Document:

<PAGE>

                                                                   EXHIBIT 10.42

                             MODIFICATION AGREEMENT

     This Modification Agreement ("Agreement") is dated as of January 5, 2002 by
                                   ---------
1999 LAWNDALE ASSOCIATES LLC, a California limited liability company
("Borrower"), and UNIFIED WESTERN GROCERS, INC., a California corporation
  --------
("Lender").
  ------

                                    RECITALS
                                    --------

     A.   Pursuant to that certain Term Loan Agreement (the "Loan Agreement")
                                                             --------------
dated as of July 5, 2000 and executed between Borrower and Lender, Lender has
made a $3,000,000 loan ("Loan") to Borrower for the purposes identified in the
                         ----
Loan Agreement and relating to the real property described in Exhibit B thereto
("Property").
  --------

     B.   The Loan is evidenced in part by a Promissory Note made as of July 5,
2000 by Borrower to the order of Lender in the original principal amount of
$3,000,000 (the "Note"), and all modifications, extensions, renewals and
                 ----
replacements thereof. The obligations of Borrower under the Loan Agreement and
the Note are secured by that certain Pledge Agreement dated as of July 5, 2000
made by and among Salomeh Khaledi and Khashayar Khaledi ("Khaledi Pledgors"), as
                                                          ----------------
pledgors, Lender, as pledgee, and Grocers Capital Company, a wholly-owned
subsidiary of Lender ("GCC"), as bailee (the "Khaledi Pledge Agreement").
                       ---                    ------------------------

     C.   Borrower's obligations under the Loan Documents have been guaranteed
by Darioush Khaledi and Shahpar Khaledi, husband and wife, Khaledi Family
Partnership II, a California general partnership, Darioush Khaledi, as trustee
of the Khaledi Family Trust under declaration of Trust dated May 17, 1995, K.V.
Property Company, a California general partnership, and Parviz Vazin and Vida
Vazin, husband and wife (collectively, the "Guarantors") pursuant to that
                                            ----------
certain Guaranty dated as of July 5, 2000 ("Guaranty") and made by Guarantors in
                                            --------
favor of Lender. The obligations of Guarantors under the Guaranty are secured by
that certain Pledge Agreement dated as of July 5, 2000 made by and among the
Khaledi Family Trust dated May 17, 1995, Parviz Vazin and Vida Vazin ("Guaranty
Pledgors", and together with the Khaledi Pledgors, the "Pledgors"), as pledgors,
                                                        --------
Lender, as pledgee, and GCC, as bailee ("Guaranty Pledge Agreement", and
                                         -------------------------
together with the Khaledi Pledge Agreement, the "Unified Pledge Agreements").
                                                 -------------------------

     D.   The collateral pledged pursuant to the Pledge Agreements is
additionally subject to a prior pledge made pursuant to that certain Pledge
Agreement dated March 26, 1999 made by and between Pledgors, as pledgors, in
favor of GCC, as pledgee ("GCC Pledge Agreement").
                           --------------------

     E.   In connection with the amendments contemplated hereby (i) Borrower, as
trustor, is executing a Deed of Trust, Assignment of Rents and Fixture Filing
for the benefit of Lender, as beneficiary, with respect to the Property
("Mortgage"), to further secure Borrower's obligations under the Loan Agreement
  --------
and the Note, and (ii) Lender will agree to the termination and release of the
Unified Pledge Agreements.

                                      -1-

<PAGE>

     F.   As used herein, the term "Loan Documents" means the Loan Agreement,
                                    --------------
the Note, the Unified Pledge Agreements, the Mortgage, the Guaranty, and any
other documents executed in connection with the Loan, including those which
evidence, guarantee, secure or modify the Loan, as any or all of them may have
been amended to date.

     G.   As of the date of this Agreement, the outstanding principal balance of
the Loan is $3,000,000.

     H.   Borrower and Lender now wish to modify the Loan as set forth below.

                                    AGREEMENT
                                    ---------

     Therefore, Borrower and Lender agree as follows:

     1.   Modification of Loan Documents. The Loan Documents are hereby amended
          ------------------------------
as follows:

          (a)  Promissory Note. The terms and provisions of the Note are hereby
               ---------------
amended and restated in their entirety by that certain Amended and Restated
Promissory Note attached as Exhibit A hereto.
                            ---------

          (b)  Loan Agreement. The phrase "be secured by the Khaledi Pledge
               --------------
Agreement" is hereby deleted from the last paragraph of Section 2.4 of the Loan
Agreement and replaced with "be secured by that certain Deed of Trust,
Assignment of Rents and Fixture Filing, executed as of January 5, 2002 by
Borrower, as trustor, naming Chicago Title Insurance Company, as trustee, for
the benefit of Lender, as beneficiary". The following language is hereby
inserted as Section 7.1(n) of the Loan Agreement:

               "(n) Any transfer of a controlling interest in the stock of KV
     Mart Co., or any sale of a substantial portion of the assets of KV Mart
     Co., in any transaction or series of related transactions, whether by sale
     of stock, sale of assets, merger, consolidation or other form of
     transaction. The phrase "controlling interest" means the direct or indirect
     beneficial ownership of, or the direct or indirect right to dispose of,
     capital stock of KV Mart Co. possessing at least 50% of the total combined
     voting power of all classes of the capital stock of KV Mart Co. The phrase
     a "substantial portion of the assets" of KV Mart Co. means 50% or more of
     the assets of KV Mart Co."

          (c)  Unified Pledge Agreements. Lender hereby releases the lien or
               -------------------------
charge of each of the Unified Pledge Agreements and agrees that the Pledge
Agreements shall be of no further force or effect whatsoever. Nothing contained
in this Agreement shall terminate, release or otherwise amend the GCC Pledge
Agreement.

     2.   Conditions Precedent. Before this Agreement becomes effective and any
          --------------------
party becomes obligated under it, all of the following conditions shall have
been satisfied at

                                      -2-

<PAGE>

Borrower's sole cost and expense in a manner acceptable to Lender in the
exercise of Lender's sole judgment:

          (a)  Lender shall have received fully executed and, where appropriate,
acknowledged originals of this Agreement and any other documents which Lender
may require or request in accordance with this Agreement or the other Loan
Documents, including without limitation, that certain Modification of Guaranty,
Consent to Modification of Loan Documents and Reaffirmation of Guaranty in the
form attached as Exhibit B hereto.
                 ---------

          (b)  Borrower shall have executed the Mortgage in the form attached as
Exhibit C hereto and the same shall have been recorded as a lien against the
---------
Property in the Official Records of Los Angeles County, California.

          (c)  A title insurance company acceptable to Lender must have issued
or committed to issue a mortgagee's policy or policies of title insurance issued
with respect to the Property which complies with the requirements set forth in
an instruction letter from Lender, insuring the lien of the Mortgage as a valid
lien on the Property, subject only to the matters approved in writing by Lender.

          (d)  Lender shall have received reimbursement, in immediately
available funds, of all costs and expenses incurred by Lender in connection with
this Agreement.

          (e)  Borrower shall deliver to Lender (i) an internally-prepared
balance sheet for Borrower as of the end of Borrower's Fiscal Year and a
statement of profit and loss for Borrower's operations, together with all
supporting schedules and (ii) certificates of Borrower's chief financial officer
that such documents (w) were prepared in accordance with generally accepted
accounting principles applied on a consistent basis, (x) fairly present
Borrower's financial condition, (y) show all material liabilities, direct and
contingent, and (z) fairly present the results of Borrower's operations.

     3.   Borrower's Representations and Warranties. Borrower represents and
          -----------------------------------------
warrants to Lender as follows:

          (a)  Recitals. The Recitals set forth above are true, accurate and
               --------
correct.

          (b)  Loan Documents. All representations and warranties made and given
               --------------
by Borrower in the Loan Documents are true, accurate and correct.

          (c)  No Default. No Event of Default has occurred and is continuing,
               ----------
and no event has occurred and is continuing which, with notice or the
passage of time or both, would be an Event of Default.

          (d)  Property. Borrower lawfully possesses and holds fee simple title
               --------
to all of the Property which is real property. Borrower owns all of the Property
which is personal property free and clear of any reservations of title and
conditional sales contracts.

                                      -3-

<PAGE>

          (e)  Borrowing Entity. Borrower is a limited liability company having
               ----------------
its chief executive office in the State of California. Borrower's state of
organization is California and Borrower is validly existing under the laws of
that State. There have been no changes in the organization, composition,
ownership structure or formation documents of Borrower since the inception of
the Loan. Borrower's exact legal name is set forth in the first paragraph of
this Agreement.

          (f)  Managing Member. The Khaledi Family Partnership II, a California
               ---------------
general partnership ("Managing Member"), is the sole Manager of Borrower. The
                      ---------------
Managing Member is duly organized and validly existing under the laws of the
State of California. There have been no changes in the organization,
composition, ownership structure or formation documents of Managing Member since
the inception of the Loan.

          (g)  Financial Information. All financial information which has been
               ---------------------
and will be delivered to Lender, including all information relating to the
financial condition of Borrower shareholders, partners or joint venturers, or
the Property, fairly and accurately represents the financial condition being
reported on, including all material contingent liabilities. Since the dates of
the financial information specified in Section 2(e), above, there has been no
material adverse change in the business condition (financial or otherwise),
operations, properties or prospects of Borrower or any other subject thereof.

     4.   Notices. Borrower shall promptly notify Lender in writing of:
          -------

          (a)  Any litigation affecting Borrower or any general partner of
Borrower where the amount claimed is Fifty Thousand Dollars ($50,000) or more;

          (b)  Any material adverse change in the physical condition of the
Property (including any damage suffered as a result of earthquakes or floods),
or in Borrower's business condition (financial or otherwise), operations,
properties or prospects, or ability to repay the Loan; and

          (c)  Any change in Borrower's legal name or chief executive office.

     5.   Incorporation. This Agreement shall form a part of each Loan Document,
          -------------
and all references to a given Loan Document shall mean that document as hereby
modified.

     6.   No Prejudice; Reservation of Rights. This Agreement shall not
          -----------------------------------
prejudice any rights or remedies of Lender under the Loan Documents. Lender
reserves, without limitation, all rights which it has against any indemnitor,
guarantor, or endorser of the Note.

     7.   Reaffirmation; No Impairment; No Novation. Borrower hereby reaffirms
          -----------------------------------------
all of its obligations under the Loan Documents. Except as specifically hereby
amended, the Loan Documents shall each remain unaffected by this Agreement and
all such documents shall remain in full force and effect. The execution and
delivery of this Agreement shall not constitute a novation of the Loan.

                                      -4-

<PAGE>

     8.  Purpose and Effect of Lender's Approval. Lender's approval of any
         ---------------------------------------
matter in connection with the Loan shall be for the sole purpose of protecting
Lender's security and rights. No such approval shall result in a waiver of any
default of Borrower. In no event shall Lender's approval be a representation of
any kind with regard to the matter being approved.

     9.  Disclosure to Title Company. Without notice to or the consent of
         ---------------------------
Borrower, Lender may disclose to any title insurance company which insures any
interest of Lender under the Mortgage (whether as primary insurer, coinsurer or
reinsurer) any information, data or material in Lender's possession relating to
Borrower, the Loan, the Improvements or the Property.

