL. The following described estate, property and rights of
Grantors are also included as security for the performance of each covenant and
agreement of Grantors contained herein and the payment of all sums of money
secured hereby:

            (a) all furniture, furnishings, appliances, machinery, vehicles,
equipment and all other property of any kind now or hereafter located on the
Property, used or intended to be used on the Property wherever actually located,
and all rights of Grantors (or either of them) as lessee of any property
described in this Section 2 and subsection 1(d) above;

            (b) all compensation, awards, damages, rights of action and proceeds
(including insurance proceeds and any interest on any of the foregoing) arising
out of or relating to a taking or damaging of the Property by reason of any
public or private improvement, condemnation proceeding (including change of
grade), fire, earthquake or other casualty, injury or decrease in the value of
the Property;

            (c) all returned premiums or other payments on any insurance
policies pertaining to the Property and any refunds or rebates of taxes or
assessments on the Property;

            (d) all rights to the payment of money, accounts receivable,
deferred payments, refunds, cost savings, payments and deposits, whether now or
later to be received from third parties (including all utility deposits),
architectural and engineering plans, specifications and drawings, contract
rights, governmental permits and licenses, and agreements and purchase orders
which pertain to or are incidental to the design or construction of any
improvements on the Property, Grantors' rights under any payment, performance,
or other bond in connection with construction of improvements on the Property,
and all construction materials, supplies, and equipment delivered to the
Property or intended to be used in connection with the

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construction of improvements on the Property wherever actually located;

            (e) all contracts and agreements pertaining to or affecting the
Property including, but not limited to, leases creating Grantors' leasehold
interest in the Real Property, if any, management, operating and franchise
agreements, licenses, trade names and trademarks;

            (f) all books and records pertaining to any and all of the Property
and the other collateral described above, including computer readable memory and
any computer hardware or software necessary to access and process such memory;
and

            (g) all additions, accessions, replacements, substitutions, proceeds
and products of the Property described in this Section 2 and of any of the
Property which is personal property.

        The Property and all of the property and rights described in Sections 1
and 2 above are referred to collectively in this Deed of Trust as the
"Collateral".

        3. SECURITY AGREEMENT. If any of the Collateral is determined to be
personal property, Grantors as debtor hereby grants to Beneficiary as secured
party a security interest in all such personal property to secure payment and
performance of the Secured Obligations. This Deed of Trust constitutes a
security agreement between Grantors and Beneficiary pursuant to the Uniform
Commercial Code as adopted in the State of Washington, as now or hereafter
amended, with respect to the Collateral, and any and all property affecting or
related to the use and enjoyment of the Real Property, now or hereafter
described in any Uniform Commercial Code financing statement naming Grantors (or
either of them) as debtor and Beneficiary as secured party. The remedies of
Beneficiary for any violation of the covenants, terms and conditions of this
Deed of Trust or any other Loan Document (as defined below) shall include all
remedies available to secured parties under the Uniform Commercial Code.
Grantors agree that the filing of a financing statement in the records normally
having to do with personal property shall not be construed as in anywise
derogating from or impairing the intention of Grantors and Beneficiary that
everything used in connection with the production of income from the Property
that is the subject of this Deed of Trust and/or adapted for use therein and/or
which is described or reflected in this Deed of Trust is, and at all times and
for all purposes and in all proceedings both legal or equitable shall be,
regarded as part of the real estate irrespective of whether (i) any such item is
physically attached to the improvements, (ii) serial numbers are used for the
better identification of certain equipment items capable of being thus
identified in any list filed with the Beneficiary, or (iii) any such item is
referred to or reflected in any such financing statement so filed at any time.

        4. FINANCING STATEMENT. This Deed of Trust shall also constitute a
financing statement filed for record in the real estate records as a fixture
filing pursuant to the Uniform Commercial Code. This Deed of Trust may be given
to secure an obligation incurred for the construction of improvements on the
Property, including the acquisition of the Property, or to secure an obligation
incurred to refinance an obligation incurred for the construction of

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<PAGE>   6

improvements on the Property, including the acquisition of the Property.

        5. OBLIGATIONS SECURED. This Deed of Trust secures the full and timely
payment and performance of the following indebtedness, liabilities and
obligations (collectively, the "Secured Obligations"):

            (a) all indebtedness, liabilities and obligations of Borrower to
Lenders and Beneficiary (or any of them) now or hereafter existing, whether
joint or several, direct or indirect, absolute or contingent or due or to become
due, howsoever evidenced, created, incurred or owing and whether or not
evidenced by promissory notes or other evidences of indebtedness, and all
modifications, renewals, extensions and rearrangements thereof and substitutions
and replacements therefor arising under or in connection with the Loan Agreement
and the other Loan Documents or any of the transactions contemplated thereby;

            (b) all indebtedness, liabilities and obligations of Borrower to
Bank of America or any affiliate of Bank of America now or hereafter existing,
whether joint or several, direct or indirect, absolute or contingent or due or
to become due, arising under or in connection with any agreement (including any
master agreement and any agreement relating to any single transaction) that is
an interest rate swap agreement or equivalent interest rate risk management
agreement, basis swap, forward rate agreement, interest rate option, rate cap,
collar or floor agreement or any other, similar agreement, including all
schedules thereto, confirmations of transactions thereunder, and documents,
definitions, and agreements incorporated therein by reference or relating
thereto and including, without limitation, any interest due thereon, all fees,
costs, and expenses incurred by Bank of America in connection therewith, and
termination payments and indemnifications relating thereto;

            (c) all indebtedness, liabilities and obligations of Borrower to
Bank of America or any affiliate of Bank of America now or hereafter existing,
whether joint or several, direct or indirect, absolute or contingent or due or
to become due, arising under or in connection with any agreement (including any
master agreement and any agreement relating to any single transaction) that is a
foreign currency exchange agreement or equivalent forward currency agreement,
currency swap, cross-currency rate swap or currency option agreement or any
other, similar agreement, including all schedules thereto, confirmations of
transactions thereunder, and documents, definitions, and agreements incorporated
therein by reference or relating thereto and including, without limitation, any
interest due thereon, all fees, costs, and expenses incurred by Bank of America
in connection therewith, and termination payments and indemnifications relating
thereto;

            (d) all indebtedness, liabilities and obligations of Borrower to
Bank of America or any affiliate of Bank of America now or hereafter existing,
whether joint or several, direct or indirect, absolute or contingent or due or
to become due, arising under or in connection with any agreement (including all
schedules thereto, confirmations of transactions thereunder, and documents,
definitions, and agreements incorporated therein by reference or relating
thereto) pursuant to which Bank of America has agreed to permit daylight
overdrafts to occur on accounts maintained by Borrower with Bank of America,
provide remote disbursement

                                       6
<PAGE>   7

services for Borrower, process automated clearing house (ACH) transactions for
the account of Borrower or extend credit to Borrower, in the form of credit card
accounts, including, without limitation, any interest due thereon, all fees,
costs, and expenses incurred by Bank of America in connection therewith, and
termination payments and indemnifications relating thereto;

            (e) all indebtedness, liabilities and obligations of Grantors (or
either of them) to Lenders and Beneficiary (or any of them) now or hereafter
existing, whether joint or several, direct or indirect, absolute or contingent
or due or to become due, howsoever evidenced, created, incurred or owing and
whether or not evidenced by promissory notes or other evidences of indebtedness,
and all modifications, renewals, extensions and rearrangements thereof and
substitutions and replacements therefor, arising under or in connection with
this Deed of Trust and the other Loan Documents; and

            (f) all accrued interest on any of the foregoing indebtedness,
liabilities and obligations, whether accruing prior to or subsequent to the
commencement of a bankruptcy or similar proceeding.

        Notwithstanding any of the foregoing, the Secured Obligations shall not
include (i) the obligations of Guarantor under the Guaranty Agreement, (ii) the
obligations of either Grantor under any Certificate and Indemnity Agreement
Regarding Building Laws and Hazardous Substances now or hereafter executed by
Grantors (or any other person or entity) in connection with the Loan Agreement
or (iii) any obligations under this Deed of Trust or any Loan Document that are
substantially equivalent to the obligations arising under any such Certificate
and Indemnity Agreement.

