Document:

<PAGE>
                                                                   Exhibit 10.10

THIS DEED OF TRUST WAS PREPARED BY
AND WHEN RECORDED, RETURN TO:

Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
Attention: Caryn J. Ettinger, Esq.
Reference No.: 089253 0012

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

                                     made by

                           LAKES SHINGLE SPRINGS, INC.
                                    (TRUSTOR)

                                       to

                    FIDELITY NATIONAL TITLE INSURANCE COMPANY
                                    (TRUSTEE)

                               for the benefit of

                                PLKS FUNDING, LLC
                                  (BENEFICIARY)

                               PROPERTY LOCATION:

                           5000 and 5020 Artesia Road
                           Shingle Springs, California

                         DATED AS OF FEBRUARY 15,2006

    THIS ALSO CONSTITUTES FINANCING STATEMENTS FILED AS A FIXTURE FILING AND
 FINANCING STATEMENT PURSUANT TO SECTIONS 9501(a)(1) AND 9502(b) AND (c) OF
   THE CALIFORNIA UNIFORM COMMERCIAL CODE AND IS RECORDED AS A FIXTURE FILING

     PURSUANT TO SECTION 2924B(d) OF THE CALIFORNIA CIVIL CODE, TRUSTOR AND
   BENEFICIARY REQUEST THAT A COPY OF ANY NOTICE OF DEFAULT AND A COPY OF ANY
    NOTICE OF SALE BE MAILED TO TRUSTOR AND BENEFICIARY, RESPECTIVELY, AT THE
                    ADDRESS FOR SUCH PARTY SET FORTH HEREIN.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
ARTICLE I DEFINITIONS....................................................     2
   SECTION 1.01   Terms Defined Above....................................     2
   SECTION 1.02   Definitions............................................     2
   SECTION 1.03   Terminology............................................     6
   SECTION 1.04   Other Defined Terms....................................     6

ARTICLE II GRANT OF LIEN AND SECURITY INTEREST...........................     6
   SECTION 2.01   Grant of Lien..........................................     6
   SECTION 2.02   Grant of Security Interest.............................     6
   SECTION 2.03   No Obligation of Beneficiary...........................     7
   SECTION 2.04   Fixture Filing.........................................     7
   SECTION 2.05   Future Advances........................................     7
   SECTION 2.06   Intentionally Omitted..................................     7

ARTICLE III ASSIGNMENT OF LEASES AND RENTS...............................     7
   SECTION 3.01   Assignment.............................................     8
   SECTION 3.02   Revocable License......................................     8
   SECTION 3.03   Enforcement of Leases..................................     8
   SECTION 3.04   Direction to Tenants...................................     9
   SECTION 3.05   Appointment of Attorney-in-Fact........................     9
   SECTION 3.06   No Liability of Beneficiary............................    10
   SECTION 3.07   Trustor's Indemnities..................................    10
   SECTION 3.08   No Modification of Trustor's Obligations...............    11
   SECTION 3.09   Rights in Bankruptcy...................................    11
   SECTION 3.10   Right to Enforce Under California Civil Code
                     Section 2938........................................    11

ARTICLE IV REPRESENTATIONS AND WARRANTIES................................    13
   SECTION 4.01   Title to Trust Property and Lien of this Deed of
                     Trust...............................................    14
   SECTION 4.02   Taxes and Other Payments...............................    14
   SECTION 4.03   Power to Create Lien and Security......................    14
   SECTION 4.04   Loan and Financing Agreements..........................    14
   SECTION 4.05   Compliance with Laws...................................    14
   SECTION 4.06   No Condemnation........................................    15
   SECTION 4.07   Flood Zone.............................................    15
   SECTION 4.08   Additional Environmental Representation................    15

ARTICLE V AFFIRMATIVE COVENANTS..........................................    15
   SECTION 5.01   Lien Status............................................    15
   Section 5.02   Payment of Impositions.................................    16
   SECTION 5.03   Repair.................................................    16
   Section 5.04   Insurance and Application of Insurance Proceeds........    16
   SECTION 5.05   Condemnation and Application of Condemnation Proceeds..    19
</TABLE>

                                        i

<PAGE>

<TABLE>
<S>                                                                          <C>
   SECTION 5.06   Maintenance of Rights of Way, Easements, Licenses
                     and Other Rights....................................    19
   SECTION 5.07   Payment and Performance of Obligations.................    20
   SECTION 5.08   Compliance with Permitted Liens and Other Obligations..    20
   SECTION 5.09   Additional Affirmative Covenants.......................    20

ARTICLE VI NEGATIVE COVENANTS............................................    20
   SECTION 6.01   Use Violations.........................................    20
   SECTION 6.02   Waste..................................................    20
   SECTION 6.03   Alterations............................................    20
   SECTION 6.04   No Further Encumbrances................................    21
   SECTION 6.05   Transfer Restrictions..................................    21
   SECTION 6.06   Loan and Financing Agreements; Additional Negative
                     Covenants...........................................    21

ARTICLE VII EVENTS OF DEFAULT AND REMEDIES...............................    21
   SECTION 7.01   Event of Default.......................................    21
   SECTION 7.02   Acceleration...........................................    21
   SECTION 7.03   Foreclosure and Sale...................................    22
   SECTION 7.04   Trustee's Successors, Substitutes and Agents...........    23
   SECTION 7.05   Receivership...........................................    23
   SECTION 7.06   Judicial Foreclosure...................................    23
   SECTION 7.07   Separate Sales.........................................    24
   SECTION 7.08   Possession of Trust Property...........................    24
   SECTION 7.09   Occupancy After Foreclosure............................    24
   SECTION 7.10   Remedies Cumulative, Concurrent and Nonexclusive.......    25
   SECTION 7.11   No Release of Obligations..............................    25
   SECTION 7.12   Release of and Resort to Collateral....................    25
   SECTION 7.13   Waiver of Redemption, Notice and Marshalling of
                     Assets..............................................    25
   SECTION 7.14   Discontinuance of Proceedings..........................    26
   SECTION 7.15   Application of Proceeds................................    26
   SECTION 7.16   Uniform Commercial Code Remedies.......................    27
   SECTION 7.17   Indemnity..............................................    27
   SECTION 7.18   Waiver of Lien.........................................    28
   SECTION 7.19   Action for Environmental Claims........................    28

ARTICLE VIII TRUSTEE.....................................................    29
   SECTION 8.01   Duties, Rights, and Powers of Trustee..................    29
   SECTION 8.02   Successor Trustee......................................    29
   SECTION 8.03   Retention of Moneys....................................    30
   SECTION 8.04   Reconveyance...........................................    30