     10. Further Assurances. Borrower hereby agrees that immediately upon
         ------------------
Lender's demand, Borrower shall execute and deliver to Lender, and shall cause
any necessary third parties to execute and deliver to Lender, all documents and
filings (including "account control agreements"), and shall otherwise take all
other actions that may be requested by Lender in order to maintain and provide
to Lender a perfected security interest in all collateral, and Borrower hereby
agrees to pay all fees and costs associated therewith, including the reasonable
fees and costs of Lender's outside counsel. Borrower hereby authorizes Lender to
execute and file any financing statements or other documents necessary to
provide or maintain such perfected security interests, without notice to, or the
consent of, Borrower.

     11. Integration. The Loan Documents, including this Agreement: (a)
         -----------
integrate all the terms and conditions mentioned in or incidental to the Loan
Documents; (b) supersede all oral negotiations and prior and other writings with
respect to their subject matter; and (c) are intended by the parties as the
final expression of the agreement with respect to the terms and conditions set
forth in those documents and as the complete and exclusive statement of the
terms agreed to by the parties. If there is any conflict between the terms,
conditions and provisions of this Agreement and those of any other agreement or
instrument, including any of the other Loan Documents, the terms, conditions and
provisions of this Agreement shall prevail.

     12. Miscellaneous. This Agreement and any attached consents or exhibits
         -------------
requiring signatures may be executed in counterparts, and all counterparts shall
constitute but one and the same document. If any court of competent jurisdiction
determines any provision of this Agreement or any of the other Loan Documents to
be invalid, illegal or unenforceable, that portion shall be deemed severed from
the rest, which shall remain in full force and effect as though the invalid,
illegal or unenforceable portion had never been a part of the Loan Documents.
This Agreement shall be governed by the laws of the State of California, without
regard to the choice of law rules of that State. As used herein, the word
"include(s)" means
 ----------

                                       -5-

<PAGE>

"includes(s), without limitation," and the word "including" means "including,
                                                 ---------
but not limited to."

Dated:   January 5, 2002

                                     BORROWER:

                                     1999 LAWNDALE ASSOCIATES LLC,
                                     a California limited liability company

                                     By:      Khaledi Family Partnership II,
                                              a California general partnership,
                                              Manager

                                              By:      _________________________

                                              Its:     _________________________
                                                       [Printed Name and Title]

                                     Lender:

                                     UNIFIED WESTERN GROCERS, INC.,
                                     a California corporation

                                     By:      _______________________________

                                     Its:     _______________________________
                                              [Printed Name and Title]

<PAGE>

                                    Exhibit A
                                    ---------

                      AMENDED AND RESTATED PROMISSORY NOTE

<PAGE>

                      AMENDED AND RESTATED PROMISSORY NOTE

$3,000,000                                                    Carson, California
                                                                 January 5, 2002

           This promissory note ("Note") evidences the indebtedness of 1999
Lawndale Associates LLC, a California limited liability company ("Borrower"),
under the loan (the "Loan") described in that certain Term Loan Agreement dated
July 5, 2000 (as modified from time to time, the "Loan Agreement") between
Borrower and Unified Western Grocers, Inc., a California corporation ("Lender").
This Note completely amends and restates the terms and conditions of that
certain promissory note dated as of July 5, 2000 made by Borrower in favor of
Lender in connection with the Loan. Capitalized terms used and not otherwise
defined herein shall have the meanings set forth for them in the Loan Agreement.
This Note is subject to the Loan Agreement.

     1. Promise to Pay. For value received, Borrower promises to pay to the
        --------------
order of Lender, at its office at Commerce, California, or at such other offices
as the holder of this Note may designate in writing from time to time, the
principal amount of $3,000,000, or so much thereof as may be advanced from time
to time, together with all other amounts now or hereafter owing by Borrower
under the Loan Documents, and together with interest thereon as provided herein.

     2. Interest. Interest shall accrue on all outstanding amounts at a variable
        --------
rate that is 2% per annum above the floating commercial prime rate published in
the Wall Street Journal, as of the 15th day of the month immediately preceding
each Payment Date but in no event in excess of 10.0% per annum. Interest shall
be due and payable in arrears monthly on the first day of each month
(collectively, the "Payment Dates"). Interest shall be calculated on an actual
day basis using a 365-day year. Borrower's reimbursement obligations shall be
due and payable on demand.

     3. Principal Payments. Commencing on February 1, 2002, and continuing
        ------------------
monthly thereafter on or before the first day of each calendar month until all
sums owing under this Note are paid in full, Borrower shall pay to Lender forty
(40) consecutive equal monthly installments of principal of this Note in the
amount of $73,170.74. The final monthly payment shall be in the amount of
$73,170.40.

     4. Maturity. The entire unpaid principal balance of the Loan, together with
        --------
all accrued and unpaid interest and any other accrued and unpaid obligations
then

                                      -8-

<PAGE>

outstanding under the Loan Documents, shall be due and payable on June 5, 2005
(the "Maturity Date").

     5. Prepayment. The principal of this Note may be voluntarily prepaid on any
        ----------
Payment Date(s), in its entirety or in any integral multiple of $5,000. After
any partial prepayment of principal, the amount of subsequent payments under
this Note shall be determined as if no such prepayment had been made until the
Loan (including all accrued interest) is paid in full.

     6. Timing of Payments. Each payment under this Note shall be made in
        ------------------
immediately available funds before noon, Los Angeles, California time, on the
date that such payment is due. If the due date for any payment is not a Business
Day, such due date shall be deemed for all purposes to fall on the next Business
Day, and any such extension shall be included in the computation of interest
payments.

     7. Acceleration and Other Remedies. Upon the occurrence of any Event of
        -------------------------------
Default, the holder of this Note may, at its option, declare the outstanding
principal balance of this Note, together with all accrued interest and related
charges, to be immediately due and payable. All rights and remedies provided to
the holder in this Note are cumulative and shall be in addition to all other
rights and remedies of the holder under other documents, at law or in equity,
and all such rights and remedies may be exercised singly, successively and/or
concurrently. Failure to exercise any right or remedy shall not be deemed a
waiver of such right or remedy.

     8. Application of Payments. While no Event of Default remains uncured, (a)
        -----------------------
all payments made hereunder shall be applied first to interest due and then in
reduction of the principal balance, and (b) if more than one monthly payment
remains unpaid, amounts received shall be applied to such payments in reverse
chronological order. While any Event of Default remains uncured, payments made
hereunder shall be applied against amounts due as Lender chooses, application as
to particular obligations or against principal or interest to be in Lender's
absolute discretion.

     9. Waivers. Borrower and all co-makers, guarantors, accommodation parties,
        -------
endorsers and other persons and entities liable for amounts owing hereunder
hereby waive presentment, demand, protest, notice of dishonor, notice of protest
and all other notices and demands of every kind, and all suretyship defenses of
every kind that would otherwise be available in connection with this Note,
including without limitation any right (whether now or hereafter existing) to
require the holder hereof to first proceed against Borrower, any other person or
entity, or any security.

                                      -9-

<PAGE>

         10. Costs of Enforcement. If any amount owing hereunder is not paid
             --------------------
when due, Borrower shall pay, on demand, all costs of collection, including
foreclosure fees and attorneys' fees incurred by Lender, whether or not suit is
filed or a foreclosure sale occurs.

         11. Maximum Interest. In no event shall the amount paid or agreed to be
             ----------------
paid to the Lender as interest under this Note exceed the highest lawful rate
allowed to be received by the Lender in the State of California. If, from any
circumstance whatsoever, fulfillment of any provision in this Note or of any
other agreement between the Borrower and the Lender related to this Note shall,
at the time of such fulfillment, involve payment of interest in excess of that
authorized to be received by the Lender under the law of the State of
California, then the obligation to be fulfilled shall be reduced to the limits
so authorized by law, and if from any circumstance the Lender shall ever receive
a sum as interest in excess of that authorized to be received by the Lender
under the law of the State of California, it shall not be deemed interest but
shall be applied to reduce the principal amount of this Note.

         12. Miscellaneous. Time is of the essence hereof. Interest not paid
             -------------
when due shall earn interest as principal. All payments hereunder shall be made
in lawful money of the United States of America. This Note shall be governed by
the laws of the State of California. .

         13. Secured Obligations. This Note is secured by a Deed of Trust,
             -------------------
Assignment of Rents and Fixture Filing executed as of January 5, 2002 by
Borrower, as trustor, naming Chicago Title Insurance Company, as trustee, for
the benefit of Lender, as beneficiary, covering certain real and personal
property, as therein described. This Note may also be secured by other
collateral.

                                      -10-

<PAGE>

                                        "Borrower":

                                        1999 LAWNDALE ASSOCIATES LLC

                                        By:  Khaledi Family Partnership II,
                                        a California general partnership,
                                        its Manager

                                        By: _____________________________

                                        Its: ____________________________
                                             [Printed Name and Title]

                                      -11-

<PAGE>

                                    Exhibit B
                                    ---------

                            REAFFIRMATION OF GUARANTY

                                      -12-

<PAGE>

              MODIFICATION OF GUARANTY, CONSENT TO MODIFICATION OF
                  LOAN DOCUMENTS AND REAFFIRMATION OF GUARANTY

The undersigned (collectively, the "Guarantors") hereby consent to the terms and
conditions of that certain Modification Agreement ("Modification Agreement")
dated as of January 5, 2002 by and between 1999 Lawndale Associates LLC, a
California limited liability company ("Borrower") and Unified Western Grocers,
Inc., a California corporation ("Lender"), any other documents evidencing
modifications to the Loan Documents (as defined in the Modification Agreement)
executed in connection therewith, and the transactions contemplated thereby and
collectively reaffirm their obligations under the Guaranty (as modified below,
the "Guaranty") dated July 5, 2000, and each of their waivers, as set forth in
the Guaranty, of each and every one of the possible defenses to such
obligations. Each Guarantor further reaffirms that each of its obligations under
the Guaranty are separate and distinct from Borrower's obligations.

The undersigned Guarantors further agree that the following terms and conditions
are hereby added as subsections (h) and (i) of Section 4 of the Guaranty:

"(h)     Guarantor waives all rights and defenses that Guarantor may have in the
event that the Indebtedness is secured by real property. This means among other
things:

         (i)     Lender may collect from Guarantor without first foreclosing on
any real or personal property collateral pledged by Borrower.

         (ii)    If Lender forecloses on any real property collateral pledged by
Borrower:

                 (a) The amount of the Indebtedness may be reduced only by the
price for which the collateral is sold at the foreclosure sale, even if the
collateral is worth more than the sale price.

                 (b) Lender may collect from Guarantor even if Lender, by
foreclosing on the real property collateral, has destroyed any right Guarantor
may have to collect from Borrower.

This subsection 4(h) is an unconditional and irrevocable waiver of the rights
and defenses Guarantor may have in the event that the Indebtedness is secured by
real

                                      -13-

<PAGE>

property. These rights and defenses include, but are not limited to, any rights
or defenses based upon Section 580a, 580b, 580d, or 726 of the Code of Civil
Procedure.