        As used herein, the term "Loan Documents" shall mean and include the
Loan Agreement and any other document executed by either Grantor evidencing,
securing or guaranteeing the indebtedness and obligations arising under the Loan
Agreement, including without limitation any deed of trust (including this Deed
of Trust), mortgage, pledge, assignment, security agreement or other security
document executed by either Grantor or any of its respective direct or indirect
subsidiaries in favor of Beneficiary to secure any obligation arising under
either Loan Agreement or under any related agreement, document, certificate or
instrument executed in connection therewith, as any thereof may be amended,
restated, supplemented or otherwise modified from time to time, excluding,
however, any Certificate and Indemnity Agreement Regarding Building Laws and
Hazardous Substances now or hereafter executed by either Grantor (or any other
person or entity) in connection with the Loan Agreement.

                                    ARTICLE 2

        1. ASSIGNMENT OF RENTS AND LEASES. Grantors hereby absolutely and
irrevocably assign to Beneficiary all Grantors' interest in the Rents and
Leases. The foregoing assignment is subject to the terms and conditions of any
separate assignment of the Leases and/or Rents, whenever executed, in favor of
Beneficiary and covering the Property. Grantors warrant

                                       7
<PAGE>   8

neither Grantor has made any prior assignment of the Rents or the Leases and
that neither will make any subsequent assignment (other than to Beneficiary)
without the prior written consent of Beneficiary. At Beneficiary's request,
Grantors shall execute and deliver to Beneficiary a separate assignment of rents
containing such terms and conditions as Beneficiary may reasonably require.

            (a) Unless otherwise provided in any separate assignment of the
Leases and/or the Rents, so long as no Event of Default (as defined below) shall
have occurred, Grantors may collect the Rents as the Rents become due. Grantors
shall use the Rents to pay normal operating expenses for the Property and sums
due and payments required under the Loan Documents. No Rents shall be collected
for a period subsequent to the current one month rental period and first or last
month's rent. Grantors' right to collect the Rents shall not constitute
Beneficiary's consent to the use of cash collateral in any bankruptcy
proceeding.

            (b) If an Event of Default shall occur, without notice to either
Grantor, Beneficiary or its agents, or a court appointed receiver (and Grantors
each hereby irrevocably consents to appointment of such a receiver), may collect
the Rents. In doing so, Beneficiary may (i) evict lessees for nonpayment of
rent, (ii) terminate in any lawful manner any tenancy or occupancy, (iii) lease
the Property in the name of the then owner on such terms as it may deem best,
(iv) institute proceedings against any lessee for past due rent, and (v) do all
other acts and things as Beneficiary deems necessary or desirable. The Rents
received shall be applied to payment of the costs and expenses of collecting the
Rents, including a reasonable fee to Beneficiary, a receiver or an agent,
operating expenses for the Property and any sums due or payments required under
the Loan Documents, in such order as Beneficiary may determine. Any excess shall
be paid to Grantors, however, Beneficiary may withhold from any excess a
reasonable amount to pay sums anticipated to become due which exceed the
anticipated future Rents. Beneficiary's failure to collect or discontinuing
collection at any time shall not in any manner affect the subsequent enforcement
by Beneficiary of its rights to collect the Rents. The collection of the Rents
by or for Beneficiary shall not cure or waive any Event of Default. Any Rents
paid to Beneficiary or a receiver shall be credited against the amount due from
the lessees under the Leases. In the event any lessee under a Lease becomes the
subject of any proceeding under the Bankruptcy Code or any other federal, state
or local statute which provides for the possible termination or rejection of any
Lease assigned hereby, Grantors covenant and agree that in the event any of the
Leases are so rejected, no damages settlement shall be made without the prior
written consent of Beneficiary; any check in payment of damages for rejection or
termination of any such Lease will be made payable both to the Grantors and
Beneficiary; and Grantors each hereby assigns any such payment to Beneficiary
and further covenant and agree that upon request of Beneficiary, they will duly
endorse to the order of Beneficiary any such check, the proceeds of which will
be applied to any portion of the indebtedness secured hereunder in such manner
as Beneficiary may elect.

            (c) Regardless of whether or not Beneficiary, in person or by agent,
takes actual possession of the Property or any part thereof, Beneficiary is not
and shall not be deemed to be: (i) "a mortgagee in possession" for any purpose;
(ii) responsible for performing any of the obligations of the lessor under any
Lease; (iii) responsible for any waste committed

                                       8
<PAGE>   9

by lessees or any other parties, any dangerous or defective condition of the
Property, or any negligence in the management, upkeep, repair or control of the
Property; or (iv) liable in any manner for the Property or the use, occupancy,
enjoyment or operation of all or any part of it. In exercising its rights under
this Section 1 Beneficiary shall be liable only for the proper application of
and accounting for the Rents collected by Beneficiary or its agents.

        2. LEASES. Grantors shall fully comply with all of the terms, conditions
and provisions of the Leases so that the same shall not become in default and do
all things necessary to preserve the Leases in force. Unless otherwise agreed in
writing by Beneficiary, without Beneficiary's prior written consent, Grantors
will not enter into any Lease (i) on a form of Lease not previously approved by
Beneficiary, (ii) for a term of three (3) years or more, or (iii) containing an
option or right to purchase all or any part of the Collateral in favor of any
lessee. With respect to any Lease of the whole or any part of the Property
involving an initial term of three (3) years or more, Grantors shall not,
without the prior written consent of Beneficiary, (a) permit the assignment or
subletting of all or part of the lessee's rights under the Lease unless the
right to assign or sublet is expressly reserved by the lessee under the Lease,
(b) modify or amend the Lease for a lesser rental or term, or (c) accept
surrender of the Lease or terminate the Lease except in accordance with the
terms of the Lease providing for termination in the event of a default. Any
proceeds or damages resulting from a lessee's default under any Lease, at
Beneficiary's option, shall be paid to Beneficiary and applied against sums owed
under the Loan Documents even though such sums may not be due and payable.
Except for real estate taxes and assessments, without Beneficiary's prior
written consent, Grantors shall not permit any lien to be created against the
Property which may be or may become prior to any Lease. If the Property is
partially condemned or suffers a casualty, Grantors shall promptly repair and
restore the Property in order to comply with the Leases.

                                    ARTICLE 3

        1. NON-AGRICULTURAL USE. Grantors represent and warrant to Beneficiary
that neither the Property nor any other Collateral is used principally for
agricultural purposes.

        2. PERFORMANCE OF OBLIGATIONS. Grantors shall promptly and timely pay
all sums due pursuant to the Loan Agreement and any other Loan Document,
strictly comply with all the terms and conditions of each Loan Document, and
perform each Secured Obligation in accordance with its terms.

        3. WARRANTY OF TITLE. Grantors warrant that it has good and marketable
title to an indefeasible fee simple estate in the Property (unless Grantors'
present interest in the Property is described in Schedule A as a leasehold
interest, in which case Grantors warrant that they lawfully possesses and hold a
valid leasehold interest in the Property as described in Schedule A), and good
marketable title to the personal property Collateral, subject to no liens,
encumbrances, easements, assessments, security interests, claims or defects of
any kind prior or subordinate to the lien of this Deed of Trust, except those
listed in Beneficiary's title insurance policy or approved by Beneficiary in
writing (the "Exceptions") and real estate taxes and assessments for the current
year. Grantors warrant the Exceptions and the real estate

                                       9
<PAGE>   10

taxes and assessments are not delinquent or in default, and Grantors have the
right to convey the Property to Trustee for the benefit of Beneficiary, and the
right to grant a security interest in the personal property Collateral. Grantors
will warrant and defend title to the Collateral and will defend the validity and
priority of the lien of this Deed of Trust and the security interests granted
herein against any claims or demands.

        4. PROHIBITED LIENS.

            (a) Subject to Grantors' rights under subsection (b) below, Grantors
shall not permit any governmental or statutory liens (including taxes,
mechanic's or materialmen's liens) to be filed against the Collateral except for
real estate taxes and assessments not yet due and liens permitted by the Loan
Agreements or approved by Beneficiary in writing.