ARTICLE IX MISCELLANEOUS.................................................    30
   SECTION 9.01   Instrument Construed as Deed of Trust, Etc.............    30
   SECTION 9.02   Performance at Trustor's Expense.......................    30
   SECTION 9.03   Survival of Obligations................................    30
   SECTION 9.04   Further Assurances.....................................    30
   SECTION 9.05   Notices................................................    31
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                          <C>
   SECTION 9.06   No Waiver..............................................    31
   Section 9.07   Beneficiary's Right to Perform; Beneficiary's
                     Expenditures........................................    31
   SECTION 9.08   Successors and Assigns.................................    32
   SECTION 9.09   Severability...........................................    32
   Section 9.10   Subrogation of Trustee.................................    32
   SECTION 9.11   Entire Agreement and Modification......................    32
   SECTION 9.12   Applicable Law.........................................    33
   SECTION 9.13   Satisfaction of Prior Encumbrance......................    33
   SECTION 9.14   No Partnership.........................................    34
   SECTION 9.15   Headings...............................................    34
   SECTION 9.16   Release of Deed of Trust...............................    34
   SECTION 9.17   Limitation of Obligations with Respect to Trust
                     Property............................................    34
   SECTION 9.18   Inconsistency with Financing Agreement.................    35
   SECTION 9.19   Limitation on Interest Payable.........................    35
   SECTION 9.20   Covenants To Run With the Land.........................    35
   SECTION 9.21   Amount Secured; Last Dollar............................    35
   SECTION 9.22   Defense of Claims......................................    36
   SECTION 9.23   Exculpation Provisions.................................    36
   SECTION 9.24   No Merger of Estates...................................    36
   Section 9.25   Suretyship Waivers.....................................    36
   SECTION 9.26   Beneficiary Statement..................................    42
   SECTION 9.27   Request for Notice.....................................    42
   SECTION 9.28   Release and Reconveyance...............................    42
</TABLE>

EXHIBIT A - LEGAL DESCRIPTION

                                       iii

<PAGE>

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

          THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT
AND FIXTURE FILING (hereinafter, together with any and all amendments,
supplements, modifications or restatements of any kind, referred to as this
"Deed of Trust"), is made as of February 15, 2006, by LAKES SHINGLE SPRINGS,
INC., a Minnesota corporation having its principal place of business at c/o
Lakes Entertainment, Inc., 130 Cheshire Lane, Suite 101, Minnetonka, Minnesota
55309, Attention: Damon E. Schramm, Esq. ("Trustor"), to Fidelity National Title
Insurance Company, a California corporation (including any successor trustee at
the time acting as such hereunder, "Trustee"), for the benefit of PLKS FUNDING,
LLC, a Delaware limited liability company, having its principal place of
business at c/o Prentice Capital Management, LP, 623 Fifth Avenue, 32nd Floor,
New York, New York 10022, Attention: Michael Weiss (in such capacity, together
with its successors and assigns, "Beneficiary"), for itself and as agent for
each of the financial institutions and their respective successors and assigns
which from time to time shall be a "Lender" under the Financing Agreement (as
hereinafter defined).

                                    RECITALS:

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

          WHEREAS, on the date hereof, Trustor, Lakes Entertainment, Inc.
("Parent") and each of the Subsidiaries of Parent listed as a "Borrower" on the
signature pages of the Financing Agreement (each, along with Trustor and Parent
are hereinafter each referred to as a "Borrower" and collectively as, the
"Borrowers"), and the Guarantors (as defined in the Financing Agreement),
entered into that certain Financing Agreement with the Lenders and Beneficiary
(as the same may be amended, modified or otherwise supplemented and in effect
from time to time, the "Financing Agreement"), pursuant to which the Lenders
agreed to extend to the Borrowers certain revolving loan facilities in the
aggregate original principal amount of up to FIFTY MILLION and 00/100 Dollars
($50,000,000.00) (the "Loan");

          WHEREAS, Trustor will derive direct economic benefit from the Loan;

          WHEREAS, as a condition to Beneficiary executing the Financing
Agreement, Beneficiary is requiring that Trustor grant to Beneficiary, on behalf
of the Lenders, a security interest in and a first deed of trust lien upon the
Trust Property (as hereinafter defined), to secure (a) the payment of all of the
obligations of Trustor under the Financing Agreement, this Deed of Trust, and
the other Loan Documents (as hereinafter defined) (except for "Unsecured
Environmental Costs", as defined in Section 7.19 below), and (b) the performance
of all terms, covenants, conditions, provisions, agreements and liabilities
contained in the Financing Agreement, this Deed of Trust, and the other Loan
Documents.

                                       1

<PAGE>

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

                                    ARTICLE I

                                   DEFINITIONS

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

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

          "Agent" has the meaning assigned to such term in the Financing
Agreement.

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

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

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

          "Default" has the meaning assigned to such term in the Financing
Agreement.

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

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

          "Governmental Authority" has the meaning assigned to such term in the
Financing Agreement.

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

          "Impositions" means any and all real estate and personal property
taxes; water, gas, sewer, electricity and other utility rates and charges;
charges for any easement, license or agreement maintained for the benefit of the
Trust Property; any and all other taxes, charges and

                                       2

<PAGE>

assessments, whether general or special, ordinary or extraordinary, foreseen or
unforeseen, of any kind and nature whatsoever which at any time prior to or
after the execution hereof may be assessed, levied or imposed upon the Trust
Property or the ownership, use, occupancy, benefit or enjoyment thereof,
together with any interest, costs or penalties that may become payable in
connection therewith.

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

          "Indemnitees" has the meaning assigned to such term in the Financing
Agreement.

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

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

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

          "Lien" has the meaning assigned to such term in the Financing
Agreement.

          "Loan Documents" means, collectively, the Financing Agreement, this
Deed of Trust, and all other instruments, agreements and other documents
executed and delivered pursuant hereto or thereto or otherwise included in the
definition of the term "Loan Documents" in the Financing Agreement.

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

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

          (i)  all rights, privileges, tenements, hereditaments, rights-of-way,
               easements, air rights, development rights or credits, zoning
               rights, appendages and appurtenances in anywise appertaining
               thereto, and all right, title and interest of Trustor in and to
               any streets, ways, alleys, strips or gores of

                                       3

<PAGE>

               land adjoining the Land or any part thereof, and all right, title
               and interest of Trustor, if any, in and to all rights, royalties
               and profits with respect to all minerals, coal, oil, gas and
               other substances of any kind or character on or underlying the
               Land, together with all right, title and interest of Trustor in
               and to all water and water rights (whether riparian,
               appropriative or otherwise and whether or not appurtenant);

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

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

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

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

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

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

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

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

                                       4

<PAGE>

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

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

          EXCLUDING, HOWEVER, all motor vehicles and forklifts now or hereafter
located on the Land and only to the extent contemplated by the Financing
Agreement.

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

          "Obligations" has the meaning assigned to such term in the Financing
Agreement but shall specifically not include "Unsecured Environmental Costs" as
defined in Section 7.19 below.