(i)           The Guarantor waives all rights and defenses arising out of an
election of remedies by the creditor, even though that election of remedies,
such as a nonjudicial foreclosure with respect to security for a guaranteed
obligation, has destroyed the Guarantor's rights of subrogation and
reimbursement against the principal by the operation of Section 580d of the Code
of Civil Procedure or otherwise."

         IN WITNESS WHEREOF, each Guarantor has caused this Modification of
Guaranty, Consent to Modification of Loan Documents and Reaffirmation of
Guaranty to be duly executed as of the date written below:

Dated as of: January 5, 2002

                                                          "GUARANTOR"

                                            ___________________________________
                                            DARIOUSH KHALEDI

                                            ___________________________________
                                            SHAHPAR KHALEDI

                                            ___________________________________
                                            DARIOUSH KHALEDI, as trustee of the
                                            Khaledi Family Trust under
                                            declaration of Trust dated May 17,
                                            1995

                                            K.V. PROPERTY COMPANY

                                            By:   ___________________________
                                                  Darioush Khaledi
                                                  [Title]

                                      -14-

<PAGE>

                                             ________________________________
                                             PARVIZ VAZIN

                                             ________________________________
                                             VIDA VAZIN

                                             KHALEDI FAMILY PARTNERSHIP II

                                             By:   ____________________________
                                                   Darioush Khaledi
                                                   Manager

                                                   KHALEDI FAMILY PARTNERSHIP II

                                                   Its

                                      -15-

<PAGE>

                                    Exhibit C
                                    ---------

                                    MORTGAGE

                                      -16-<PAGE>

                                                                   EXHIBIT 10.43

RECORDING REQUESTED BY, AND
WHEN RECORDED RETURN TO:

Sheppard, Mullin, Richter & Hampton LLP
333 South Hope Street, 48th Floor
Los Angeles, California  90071
Attention: Richard F. Anthony

INSTRUCTIONS TO COUNTY RECORDER:

Index this document as
(1) a deed of trust and
(2) a fixture filing

________________________________________________________________________________

                       DEED OF TRUST, ASSIGNMENT OF RENTS
                               AND FIXTURE FILING

          This Deed of Trust, Assignment of Rents and Fixture Filing ("Deed of
Trust"), dated as of January 5, 2002, is executed by 1999 LAWNDALE ASSOCIATES
LLC, a California limited liability company ("Trustor"), whose address is 1245
East Watson Center Road, Carson, California 90745-4207, Attention: President, as
trustor, in favor of CHICAGO TITLE INSURANCE COMPANY ("Trustee"), as trustee,
for the benefit of UNIFIED WESTERN GROCERS, INC., a California corporation
("Beneficiary"), whose address is 5200 Sheila Street, Commerce, California
90040, Attention: Secretary, as beneficiary.

NOTICE: THE OBLIGATIONS SECURED HEREBY PROVIDE FOR PERIODIC INCREASES AND/OR
DECREASES IN THE APPLICABLE INTEREST RATE WHICH MAY RESULT IN INCREASES IN THE
PRINCIPAL BALANCE ABOVE THE FACE PRINCIPAL AMOUNT OF THE APPLICABLE NOTE.

     1.   Assignment in Trust with Power of Sale. For good and valuable
          --------------------------------------
consideration, the receipt and adequacy of which are hereby acknowledged,
Trustor hereby irrevocably grants, conveys and assigns to Trustee, IN TRUST,
WITH POWER OF SALE, AND WITH RIGHT OF ENTRY AND POSSESSION, as security for the
obligations described below, all of Trustor's right, title and interest, whether
now existing or hereafter acquired, in and to all of the following
(collectively, the "Property"):

                                       -1-

<PAGE>

          1.1   That certain real property (the "Land") in the City of Lawndale,
County of Los Angeles, State of California, described in Exhibit "A," attached
hereto and incorporated herein by this reference.

          1.2   All buildings, landscaping and other improvements now or
hereafter located on or appurtenant to the Land, including without limitation
the Fixtures (as defined below) (collectively, the "Improvements").

          1.3   All easements, rights of way, licenses and other rights now or
hereafter used in connection with the Property or as a means of access thereto,
including without limitation: water and water rights, and shares of stock
evidencing the same; trackage agreement rights; rights to use common drive
entries; rights relating to land within the right-of-way of adjoining streets;
rights in or to sidewalks, alleys and strips and gores of land adjoining or used
in connection with the Property; air rights; development rights and credits; and
tenements, hereditaments and other appurtenances of and to the Property.

          1.4   All fixtures now or hereafter located on, attached to, installed
in or used in connection with the Property (collectively, the "Fixtures"),
including without limitation all partitions; generators; awnings; boilers;
furnaces; pipes; plumbing; elevators and escalators; cleaning, call and
sprinkler systems; fire extinguishing machinery and equipment; water tanks;
heating, ventilating, air conditioning and air cooling machinery and equipment;
storm windows and doors; screens, blinds, shades, curtains and related fixtures;
lighting fixtures and equipment; gas and electric machinery and equipment;
security and access control equipment; built-in cabinets, paneling and wall and
floor coverings; refrigerators, stoves, ovens, dishwashers, garbage disposal and
other kitchen appliances; washers and dryers; and other appliances, machinery
and equipment and other fixtures of every nature, all of which shall remain real
property.

          1.5   All oil, gas and other mineral rights relating to the Property,
all crops growing or hereafter grown on the Property, and all other commercially
valuable substances on, under or produced from any part of the Land, and all
royalty, leasehold and other rights pertaining to the foregoing.

          1.6   All of Trustor's right, title and interest as landlord or tenant
in and to all leases and subleases relating to any portion of the Property,
including without limitation all advance rentals and deposits (but not including
the Rents, as defined and separately assigned in Article 3).

          1.7   All deposits made with and other security given to utility
companies by Trustor in connection with the Property, and all claims in law and
equity that relate to the Property.

                                       -2-

<PAGE>

          1.8   All greater right, title and interest hereafter acquired by
Trustor in or to the Property, and all options relating to such property
(whether Trustor is optionor or optionee).

          1.9   All rights to proceeds of property, liability, rent abatement
and other insurance relating to the ownership or operation of the Property
(whether or not Trustor is obligated to maintain any such insurance under the
Loan Documents), and all awards made for the taking by eminent domain (or by any
proceeding in lieu thereof) of any portion of the Property, including awards
relating to changes in grade of streets or for severance damages.

          1.10  All additions and accretions to any of the foregoing.

     2.   Obligations Secured. This Deed of Trust secures the performance of
          -------------------
each of the following obligations (collectively, the "Secured Obligations"):

          2.1   The indebtedness evidenced by that certain Promissory Note dated
July 5, 2000 in the original face principal amount of $3,000,000 made by Trustor
to the order of Beneficiary, as the same has been amended and restated by that
certain Amended and Restated Promissory Note dated January 5, 2002 in the face
principal amount of $3,000,000 made by Trustor to the order of Beneficiary (the
"Note").

          2.2   Each of Trustor's obligations under that certain Term Loan
Agreement dated as of July 5, 2000 (as the same may have been amended or
modified, the "Loan Agreement") by and between Trustor and Beneficiary.

          2.3   Each of Trustor's other obligations to Beneficiary in connection
with the transaction to which the Note relates, including Trustor's obligations
under all documents now or hereafter executed by Trustor (at Beneficiary's
request) in connection with such transaction (collectively, together with the
Note and this Deed of Trust, the "Loan Documents"), unless such document
expressly states that it is not secured by this Deed of Trust.

          2.4   Each of Trustor's obligations hereunder.

          2.5   Any and all amendments, renewals, extensions and other
modifications of any of the foregoing, including without limitation
modifications that change the rate of interest on any Secured Obligation.

          2.6   Reimbursement of all amounts advanced by or on behalf of
Beneficiary to protect Beneficiary's interests under this Deed of Trust.

                                      -3-

<PAGE>

     3.   Assignment of Rents and Profits.
          -------------------------------

          3.1   Absolute Assignment. Trustor hereby absolutely and irrevocably
                -------------------
assigns to Beneficiary all of its right, title and interest in and to all rents,
issues, profits, royalties, income and other proceeds and similar benefits
derived from the Property (collectively, the "Rents"), and hereby irrevocably
appoints Beneficiary its true and lawful attorney-in-fact, at Beneficiary's
option at any time, to demand, receive and enforce payment, to give receipts,
releases and satisfactions, and to sue, either in Trustor's name or in
Beneficiary's name, for all Rents.

          3.2   License to Collect. Notwithstanding the foregoing assignment of
                ------------------
the Rents, so long as no Event of Default (as defined below) remains uncured,
Trustor shall have a license to collect all Rents (but no more than one month in
advance), and to retain and enjoy the same.

          3.3   Collection and Application of Rents by Beneficiary. While any
                --------------------------------------------------
Event of Default remains uncured, (a) Trustor's license to collect the Rents
shall automatically terminate, without notice, (b) Beneficiary may at any time,
without notice, in person, by agent or by court-appointed receiver, and without
regard to the adequacy of any security for the Secured Obligations, enter upon
any portion of the Property and/or, with or without taking possession thereof,
in its own name sue for or otherwise collect the Rents (including past due
amounts), and (c) promptly following demand by Beneficiary therefor, Trustor
shall deliver to Beneficiary all prepaid Rents, deposits relating to Rents, and
all other Rents then held by or thereafter collected by Trustor. All Rents
collected by or delivered to Beneficiary may only be (i) held by Beneficiary as
collateral for the Secured Obligations and/or (ii) applied by Beneficiary
against the Secured Obligations, in such order as Beneficiary shall determine in
its absolute discretion. No application of Rents against any Secured Obligation
or other action taken by Beneficiary under this Article 3 shall be deemed to
cure or waive any Event of Default, or to invalidate any other action taken in
response to such default, or to make Beneficiary a mortgagee-in-possession of
the Property.

          3.4   Further Assignments. Upon demand by Beneficiary from time to
                -------------------
time, Trustor shall promptly execute and deliver to Beneficiary, in form and
substance reasonably satisfactory to Beneficiary, recordable assignments of
Trustor's interest in any leases, subleases, contracts, licenses, permits and
other documents and agreements to which Rents relate; provided, however, that no
such assignment shall be construed to impose upon Beneficiary any obligation
with respect thereto.

          3.5   Termination. The assignment of the Rents to Beneficiary
                -----------
hereunder shall terminate and be of no further force and effect following the
satisfaction in full of all Secured Obligations.

                                      -4-

<PAGE>

          3.6   Assigned Leases. Except as otherwise agreed in writing by
                ---------------
Beneficiary from time to time, the following shall apply to each lease and
sublease (collectively, the "Assigned Leases") with respect to which any portion
of the landlord's interest is assigned to Beneficiary under this Deed of Trust:

                3.6.1  Trustor shall promptly perform all of its obligations as
landlord under each Assigned Lease, and shall immediately notify Beneficiary in
writing of any notice of default received by Trustor from the tenant thereunder.

                3.6.2  Trustor shall diligently enforce the performance of all
of the obligations of the tenant under each Assigned Lease; shall not waive any
default or waive, release or discharge any such tenant of or from any such
obligation; and shall not modify or terminate any Assigned Lease without
Beneficiary's prior written consent, which shall not be unreasonably withheld.