            (b) Grantors will have the right to contest in good faith by
appropriate legal or administrative proceeding the validity of any prohibited
lien, encumbrance or charge so long as (i) no Event of Default has occurred and
is continuing, (ii) Grantors first deposit with Beneficiary a bond or other
security satisfactory to Beneficiary in the amount reasonably required by
Beneficiary; (iii) Grantors immediately commence their contest of such lien,
encumbrance or charge, and continuously pursues the contest in good faith and
with due diligence; (iv) foreclosure of the lien, encumbrance or charge is
stayed; and (v) Grantors pay any judgment rendered for the lien claimant or
other third party within ten (10) days after the entry of the judgment. If the
contested item is a mechanic's or materialmen's lien, Grantors will furnish
Beneficiary with an endorsement to its title insurance policy which insures the
priority of this Deed of Trust over the lien being contested. Grantors will
discharge or elect to contest and post an appropriate bond or other security
within twenty (20) days of written demand by Beneficiary.

        5. PAYMENT OF TAXES AND OTHER ENCUMBRANCES. Grantors shall pay the real
estate taxes and any assessments or ground rents at least seven (7) days prior
to delinquency unless otherwise provided for in the reserve account described in
Section 15 below. All other encumbrances, charges and liens affecting the
Collateral, including mortgages and deeds of trust, whether prior to or
subordinate to the lien of this Deed of Trust, shall be paid when due and shall
not be in default. On request Grantors shall furnish evidence of payment of
these items.

        6. MAINTENANCE; NO WASTE. Grantors shall protect and preserve the
Collateral and maintain it in good condition and repair. Grantors shall do all
acts and take all precautions which, from the character and use of the
Collateral, are reasonable, proper or necessary to so maintain, protect and
preserve the Collateral. Grantors shall not commit or permit any waste of the
Collateral.

        7. ALTERATIONS, REMOVAL AND DEMOLITION. Unless otherwise agreed in
writing by Beneficiary, Grantors shall not structurally alter, remove or
demolish any building or improvement on the Property without Beneficiary's prior
written consent. Grantors shall not remove any fixture or other item of property
which is part of the Collateral without

                                       10
<PAGE>   11

Beneficiary's prior written consent unless the fixture or item of property is
replaced by an article of equal suitability, owned by Grantors (or either of
them) free and clear of any lien or security interest.

        8. COMPLETION, REPAIR AND RESTORATION. Grantors shall promptly complete
or repair and restore in good workmanlike manner any building or improvement on
the Property which may be constructed or damaged or destroyed and shall pay all
costs incurred therefor. Prior to commencement of any construction Grantors
shall submit the plans and specifications for Beneficiary's approval and furnish
evidence of sufficient funds to complete the work.

        9. COMPLIANCE WITH LAWS. Grantors shall comply with all laws,
ordinances, regulations, covenants, conditions, and restrictions affecting the
Collateral, including, without limitation, all applicable requirements of the
Fair Housing Act of 1968 (as amended from time to time) and the Americans With
Disabilities Act of 1990 (as amended from time to time), and shall not commit or
permit any act upon or concerning the Collateral in violation of any such laws,
ordinances, regulations, covenants, conditions, and restrictions. Grantors shall
defend, indemnify and hold Beneficiary harmless from and against all liability
threatened against or suffered by Beneficiary by reason of a breach by Grantors
(or either of them) of the foregoing representations, warranties, covenants and
agreements. The foregoing indemnity shall include the cost of all alterations to
the Collateral (including architectural, engineering, legal and accounting
costs), all fines, fees and penalties, and all legal and other expenses
(including attorneys' fees) incurred in connection with the Property being in
violation of any such laws, ordinances, regulations, covenants, conditions and
restrictions. If Beneficiary or its designee shall become the owner of or
acquire an interest in or rights to the Collateral by foreclosure or deed in
lieu of foreclosure of this Deed of Trust or by other means, the foregoing
indemnification obligation shall survive such foreclosure or deed in lieu of
foreclosure or other acquisition of the Collateral. Notwithstanding the
preceding sentence, neither Grantor shall have no obligation to defend,
indemnify or hold Beneficiary harmless from any liability arising from or out of
the activities of Beneficiary or its agents with respect to the Collateral on or
after the transfer of the Collateral to Beneficiary pursuant to foreclosure
proceedings or in lieu thereof.

        10. IMPAIRMENT OF COLLATERAL. Grantors shall not, without Beneficiary's
prior written consent, change the present use or the intended use of the
Property, change the general nature of the occupancy of the Property, initiate,
acquire or permit any change in any public or private restrictions (including
without limitation a zoning reclassification) limiting the uses which may be
made of the Collateral, or take or permit any action which would impair the
Collateral or Beneficiary's lien or security interest in the Collateral.

        11. INSPECTION OF COLLATERAL. Beneficiary, any Lender and/or their
respective representatives may enter on to and inspect the Collateral (including
taking and removing soil, groundwater and other samples) at reasonable times
after reasonable notice. If any of the Collateral is in the possession of a
third party, Grantors authorize the third party to permit Beneficiary and/or its
representatives to have access to and perform inspections of the Collateral and
to respond fully and freely to Beneficiary's and/or its representatives requests

                                       11
<PAGE>   12

for information concerning the Collateral. Grantors agree that Beneficiary
neither has nor undertakes any duty or obligation to examine or inspect the
Collateral or any records, books or papers relating thereto. In the event that
Beneficiary or any Lender inspects the Collateral or examines, audits or copies
any records, books or papers relating thereto, the Beneficiary or such Lender
will be acting solely for the purposes of protecting the Beneficiary's security
and Beneficiary's or such Lender's rights under this Deed of Trust and the other
Loan Documents. Neither Grantors nor any other party is entitled to rely on any
inspection or other inquiry by Beneficiary and/or its representatives. Neither
Beneficiary nor its representatives owes a duty of care to protect Grantors or
any other party against, or to inform Grantors or any other party of, any
adverse condition that may be observed or discovered as affecting the Collateral
or Grantors' or such third party's business. If Beneficiary, any Lender and/or
their respective representatives believes it has a duty or obligation to
disclose any report or findings made as a result of, or in connection with any
inspection of the Collateral, then Beneficiary, such Lender and/or its
representative may make such disclosure. Any failure by Grantors or a third
party to permit Beneficiary to exercise its rights herein, following five (5)
days written demand from Beneficiary or any Lender, shall entitle Beneficiary or
such Lender without further notice to Grantors to make ex parte application to
the court of applicable jurisdiction where the Collateral that Beneficiary or
such Lender seeks to inspect is located for immediate issuance of any order,
without bond, granting specific performance of Beneficiary's or such Lender's
rights to enter on and inspect the Collateral.

        12. GRANTORS' DEFENSE OF COLLATERAL. Grantors shall appear in and defend
any action or proceeding which may affect the Collateral or the rights or powers
of Beneficiary or Trustee under this Deed of Trust.

        13. BENEFICIARY'S RIGHT TO PROTECT COLLATERAL. Beneficiary may commence,
appear in, and defend any action or proceeding which may affect the Collateral
or the rights or powers of Beneficiary or Trustee under this Deed of Trust.
Beneficiary may pay, purchase, contest or compromise any encumbrance, charge or
lien not listed as an Exception which in its judgment appears to be prior or
superior to the lien of this Deed of Trust. If Grantors fail to make any payment
or do any act required under any Loan Document (including this Deed of Trust),
Beneficiary, without any obligation to do so and without releasing Grantors (or
either of them) from any obligations under any Loan Document, may make the
payment or cause the act to be performed in such manner and to such extent as
Beneficiary may deem necessary to protect the Collateral. Beneficiary is
authorized to enter upon the Property for such purposes. In exercising any of
these powers Beneficiary may incur such expenses, in its absolute discretion, it
deems necessary.