          "Permitted Liens" has the meaning assigned to such term in the
Financing Agreement.

          "Person" has the meaning assigned to such term in the Financing
Agreement.

          "Personalty" means all of Trustor's right, title and interest in and
to all furniture, furnishings, equipment, machinery, goods, general intangibles,
money, insurance proceeds, contract rights, option rights, inventory, together
with all refundable, returnable or reimbursable fees, deposits or other funds or
evidences of credit or indebtedness deposited by or on behalf of Trustor with
any Governmental Authority, boards, corporations, providers of utility services,
public or private, including all refundable, returnable or reimbursable tap
fees, utility deposits, commitment fees and development costs, and all other
personal property (other than Fixtures) of any kind or character), and including
such property that is now or hereafter located or to be located upon, within or
about the Land and the Buildings, or which are or may be used in or related to
the planning, development, financing or operation of the Trust Property,
together with all accessories, replacements and substitutions thereto or
therefor and the proceeds thereof.

          "Post-Default Rate" has the meaning assigned to such term in the
Financing Agreement.

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

          "Rents" means all of the rents, revenues, income, proceeds, issues,
profits, security and other types of deposits (after Trustor acquires title
thereto), and other benefits paid or payable by parties (other than Trustor) for
using, leasing, licensing, possessing, operating

                                       5

<PAGE>

from, residing in, benefiting from or otherwise enjoying all or any part of the
Land, the Buildings, the Fixtures and/or the Personalty.

          SECTION 1.03 Terminology. Except as otherwise provided herein:

          (A) references to Articles and Sections shall mean the corresponding
Article or Section of this Deed of Trust;

          (B) words used herein in the singular, where the context so permits,
shall be deemed to include the plural and vice versa, and the definitions of
words used in the singular herein shall apply to such words when used in the
plural where the context so permits and vice versa;

          (C) the words "herein," "hereof," "hereunder," and other words of
similar import when used in this Deed of Trust refer to this Deed of Trust as a
whole, and not to any particular Article or Section; and

          (D) the words "includes" or "including" mean includes or including,
without limitation.

          SECTION 1.04 Other Defined Terms. Any capitalized term used in this
Deed of Trust and not otherwise defined herein shall have the meaning assigned
to such term in the Financing Agreement.

                                   ARTICLE II

                      GRANT OF LIEN AND SECURITY INTEREST

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

          SECTION 2.02 Grant of Security Interest. This Deed of Trust shall also
constitute and serve as a "security agreement" within the meaning of, and shall
constitute a first and prior security interest under, the Applicable UCC with
respect to the Personalty and the Fixtures. To

                                       6

<PAGE>

this end, Trustor by these presents does GRANT, BARGAIN, CONVEY, ASSIGN, SELL,
TRANSFER and SET OVER unto Beneficiary, as collateral agent for the Lenders
pursuant to the Financing Agreement, a security interest in all of Trustor's
right, title and interest in, to and under the Personalty and the Fixtures, to
secure the full and timely payment, performance and discharge of the
Obligations. Trustor hereby consents to Beneficiary filing and recording
financing statements (and continuations thereof) with the appropriate filing and
recording offices in order to perfect (and maintain the perfection of) the
security interests granted herein.

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

          SECTION 2.04 Fixture Filing. Without in any manner limiting the
generality of any of the other provisions of this Deed of Trust: (a) some
portions of the goods described or to which reference is made herein are or are
to become fixtures on the Land described or to which reference is made herein or
on Exhibit A attached to this Deed of Trust; (b) this Deed of Trust is to be
filed of record in the real estate records as a financing statement and shall
constitute a "fixture filing" for purposes of the Applicable UCC; and (c)
Trustor is the record owner of the real estate or interests in the real estate
constituting the Trust Property hereunder. Information concerning the security
interest herein granted may be obtained at the addresses set forth on the first
page hereof. The addresses of the Secured Party (Beneficiary) and of the Debtor
(Trustor) are set forth on the first page hereof, in that regard, the following
information is provided:

          Name of Debtor: LAKES KAR - SHINGLE SPRINGS, LLC

          Type of Organization: Corporation

          State: Minnesota

          FEIN: 41-1977762

          Organizational ID Number: 10V-698

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

          SECTION 2.06 Intentionally Omitted

                                   ARTICLE III

                         ASSIGNMENT OF LEASES AND RENTS

                                       7

<PAGE>

          SECTION 3.01 Assignment. For Ten Dollars ($10.00) and other good and
valuable consideration, including the indebtedness evidenced by the Financing
Agreement, the receipt and sufficiency of which are hereby acknowledged and
confessed, Trustor has presently, absolutely and irrevocably GRANTED, ASSIGNED,
TRANSFERRED and CONVEYED, and by these presents does presently, absolutely and
irrevocably GRANT, ASSIGN, TRANSFER and CONVEY, unto Beneficiary, as collateral
agent for the Lenders pursuant to the Financing Agreement, as security for the
payment, performance and discharge of the Obligations, all of the Leases and
Rents (if any), subject only to the Permitted Liens applicable thereto and the
License (as hereinafter defined); provided, however, that if Trustor shall pay
(or cause to be paid) and perform and discharge (or cause to be performed and
discharged) all of the Obligations on or before the date on which the same are
to be paid, performed and discharged, then this assignment shall terminate, and
all rights, titles and interests conveyed pursuant to this assignment shall
become vested in Trustor.

          SECTION 3.02 Revocable License.

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

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

          SECTION 3.03 Enforcement of Leases. Trustor shall (a) submit any and
all proposed Leases (including subleases provided to Trustor for approval) to
Beneficiary for approval prior to the execution thereof or consent thereto, as
applicable; (b) duly and punctually perform and comply with any and all
representations, warranties, covenants and agreements expressed as binding upon
the lessor under any Lease; (c) maintain each Lease in full force and effect
during the term thereof; (d) provide Beneficiary with prompt notice of each
notice of default sent to a tenant under a Lease, provide Beneficiary with
prompt notice of each notice of

                                       8

<PAGE>

default received from (or relating to) a tenant under a Lease, and otherwise
promptly reasonably indicate that a material default or termination of a Lease
may occur (other than by reason of the expiration of the term of such Lease);
(e) appear in and defend any action or proceeding in any manner connected with
any of the Leases; (f) deliver to Beneficiary true and complete copies of all
Leases; and (g) deliver to Beneficiary all such further information, and execute
and deliver to Beneficiary such further assurances and assignments, with respect
to the Leases as Beneficiary may from time to time reasonably request. Without
Beneficiary's prior written consent, Trustor shall not (i) do or knowingly
permit to be done anything to materially impair the value of any of the Leases;
(ii) except for security or similar deposits, collect any of the Rent more than
one (1) month in advance of the time when the same becomes due under the terms
of any Lease; (iii) discount any future accruing Rents; (iv) amend, modify,
accept the surrender of or terminate any of the Leases; or (v) assign or grant a
security interest in or to any of the Leases or Rents.