                3.6.3  Trustor shall not collect the rents (or any other
amounts) due under any Assigned Lease more than one month in advance of the date
due.

                3.6.4  Trustor hereby irrevocably authorizes and directs the
tenants under all Assigned Leases to pay all amounts owing to Trustor thereunder
to Beneficiary following receipt of any written notice from Beneficiary which
states that an Event of Default remains uncured and that all such amounts are to
be paid to Beneficiary. Trustor further authorizes and directs all such tenants
to pay all such amounts to Beneficiary without any right or obligation to
inquire as to the validity of Beneficiary's notice and regardless of the fact
that Trustor has notified any such tenant(s) that Beneficiary's notice is
invalid or has then directed any such tenant(s) not to pay such amounts to
Beneficiary.

                3.6.5  Upon the foreclosure of this Deed of Trust, no Assigned
Lease shall be destroyed or terminated by application of the doctrine of merger
or as a matter of law unless Beneficiary or any purchaser at such foreclosure
sale so elects. No act by or on behalf of Beneficiary or any such purchaser
shall constitute a termination of any Assigned Lease unless Beneficiary or such
purchaser gives written notice thereof to the applicable tenant or subtenant.

                3.6.6  Trustor hereby represents and warrants to Beneficiary,
with respect to each Assigned Lease that is presently in effect (collectively,
the "Current Assigned Leases"), (a) that Trustor has delivered to Beneficiary a
true and complete copy of each Current Assigned Lease, together with all
modifications; (b) that Trustor has not accepted any payment of rent (or other
charge) under any Current Assigned Lease that is not due until on or after the
30th day following the execution hereof; and (c) that, to the best of Trustor's
knowledge, no material default by Trustor or any other person under any Current
Assigned Lease remains uncured.

                                      -5-

<PAGE>

               3.6.7  Beneficiary may elect in its absolute discretion, at any
time and from time to time, by written notice to Trustor, to unilaterally
subordinate the lien of this Deed of Trust to any Assigned Lease which is then
junior in priority to the lien hereof. Trustor shall provide written notice of
any such subordination to the applicable tenant within five (5) business days
following Trustor's receipt of any such written notice from Beneficiary, but
Trustor's failure to so notify any such tenant shall not impair the
effectiveness of Beneficiary's subordination.

     4.   Maintenance, Operation, Preservation and Repair of Property. Trustor
          -----------------------------------------------------------
shall maintain the Property (and all abutting grounds, sidewalks, roads, parking
and landscape areas) in good condition and repair, shall operate the Property in
a businesslike manner, shall prudently preserve and protect both its own and
Beneficiary's interests in connection with the Property, shall not commit or
permit any waste or deterioration of the Property, shall not abandon any portion
of the Property or leave the Property unguarded or unprotected, and shall not
otherwise act, or fail to act, in such a way as to unreasonably increase the
risk of any damage to the Property or of any other impairment of Beneficiary's
interests hereunder. Without limiting the generality of the foregoing, and
except as otherwise agreed by Beneficiary in writing from time to time, Trustor
shall promptly and faithfully perform and observe each of the following
provisions:

          4.1  Alterations and Repair. Trustor shall not remove, demolish or
               ----------------------
materially alter any Improvement, except to make non-structural repairs which
preserve or increase the Property's value. Trustor shall promptly restore, in a
good and workmanlike manner, any Improvement (or other aspect of the Property)
that is damaged or destroyed from any cause, and shall diligently complete, in a
good and workmanlike manner, any Improvement constructed by Trustor from time to
time.

          4.2  Compliance with Laws. Trustor shall comply with all federal,
               --------------------
state and local laws, rules, regulations, codes and administrative and judicial
decisions applicable to the Property, shall not permit any act on or with
respect to the Property in violation of any of the foregoing, and shall obtain
and maintain in effect all licenses, permits, exemptions, approvals and other
authorizations required by law in connection with the ownership and operation of
the Property.

          4.3  Compliance with Rights of Third Parties. Trustor shall comply
               ---------------------------------------
with all covenants, conditions, restrictions, easements and rights of way, and
all other contract and other rights of third parties relating to the Property,
including without limitation all leases and subleases under which Trustor is a
landlord or tenant.

          4.4  Changes in Property Restrictions. Trustor shall not initiate,
               --------------------------------
join in or consent to any parcel map or other subdivision (or change thereto),
any change in any applicable zoning ordinance, general plan or similar law, or
any change to any

                                      -6-

<PAGE>

private restrictive covenant or any similar public or private restriction or
obligation with respect to the Property.

          4.5  Taxes and Impositions. Trustor shall pay, prior to delinquency,
               ---------------------
all of the following (collectively, the "Impositions"): all general and special
real property taxes and assessments imposed on the Property; all other taxes and
assessments of every kind that are assessed upon the Property (or upon the owner
and/or operator of the Property) and that create or may create a lien upon the
Property (or upon any personal property or fixture used in connection with the
Property), including without limitation non-governmental levies and assessments
imposed in connection with covenants, conditions or restrictions; all taxes and
assessments imposed on the Property following Trustor's execution hereof in lieu
of or in addition to any of the foregoing Impositions; and all license fees,
taxes and assessments imposed on Beneficiary (other than income and franchise
taxes) and measured by or based upon (in whole or in part) the Secured
Obligations. If permitted by law, Trustor may pay any Imposition in
installments.

               4.5.1  Right to Contest. Trustor shall not be required to pay any
                      ----------------
Imposition so long as (a) its validity is being actively contested in good faith
and by appropriate proceedings and (b) Trustor has demonstrated to Beneficiary's
reasonable satisfaction that leaving such Imposition unpaid pending the outcome
of such proceedings could not result in the sale of the Property to satisfy such
Imposition or otherwise impair Beneficiary's interests hereunder; provided that,
if reasonable under the circumstances, Beneficiary may require Trustor to
furnish Beneficiary with a bond or other security reasonably satisfactory to
Beneficiary in an amount not less than 150% of the applicable claim.

               4.5.2  Evidence of Payment; Tax Reporting Service. Upon demand by
                      ------------------------------------------
Beneficiary from time to time, Trustor shall (a) deliver to Beneficiary, within
30 days following the due date of any Imposition, evidence of payment reasonably
satisfactory to Beneficiary and (b) furnish to Beneficiary a tax reporting
service for the Property of a type and duration, and with a company, reasonably
satisfactory to Beneficiary.

          4.6  Utility Charges. Trustor shall promptly pay all utility charges
               ---------------
incurred for the benefit of the Property or which may become a lien upon the
Property, and all assessments and other charges of a similar nature, public or
private, relating to the Property, regardless of whether any such charge is or
may become a lien thereon.

          4.7  Liens. Trustor shall perform, on or before the date due, all
               -----
obligations secured by any lien or encumbrance upon any portion of the Property.

               4.7.1  Right to Contest. Notwithstanding the foregoing, Trustor
                      ----------------
shall not be required to perform any such secured obligation so long as (a) its
validity

                                      -7-

<PAGE>

is being actively contested in good faith and by appropriate proceedings and (b)
Trustor has demonstrated to Beneficiary's reasonable satisfaction that leaving
such obligation unpaid or unperformed pending the outcome of such proceedings
could not result in the sale of the Property to satisfy such obligation or
otherwise impair Beneficiary's interests hereunder; provided that, if reasonable
under the circumstances, Beneficiary may require Trustor to furnish Beneficiary
with a bond or other security reasonably satisfactory to Beneficiary in an
amount not less than 150% of the applicable claim.

               4.7.2  Discharge by Beneficiary. If Trustor fails to fulfill its
                      ------------------------
obligations under this Section with respect to any lien or encumbrance,
Beneficiary may discharge the same by paying the amount due or by providing a
bond or other security therefor, without inquiring into the validity of such
lien or encumbrance and without regard for any claimed defense or offset, and
Trustor shall, within 3 business days following receipt of written demand,
reimburse Beneficiary for all costs incurred by Beneficiary in connection
therewith.

          4.8  Books and Records. Trustor shall maintain complete books of
               -----------------
account and other records relating to the ownership and operation of the
Property, including contributions of equity investment capital, in accordance
with accounting principles reasonably acceptable to Beneficiary and applied on a
consistent basis.

          4.9  Hazardous Materials.
               -------------------

               4.9.1  Without limiting the generality of Section 4.2, Trustor
                                                                 ---
shall not cause or permit the violation of any law relating to industrial
hygiene or environmental conditions in connection with the Property, including
soil and ground water conditions, or use, generate, manufacture, store or
dispose of on, under or about the Property, or transport to or from the
Property, any flammable explosives, radioactive materials, hazardous wastes,
toxic substances and similar substances and materials, including all substances
and materials defined as hazardous or toxic wastes, substances or materials
under any applicable law (collectively, "Hazardous Materials"). Trustor shall
promptly take all remedial actions required by law from time to time with
respect to any Hazardous Materials on, under or about the Property; provided
that, in any instance where remedial action is not expressly required or the
precise nature of the required remedial action is not mandated by law, Trustor
shall not pursue any particular remedial action without Beneficiary's prior
written consent. Trustor shall not enter into any settlement agreement, consent
decree or other compromise or agreement relating to any such Hazardous Materials
without Beneficiary's prior written consent.

               4.9.2  Except as previously disclosed to Beneficiary in writing
in Exhibit "B" hereto (collectively, the "Environmental Disclosure Documents"),
Trustor has no knowledge of the presence on, under or about the Property, now or
in the past,

                                      -8-

<PAGE>

of any Hazardous Materials, or of the transportation to or from the Property of
any Hazardous Materials, and Trustor has made no disclosures to Beneficiary with
respect to any of the foregoing, written or oral, other than those set forth in
the Environmental Disclosure Documents. Trustor acknowledges that the delivery
to Trustor by Beneficiary of Beneficiary's request for the Environmental
Disclosure Documents an execution copy of this Deed of Trust constitutes a
"written request for information" by Beneficiary pursuant to California Code of
Civil Procedure Section 726.5(d)(2). Beneficiary and its representatives may
from time to time, at reasonable times and following reasonable notice, perform
such tests (including soil and groundwater tests) as Beneficiary reasonably
deems appropriate to protects its interests with respect to the Property.

     5.   Insurance.
          ---------

          5.1  Policies Required. Trustor shall at all times maintain at
               -----------------
Trustor's sole expense, with insurers reasonably approved by Beneficiary, the
following policies of insurance in form and substance reasonably satisfactory to
Beneficiary:

               (a)  all insurance required by law from time to time with respect
     to the ownership or operation of the Property, including without limitation
     workers' compensation and employer's liability insurance;

               (b)  fire and hazard "all risk" insurance covering 100% of the
     replacement cost of the Improvements in the event of fire, lightning,
     windstorm, earthquake, vandalism, malicious mischief and all other risks
     normally covered by "all risk" coverage policies in the area where the
     Property is located (including loss by flood if the Property is in an area
     designated as subject to the danger of flood);

               (c)  commercial general liability insurance in amounts reasonably
     required by Beneficiary from time to time, and in no event less than
     $3,000,000 combined single limit;

               (d)  all business interruption insurance that Beneficiary
     reasonably requires (including insurance against income loss during a
     period of restoration of at least two years); and

               (e)  all other insurance reasonably required by Beneficiary from
     time to time.