        14. HAZARDOUS SUBSTANCES.

            (a) Grantors represent and warrant to Beneficiary, to the best of
Grantors' knowledge after due and diligent inquiry, except as previously
disclosed to Beneficiary in writing, no hazardous or toxic waste or substances
are being stored on the Property or any adjacent property nor have any such
waste or substances been stored or used in, on, under, over or about the
Property or any adjacent property prior to or during Grantors' ownership,

                                       12
<PAGE>   13

possession or control of the Property, other than the use or storage of
hazardous or toxic waste or substances generally used in the ordinary course of
operating, maintaining or developing properties such as the Property, all of
which Grantors covenant have and will be used, stored and disposed of in
accordance with commercially reasonable practices and all applicable federal,
state and local laws, regulations and ordinances. Grantors shall provide written
notice to Beneficiary immediately upon Grantors (or either of them) becoming
aware that the Property or any adjacent property is being or has been
contaminated with hazardous or toxic waste or substances. Grantors will not
cause nor permit any activities on the Property which directly or indirectly
could result in the Property or any other property becoming contaminated with
hazardous or toxic waste or substances. For purposes of this Deed of Trust, the
term "hazardous or toxic waste or substances" means any chemical, substance or
material classified or designated as hazardous, toxic or radioactive, or similar
term, and now or hereafter regulated under any applicable federal, state or
local statute, regulation, ordinance or requirement, now or hereafter in effect,
pertaining to environmental protection, contamination or cleanup.

            (b) Grantors shall comply, at Grantors' expense, with all statutes,
regulations and ordinances which apply to Grantors (or either of them) or the
Collateral, and with all orders, decrees or judgments of governmental
authorities or courts having jurisdiction which such Grantor is bound by,
relating to the use, collection storage, treatment, control, removal or cleanup
of hazardous or toxic substances in, on, under, over or about the Property or
in, on, under, over or about any adjacent property that becomes contaminated
with hazardous or toxic substances as a result of construction, operations or
other activities on, or the contamination of, the Property. Beneficiary may, but
is not obligated to, enter upon the Property to inspect it for compliance and to
take such actions and incur such costs and expenses to effect such compliance as
it deems advisable to protect its interest as Beneficiary. Grantor's obligations
under this Section 14 are unconditional and shall not be limited by a
non-recourse or other limitations of liability provided for in this Deed of
Trust or any other Loan Document.

        15. RESERVE ACCOUNT.

            (a) Subject to subsection (d) below, if Beneficiary so requires,
Grantors shall pay to Beneficiary quarterly, a sum, as estimated by Beneficiary,
equal to the ground rents, if any, the real estate taxes and assessments next
due on the Property and the premiums next due on insurance policies required
under any Loan Document, less all sums already paid therefor, divided by the
number of quarters (or portion thereof) to elapse before two (2) months prior to
the date when the ground rents, real estate taxes, assessments and insurance
premiums will become delinquent. The quarterly reserve accounts payments shall
be paid first business day of each calendar quarter and shall be applied by
Beneficiary, at its option, first, to ground rents, real estate taxes,
assessments and insurance premiums, second, to expenditures made pursuant to the
Loan Documents (including this Deed of Trust) and interest thereon and,
thereafter, to the Secured Obligations. Grantors shall promptly deliver to
Beneficiary all bills and notices pertaining to the ground rents, taxes,
assessments and insurance premiums.

                                       13
<PAGE>   14

            (b) The reserve account is solely for the protection of Beneficiary.
Beneficiary shall have no responsibility except to credit properly the sums
actually received by it. No interest will be paid on the funds in the reserve
account and Beneficiary shall have no obligation to deposit the funds in an
interest-bearing account. Upon assignment of this Deed of Trust by Beneficiary,
any funds in the reserve account shall be turned over to the assignee and any
responsibility of Beneficiary with respect thereto shall terminate. Each
transfer of the Property shall automatically transfer to the grantee all rights
of Grantors (and each of them) to any funds in the reserve account.

            (c) If the total of the payments to the reserve exceeds the amount
of payments actually made by Beneficiary, plus such amounts as have been
reasonably accumulated in the reserve account toward payments to become due,
such excess may, at Beneficiary's election, be (i) credited by Beneficiary
against the Secured Obligations, or (ii) refunded to Grantors as their name
appears on the records of Beneficiary. If, however, the reserve account does not
have sufficient funds to make the payments when they become due, Grantors shall
pay to Beneficiary the amount necessary to make up the deficiency within fifteen
(15) days after written notice to Grantors. If this Deed of Trust is foreclosed
or if Beneficiary otherwise acquires the Collateral, Beneficiary shall, at the
time of commencement of the proceedings or at the time the Collateral is
otherwise acquired, apply the remaining funds in the reserve account, less such
sums as will become due during the pendency of the proceedings, against the
Secured Obligations.

            (d) Unless required by the terms of the Loan Agreement, Grantors
shall not be required to pay quarterly reserve account payments so long as no
Event of Default has occurred and is continuing and so long as Grantors remain
in ownership of the Collateral, provided receipted bills evidencing the payment
of all taxes and/or assessments and insurance premiums are exhibited to
Beneficiary within fifteen (15) days after Beneficiary's request therefor. Upon
any change in any of these conditions, Beneficiary may, at its option then or
thereafter exercised, require the payment of reserves pursuant to this Section
15.

        16. REPAYMENT OF BENEFICIARY'S EXPENDITURES. Without limiting any other
provision hereof requiring Grantors to pay Beneficiary's costs and expenses,
Grantors shall pay within ten (10) days after written notice from Beneficiary
all sums expended by Beneficiary and all costs and expenses incurred by
Beneficiary in taking any actions pursuant to any Loan Document to which it is a
party including attorneys' fees, accountants' fees, appraisal and inspection
fees, and the costs for title reports. If any laws or regulations are passed
subsequent to the date of this Deed of Trust which require Beneficiary to incur
out-of-pocket expenses in order to maintain, modify, extend or foreclose this
Deed of Trust, Grantors shall reimburse Beneficiary for such expenses within
fifteen (15) days after written notice from Beneficiary. Expenditures by
Beneficiary shall bear interest at a rate per annum equal from time to time to
the Prime Rate plus 2% (the "Default Rate") from the date of such advance or
expenditure until repaid by Grantors. Any such amounts shall be secured hereby
with the same priority as the lien of this Deed of Trust. If Grantors fail to
pay any such expenditures, costs and expenses and interest thereon, Beneficiary
may, at its option, without foreclosing the lien of this Deed of Trust, commence
an independent action against Grantors

                                       14
<PAGE>   15

(or either of them) for the recovery of the expenditures and/or advance any
undisbursed Loan proceeds to pay the expenditures. As used herein, "Prime Rate"
shall mean, on any date, the rate of interest publicly announced from time to
time by Bank of America as its "Prime Rate." The Prime Rate is set based on
various factors, including Bank of America's costs and desired return, general
economic conditions, and other factors, and is used as a reference point for
pricing some loans. Any change in the Prime Rate shall take effect at the
opening of business on the day specified in the public announcement of a change
in the Prime Rate.

        17. ACCELERATING TRANSFERS.

            (a) As used herein, "Accelerating Transfer" means any sale, contract
to sell, conveyance, encumbrance, transfer of full possessory rights, or other
transfer of all or any material part of the Collateral or any interest in it,
whether voluntary, involuntary, by operation of law or otherwise and whether or
not for record or for consideration. Grantors acknowledge that Beneficiary is
taking actions in reliance on the expertise, skill, experience and reliability
of Grantors, and the obligations secured hereby include material elements
similar in nature to a personal service contract or ownership interest. In
consideration of Beneficiary's reliance, Grantors agree that neither Grantor
shall make any Accelerating Transfer without Beneficiary's prior written
consent, which Beneficiary may withhold in its sole discretion. Grantors shall
pay Beneficiary's actual costs incurred in making its decision to consent to an
Accelerating Transfer, including but not limited to the cost of credit reports,
an updated appraisal of the Property, an updated environmental assessment and
documentation. If any Accelerating Transfer occurs without Beneficiary's prior
written consent, Beneficiary in its sole discretion may declare an immediate
default and all sums secured by this Deed of Trust to be immediately due and
payable, and Beneficiary may invoke any rights and remedies provided herein.
This provision shall apply to each and every Accelerating Transfer regardless of
whether or not Beneficiary has consented or waived its rights, whether by action
or nonaction, in connection with any previous Accelerating Transfer(s).

            (b) If all or any part of this Section 17 relevant to a particular
Accelerating Transfer is unenforceable according to the law in effect at the
time of the Accelerating Transfer, then Grantors shall reimburse Beneficiary for
its actual costs incurred in processing the Accelerating Transfer on its
records.