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

          SECTION 3.05 Appointment of Attorney-in-Fact.

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

          (B) Trustor hereby constitutes and appoints Beneficiary the true and
lawful attorney-in-fact, coupled with an interest, of Trustor and Trustor hereby
confers upon Beneficiary the right, in the name, place and stead of Trustor, to
subject and subordinate at any time and from time to time any Lease or any part
thereof to the lien, assignment and security interest of this Deed of Trust and
to the terms hereof, or to any other mortgage, deed of trust, assignment or
security agreement, or to any ground lease or surface lease, with respect to all
or a

                                       9

<PAGE>

portion of the Trust Property, or to request or require such subordination,
where such reservation, option or authority was reserved to Trustor under any
such Lease, or in any case where Trustor otherwise would have the right, power
or privilege so to do. The foregoing appointment is irrevocable and continuing,
and such rights, powers and privileges shall be exclusive in Beneficiary, and
its successors and assigns, so long as any part of the Obligations remains
unpaid or unperformed and undischarged. Trustor hereby represents and warrants
that it has not at any time prior to the date hereof exercised (or appointed any
Person as attorney-in-fact to exercise) any of the rights described in this
Section 3.05(b), and Trustor hereby covenants not to exercise (or appoint any
other Person as attorney-in-fact to exercise) any such right, nor (except at
Beneficiary's written request) to subordinate any such Lease to the lien of this
Deed of Trust or to any other mortgage, deed of trust, assignment or security
agreement or to any ground lease or surface lease.

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

          SECTION 3.07 Trustor's Indemnities. Trustor hereby agrees to protect,
indemnify and hold harmless Beneficiary and each of the other Indemnitees and
each Indemnified Party related to Beneficiary or such other Indemnitees from and
against any and all Losses which Beneficiary or any such other Indemnitees or
Indemnified Party may incur under or by reason of this Article III, or for any
action taken by Beneficiary or any such other Lender or Indemnified Party
hereunder, or by reason or in defense of any and all claims and demands
whatsoever which may be asserted against Beneficiary or any such other
Indemnitees or Indemnified Party arising out of the Leases, including, without
limitation, any claim by any third Person for credit on account of Rents paid to
and received by Trustor, but not delivered to Beneficiary or its agents,
representatives or employees, for any period under any Lease more than one (1)
month in advance of the due date thereof. The foregoing indemnity shall include,
in any case, such Loss as may result from the ordinary negligence of Beneficiary
or such other Indemnitees or Indemnified Party, but not any such Loss that is
caused by the gross negligence or willful misconduct of Beneficiary or any such
other Indemnitees or Indemnified Party. In the event that Beneficiary or any of
the other Lenders or any Indemnified Party incurs any Losses covered by the
indemnity set forth in this Section 3.07, the amount thereof, including
reasonable attorneys'

                                       10

<PAGE>

fees, with interest thereon at the Post-Default Rate, shall be payable by
Trustor to Beneficiary within ten (10) days after demand therefor, and shall be
secured hereby and by all other security for the payment and performance of the
Obligations, including, without limitation, the lien and security interest of
this Deed of Trust. The liabilities of Trustor as set forth in this Section 3.07
shall survive the termination of this Deed of Trust and the repayment of the
Obligations.

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

          SECTION 3.09 Rights in Bankruptcy. Upon execution of this Deed of
Trust, Beneficiary, and not Trustor, shall be the creditor of any Tenant in
respect of assignments for the benefit of creditors and bankruptcy,
reorganization, insolvency, dissolution or receivership proceedings affecting
any such Tenant; provided, however, that Trustor shall be the party obligated to
make timely filings of claims in such proceedings or to otherwise pursue
creditor's rights therein. Notwithstanding the foregoing, Beneficiary shall have
the right, but not the obligation, to file such claims instead of Trustor and if
Beneficiary does file a claim, Trustor agrees that Beneficiary (a) is entitled
to all distributions on such claim to the exclusion of Trustor and (b) has the
exclusive right to vote such claim and otherwise to participate in the
administration of the estate in connection with such claim. Beneficiary shall
have the option to apply any monies received by it as such creditor to any of
the obligations of Trustor under the Loan Documents (as defined in the Mortgage)
in the order set forth in the Loan Documents. If a petition is filed under the
Bankruptcy Code by or against Trustor, and Trustor, as landlord under any Lease,
decides to reject such Lease pursuant to Section 365(a) of the Bankruptcy Code,
then Trustor shall give Beneficiary at least ten (10) days' prior written notice
of the date when Trustor shall apply to the bankruptcy court for authority to
reject the Lease. Beneficiary may, but shall not be obligated to, send Trustor
within such ten-day period a written notice stating that (a) Beneficiary demands
that Trustor assume and assign the Lease to Beneficiary pursuant to Section 365
of the Bankruptcy Code, and (b) Beneficiary covenants to cure or provide
adequate assurance of future performance under the Lease. If Beneficiary sends
such notice, Trustor shall not reject the Lease provided Beneficiary complies
with clause (b) of the preceding sentence.

          SECTION 3.10 Right to Enforce Under California Civil Code Section
2938. Without limiting any other rights or remedies of Beneficiary set forth in
this Assignment or under any of the other Loan Documents to which Trustor is a
party, or available at law or in equity, at any time upon or following the
occurrence of any Event of Default, Beneficiary shall have the right to enforce
all of the rights and remedies of an Beneficiary under Section 2938 of the
California Civil Code ("Section 2938"). In the event that Beneficiary shall
elect to enforce this Assignment in accordance with Section 2938, the following
procedures shall apply, as applicable:

               (i) Beneficiary may send a demand notice in the form prescribed
     by Section 2938 to, in the case of enforcement under Section 2938(c)(3),
     one or more of the tenants of the Trust Property, with a copy to Trustor
     and any other Beneficiary under a

                                       11

<PAGE>

     recorded assignment of leases, rents, issues and profits with respect to
     the Trust Property, or, in the case of enforcement under Section
     2938(c)(4), to Trustor with a copy to any such other Beneficiarys in
     accordance with the procedures set forth therein. Without limiting
     Beneficiary's rights to any amounts received by Trustor after an Event of
     Default, Trustor shall immediately turn over to Beneficiary any Rents
     received by Trustor from any tenant of the Trust Property from and after
     Beneficiary's enforcement of this assignment under either of such Sections
     2938(c)(3) or (4), it being understood that Trustor shall be deemed to hold
     such amounts as trustee for Beneficiary until such amounts have been paid
     to Beneficiary. In addition, Trustor shall also cause any collection agent
     for Trustor or any other person who has collected for Trustor's benefit
     relating to the period from and after Beneficiary's enforcement of this
     assignment under either of such Sections 2938(c)(3) or (4), to turn such
     Rents over to Beneficiary.