All such insurance shall provide that it may not be cancelled or materially
modified without 30 days' prior written notice to Beneficiary. The policies
required under subparagraphs (b) and (d), and any other property insurance
policies maintained from time to time with respect to the Property, shall
include a "lender's loss payable

                                      -9-

<PAGE>

endorsement" (Form 438BFU) in form and substance satisfactory to Beneficiary,
assuring Beneficiary that all proceeds shall be paid to Beneficiary as
encumbrancer. Beneficiary shall be an additional named insured in the policies
required under subparagraph (c). No insurance required hereunder shall include
deductible amounts to which Beneficiary has not previously consented in writing.
Certificates of insurance for the policies required hereunder (and/or original
policies, if required by Beneficiary) shall be delivered to Beneficiary from
time to time upon demand. All policies insuring against damage to the
Improvements shall contain an agreed value clause sufficient to eliminate any
risk of co-insurance. No less than 30 days prior to the expiration of each
policy, Trustor shall deliver to Beneficiary evidence of renewal or replacement
of such policy reasonably satisfactory to Beneficiary.

          5.2  Claims. Trustor shall give Beneficiary immediate notice of any
               ------
casualty to any portion of the Property, whether or not covered by insurance. If
covered (and regardless of whether the applicable insurance policy was required
under the terms hereof), Trustor hereby authorizes Beneficiary, if Beneficiary
so elects, to make proof of loss, to appear in and prosecute any action arising
from any applicable policy and, while any Event of Default remains uncured, to
settle, adjust or compromise any claim under any such policy, and Trustor hereby
irrevocably appoints Beneficiary its true and lawful attorney-in-fact for all
such purposes. Trustor shall not settle, adjust or compromise any such claim
without the reasonable prior written approval of Beneficiary.

          5.3  Delivery of Proceeds to Beneficiary. In the event that,
               -----------------------------------
notwithstanding the "lender's loss payable endorsement" requirement set forth
above, the proceeds of any casualty insurance policy relating to the Property
are paid to Trustor, Trustor shall deliver such proceeds to Beneficiary
immediately upon receipt.

          5.4  Application of Casualty Insurance Proceeds. Any proceeds
               ------------------------------------------
collected (the "Proceeds") under any casualty insurance policy described in this
Deed of Trust or relating to the Property shall be disbursed to Trustor as
provided below, but only upon fulfillment of each of the following conditions
(the "Restoration Conditions") within 60 days following the occurrence of the
damage for which the Proceeds are collected:

          (a)  Trustor shall demonstrate to Beneficiary's reasonable
satisfaction that the Proceeds (together with amounts deposited by Trustor
pursuant to subparagraph (b)) will be adequate to repair the Improvements and to
restore the fair market value of the Property, within a time period reasonably
determined by Beneficiary, to at least the value it had immediately prior to
sustaining the damage. Such demonstration shall include delivery to Beneficiary
of (i) plans and specifications reasonably satisfactory to Beneficiary and (ii)
a construction contract in form and content, and with a contractor, reasonably
satisfactory to Beneficiary.

                                      -10-

<PAGE>

          (b)  To the extent that the Proceeds are insufficient to accomplish
the restoration required above, Trustor shall deliver to Beneficiary funds (the
"Shortfall Funds") in the amount of such shortfall, which funds shall be
assigned to Beneficiary as security for Trustor's obligations hereunder and held
and disbursed in the same manner as the Proceeds.

          (c)  Trustor shall execute such documents as Beneficiary requires to
evidence and secure Trustor's obligation to use all amounts disbursed for the
diligent restoration of the Property.

          (d)  No Event of Default shall remain uncured.

               5.4.1  Any Proceeds and Shortfall Funds to be disbursed to
Trustor shall be held by Beneficiary and disbursed in accordance with customary
construction lending practices. Any amounts remaining undisbursed following
completion of such restoration shall be returned to Trustor up to the amount of
any Shortfall Funds deposited by Trustor, and any other amounts remaining shall
either be paid to Trustor or applied by Beneficiary against the Secured
Obligations, as Beneficiary elects in its absolute discretion.

               5.4.2  In the event that Trustor fails to fulfill the Restoration
Conditions within 60 days following the date on which the damage occurs, the
Proceeds shall (if Beneficiary so elects in its absolute discretion) be applied
by Beneficiary against the Secured Obligations, and in such event the selection
of which Secured Obligations to apply the Proceeds against shall be made by
Beneficiary in its absolute discretion.

          5.5  Restoration. Nothing in this Article 5 shall be construed to
               -----------
excuse Trustor from repairing and restoring all damage to the Property in
accordance with other Loan Document provisions, regardless of whether insurance
proceeds are available or sufficient.

          5.6  Assignment of Policies Upon Foreclosure. In the event of
               ---------------------------------------
foreclosure of this Deed of Trust or other assignment of the Property in
extinguishment of any Secured Obligations, all policies of insurance required
hereunder (and all other policies encumbered by this Deed of Trust or any other
Loan Document) and any related unearned premiums shall, without further action,
be assigned to the successor-in-interest to Trustor with respect to the
Property, and Trustor hereby irrevocably appoints Beneficiary as its true and
lawful attorney-in-fact to execute all documents necessary to effect any such
transfer.

          5.7  Waiver of Subrogation. Trustor hereby waives all right to recover
               ---------------------
against Beneficiary (or any officer, employee, agent or representative of
Beneficiary) for any loss incurred by Trustor from any cause insured against or
required by any

                                      -11-

<PAGE>

Loan Document to be insured against; provided, however, that this waiver of
subrogation shall not be effective with respect to any insurance policy if the
coverage thereunder would be materially reduced or impaired as a result. Trustor
shall use its best efforts to obtain only policies which permit the foregoing
waiver of subrogation.

    6.    Condemnation.
          ------------

          6.1  Proceedings. Upon learning of the institution or threatened
               -----------
institution of any proceeding for the condemnation or other taking for public or
quasi-public use of any portion of the Property, Trustor shall immediately
notify Beneficiary in writing, together with copies of all applicable documents.
Trustor shall take all action reasonably required by Beneficiary in connection
therewith to protect the interests of Trustor and/or Beneficiary, and
Beneficiary shall be entitled (without regard to the adequacy of its security)
to participate in any such proceeding and be represented therein by counsel of
its choice.

          6.2  Compensation. Trustor hereby assigns to Beneficiary, as security
               ------------
for the Secured Obligations, all amounts payable to Trustor in connection with
any taking of any portion of the Property for public or quasi-public use, and
any proceeds of any related settlement regardless of whether eminent domain
proceedings are instituted in connection therewith (collectively,
"Compensation"). Trustor shall deliver all Compensation to Beneficiary
immediately upon receipt. In the event Beneficiary chooses, in its absolute
discretion, to waive any Event of Default resulting from any such taking, any
Compensation received by Beneficiary shall be (i) disbursed to Trustor for
repairs and reconstruction and/or (ii) paid to Trustor and/or (iii) applied by
Beneficiary against the Secured Obligations, in accordance with the rights,
procedures and other provisions set forth in this Deed of Trust for the
application of casualty insurance proceeds (including requirements with respect
to Trustor's deposit of Shortfall Funds).

     7.   Additional Duties and Powers.
          ----------------------------

          7.1  Actions by Beneficiary to Protect Its Interests. If Trustor fails
               -----------------------------------------------
to perform any Secured Obligation, either Beneficiary or Trustee or both may,
without releasing Trustor from such obligation, perform such obligation to the
extent reasonably necessary to protect its interests hereunder. Without limiting
the generality of the foregoing, Beneficiary and Trustee are each hereby
specifically authorized to do any or all of the following:

               7.1.1 Enter upon and/or take possession of the Property.

               7.1.2 Make alterations, repairs and other improvements reasonably
necessary to maintain the Property in good condition and repair.

                                      -12-

<PAGE>

               7.1.3  Participate and appear in any action or proceeding which
may affect Beneficiary's interests hereunder.

               7.1.4  Pay, purchase, contest and/or compromise any encumbrance,
lien or other claim which may affect Beneficiary's interests hereunder.

               7.1.5  Pay all expenses reasonably incurred in protecting
Beneficiary's interests hereunder, including fees and costs of attorneys and
other consultants.

          7.2  Inspections. Beneficiary and its representatives may from time to
               -----------
time, at reasonable times and following reasonable notice (except in
emergencies), conduct inspections of the Property, and inspect and/or copy any
and all books and records relating thereto, for the purpose of monitoring
Trustor's compliance with its obligations under this Deed of Trust and any other
document secured hereby.

          7.3  Defense of Actions. Trustor shall, at its sole expense, appear in
               ------------------
and defend any action or proceeding which may affect Beneficiary's interests
hereunder or under any other Loan Document.

          7.4  Indemnity of Beneficiary and Trustee. Trustor shall defend,
               ------------------------------------
indemnify and hold Beneficiary and Trustee and the directors, officers, agents
and employees of each (collectively, the "indemnitees") harmless from and
against:

               (a)    all claims, demands and causes of action asserted against
     any indemnitee by any person which directly or indirectly relate to (i) a
     claim, demand or cause of action that such person has or asserts against
     Trustor (or any other obligor or guarantor with respect to any Secured
     Obligation), (ii) any lease or other contract assigned to Beneficiary
     hereunder, (iii) acts or omissions of Trustor, or other rights of third
     parties, relating to the Property, or (iv) the ownership, occupancy or use
     of the Property; and

               (b)    all liabilities, losses and other costs (including court
     costs and attorneys' fees) incurred by any indemnitee as the result of any
     claim, demand or cause of action described in subparagraph (a).

Each indemnitee's indemnity rights shall not be limited, prejudiced or impaired
in any way by any finding or allegation that such indemnitee's conduct was
active, passive or subject to any other classification or that such indemnitee
was directly or indirectly responsible under any theory for any act or omission
by Trustor or any other person. Notwithstanding the foregoing, Trustor shall not
be obligated to indemnify any indemnitee with respect to the consequences of any
act of gross negligence or willful misconduct which such indemnitee is
determined by a court of competent jurisdiction (sustained on appeal, if any) to
have committed. Trustor's indemnity obligations

                                      -13-

<PAGE>

hereunder shall survive the foreclosure (or transfer by deed in lieu thereof) or
reconveyance of this Deed of Trust.

          7.5  Reimbursement of Beneficiary. Trustor shall reimburse Beneficiary
               ----------------------------
immediately upon written demand for all costs reasonably incurred by Beneficiary
(including fees and expenses of attorneys and other consultants) in the exercise
of Beneficiary's rights hereunder and the enforcement of Trustor's obligations
hereunder, including without limitation the following:

               7.5.1  Costs incurred under Section 7.1 to protect Beneficiary's
                                                   ---
interests hereunder.

               7.5.2  Costs incurred in connection with claims, demands, causes
of action, liabilities, losses and other costs against which Beneficiary is
indemnified hereunder.