        18. RELEASE OF PARTIES OR COLLATERAL. Without affecting the obligations
of any party under the Loan Documents and without affecting the lien of this
Deed of Trust and Beneficiary's security interest in the Collateral, Beneficiary
may, without notice (a) release all or any other party now or hereafter liable
for any of the Secured Obligations (including either Grantor), (b) release all
or any part of the Collateral, (c) subordinate the lien of this Deed of Trust or
Beneficiary's security interest in the Collateral, (d) take and/or release any
other security for or guarantees of the Secured Obligations, (e) grant an
extension of time for performance of the Secured Obligations, (f) modify, waive,
forbear, delay or fail to enforce any of the Secured Obligations, (g) sell or
otherwise realize on any other security or guaranty prior to, contemporaneously
with or subsequent to a sale of all or any part of the Collateral,

                                       15
<PAGE>   16

(h) make advances pursuant to the Loan Documents, (i) consent to the making of
any map or plat of the Property, and (j) join in the grant of any easement on
the Property. Any subordinate lienholder shall be subject to all such releases,
extensions or modifications without notice to or consent from the subordinate
lienholder. Grantors shall pay any trustee's, attorneys', title insurance,
recording, inspection or other fees or expenses incurred in connection with
release of Collateral, the making of a map, plat or the grant of an easement.

                                    ARTICLE 4

        1. INSURANCE.

            (a) Grantors shall maintain such insurance on the Collateral as may
be required from time to time by Beneficiary, with premiums prepaid, providing
replacement cost coverage and insuring against loss by fire and such other risks
covered by extended coverage insurance, and such other perils and risks as
Beneficiary may require from time to time, including earthquake, loss of rents
and business interruption. Grantors also shall maintain comprehensive general
public liability insurance and if the Property is located in a designated flood
hazard area, flood insurance. All insurance shall be with companies satisfactory
to Beneficiary and in such amounts and with such coverages as Beneficiary may
require from time to time, with lender's loss payable clauses in favor of and in
form satisfactory to Beneficiary. At least thirty (30) days prior to the
expiration of the term of any insurance policy, Grantors shall furnish
Beneficiary with written evidence of renewal or issuance of a satisfactory
replacement policy. If requested Grantors shall deliver copies of all polices to
Beneficiary. Each policy of insurance shall provide Beneficiary with no less
than forty-five (45) days prior written notice of any cancellation, expiration,
non-renewal or modification.

            (b) In the event of foreclosure of this Deed of Trust all interest
of Grantors (or either of them) in any insurance policies pertaining to the
Collateral and in any claims against the policies and in any proceeds due under
the policies shall pass to Beneficiary.

            (c) If under the terms of any Lease the lessee is required to
maintain insurance of the type required by the Loan Documents and if the
insurance is maintained for the benefit of both the lessor and Beneficiary,
Beneficiary will accept such policies provided all of the requirements of
Beneficiary and the Loan Documents are met. In the event the lessee fails to
maintain such insurance, Grantors shall promptly obtain such policies as are
required by the Loan Documents.

            (d) If Grantors fail to maintain any insurance required of it by
Beneficiary, or fails to pay any premiums with respect to such insurance,
Beneficiary may obtain such replacement insurance as it deems necessary or
desirable, or pay the necessary premium on behalf of Grantors, and any sums
expended by Beneficiary in so doing shall bear interest at the Default Rate from
the date until repaid by Grantors. Any such amounts shall be secured hereby and
shall be repaid by Grantors on demand.

                                       16
<PAGE>   17

        2. DAMAGES AND CONDEMNATION AND INSURANCE PROCEEDS.

            (a) Grantors hereby absolutely and irrevocably assign to
Beneficiary, and authorizes the payor to pay to Beneficiary, the following
claims, causes of action, awards, payments and rights to payment: (i) all awards
of damages and all other compensation payable directly or indirectly because of
a condemnation, proposed condemnation or taking for public or private use which
affects all or part of the Collateral or any interest in it; (ii) all other
awards, claims and causes of action, arising out of any warranty affecting all
or any part of the Collateral, or for damage or injury to or decrease in value
of all or part of the Collateral or any interest in it; (iii) all proceeds of
any insurance policies payable because of loss sustained to all or part of the
Collateral; and (iv) all interest which may accrue on any of the foregoing.

            (b) Grantors shall immediately notify Beneficiary in writing if: (i)
any damage occurs or any injury or loss is sustained in the amount of $500,000
or more to all or part of the Collateral, or any action or proceeding relating
to any such damage, injury or loss is commenced; or (ii) any offer is made, or
any action or proceeding is commenced, which relates to any actual or proposed
condemnation or taking of all or part of the Collateral. If Beneficiary chooses
to do so, it may in its own name appear in or prosecute any action or proceeding
to enforce any cause of action based on warranty, or for damage, injury or loss
to all or part of the Collateral, and it may make any compromise or settlement
of the action or proceeding. Beneficiary, if it so chooses, may participate in
any action or proceeding relating to condemnation or taking of all or part of
the Collateral, and may join Grantors (or either of them) in adjusting any loss
covered by insurance.

            (c) All proceeds of these assigned claims, other property and rights
which Grantors (or either of them) may receive or be entitled to shall be paid
to Beneficiary. In each instance, Beneficiary shall apply those proceeds first
toward reimbursement of all of Beneficiary's costs and expenses of recovering
the proceeds, including attorneys' fees.

            (d) If, in any instance, each and all of the following conditions
are satisfied in Beneficiary's reasonable judgment, Beneficiary shall permit
Grantors to use the balance of the proceeds ("Net Claims Proceeds") to pay costs
of repairing or reconstructing the Collateral in the manner described below: (i)
the plans and specifications, cost breakdown, construction contract,
construction schedule, contractor and payment and performance bond for the work
of repair or reconstruction must all be acceptable to Beneficiary; (ii)
Beneficiary must receive evidence satisfactory to it that after repair or
reconstruction, the Collateral will be at least as valuable as it was
immediately before the damage or condemnation occurred; (iii) the Net Claims
Proceeds must be sufficient in Beneficiary's determination to pay for the total
cost of repair or reconstruction, including all associated development costs; or
Grantors must provide their own funds in an amount equal to the difference
between the Net Claims Proceeds and a reasonable estimate, made by Grantors and
found acceptable by Beneficiary, of the total cost of repair or reconstruction;
(iv) Beneficiary must receive evidence satisfactory to it that all Leases which
it may find acceptable will continue after the repair or reconstruction is
complete; (v) Beneficiary has received evidence satisfactory to it, that
reconstruction and/or

                                       17
<PAGE>   18

repair can be completed at least three (3) months prior to the maturity date of
the obligations arising under the Loan Agreement are due and payable; and (vi)
no Event of Default shall have occurred and be continuing. If the foregoing
conditions are met to Beneficiary's satisfaction, Beneficiary shall hold the Net
Claims Proceeds and any funds which Grantors are required to provide and shall
disburse them to Grantors to pay costs of repair or reconstruction upon
presentation of evidence reasonably satisfactory to Beneficiary that repair or
reconstruction has been completed satisfactorily and lien-free. However, if
Beneficiary finds that one or more of the conditions are not satisfied, it may
apply the Net Claims Proceeds to pay or prepay some or all of the Secured
Obligations.

                                    ARTICLE 5

        1. DEFAULT; REMEDIES.

            (a) The occurrence of any of the following events, shall constitute
an "Event of Default" hereunder:

                (i) Grantors (or either of them) shall fail to pay when due the
whole or any part of any Secured Obligation requiring the payment of money;

                (ii) any representation or warranty made or deemed made by any
Grantors (or either of them) under or in connection with this Deed of Trust
shall prove to have been incorrect in any material respect when made or deemed
made;

                (iii) Grantors (or either of them) defaults under any lease or
other contract or agreement relating to the Collateral, and such default is not
cured within the applicable cure period, if any; or

                (iv) Grantors (or either of them) shall fail to perform or
observe any covenant, obligation or term of any Loan Document to which it is a
party (including this Deed of Trust) the performance of which is a Secured
Obligation and does not require the payment of money, and such failure shall
remain unremedied for thirty (30) days.