               (ii) Notwithstanding anything to the contrary contained in this
     Deed of Trust or any other Loan Document, if Beneficiary shall proceed to
     enforce this assignment by means other than the appointment of a receiver
     and consequently receives Rents as a result thereof, and Beneficiary
     receives written demand from Trustor (or any other party entitled under law
     to make demand on Beneficiary) to pay the reasonable costs of protecting
     and preserving the Trust Property, Beneficiary may elect either to pay
     (either directly to the party to whom owed, or by joint check payable to
     Trustor and such party) or authorize Trustor to pay, such costs (such
     payments being referred to herein as "Protective Payments"), conditioned
     upon Trustor furnishing to Beneficiary all information (such as invoices,
     bills, contracts, or purchase orders) necessary in order for Beneficiary to
     identify the party to whom payment is owed or the work, service or item for
     which payment is requested and to establish that such Protective Payments
     are required to be paid or authorized under this Section. If Trustor is
     authorized to pay any Protective Payments under this Section, Beneficiary
     reserves the right to deposit the amounts necessary to pay such Protective
     Payments into a non-interest bearing checking account, in which Trustor
     shall have granted to Beneficiary a perfected, first priority security
     interest, from which Trustor shall be obligated to draw the funds necessary
     to pay such Protective Payments. In the event that Beneficiary agrees or is
     required under any circumstances to pay or authorize the payment of any
     Protective Payments consisting of costs of improvement of the Trust
     Property or any portion thereof (or any other costs the non-payment of
     which would entitle the payee to enforce mechanic's or materialman's liens
     or similar rights), Beneficiary shall be authorized, before paying or
     authorizing the payment of any such payments, to require compliance with
     standard construction loan disbursement conditions with respect to such
     costs, including, without limitation, the receipt of unconditional
     mechanics' lien waivers with respect to the work for which such costs are
     to be paid.

               (iii) In no event shall Beneficiary be obligated to pay or
     authorize the payment of Protective Payments in excess of any Rents
     actually received by Beneficiary as a result of the enforcement of Section
     (i) of this Section.

               (iv) Nothing contained in this Section shall limit the rights of
     Beneficiary under any other provision of Deed of Trust.

                                       12

<PAGE>

               (v) Nothing contained in this Section shall limit either (x)
     Beneficiary's right to cease at any time any further enforcement of this
     Assignment under Section 2938 by sending written notice of the cancellation
     thereof to each party to whom a demand notice was sent, or (y)
     Beneficiary's right to seek the appointment of a receiver, either of which
     if enforced by Beneficiary, shall terminate Beneficiary's obligations under
     Section (i) of this Section.

               (vi) In no event shall any enforcement of Beneficiary's rights
     under this Section, including, without limitation, the payment or
     authorization of payment of any Protective Payments, make Beneficiary a
     "mortgagee-in-possession" or limit, waive, or otherwise derogate any of
     Beneficiary's other rights and remedies available to it under the Loan
     Documents to which Trustor is a party or at law. In no event shall any
     exercise of lights by the Beneficiary under this Section, including,
     without limitation, the payment or authorization of payment of any
     Protective Payments, be construed to require the Beneficiary to operate or
     manage the Trust Property or be construed as an assumption by Beneficiary
     of any obligation to operate or manage the Trust Property, and all
     liabilities and obligations in relation to the operation and management of
     the Trust Property shall remain exclusively that of the Trustor.

          (B) Any Rents received by Beneficiary as a result of any such
enforcement measures shall be applied as provided in this Deed of Trust.

          (C) Without in any way limiting Trustor's other indemnification
obligations set forth in this Assignment and in any of the Loan Documents to
which Trustor is a party, Trustor shall indemnify, defend, protect, and hold
harmless Beneficiary, and its successors and assigns, from and against any and
all losses, costs, expenses (including, without limitation, reasonable
attorneys' fees, costs and expenses), damages, liabilities, or claims asserted
against or suffered by Beneficiary (i) arising from any Protective Payments
made, or authorized to be made, by Beneficiary in good faith, and (ii) arising
from any work performed or goods or services furnished in connection with the
ownership or operation of the Trust Property at any time during which
Beneficiary shall be enforcing its rights under this Section.

          (D) Without limiting the restrictions on assignment set forth in this
Assignment and any of the other Loan Documents to which Trustor is a party, each
Beneficiary of any interest in the Rents shall acquire its interest in the Rents
subject to the rights of the Beneficiary set forth in this Assignment, and shall
acquire no greater rights with respect to the payment of Protective Payments
than the rights of Trustor as set forth in this Section.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

Trustor hereby unconditionally represents and warrants to Beneficiary (but to
the extent any representation or warranty in this Section IV is substantively
the same as a representation or warranty contained in Article V of the Financing
Agreement and such representation or warranty is qualified by a materiality or
other qualifier in the Financing Agreement, such representation or

                                       13

<PAGE>

warranty herein shall be subject to the same materiality or other qualifier as
in Article V of the Financing Agreement) as follows:

          SECTION 4.01 Title to Trust Property and Lien of this Deed of Trust.
Trustor has good, marketable and indefeasible fee simple title to the Land and
the Buildings, and has good, marketable and indefeasible title to the Fixtures,
the Personalty and the other Trust Property. The Trust Property is free and
clear of any and all Liens, charges, encumbrances, security interests and
adverse claims whatsoever, except for all Liens, charges, encumbrances, security
interests and adverse claims specifically identified as exceptions in the policy
of title insurance accepted by Beneficiary in connection herewith, or otherwise
permitted under the Financing Agreement.

          SECTION 4.02 Taxes and Other Payments. Trustor has filed all federal,
state, commonwealth, county, municipal and city income and other material tax
returns required to have been filed by it and has paid all taxes and other
Impositions which have become due pursuant to such returns or pursuant to any
assessments or charges received by it, and Trustor does not know of any basis
for any additional assessment or charge in respect of any such taxes or other
Impositions. Trustor has paid in full all sums owing or claimed for labor,
material, supplies, personal property (whether or not forming a Fixture
hereunder) and services of every kind and character used, furnished or installed
in or on the Trust Property that are now due and owing and no claim for same
exists or will be permitted to be created, except such claims as may arise in
the ordinary course of business and that are not yet past due.