               7.5.3  All liabilities, losses and other costs incurred by
Beneficiary as a direct or indirect result of any Event of Default, including
the cost of a Trustee's Sale Guarantee, Trustee's fees and expenses, and
receiver's fees and expenses.

Trustor's reimbursement obligations under this Deed of Trust shall be Secured
Obligations, shall bear interest following written demand in accordance with the
Note, and shall survive the foreclosure (or transfer by deed in lieu thereof) or
reconveyance of this Deed of Trust.

          7.6  Notice of Certain Matters. Trustor shall give notice to
               -------------------------
Beneficiary, within 7 days of Trustor's learning thereof, of each of the
following:

               (a)    any litigation or claim affecting or relating to the
     Property and involving an amount in excess of $10,000;

               (b)    any dispute between Trustor and any Governmental Agency
     relating to the Property, the adverse determination of which might
     materially affect the Property; and

               (c)    the presence of any Hazardous Materials on, under or about
     the Property; and enforcement, clean-up, removal or other action or
     requirement of any Governmental Agency relating to any such Hazardous
     Materials; and the existence of any occurrence or condition on any property
     in the vicinity of the Property that could cause any portion of the
     Property to be classified as "borderzone property" under the provisions of
     the California Health and Safety Code or any related regulations, or that
     could cause the

                                      -14-

<PAGE>

     Property to be otherwise subject to any restrictions relating to Hazardous
     Materials.

          7.7  Further Assurances. Trustor shall execute and deliver to
               ------------------
Beneficiary all documents, and take all actions, reasonably required by
Beneficiary from time to time to confirm the rights created or now or hereafter
intended to be created hereunder, to protect and further the validity, priority
and enforceability hereof, to subject to the lien hereof any property intended
to be encumbered hereby, or otherwise to carry out the purposes hereof. Without
limiting the generality of the foregoing, Trustor shall, upon request of
Beneficiary, promptly correct any defect, error or omission which may be
discovered in the contents hereof or in the execution or acknowledgment hereof.

          7.8  Impounds.
               --------

               7.8.1  Impositions. If requested by Beneficiary, Trustor shall
                      -----------
deposit with Beneficiary, in monthly installments, an amount equal to
one-twelfth of the estimated aggregate annual amounts required to be paid for
real and personal property taxes payable with respect to the Property
(collectively, the "Impositions"). In such event, Trustor shall cause all bills
and other documents relating to Impositions to be sent directly to Beneficiary
and, upon receipt of the same, and provided Trustor has deposited sufficient
funds with Beneficiary, Beneficiary shall pay the amounts due out of the funds
so deposited. If at any time and for any reason the funds so deposited are or
will be insufficient to pay such amounts as may then or subsequently be due,
Beneficiary shall notify Trustor and Trustor shall immediately deposit an amount
equal to such deficiency with Beneficiary. Notwithstanding the foregoing,
nothing contained herein shall cause Beneficiary to be deemed a trustee of such
funds or obligate Beneficiary to pay any amounts in excess of the deposited
funds. Beneficiary may commingle such funds with its own funds and Trustor shall
not be entitled to interest thereon.

               7.8.2  Premiums. While any Event of Default remains uncured, if
                      --------
requested by Beneficiary, Trustor shall deposit with Beneficiary, in monthly
installments, an amount equal to one-twelfth of the estimated aggregate annual
premiums on all policies of insurance required by this Deed of Trust. In such
event, Trustor shall cause all bills and other documents relating to such
insurance premiums to be sent directly to Beneficiary and, upon receipt of the
same, and provided Trustor has deposited sufficient funds with Beneficiary,
Beneficiary shall pay the amounts due out of the funds so deposited. If at any
time and for any reason the funds so deposited are or will be insufficient to
pay such amounts as may then or subsequently be due, Beneficiary shall notify
Trustor and Trustor shall immediately deposit an amount equal to such deficiency
with Beneficiary. Notwithstanding the foregoing, nothing contained herein shall
cause Beneficiary to be deemed a trustee of such funds or

                                      -15-

<PAGE>

obligate Beneficiary to pay any amounts in excess of the deposited funds,
nor shall anything contained herein modify the obligation of Trustor to maintain
such insurance in force at all times. Beneficiary may commingle such funds with
its own funds and Trustor shall not be entitled to interest thereon.

     8.   Sale or Lease of Property. Except as otherwise permitted in this Deed
          -------------------------
of Trust, Trustor shall not sell, lease or otherwise transfer any interest in
the Property without the prior written consent of Beneficiary, which consent may
be withheld in Beneficiary's absolute discretion. In connection with the
foregoing consent requirements, Trustor acknowledges that Beneficiary relied
upon Trustor's particular expertise in entering into the transaction to which
this Deed of Trust relates and continues to rely on such expertise to ensure the
satisfactory operation of the Property.

          8.1   Transfers. Transfers requiring Beneficiary's prior written
                ---------
consent shall include, without limitation, the following:

                (a)  involuntary transfers and transfers by operation of law;

                (b)  liens and assignments as security for obligations, whether
     voluntary or involuntary; and

                (c)  if Trustor is a partnership, limited liability company,
     joint venture, trust or closely-held corporation, the issuance, transfer,
     disposition or encumbering (whether as the result of one transfer, or as
     the aggregate result of two or more transfers) of more than 10% of any
     class of outstanding capital stock of Trustor or of the beneficial interest
     of such partnership, limited liability company, joint venture or trust, or
     a change of any general partner, manager or joint venturer (as applicable),
     whether voluntarily, involuntarily or otherwise. For purposes of this
     subparagraph, "closely-held corporation" shall mean any corporation not
     listed on a national or regional stock exchange.

          8.2   Continuing Liability of Trustor. No sale, lease or other
                -------------------------------
transfer shall relieve Trustor from primary liability for any Secured Obligation
or relieve any guarantor of any such obligation from any liability under its
guaranty, and Trustor shall deliver to Beneficiary all documents reasonably
required by Beneficiary to evidence its continuing liability.

     9.   Other Waivers, Rights and Obligations.
          -------------------------------------

          9.1   Authority to Modify Obligations. Beneficiary may from time to
                -------------------------------
time, without notice, and without affecting the lien of this Deed of Trust or
the liability of any other person or entity for any Secured Obligation, (a)
release any person from any Secured Obligation, (b) extend the maturity or
otherwise alter the terms of any Secured Obligation, (c) grant other
indulgences, (d) release or reconvey any portion of

                                      -16-

<PAGE>

the Property, (e) take or release any other security for any Secured Obligation,
and/or (f) make compositions and other arrangements with debtors relating to any
Secured Obligation.

          9.2   Additional Security. No other collateral held as security for
                -------------------
any Secured Obligation shall be affected by the execution of this Deed of Trust,
and all such collateral shall be cumulative. Neither the taking of additional
security nor the release or partial release of any security for any Secured
Obligation shall affect the lien hereof or the liability of any obligor,
endorser, guarantor or other surety in connection therewith. Beneficiary may, in
its absolute discretion, enforce the sale of (or otherwise realize on) any other
security for any Secured Obligation before, after, or concurrently with, any
exercise of its remedies hereunder.

          9.3   Survival of Warranties. Any representations and warranties set
                ----------------------
forth herein or otherwise made by Trustor in connection herewith shall survive
the delivery and recording hereof and continue so long as any Secured Obligation
remains outstanding.

          9.4   Other Waivers By Trustor. Trustor waives, to the extent
                ------------------------
permitted by law and except as otherwise provided in the Loan Documents, (a) the
benefit of all present and future laws providing for any appraisement before
sale of any portion of the Property, (b) whether now existing or hereafter
created, all rights of redemption, valuation, appraisement, stay of execution,
and marshaling, in the event of any foreclosure hereunder, (c) the right to
plead or assert any statute of limitations as a defense to the enforcement of
(i) any Secured Obligation or (ii) this Deed of Trust, and (d) all rights which
Trustor may now or hereafter have by reason of laws of the State of California
pertaining to sureties.

          9.5   Subrogation to Lienholder Rights. To the extent that proceeds of
                --------------------------------
the Note are used to pay any outstanding lien, charge or encumbrance against the
Property, Beneficiary shall be subrogated to all rights and liens held by the
owner or holder of such lien, charge or encumbrance, regardless of whether such
lien, charge or encumbrance is released.

          9.6   Nonliability of Beneficiary. Except as otherwise expressly
                ---------------------------
provided herein, no assignment to Beneficiary hereunder of any lease, sublease
or other document shall be construed to impose any obligation or liability upon
Beneficiary in connection therewith.

          9.7   Partial Invalidity of Lien. If the lien of this Deed of Trust is
                --------------------------
invalid or unenforceable as to any part of the Secured Obligations or any part
of the Property, the unsecured or partially secured portion of such obligations
shall be completely paid prior to the payment of the remaining and secured or
partially secured portion of such obligations, and all payments made on the
Secured Obligations,

                                      -17-

<PAGE>

whether voluntary or under foreclosure or other enforcement action or procedure,
shall be first applied against that portion of such obligations which is not
secured or fully secured by the lien of this Deed of Trust.

          9.8   Performance of Secured Obligations. Trustor shall pay and
                ----------------------------------
perform each of the Secured Obligations when due.

     10.  Events of Default.  The occurrence of any of the following, whatever
          -----------------
the reason therefor, shall constitute an "Event of Default" hereunder:

          10.1  Failure by Trustor to perform any of its obligations under the
Loan Agreement.

          10.2  A default under any other Loan Document or other document or
agreement secured hereby, subject to any applicable cure period.

          10.3  A default by Trustor in any non-monetary obligation contained
herein that remains uncured following receipt of written notice from Beneficiary
for more than 10 calendar days (or such longer period as is reasonably necessary
to diligently effect cure, if not curable within such 10-day period, but in no
event more than 60 days).

          10.4  Any representation or warranty by Trustor contained herein or in
any document or agreement secured hereby proves to have been incorrect in any
material respect when made.

No non-monetary default described in Section 10.1 or 10.2 for which there is no
                                             ----    ----
cure period under the applicable document shall constitute an "Event of Default"
hereunder unless it remains uncured following receipt of written notice from
Beneficiary for more than 10 calendar days (or such longer period as is
reasonably necessary to diligently effect cure, if not curable within such
10-day period, but in no event more than 60 days).

     11.  Foreclosure and Other Remedies.
          ------------------------------

          11.1  Acceleration Upon Default; Additional Remedies. Upon the
                ----------------------------------------------
occurrence of any Event of Default, Beneficiary may declare all Secured
Obligations immediately due and payable and, whether or not Beneficiary
exercises such option, Beneficiary may do any or all of the following:

                11.1.1  In person or by agent or court-appointed receiver, and
without regard to the adequacy of its security: enter upon and take possession
of the Property, or any part thereof, in its own name or in the name of Trustee;
take any action which it reasonably deems necessary to preserve the value,
marketability or rentability of the Property, increase the income therefrom or
protect the security

                                      -18-

<PAGE>

hereof; and, with or without taking possession of the Property, sue for or
otherwise collect the Rents, including those past due and unpaid, and apply the
same, less costs of operation and collection, against any Secured Obligation,
all in such order as Beneficiary determines in its absolute discretion.