            (b) If an Event of Default shall occur, Beneficiary shall have all
remedies provided by law and, without limiting the generality of the foregoing
or the remedies provided in any other section hereof or in any other Loan
Document, shall have the following remedies:

                (i) the right to foreclose of this Deed of Trust judicially as a
mortgage or non-judicially pursuant to the power of sale; and

                (ii) the remedies of a secured party under the Uniform
Commercial Code; and

                (iii) all other remedies which may be available in law or
equity.

        Beneficiary's exercise of any right, power or remedy shall in no event
constitute a

                                       18
<PAGE>   19

waiver of any Event of Default nor prejudice the right of Beneficiary in the
exercise of any right hereunder. Beneficiary's failure to enforce any of its
rights, powers or remedies upon the occurrence of an Event of Default shall not
constitute a waiver of the default or any subsequent default of its rights and
remedies with respect to such default. In the event of foreclosure, the cost of
the title premium for the trustee's sale guaranty (or equivalent title policy or
report) shall be paid for by Grantors and shall be added to and be a part of the
Secured Obligations. If this Deed of Trust or any of the other Loan Documents
are referred to an attorney for enforcement or for preservation of Beneficiary's
rights or remedies, and whether or not suit is filed or any proceedings are
commenced, all of Beneficiary's costs and expenses incurred in connection
therewith including, without limitation, trustee's and attorneys' fees
(including attorneys' fees for any appeal, bankruptcy proceeding or any other
proceeding), accountants' fees, appraisal and internal appraisal review fees,
inspection fees (including inspections for hazardous substances, asbestos
containing materials, and compliance with building and land use codes and
regulations), engineering fees, and expert witness fees and costs of title
reports shall be added to and be a part of the Secured Obligations and shall be
payable on demand.

        2. CUMULATIVE REMEDIES. To the fullest extent allowed by law, all of
Beneficiary's, Lenders' and Trustee's rights and remedies specified in the Loan
Documents (including this Deed of Trust) are cumulative, not mutually exclusive
and not in substitution for any rights or remedies available at law or in
equity. Without waiving its rights in the Collateral, Beneficiary may proceed
against Grantors (or either of them), any other party obligated to pay or
perform the Secured Obligations or against any other security or guaranty for
the Secured Obligations, in such order or manner as Beneficiary may elect.
Except where prohibited by applicable law, the commencement of proceedings to
enforce a particular remedy shall not preclude the commencement of other
proceedings to enforce a different remedy.

        3. ENTRY. If an Event of Default shall occur, Beneficiary, in person, by
agent or by court appointed receiver, may enter, take possession of, manage and
operate all or any part of the Collateral, and may also do any and all other
things in connection with those actions that Beneficiary may consider necessary
and appropriate to protect the security of this Deed of Trust, including taking
and possessing all of Grantors' or the then owner's books and records; entering
into, enforcing, modifying, or canceling Leases on such terms and conditions as
Beneficiary may consider proper; obtaining and evicting tenants; fixing or
modifying Rents; collecting and receiving any payment of money owing to Grantors
(or either of them); completing any unfinished construction; and/or contracting
for and making repairs and alterations. Grantors hereby irrevocably constitute
and appoint Beneficiary as their attorney-in-fact to perform such acts and
execute such documents as Beneficiary in its sole discretion may consider to be
appropriate in connection with taking these measures. Although the foregoing
power of attorney is effective immediately, Beneficiary shall not exercise the
power until the occurrence of an Event of Default.

        4. APPOINTMENT OF RECEIVER. If an Event of Default shall occur, Grantors
consents to, and Beneficiary, to the fullest extent permitted by applicable law,
shall be

                                       19
<PAGE>   20

entitled, without notice, bond or regard to the adequacy of the Collateral, to
the appointment of a receiver for the Collateral. The receiver shall have, in
addition to all the rights and powers customarily given to and exercised by a
receiver, all the rights and powers granted to Beneficiary by the Loan
Documents. The receiver shall be entitled to receive a reasonable fee for
management of the Property. If Grantors (or either of them) is an occupant of
the Property, Beneficiary has the right to require Grantors (or either of them)
to pay rent at fair market rates and the right to remove Grantors (or either of
them) from Property if Grantors (or either of them) fail to pay rent.

        5. SALE OF PROPERTY AFTER DEFAULT. Following the occurrence of an Event
of Default and the foreclosure of this Deed of Trust, either judicially or
non-judicially, the Collateral may be sold separately or as a whole, at the
option of Beneficiary. In the event of a trustee's sale of the Collateral
pursuant to the power of sale granted herein, Beneficiary hereby assigns its
security interest in the personal property Collateral to the trustee.
Beneficiary may also realize on the personal property Collateral in accordance
with the remedies available to secured parties under the Uniform Commercial Code
or at law. In the event of a trustee's sale, Grantors, and the holder of any
subordinate liens or security interest with actual or constructive notice
hereof, waive any equitable, statutory or other right they may have to require
marshaling of assets in connection with the exercises of any of the remedies
permitted by applicable law or provided herein, or to direct the order in which
any of the Collateral will be sold in the event of any sale under this Deed of
Trust or foreclosure in the inverse order of alienation.

        6. FORECLOSURE OF LESSEE'S RIGHTS; SUBORDINATION. Beneficiary shall have
the right, at its option, to foreclose this Deed of Trust subject to the rights
of any lessees of the Property. Beneficiary's failure to foreclose against any
lessee shall not be asserted as a claim against Beneficiary or as a defense
against any claim by Beneficiary in any action or proceeding. Beneficiary at any
time may subordinate this Deed of Trust to any or all of the Leases except that
Beneficiary shall retain its priority claim to any condemnation or insurance
proceeds.

        7. REPAIRS DURING REDEMPTION. In the event of a judicial foreclosure the
purchaser during any redemption period may make such repairs and alterations to
the Property as may be reasonably necessary for the proper operation, care,
preservation, protection and insuring of the Property. Any sums so paid,
together with interest from the date of the expenditure at the rate provided in
the judgment, shall be added to the amount required to be paid for redemption of
the Property.

                                    ARTICLE 6

        1. JOINT AND SEVERAL LIABILITY. All obligations of Grantors hereunder
are the joint and several obligation of each Grantor and each Grantor expressly
disclaims any intent to execute this Deed of Trust merely as an accommodation
party or as a guarantor of any the other Grantor's obligations hereunder or
thereunder.

        2. GUARANTOR'S CONSENT. Guarantor hereby consents to all terms and
condition

                                       20
<PAGE>   21

of agreements heretofore or hereafter made between Beneficiary or Lenders (or
any of them) and Borrower (including without limitation the Loan Agreement and
related documents) and further consents that Beneficiary and Lenders (or any of
them) may without further consent or disclosure and without affecting or
releasing the obligations of Guarantor hereunder: (a) surrender, exchange,
release, assign, or sell any collateral (including the Collateral) or waive,
release, assign, sell, or subordinate any security interest, in whole or in
part; (b) waive or delay the exercise of any rights or remedies of Beneficiary
or Lenders (or any of them) against Borrower; (c) waive or delay the exercise of
any rights or remedies of Beneficiary or Lenders (or any of them) against any
surety or guarantor (including, without limitation, rights or remedies of
Beneficiary or Lenders (or any of them) against Guarantor under this Deed of
Trust); (d) waive or delay the exercise of any rights or remedies of Beneficiary
or Lenders (or any of them) in respect of any collateral (including the
Collateral) or security interest now or hereafter held; (e) release any surety
or guarantor (including Guarantor); (f) renew, extend, waive or modify the terms
of any Secured Obligation or the obligations of any surety or guarantor
(including Guarantor), or any instrument or agreement evidencing the same; (g)
renew, extend, waive or modify the terms of any deed of trust, mortgage, pledge,
assignment, security agreement or other security document (h) apply payments
received from Borrower or any surety or guarantor (including Guarantor) or from
any collateral (including the Collateral), to any indebtedness, liability, or
obligations of Borrower or such sureties or guarantors whether or not an Secured
Obligation hereunder; and (i) realize on any security interest, judicially or
nonjudicially, with or without preservation of a deficiency judgment.