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

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

          SECTION 4.05 Compliance with Laws. All of the improvements on the Land
(i) comply with all material requirements of all applicable laws and ordinances
with respect to zoning, subdivision, construction, building and land use,
including, without limitation, requirements with respect to parking, access and
certificates of occupancy (and similar certificates), and (ii) comply with, and
shall remain in compliance with, applicable health, fire and building codes. All
of the Buildings lie wholly within the boundaries and building restriction lines
of the Land. No improvements on adjoining properties encroach upon the Land, and
no easements or other encumbrances upon the Land encroach upon or under any of
the Buildings or any portion of the Trust Property. All of the Buildings and the
use of the Trust

                                       14

<PAGE>

Property materially comply with, and shall remain in material compliance with,
all applicable statutes, rules, regulations and private covenants now or
hereafter relating to the ownership, construction, use or operation of the Trust
Property, including all applicable statutes, rules and regulations pertaining to
requirements for equal opportunity, anti-discrimination, fair housing,
environmental protection, zoning and land use. All certifications, permits,
licenses and approvals, including, without limitation, certificates of
completion and occupancy permits required for the legal use, occupancy and
operation of the Trust Property have been obtained and are in full force and
effect. Trustor has not received any notice of, or other communication with
respect to, an alleged violation with respect to any of the foregoing.

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

          SECTION 4.07 Flood Zone. The Trust Property is not located in an area
identified by the Federal Emergency Management Agency ("FEMA") as having special
flood hazards or if the Land or any part thereof is identified by the Federal
Emergency Management Agency as an area having special flood hazards (including,
without limitation, those areas designated as Zone A or Zone V), then Trustor
has obtained the insurance required under Section 5.04(a)(v) of this Deed of
Trust.

          SECTION 4.08 Additional Environmental Representation. The Trust
Property has not been designated as a "hazardous waste property" and to Tenant's
knowledge, the Trust Property has not been designated as a "border zone
property" pursuant to Section 25220, et. seq. of the California Health and
Safety Code.

                                    ARTICLE V

                              AFFIRMATIVE COVENANTS

          Trustor hereby unconditionally covenants and agrees with Beneficiary
as follows:

          SECTION 5.01 Lien Status. Except as otherwise expressly provided in
the Financing Agreement, Trustor shall not place, or permit to be placed, or
otherwise mortgage, hypothecate or encumber the Trust Property, or any portion
thereof or interest therein, with any other Lien or security interest of any
nature whatsoever (statutory, constitutional or contractual), other than
Permitted Liens, regardless of whether such Lien or security interest is
inferior to the Lien and security interest created by this Deed of Trust, and,
if any such Lien or security interest is asserted against the Trust Property,
Trustor shall promptly, at its own cost and expense, (a) pay the underlying
claim in full (except for so long as such claim is being contested by Trustor in
good faith and in accordance with the terms of the Financing Agreement) or take
such other action as may be necessary to cause the same to be released of record
and otherwise, and (b) within ten (10) days after the date on which Mortgagor
receives notice of such Lien or security interest. Such notice shall specify who
is asserting such Lien or security interest and shall detail the origin and
nature of the underlying claim giving rise to such asserted Lien or security
interest.

                                       15

<PAGE>

          SECTION 5.02 Payment of Impositions. Trustor shall duly pay and
discharge, or cause to be paid and discharged, all Impositions not later than
the due date thereof, or the day on which any fine, penalty, interest or cost
may be added thereto or imposed, or the day on which any Lien may be filed for
the nonpayment thereof (if such day is used to determine the due date of the
respective item); provided, however, that Trustor may, if permitted by
applicable law and if such installment payment would not create or permit the
filing of a Lien against the Trust Property, pay the Impositions in
installments. Notwithstanding the foregoing, Trustor may in good faith, by
appropriate proceedings and upon notice to Beneficiary, contest the validity,
applicability or amount of any asserted tax or assessment, subject to any more
restrictive provisions applicable to any such contest contained in the Financing
Agreement and (without limiting the foregoing) so long as (a) such contest is
diligently pursued, (b) Beneficiary determines, in its opinion reasonably
exercised, that such contest suspends the obligation to pay the tax and that
nonpayment of such tax or assessment will not result in the sale, loss,
forfeiture or diminution of the Trust Property or any part thereof or any
interest of Beneficiary therein, and (c) unless expressly provided to the
contrary in the Financing Agreement, prior to the earlier of the commencement of
such contest or the delinquency date of the asserted tax or assessment, Trustor
deposits with Beneficiary an amount determined by Beneficiary to be adequate to
cover the payment of such tax or assessment and a reasonable additional sum to
cover possible interest, costs and penalties; provided, however, that Trustor
shall promptly cause to be paid any amount adjudged by a court of competent
jurisdiction to be due, with all interest, costs and penalties thereon, promptly
after such judgment becomes final (and, subject to Beneficiary's rights and
remedies during an Event of Default, Beneficiary shall make any sum deposited
pursuant to clause (c) above available for such payment); and provided, further,
that in any event each such contest shall be concluded, the taxes, assessments,
interest, costs and penalties shall be paid prior to the date any writ or order
is issued under which the Trust Property may be sold, lost or forfeited.

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

          SECTION 5.04 Insurance and Application of Insurance Proceeds.

          (A) During the term of this Deed of Trust, Trustor, at its sole cost
and expense, shall maintain, or cause to be maintained the following policies of
insurance, with respect to the Trust Property:

               (i) If applicable or appropriate, Casualty (property) insurance
     against loss or damage by fire, lightning and such other perils as are
     included in a standard "special form" policy (formerly known as an
     "all-risk" endorsement policy), and against loss or damage by all other
     risks and hazards covered by a standard extended coverage insurance policy
     including, without limitation, riot and civil commotion, terrorist actions,
     vandalism, malicious mischief, burglary and theft, in an amount equal to
     the greater of (A) the then full replacement cost of the improvements,
     without deduction for physical

                                       16

<PAGE>

     depreciation and (B) such amount that the insurer would not deem Trustor a
     co-insurer under said policies. The policies of insurance required under
     this Section 5.04 shall contain a "Replacement Cost" endorsement with a
     waiver of depreciation and an "Agreed Amount" or "No Coinsurance"
     endorsement and shall otherwise comply with the Financing Agreement.

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

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

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

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

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

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

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

          All such insurance policies with respect to the Trust Property shall
contain a standard, non-contributory mortgagee clause naming Beneficiary, and
its successors and assigns, as an additional insured under all liability
insurance policies, as the first mortgagee and loss payee on all property
insurance policies, and as the sole loss payee on all rental loss or business
interruption insurance policies. Trustor shall not take out separate insurance
with respect to the

                                       17

<PAGE>

Trust Property concurrent in form or contributing in the event of loss with that
required to be maintained hereunder or under the Financing Agreement unless
Beneficiary is named as an additional insured thereon under a standard mortgagee
clause acceptable to Beneficiary and each such policy is otherwise in form and
substance acceptable to Beneficiary.