                11.1.2 Commence an action to foreclose this Deed of Trust as a
mortgage, appoint a receiver, or specifically enforce any of the covenants
hereof.

                11.1.3 Deliver to Trustee a written declaration of default and
demand for sale, and a written notice of default and election to cause Trustor's
interest in the Property to be sold, which notice the Trustee or Beneficiary
shall cause to be duly filed for record in the Official Records of the County in
which the Property is located.

                11.1.4 Exercise all other rights and remedies provided herein,
in any Loan Document, in any other document secured hereby, or in any document
that secures all or any portion of the Secured Obligations, or provided by law
(including all rights under applicable law to conduct separate and/or combined
sales of real property and personal property related thereto).

          11.2  Foreclosure By Power of Sale.
                ----------------------------

                11.2.1 Should Beneficiary elect to foreclose by exercise of the
power of sale contained herein, Beneficiary shall notify Trustee and deposit
with Trustee this Deed of Trust and such evidence of expenditures made and
secured hereby as Trustee may reasonably require.

                11.2.2 Upon receipt of any such notice from Beneficiary, Trustee
shall cause to be recorded, published and delivered to Trustor and all other
entitled parties such Notice of Default and Election to Sell as is then required
by law and by this Deed of Trust. Trustee shall, without demand on Trustor,
after lapse of such time as is then required by law after recordation of such
Notice of Default and after Notice of Sale has been given as required by law,
sell the Property at the time and place of sale fixed in such Notice of Sale,
either as a whole or in separate lots, parcels or items and in such order as
Beneficiary elects, at public auction to the highest bidder for cash in lawful
money of the United States payable at the time of sale. Trustee shall deliver to
such purchaser(s) good and sufficient deed(s) conveying the property so sold,
but without any warranty, express or implied. Any person, including Trustor,
Trustee or Beneficiary, may purchase at any such sale.

                11.2.3 After deducting all fees and costs of Beneficiary and
Trustee, including costs of evidence of title in connection with any such sale,
Beneficiary shall apply the proceeds of sale to payment of (i) first, all
amounts expended under the terms hereof and not then repaid, with accrued
interest;

                                      -19-

<PAGE>

(ii) second, all other amounts then secured hereby, in such order as Beneficiary
shall determine in its absolute discretion; and (iii) the remainder, if any, to
the person(s) legally entitled thereto.

                11.2.4 To the extent permitted by applicable law, Trustee may
postpone the sale of all or any portion of the Property by public announcement
at the time and place of sale, and from time to time thereafter may again
postpone such sale by public announcement or subsequently noticed sale.

                11.2.5 A sale of less than all of the Property or any defective
or irregular sale made hereunder shall not exhaust the power of sale provided
for herein, and subsequent sales may be made hereunder until all Secured
Obligations have been satisfied or the entire Property has been sold without
defect or irregularity.

          11.3  Appointment of Receiver. While any Event of Default remains
                -----------------------
uncured, Beneficiary may, without regard to the value of the Property, apply to
any court having jurisdiction to appoint a receiver or receivers of the
Property, and Trustor hereby irrevocably consents to such appointment and waives
notice of any application therefor. Any such receiver shall have the usual
powers and duties of receivers in similar cases, and all the powers and duties
of Beneficiary in case of entry as provided herein, until the date of
confirmation of sale of the Property (unless such receivership is sooner
terminated).

          11.4  Application of Funds. Except as otherwise provided herein, while
                --------------------
any Event of Default remains uncured, Beneficiary may, at any time without
notice, apply any amounts received by Beneficiary from or on account of Trustor
or the Property (including amounts received as Rents, as insurance or
condemnation proceeds, and/or as impounds with respect to insurance premiums or
Impositions) against any Secured Obligation, in such order as Beneficiary
elects, regardless of whether any such obligation is yet due. The receipt, use
or application of any such amount shall not be construed to affect the maturity
of any Secured Obligation, any rights of Beneficiary or Trustee under the Loan
Documents, or any obligations of Trustor or any guarantor under the Loan
Documents; or to cure or waive any default under any Loan Document; or to
invalidate any act of Trustee or Beneficiary.

          11.5  Cumulative Remedies; No Waiver. Trustee and Beneficiary shall
                ------------------------------
each be entitled to enforce the performance of any Secured Obligation and to
exercise all rights under this Deed of Trust or any Loan Document or other
agreement or any law now or hereafter in force, regardless of whether some or
all of the Secured Obligations are otherwise secured, whether by guaranty, deed
of trust, lien, assignment or otherwise. Neither the acceptance or enforcement
of this Deed of Trust, whether by court action or pursuant to the power of sale
or other powers contained herein, shall prejudice Trustee's or Beneficiary's
right to realize upon any other security held by Trustee or Beneficiary, it
being agreed that Trustee and Beneficiary shall each be

                                      -20-

<PAGE>

entitled to enforce this Deed of Trust and any such other security in such
order as they determine in their absolute discretion. Trustee's and
Beneficiary's rights and remedies hereunder and under all other Loan Documents
are cumulative and in addition to all rights and remedies provided by law or
otherwise from time to time. Every right or remedy given by any Loan Document to
Trustee or Beneficiary or to which either of them is otherwise entitled may be
exercised, concurrently or independently, from time to time and as often as is
deemed expedient by Trustee or Beneficiary, and either of them may pursue
inconsistent remedies. No waiver of any default shall be implied from any
omission by Beneficiary to take action on account of such default if such
default persists or is repeated. No waiver of any default shall affect any
default other than the default expressly waived, and any such waiver shall be
operative only for the time and to the extent stated. No waiver of any provision
of any Loan Document shall be construed as a waiver of any subsequent breach of
the same provision. Beneficiary's consent to or approval of any act by Trustor
requiring further consent or approval shall not be deemed to waive or render
unnecessary Beneficiary's consent to or approval of any subsequent act.
Beneficiary's acceptance of the late performance of any Secured Obligation shall
not constitute a waiver by Beneficiary of the right to require prompt
performance of all further Secured Obligations; Beneficiary's acceptance of any
performance following the filing of a notice of default hereunder shall not
constitute a waiver of Beneficiary's right to proceed with the exercise of its
remedies for any unfulfilled obligations; and Beneficiary's acceptance of any
partial performance shall not constitute a waiver of any rights relating to the
unfulfilled portion of the applicable obligation.

          11.6  Request for Notice. Trustor hereby requests that a copy of any
                ------------------
notice of default and a copy of any notice of sale hereunder be mailed to it at
the address set forth in the first paragraph of this Deed of Trust.

     12.  Miscellaneous Provisions.
          ------------------------

          12.1  Execution of Reconveyances and Other Instruments by Trustee.
                -----------------------------------------------------------
Upon written request of Beneficiary from time to time and upon payment of
Trustee's fees and costs in connection therewith and, if reasonably required by
Trustee, upon presentation of this Deed of Trust for endorsement, Trustee shall,
without affecting the personal liability of any person with respect to any
Secured Obligation or the lien of this Deed of Trust upon the remainder of the
Property, (i) reconvey to "the person(s) legally entitled thereto," without
warranty, any portion of the Property then held hereunder, (ii) consent in
writing to the making of any map or plat thereof, (iii) join in granting any
easement thereon, or (iv) join in any extension agreement, agreement
subordinating the lien or charge hereof, or other agreement or document relating
hereto or to the Property.

                                      -21-

<PAGE>

          12.2  Appointment of Successor Trustee. Trustee or any successor
                --------------------------------
acting hereunder may resign and thereupon be discharged of the trusts hereunder
upon 30 days' prior written notice to Beneficiary. Regardless of whether such
resignation occurs, Beneficiary may from time to time substitute a successor or
successors to any Trustee. If permitted by law, Beneficiary may substitute such
successor or successors by recording a document executed by Beneficiary and
containing the name of the original Trustor and Beneficiary hereunder, the book
and page where this Deed of Trust is recorded (and/or instrument number, as
applicable) and the name of the new Trustee, in which event such successor
Trustee or Trustees shall, without conveyance from the predecessor Trustee,
succeed to all its estate, rights and duties hereunder.

          12.3  Trust Irrevocable; Acceptance by Trustee. The trust created
                ----------------------------------------
hereby is irrevocable by Trustor. Trustee accepts this trust when this Deed of
Trust is made a public record as provided by law.

          12.4  Statements by Trustor. Trustor shall, within 10 days following
                ---------------------
Beneficiary's demand from time to time, deliver to Beneficiary a written
statement setting forth all outstanding amounts secured by this Deed of Trust
and stating whether any offset or defense exists against such amounts.

          12.5  Beneficiary Statements. For any statement or accounting
                ----------------------
requested by Trustor or any other entitled person pursuant to Section 2943 or
Section 2954 of the California Civil Code or any other provision of applicable
law, or for any other document furnished to Trustor by Beneficiary, Beneficiary
may charge the maximum amount then permitted by law or, if there is no such
maximum, then in accordance with Beneficiary's reasonable and customary charges
therefor or the actual cost reasonably incurred by Beneficiary, whichever is
greater.

          12.6  Notices. All notices, demands, approvals and other
                -------
communications provided for herein shall be in writing and be sent or delivered
to the appropriate party at the address set forth in the first paragraph of this
Deed of Trust. Addresses for notice may be changed from time to time by written
notice to all other parties. All communications shall be effective when actually
received; provided, however, that nonreceipt of any communication as the result
of a change of address of which the sending party was not notified or as the
result of a refusal to accept delivery shall be deemed receipt of such
communication.

          12.7  Amendments. This Deed of Trust cannot be modified except by an
                ----------
instrument in writing signed by the party against whom enforcement of any waiver
or other modification is sought. A copy of any such document shall be sent by
such party to all other parties.

                                      -22-

<PAGE>

          12.8  Headings. Article and section headings are included in this Deed
                --------
of Trust for convenience of reference only and shall not be used in construing
this Deed of Trust.

          12.9  Severability of Provisions. Every provision of this Deed of
                --------------------------
Trust is intended to be severable. In the event that any provision hereof is
declared to be invalid or unenforceable for any reason by a court of competent
jurisdiction, such invalidity or unenforceability shall not affect the remaining
provisions hereof.

          12.10 Governing Law. This Deed of Trust shall be governed by and
                -------------
construed in accordance with the laws of the State of California.

          12.11 Joint and Several Obligations. Should this Deed of Trust be
                -----------------------------
signed by more than one party, all obligations contained herein shall be deemed
to be the joint and several obligations of each such party. Any married person
signing this Deed of Trust agrees that recourse may be had against community
assets and against his or her separate property for the satisfaction of all
obligations contained herein.