        3. GUARANTOR'S WAIVERS. Guarantor waives any action on delinquency in
respect of the Secured Obligations or any part thereof, including any right to
require Beneficiary or Lenders (or any of them) to sue Borrower or any guarantor
(including Guarantor) or surety obligated with respect to the Secured
Obligations or any part thereof, or otherwise to enforce payment thereof against
any collateral securing the Secured Obligations or the obligations of any
guarantor of surety or any part thereof. Guarantor further waives notice of (a)
Beneficiary's acceptance of this Deed of Trust or its intention to act or its
actions in reliance hereon; (b) the present existence or future incurring of any
Secured Obligations or any terms or amounts thereof or any change therein; (c)
any default by Borrower or any surety or guarantor (including Guarantor); (d)
the obtaining of any guaranty or surety agreement (in addition to this Deed of
Trust); (e) the obtaining of any pledge, assignment or other security for any
Secured Obligations; (f) the release of any surety or guarantor (including
Guarantor); (g) the release of any collateral (including the Collateral); (h)
any change in Borrower's business or financial condition; (i) any renewal,
extension or modification of the terms of any Secured Obligation or of the
obligations or liabilities of any surety or guarantor or any instruments or
agreements evidencing the same; (j) any acts or omissions of Beneficiary or
Lenders (or any of them) consented to in Section 2 hereof; and (k) any other
demands or notices whatsoever with respect to the Secured Obligations or this
Deed of Trust. Guarantor further waives notice of presentment, demand, protest,
notice of nonpayment and notice of protest in relation to any instrument or
agreement evidencing any Secured Obligation.

        4. GUARANTOR'S KNOWLEDGE OF BORROWER'S ECONOMIC CONDITIONS. Guarantor
represents and warrants to Beneficiary and Lenders that it has reviewed such
documents and other information as it has deemed

                                       21
<PAGE>   22

appropriate in order to permit it to be fully apprised of Borrower's financial
condition and operations and has, in entering into this Deed of Trust made its
own credit analysis independently and without reliance upon any information
communicated to it by Beneficiary or any Lender. Guarantor covenants for the
benefit of Beneficiary and Lenders to remain apprised of all material economic
or other developments relating to or affecting Borrower, its property or its
business. Guarantor expressly waives any requirement that Beneficiary or Lenders
(or any of them) advise, disclose, discuss or deliver notice to Guarantor
regarding Borrower's financial condition or operations or with respect to any
default by Borrower in its performance of the Secured Obligations whether or not
knowledge of such condition, operations or default is or reasonably could be in
the possession of Guarantor and whether or not such knowledge is in the
possession of Beneficiary or any Lender before or after the extension of any
credit giving rise to Secured Obligations by Borrower.

        5. LIMITATIONS ON GRANTORS' RIGHTS. Each Grantor hereby agrees that it
will not exercise any rights of subrogation which it may acquire by payment or
performance of the Secured Obligations until all Secured Obligations shall have
been paid in full and Lenders (or any of them) shall have no further commitment
to make loans or otherwise extend credit to Borrower. In the event that either
Grantor shall receive any payment on account of such rights of subrogation while
any Secured Obligations remain outstanding or while Lenders (or any of them)
remain committed to make loans or otherwise extend credit to Borrower, each
Grantor agrees to pay such amounts so received to Beneficiary for the ratable
benefit of Lenders for immediate application to the outstanding Secured
Obligations or, in Beneficiary's sole discretion, to be held as cash collateral
to secure repayment of the Secured Obligations.

                                    ARTICLE 7

        1. ADDITIONAL SECURITY DOCUMENTS. Grantors shall within fifteen (15)
days after request by Beneficiary execute and deliver any financing statement,
renewal, affidavit, certificate, continuation statement, or other document
Beneficiary may request in order to perfect, preserve, continue, extend, or
maintain security interests or liens granted herein to Beneficiary and the
priority of such security interests or liens. Grantors shall pay all costs and
expenses incurred by Beneficiary in connection with the preparation, execution,
recording, filing, and refiling of any such document.

        2. RECONVEYANCE AFTER PAYMENT. Upon written request of Beneficiary
stating that all obligations secured by this Deed of Trust have been satisfied
in full, Trustee shall reconvey, without warranty, the Collateral then subject
to the lien of this Deed of Trust. Grantors shall pay any costs, trustee's fees
and recording fees incurred in so reconveying the Property.

        3. NONWAIVER OF TERMS AND CONDITIONS. Time is of the essence with
respect to performance of the obligations under the Loan Documents.
Beneficiary's failure to require prompt enforcement of any such obligation shall
not constitute a waiver of the obligation or any subsequent required performance
of the obligation. No term or condition of this Deed of Trust may be waived,
modified or amended except by a written agreement signed by Grantors

                                       22
<PAGE>   23

and Beneficiary. Any waiver of any term or condition of this Deed of Trust shall
apply only to the time and occasion specified in the waiver and shall not
constitute a waiver of the term or condition at any subsequent time or occasion.

        4. WAIVERS BY GRANTORS. Without affecting any of either Grantor's
obligations under any Loan Document to which it is a party, each Grantor waives
the following: (a) any right to require Beneficiary to proceed against any
specific party liable for sums due under the Loan Documents or to proceed
against or exhaust any specific security for sums due under the Loan Documents;
(b) notice of new or additional indebtedness of either Grantor or any other
party liable for sums due under the Loan Documents to Beneficiary or any Lender;
(c) any defense arising out of Beneficiary entering into additional financing or
other arrangements with either Grantor or any other party liable for sums due
under the Loan Documents and any action taken by Beneficiary or any Lender in
connection with any such financing or other arrangements or any pending
financing or other arrangements; (d) any defense arising out of the absence,
impairment, or loss of any or all rights of recourse, reimbursement,
contribution or subrogation or any other rights or remedies of Beneficiary
against either Grantor any other party liable for sums due under the Loan
Documents or any Collateral; and (e) any obligation of Beneficiary or any Lender
to see to the proper use and application of any proceeds advanced pursuant to
the Loan Documents.

        5. RIGHT OF SUBROGATION. Beneficiary is subrogated to the rights,
whether legal or equitable, of all beneficiaries, mortgagees, lienholders and
owners directly or indirectly paid off or satisfied in whole or in part by the
proceeds of any credit extended by any Lender or Beneficiary under the Loan
Documents, regardless of whether such parties assigned or released of record
their rights or liens upon payment.

        6. BOOKS AND RECORDS. Grantors will keep and maintain, at such Grantor's
address stated above, or such other place as Beneficiary may approve in writing,
accurate books and records of the operations of such Grantor and of the
Property, and copies of all leases, contracts, agreements and other documents
which affect the operation of the Property, subject to examination and copying
at any reasonable time by Beneficiary.

        7. PAYMENT OF NEW TAXES. If any federal, state or local law is passed
subsequent to the date of this Deed of Trust which requires any Beneficiary or
any Lender to pay any tax because of this Deed of Trust or the sums due under
the Loan Documents (excluding income taxes), then Grantors shall pay to such
party or parties on demand any such taxes if it is lawful for Grantors to pay
them, or, in the alternative Grantors may repay all sums due under the Loan
Documents plus any prepayment fee within thirty (30) days of such demand.

        8. IN-HOUSE COUNSEL FEES. Whenever Grantors are obligated to pay or
reimburse Beneficiary, Trustee or any Lender for any attorneys' fees, those fees
shall include the allocated costs for services of in-house counsel.

        9. NOTICES. Any notice given by Grantors (or either of them) or
Beneficiary shall be given in the manner prescribed for notices, and such
notices shall be effective, as set forth in

                                       23
<PAGE>   24

the Loan Agreement.

        10. OTHER AGREEMENTS. The terms of this Deed of Trust are intended to
supplement and not to replace or be replaced by the terms of the other Loan
Documents and the rights and remedies herein provided to Beneficiary are
intended to be cumulative of and in addition to all rights and remedies
conferred by the other Loan Documents.

        11. SEVERABILITY. In case any one or more of the provisions contained in
this Deed of Trust is invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein will not in any way be affected or impaired thereby.

        12. LEGISLATION AFFECTING BENEFICIARY'S RIGHTS. If enactment or
expiration of applicable laws has the effect of rendering any provision of this
Deed of Trust unenforceable according to its terms, Beneficiary, at its option,
may require Grantors to pay to Beneficiary an amount equal to the then existing
fair market value of the Property. Such amounts shall be payable on demand and
shall be credited by Beneficiary against the Secured Obligations.