          (B) In the event of the foreclosure of this Deed of Trust, or in the
event of any transfer of title to the Trust Property, or any part thereof, by
foreclosure sale or by power of sale or deed in lieu of foreclosure, the
purchaser of the Trust Property, or such part thereof, shall succeed to all of
Trustor's rights with respect to the Trust Property, including any rights to
unexpired, unearned or returnable insurance premiums, subject to limitations on
the assignment of blanket policies, but limited to such rights as relate to the
Trust Property or such part thereof. If Beneficiary acquires title to the Trust
Property, or any part thereof, in any manner, Beneficiary shall thereupon (as
between Trustor and Beneficiary) become the sole and absolute owner of the
insurance policies with respect to the Trust Property, and all insurance
proceeds payable thereunder with respect to the Trust Property, with the sole
right to collect and retain all unearned or returnable premiums thereon with
respect to the Trust Property, or such part thereof, if any.

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

          (D) Following any damage to, destruction or loss of or other casualty
with respect to any of the Trust Property, Beneficiary shall apply the entire
amount of any insurance proceeds in accordance with the provisions of the
Financing Agreement or, if there is no provision contained in the Financing
Agreement governing how the same are to be applied, then Beneficiary shall apply
the entire amount thereof to the payment of the Obligations, whether or not then
due and payable, in such manner and order as Beneficiary may elect. In all
events, unless expressly provided to the contrary in the Financing Agreement,
Trustor hereby covenants and agrees to promptly commence and to diligently
prosecute the restoration of the Trust Property upon the occurrence of any
casualty loss affecting the Trust Property, without regard to the availability
or adequacy of insurance proceeds, but in all events in a manner approved by
Beneficiary. Notwithstanding any damage to, destruction or loss of or other
casualty with respect to any of the Trust Property, Trustor shall continue to
pay the Obligations at the time and in the manner provided for in the Financing
Agreement and the other Loan Documents until the Obligations have been paid in
full. If the Trust Property is sold, through foreclosure or otherwise, prior to
the receipt by Beneficiary of such insurance proceeds, Beneficiary shall have
the right, whether or not a deficiency judgment on any Loan Document shall have
been sought,

                                       18

<PAGE>

recovered or denied, to receive such insurance proceeds, or a portion thereof
sufficient to pay the then unpaid Obligations, whichever is less.

          SECTION 5.05 Condemnation and Application of Condemnation Proceeds.

          (A) Promptly upon its obtaining knowledge of the institution or the
threatened institution of any proceeding for the condemnation or other taking of
the Trust Property, or any portion thereof or interest therein, Trustor shall
notify Beneficiary of such proceeding. Trustor shall then, if requested by
Beneficiary, file or defend its claim thereunder and prosecute same with due
diligence to its final disposition and shall, subject to the terms of the
Financing Agreement, cause any awards or settlements to be paid over to
Beneficiary for disposition pursuant to the terms of this Deed of Trust.
Beneficiary shall be entitled to participate in any such proceeding, at
Trustor's sole cost and expense, and Trustor shall deliver or cause to be
delivered to Beneficiary such instruments as may be requested by Beneficiary
from time to time to permit such participation.

          (B) If the Trust Property or any part thereof is taken or diminished
in value, or if a consent settlement is entered by or under threat of such
proceeding, the award or settlement payable to Trustor by virtue of its interest
in the Trust Property shall be, and by these presents is, assigned, transferred
and set over unto Beneficiary to be held by Beneficiary, subject to the Lien and
security interest of this Deed of Trust, and disbursed in accordance with the
provisions of the Financing Agreement or, if there is no provision contained in
the Financing Agreement governing how the same is to be disbursed, then
Beneficiary shall apply the entire amount thereof to the payment of the
Obligations, whether or not then due and payable, in such manner and order as
Beneficiary may elect. In all events, unless otherwise expressly provided to the
contrary in the Financing Agreement, Trustor hereby covenants and agrees to
commence and diligently to prosecute the restoration of the Trust Property upon
the occurrence of any condemnation or other taking affecting the Trust Property,
without regard to the availability or adequacy of any award or settlement.
Notwithstanding any condemnation or other taking of any of the Trust Property,
Trustor shall continue to pay the Obligations at the time and in the manner
provided for in the Financing Agreement and the other Loan Documents, and the
Obligations shall not be reduced until, and then only to the extent that, any
condemnation award or settlement shall have been actually received and applied
by Beneficiary to the discharge of the Obligations. If the Trust Property is
sold, through foreclosure or otherwise, prior to the receipt by Beneficiary of
such condemnation award or settlement, Beneficiary shall have the right, whether
or not a deficiency judgment on any Loan Document shall have been sought,
recovered or denied, to receive such condemnation award or settlement, or a
portion thereof sufficient to pay the Obligations, whichever is less.

          (C) Any implied covenant in this Deed of Trust restricting the right
of Beneficiary to apply the proceeds of condemnation as described above is
waived by Trustor. Trustor hereby waives the provisions of any law prohibiting
Beneficiary from making elections regarding the application of condemnation
proceeds, including, without limitation, the provisions of California Code of
Civil Procedure Sections 1265.210 et seq.

          SECTION 5.06 Maintenance of Rights of Way, Easements, Licenses and
Other Rights. Trustor shall maintain, preserve and renew all rights of way,
easements, tenements,

                                       19

<PAGE>

hereditaments, development rights and credits, zoning rights, grants,
privileges, appurtenances, licenses, franchises and other rights reasonably
necessary for the use or operation of the Trust Property from time to time, or
otherwise relevant to the value thereof, and Trustor shall not, without the
prior written consent of Beneficiary, initiate, join in or consent to any
private restrictive covenant or other public or private restriction as to the
present or future use or operation of the Trust Property. Trustor shall,
however, comply with all restrictive covenants which may at any time affect the
Trust Property, all applicable zoning ordinances and all other public or private
restrictions relating to the use of the Trust Property.

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

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

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

                                   ARTICLE VI

                               NEGATIVE COVENANTS

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

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

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

          SECTION 6.03 Alterations. Trustor shall notify Beneficiary, in writing
and in advance, with respect to all proposed alterations, improvements or
additions to the Trust

                                       20

<PAGE>

Property which are of a material nature, and, unless and to the extent otherwise
expressly provided in the Financing Agreement, Trustor shall not effect any
material alteration, improvement or addition to the Trust Property without the
prior written consent of Beneficiary.

          SECTION 6.04 No Further Encumbrances. Trustor shall not, without the
prior written consent of Beneficiary, create, place or permit to be created or
placed, or through any act or failure to act, acquiesce in the placing of, or
allow to remain, any mortgage, pledge, Lien (statutory, constitutional or
contractual), security interest, encumbrance or charge on, or conditional sale
or other title retention agreement with respect to, the Trust Property, or any
portion thereof or interest therein, other than the Permitted Liens, regardless
of whether the same are subordinate to the Lien(s) and security interest(s)
created by this Deed of Trust.