          12.12 Interpretation. In this Deed of Trust the singular shall include
                --------------
the plural and the masculine shall include the feminine and neuter and vice
versa, if the context so requires. Any reference to any Loan Document or other
document shall include such document both as originally executed and as it may
from time to time be modified. References herein to Articles, Sections and
Exhibits shall be construed as references to this Deed of Trust unless a
different document is named, and references to subparagraphs shall be construed
as references to the same Section in which the reference appears. The term
"document" is used in its broadest sense and encompasses agreements,
certificates, opinions, consents, instruments and other written material of
every kind. The terms "including" and "include" mean "including (include)
without limitation." The term "any," as a modifier to any noun, shall be
construed to mean "any and/or all" preceding the same noun in the plural. The
term "agreement" includes both written and oral agreements. The terms "modify"
and "modification," when used with reference to any document or obligation,
include amendments, supplements, renewals, extensions, waivers, terminations and
other modifications of every kind. The terms "law" and "laws," unless otherwise
modified, mean, collectively, all federal, state and local laws, rules,
regulations, codes and administrative and judicial precedents. The word "person"
includes corporations, partnerships and other forms of association. The terms
"herein," "hereunder" and other similar compounds of the word "here" refer to
this entire Deed of Trust and not to any particular provision or Section hereof.
In the event of any conflict between the provisions of this Deed of Trust and
those of the Loan Agreement, the Loan Agreement shall prevail; provided however
that, with respect to any matter addressed in both such documents, the fact that
one document provides for greater, lesser or different rights or obligations
than the other shall not be deemed a conflict unless the applicable provisions
are inconsistent and

                                      -23-

<PAGE>

could not be simultaneously enforced or performed. Capitalized terms used and
not otherwise defined herein shall have the meanings set forth for them in the
Loan Agreement.

          12.13 Counterparts. This Deed of Trust may be executed in counterparts
                ------------
and any party may execute any counterpart, each of which shall be deemed to be
an original and all of which, taken together, shall be deemed to be one and the
same document.

          12.14 Successors and Assigns. This Deed of Trust shall bind, and shall
                ----------------------
inure to the benefit of, Trustor, Trustee, Beneficiary and their heirs,
legatees, devisees, administrators, executors and other successors and assigns.

          12.15 Fixture Filing. This Deed of Trust is being recorded in the real
                --------------
estate records as a fixture filing and covers goods which are, and goods which
become, fixtures on the Property.

          12.16 Applicability of Certain Environmental Statutes. Trustor hereby
                -----------------------------------------------
acknowledges and agrees that, to the extent that any of the statutory provisions
(the "Incorporated Provisions") described below (each of which is applicable to
the trustor under a deed of trust which secures obligations of such trustor)
would otherwise be inapplicable to this Deed of Trust as a result of the fact
that this Deed of Trust from time to time secures obligations of persons or
entities other than Trustor, each such Incorporated Provision shall be deemed
incorporated herein by this reference, and each such Incorporated Provision
shall therefore apply to Trustor and this Deed of Trust:

                12.16.1  All rights of a secured lender under Section 2929.5 of
the California Civil Code and under Sections 564(c) and 564(d) of the California
Code of Civil Procedure.

                12.16.2  All rights and remedies of a secured lender under
Section 726.5 of the California Code of Civil Procedure.

                12.16.3  All rights and remedies of a secured lender under
Section 736 of the California Code of Civil Procedure with respect to any
"environmental provisions" (as defined in that Section) made by Trustor or any
other person or entity in this Deed of Trust. Subparagraph (a) of such Section
736 provides, among other things, that an action by a secured lender for the
breach of such an "environmental provision" in accordance with such Section 736
shall not constitute an "action" for purposes of Section 726(a) of the
California Code of Civil Procedure, and shall also not constitute a money
judgment for a deficiency or a deficiency judgment within the meaning of Section
580a, 580b, 580d or 726(b) of the California Code of Civil Procedure, and,
without limiting the generality of the first sentence of this paragraph, Trustor
specifically agrees that the foregoing limitations with respect to the

                                      -24-

<PAGE>

applicability of such Sections 726(a), 580a, 580b, 580d and 726(b) shall apply
to this Deed of Trust (pursuant to the Incorporated Provisions) in connection
with the enforcement by Beneficiary of such an "environmental provision" made by
Trustor or any other person in connection with the Secured Obligations, to the
same extent that such limitations would apply in connection with (i) the
enforcement of an "environmental provision" made by the applicable Borrower and
(i) a deed of trust executed by such Borrower rather than by Trustor.

Beneficiary acknowledges that the intent of this Section is to make any
otherwise inapplicable Incorporated Provision applicable to Trustor, but only to
the extent that the reason that such provision would otherwise be inapplicable
is solely (A) that Trustor is not the "Borrower" with respect to one or more of
the Secured Obligations, and/or (B) that the "environmental provision" being
enforced by Beneficiary in accordance with Section 736 of the California Code of
Civil Procedure, although made in connection with the Secured Obligations,
either (1) was not made by the "Borrower" with respect to one or more of the
Secured Obligations or (2) was not made by Trustor.

          12.17 Lawfulness and Reasonableness. Trustor warrants that all of the
                -----------------------------
waivers in this Deed of Trust are made with full knowledge of their
significance, and of the fact that events giving rise to any defense or other
benefit waived by Trustor may destroy or impair rights which Trustor would
otherwise have against Beneficiary, Borrowers and other persons, or against
collateral. Trustor agrees that all such waivers are reasonable under the
circumstances and further agrees that, if any such waiver is determined (by a
court of competent jurisdiction) to be contrary to any law or public policy,
such waiver shall be effective to the fullest extent permitted by law.

                                      -25-

<PAGE>

          IN WITNESS WHEREOF, Trustor has caused this Deed of Trust to be duly
executed as of the date first written above.

                                        "Trustor":

                                        1999 LAWNDALE ASSOCIATES LLC,
                                        a California limited liability company

                                        By:  Khaledi Family Partnership II,
                                             a California general partnership,
                                             Manager

                                        By:  ___________________________________

                                        Its: ___________________________________
                                                 [Printed Name and Title]

                                      -26-

<PAGE>

                                   EXHIBIT "A"

                            (Description of Property)

All that certain real property, together with all appurtenances thereto and all
improvements now or hereafter located thereon, situated in the County of Los
Angeles, State of California, and described as follows:

               PARCEL 1:

               PARCEL 1 OF PARCEL MAP NO. 20048, IN THE CITY OF LAWNDALE, AS PER
               MAP FILED IN BOOK 232 PAGES 98 AND 99 OF PARCEL MAPS, IN THE
               OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

               EXCEPT FROM A PORTION OF SAID LAND, ONE-HALF OF ALL OIL, GAS AND
               OTHER HYDROCARBON SUBSTANCES AND MINERALS IN, UNDER AND/OR THAT
               MAY BE PRODUCED FROM SAID LAND OR ANY PART THEREOF, WITHOUT RIGHT
               OF ENTRY, AS RESERVED BY SAMUEL TUCK, A MARRIED MAN IN DEED
               RECORDED APRIL 25, 1950 AS INSTRUMENT NO. 955 IN BOOK 32941 PAGE
               370, OFFICIAL RECORDS.

               ALSO EXCEPT FROM A PORTION OF SAID LAND, ALL RIGHTS TO ONE-HALF
               INTEREST TO ALL OIL, GAS, MINERALS AND HYDROCARBON SUBSTANCES AS
               RESERVED BY SAMUEL ALLEN, A WIDOWER, IN DEED RECORDED APRIL 25,
               1950 AS INSTRUMENT NO. 1108, IN BOOK 32945 PAGE 222, OFFICIAL
               RECORDS.

               ALSO EXCEPT FROM A PORTION OF SAID LAND, ONE-HALF OF ALL OIL,
               GAS, NAPTHA, AND OTHER HYDROCARBON SUBSTANCES DEPOSITED IN, LYING
               UNDER, OR FLOWING, THROUGH SAID LAND, BUT WITHOUT THE RIGHT OF
               SURFACE ENTRY, AS RESERVED IN THE DEED FROM SAMUEL TUCK, A
               MARRIED MAN, RECORDED JANUARY 23, 1958 IN BOOK 56421 PAGE 248,
               OFFICIAL RECORDS.

               PARCEL 2:

               LOTS 21 AND 22 IN BLOCK 52 OF LAWNDALE ACRES, IN THE CITY OF LOS
               ANGELES, AS PER MAP RECORDED IN BOOK 17

                                      -27-

<PAGE>

               PAGE 73 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
               COUNTY.

               PARCEL 3:

               LOTS 15 AND 16 IN BLOCK 52 OF LAWNDALE ACRES, IN THE CITY OF
               LAWNDALE, AS PER MAP RECORDED IN BOOK 17 PAGE 73 OF MAPS, IN THE
               OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

               PARCEL 4:

               LOT 14 IN BLOCK 52 IN LAWNDALE ACRES, CITY OF LAWNDALE, AS PER
               MAP RECORDED IN BOOK 17 PAGE 73 OF MAPS, IN THE OFFICE OF THE
               COUNTY RECORDER OF SAID COUNTY.

               PARCEL 5:

               THE WESTERLY 163.5 FEET OF LOT 13 IN BLOCK 52 OF LAWNDALE ACRES,
               IN THE CITY OF LAWNDALE, AS PER MAP RECORDED IN BOOK 17 PAGE 73
               OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

               PARCEL 6:

               THE EAST 41 FEET OF LOT 13 IN BLOCK 52 OF LAWNDALE ACRES, IN THE
               CITY OF LAWNDALE, AS PER MAP RECORDED IN BOOK 17 PAGE 73 OF MAPS,
               IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

               PARCEL 7:

               LOT 6, EXCEPT THE NORTH 42 FEET OF THE EAST 130 FEET IN BLOCK 52
               OF LAWNDALE ACRES, IN THE CITY OF LAWNDALE, AS PER MAP RECORDED
               IN BOOK 17 PAGE 73 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER
               OF SAID COUNTY.

               PARCEL 8:

               LOTS 3, 4 AND 5 IN BLOCK 52 OF LAWNDALE ACRES, IN THE CITY OF
               LAWNDALE, AS PER MAP RECORDED IN BOOK 17 PAGE 73 OF MAPS, IN THE
               OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

                                      -28-

<PAGE>

               EXCEPT THEREFROM THE EAST 130 FEET THEREOF.

               PARCEL 9:

               LOTS 1 AND 2 IN BLOCK 52 OF LAWNDALE ACRES, IN THE CITY OF
               LAWNDALE, AS PER MAP RECORDED IN BOOK 17 PAGE 73 OF MAPS, IN THE
               OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

               EXCEPT THE EAST 166.5 FEET OF SAID LOTS.

               ALSO EXCEPT THEREFROM THE NORTHERLY 20 FEET OF THE WESTERLY 120
               FEET OF LOT ONE AS DEEDED TO THE CITY OF LAWNDALE BY DEED
               RECORDED SEPTEMBER 25, 1962 AS INSTRUMENT NO. 1442.

Assessor Parcel Number:    4076-011-021, 4076-011-030 to 036, 4076-011-041

                                      -29-

<PAGE>

                                   EXHIBIT "B"

                      (Environmental Disclosure Documents)

None

                                      -30-

<PAGE>

State of California        )
                           )
County of __________       )

On ______________ before me, __________________, Notary Public, personally
appeared ___________________________________,

____ personally known to me or ____ proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s)
on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.

WITNESS my hand and official seal.

                                                ________________________________

State of California        )
                           )
County of __________       )

On ______________ before me, __________________, Notary Public, personally
appeared ___________________________________,

____ personally known to me or ____ proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s)
on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.

WITNESS my hand and official seal.

                                                ________________________________

                                      -31-

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