        13. RULES OF CONSTRUCTION. This Deed of Trust shall be construed so
that, whenever applicable, the use of the singular shall include the plural, the
use of the plural shall include the singular, and the use of any gender shall be
applicable to all genders and shall include corporations, partnerships, limited
partnerships, limited liability companies and other forms of entities. This Deed
of Trust inures to the benefit of, and binds all parties named herein and their
successors and assigns. The headings to the various sections have been inserted
for convenience of reference only and shall not be used to construe this Deed of
Trust.

        14. GOVERNING LAW. This Deed of Trust shall be construed and enforced in
accordance with the laws of the State of Washington.

        IN WITNESS WHEREOF, Grantors have executed this Deed of Trust the day
and year first above written.

        GRANTORS:               SPACELABS MEDICAL, INC., formerly known as
                                Spacelabs, Inc., a California corporation

                                By
                                Its

                                SPACELABS MEDICAL, INC., a Delaware corporation

                                By
                                Its

                                       24
<PAGE>   25

SCHEDULE:

Schedule A     Real Property Description

STATE OF WASHINGTON                 )
                                    ) ss.
COUNTY OF KING                      )

        On this _______ day of August, 2000, before me, a Notary Public in and
for the State of Washington, personally appeared _______________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person who executed this instrument, on oath stated that he was
authorized to execute the instrument, and acknowledged it as the
_________________________ of SPACELABS MEDICAL, INC., formerly known as
Spacelabs, Inc., a California corporation, to be the free and voluntary act and
deed of said corporation for the uses and purposes mentioned in the instrument.

        IN WITNESS WHEREOF, I have hereunto set my hand and official seal the
day and year first above written.

                                        NOTARY PUBLIC in and for the State of
                                        Washington, residing at
                                        My appointment expires

STATE OF WASHINGTON                 )
                                    ) ss.
COUNTY OF KING                      )

        On this _______ day of August, 2000, before me, a Notary Public in and
for the State of Washington, personally appeared _______________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person who executed this instrument, on oath stated that he was
authorized to execute the instrument, and acknowledged it as the
_________________________ of SPACELABS MEDICAL, INC., a Delaware corporation, to
be the free and voluntary act and deed of said corporation for the uses and
purposes mentioned in the instrument.

        IN WITNESS WHEREOF, I have hereunto set my hand and official seal the
day and year first above written.

                                        NOTARY PUBLIC in and for the State of

                                       25
<PAGE>   26

                                        Washington, residing at
                                        My appointment expires

                                       26
<PAGE>   27

                                   SCHEDULE A

THIS SCHEDULE IS PART OF THE DEED OF TRUST DATED AUGUST 11, 2000, AMONG
SPACELABS MEDICAL, INC. FORMERLY KNOWN AS SPACELABS, INC. (A CALIFORNIA
CORPORATION) AND SPACELABS MEDICAL, INC. (A DELAWARE CORPORATION), AS GRANTORS,
PRLAP, INC., AS TRUSTEE, AND BANK OF AMERICA, N.A., AS AGENT FOR ITSELF AND
CERTAIN OTHER LENDERS, AS BENEFICIARY.

LEGAL DESCRIPTION:

PARCEL 1:

THAT PORTION OF THE NORTHWEST 1/4 OF THE SOUTHEAST 1/4 OF THE SOUTHWEST 1/4 OF
SECTION 14, TOWNSHIP 25 NORTH, RANGE 5 EAST W.M., LYING WEST OF SR 520, AS
CONVEYED TO THE STATE OF WASHINGTON, BY DEED RECORDED OCTOBER 28, 1971, UNDER
RECORDING NO. 7110280156;

TOGETHER WITH THE NORTH 1/2 AND THE WEST 236.028 FEET, AS MEASURED AT RIGHT
ANGLES, OF THE SOUTH 1/2 OF THE FOLLOWING DESCRIBED TRACT OF LAND:

THE SOUTHWEST 1/4 OF THE SOUTHEAST 1/4 OF THE SOUTHWEST 1/4 OF SECTION 14,
TOWNSHIP 25 NORTH, RANGE 5 EAST W.M.;

EXCEPT THE SOUTH 30.00 FEET THEREOF FOR ROAD;

AND EXCEPT THAT PORTION CONVEYED TO THE CITY OF REDMOND BY DEED RECORDED UNDER
KING COUNTY RECORDING NO. 8310180010;

AND EXCEPT THAT PORTION CONVEYED TO THE STATE OF WASHINGTON BY DEED RECORDED
UNDER KING COUNTY RECORDING NO. 7209270505;

AND EXCEPT THAT PORTION THEREOF CONVEYED TO THE STATE OF WASHINGTON BY DEED
RECORDED UNDER KING COUNTY RECORDING NO. 9902252351;

AND TOGETHER WITH THAT PORTION OF THE NORTH 3/4 OF THE EAST 1/2 OF THE SOUTHWEST
1/4 OF THE SOUTHWEST 1/4 OF SECTION 14, TOWNSHIP 25 NORTH, RANGE 5 EAST W.M.,
DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT ON THE EAST LINE OF THE SOUTHWEST 1/4 OF THE SOUTHWEST 1/4
OF SAID SECTION, SAID POINT BEING 737.34 FEET NORTH OF THE SOUTHEAST CORNER
THEREOF;

THENCE NORTH 89(degrees) 58' 18" WEST ALONG THE NORTH LINE OF THE SOUTH 737.34
FEET OF SAID SUBDIVISION, A DISTANCE OF 177.21 FEET; THENCE SOUTH 00(degrees) 5'
37" EAST A DISTANCE OF 398.01 FEET; THENCE SOUTH 89(degrees) 45' 23" EAST A
DISTANCE OF 177.22 FEET TO A POINT ON THE EAST LINE OF SAID SUBDIVISION WHICH IS
398.67 FEET SOUTH OF THE POINT OF BEGINNING;

THENCE NORTH 00(degrees) 25' 37" WEST ALONG SAID EAST LINE A DISTANCE OF 398.67
FEET TO

                                       27
<PAGE>   28

THE POINT OF BEGINNING;

(BEING KNOWN AS LOTS 2 AND 3 OF LOT LINE REVISION NO. LLR 90-0013, ACCORDING TO
THE LOT LINE ADJUSTMENT RECORDED UNDER KING COUNTY RECORDING NO. 9103059015,
EXCEPT THAT PORTION THEREOF LYING EASTERLY OF SR 520 AS CONVEYED BY DEED NO.
9902252351);

SITUATE IN THE CITY OF REDMOND, COUNTY OF KING, STATE OF WASHINGTON.

PARCEL 2:

THE SOUTH 1/2 OF THE SOUTHEAST 1/4 OF THE SOUTHWEST 1/4 OF THE SOUTHWEST 1/4 OF
SECTION 14, TOWNSHIP 25 NORTH, RANGE 5 EAST W.M.;

EXCEPT THE EAST AND WEST 30 FEET THEREOF;

AND EXCEPT THE SOUTH 40 FEET THEREOF CONVEYED TO KING COUNTY FOR N.E. 40TH
STREET BY DEED RECORDED UNDER KING COUNTY RECORDING NO. 2442028 AND CONVEYED TO
THE CITY OF REDMOND BY DEED RECORDED UNDER KING COUNTY RECORDING NO. 8102050557;

SITUATE IN THE CITY OF REDMOND, COUNTY OF KING, STATE OF WASHINGTON.

PARCEL 3:

THE EAST 30 FEET OF THE SOUTH 1/2 OF THE SOUTHEAST 1/4 OF THE SOUTHWEST 1/4 OF
THE SOUTHWEST 1/4 OF SECTION 14, TOWNSHIP 25 NORTH, RANGE 5 EAST W.M.;

AND EXCEPT THE SOUTH 40 FEET THEREOF CONVEYED TO KING COUNTY FOR N.E. 40TH
STREET BY DEED RECORDED UNDER KING COUNTY RECORDING NO. 2442028 AND CONVEYED TO
THE CITY OF REDMOND BY DEED RECORDED UNDER KING COUNTY RECORDING NO. 8102050557;

SITUATE IN THE CITY OF REDMOND, COUNTY OF KING, STATE OF WASHINGTON.

                                       28

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