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

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

                                   ARTICLE VII

                         EVENTS OF DEFAULT AND REMEDIES

          SECTION 7.01 Event of Default. The "Events of Default" set forth in
Section 8.01 of the Financing Agreement are hereby incorporated herein as if
fully set forth herein, and, without limiting the generality of the foregoing,
the occurrence of an "Event of Default" under the Financing Agreement or any
other Loan Document shall constitute an "Event of Default" hereunder. All
notices and cure periods described herein or in the Financing Agreement or any
other Loan Document shall not be applicable to any "Potential Event of Default"
(as hereinafter defined) if such Potential Event of Default has occurred as of
the date on which Beneficiary commences a nonjudicial foreclosure proceeding
with respect to another Potential Event of Default or Event of Default. Such
event shall constitute an independent Event of Default hereunder. For purposes
hereof, "Potential Event of Default" shall mean any event, but for the passage
of time or giving of notice, would be an Event of Default.

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

                                       21

<PAGE>

          SECTION 7.03 Foreclosure and Sale. If an Event of Default shall occur
and be continuing, Beneficiary shall have the right and option to with
foreclosure by power of sale in accordance with California Civil Code Section
2924 or other applicable law by notice to Trustee and shall, if required,
deposit with Trustee the Note, the original or a certified copy of this Deed of
Trust, and such other documents, receipts and evidences of expenditures made and
secured hereby as Trustee may require.

          Upon receipt of such notice from Beneficiary, Trustee shall cause to
be recorded and delivered to Trustor such notice of default as may then be
required by law and by this Deed of Trust. Trustee shall, without demand on
Trustor, after lapse of such time as may then be required by law and after
recordation of such notice of default and after notice of sale has been given as
required by law, sell the Trust Property or any portion thereof at the time and
place of sale fixed by it in said notice of sale, either as a whole or in
separate lots or parcels or items as Trustee shall deem expedient, and in such
order as it may determine, at public auction to the highest bidder for cash in
lawful money of the United State (or other cash equivalent as is acceptable to
Trustee and Beneficiary) payable at the time of sale. Trustee shall deliver to
the purchaser or purchasers at such sale its good and sufficient deed or deeds
conveying the property so sold, but without any covenant or warranty, express or
implied. The recitals in such deed of any matters or facts shall be conclusive
proof of the truthfulness thereof. Any person, including, without limitation,
Trustor, Trustee or Beneficiary, may purchase at such sale, and Trustor hereby
covenants to warrant and defend the title of such purchaser or purchasers.

          Trustee may postpone the sale of all or any portion of the Property
from time to time in accordance with the laws of the State of California.

          To the fullest extent allowed by law, Borrower hereby expressly waives
any right which it may have to direct the order in which any of the Property
shall be sold in the event of any sale or sales pursuant to this Deed of Trust.

          Upon any foreclosure sale, Beneficiary may bid for and purchase the
Trust Property and shall be entitled to apply all or any part of the unpaid
Obligations as a credit to the purchase price.

          Beneficiary may from time to time rescind any notice of default or
notice of sale before any Trustee's sale as provided above in accordance with
the laws of the State of California. The exercise by Beneficiary of such right
of rescission shall not constitute a waiver of any breach or default then
existing or subsequently occurring, or impair the right of Beneficiary to
execute and deliver to Trustee, as above provided, other declarations or notices
of default to satisfy the obligations of this Deed of Trust, or otherwise affect
any provision, covenant or condition of the Financing Agreement or any Loan
Document or any of the rights, obligations or remedies of Trustee or Beneficiary
hereunder or thereunder.

          Each remedy provided in this instrument is distinct from and
cumulative with all other rights and remedies provided hereunder or afforded by
applicable law or equity, and may be exercised concurrently, independently or
successively, in any order whatsoever.

                                       22

<PAGE>

          SECTION 7.04 Trustee's Successors, Substitutes and Agents. Trustee or
any successor to or substitute for Trustee may appoint or delegate any one or
more persons as agent to perform any act or acts necessary or incident to any
sale held by Trustee, including the posting of notices and the conduct of sale,
but in the name and on behalf of Beneficiary. If Trustee or any successor to or
substitute for Trustee shall have given notice of sale hereunder, any successor
or substitute trustee thereafter appointed may complete the sale and the
conveyance of the Trust Property pursuant thereto as if such notice had been
given by the successor to or substitute for Trustee conducting the sale.

          SECTION 7.05 Receivership. If any of the Obligations shall become due
and payable and shall not be promptly paid, Beneficiary shall have the right and
power to proceed by a suit or suits in equity or at law, whether for the
specific performance of Beneficiary which Trustee may apply for and obtain as a
matter of right and without notice to Trustor, which notice is hereby expressly
waived by Trustor, the appointment of a receiver to collect the Rents of the
Trust Property and to preserve the security hereof in accordance with California
Code of Civil Procedure Section 564 (including, without limitation, in order to
enforce Beneficiary's rights under California Civil Code Section 2929.5), either
before or after any foreclosure sale or the sale of the Trust Property under the
order of a court or courts of competent jurisdiction or under executory or other
legal process, without regard to the value of the Trust Property as security for
the amount then due to Beneficiary, or the solvency of any entity or entities,
person or persons primarily or secondarily liable for the payment of such
amounts; the Rents of the Trust Property, in any such event, having heretofore
been assigned to Beneficiary pursuant to Section 3.01 hereof as additional
security for the payment of the Obligations secured hereby.

          Without limiting the foregoing, the receiver shall have the right to
apply Rents to cleanup, remediation or other response action concerning the
release or threatened release of Hazardous Materials, whether or not such
actions are pursuant to an order of any federal, state or local governmental
agency. Trustor hereby confirms the right of Beneficiary (or a receiver
appointed by Beneficiary) to enter upon and inspect all or any portion of the
Trust Property for the purpose of determining the existence, location, nature
and magnitude of any past or present release or threatened release of any
hazardous substance into, onto, beneath, or from the Trust Property in
accordance with the California Civil Code Section 2929.5. All reasonable costs
and expenses incurred by Beneficiary pursuant to this provision or pursuant to
California Civil Code Section 2929.5, including, without limitation, costs of
consultants and contractors, costs of repair of any physical injury to the Trust
Property normal and customary to the tests and studies, court costs and
attorneys' fees, costs and expenses, whether incurred in litigation or not and
whether before or after judgment, shall be payable by Trustor and, to the extent
advanced or incurred by Beneficiary, shall be reimbursed to Beneficiary by
Trustor upon demand. This provision is separate and several, and shall survive
merger into any judgment.

          SECTION 7.06 Judicial Foreclosure. If an Event of Default shall occur
and be continuing, Trustee or Beneficiary shall have the right and power to
proceed by a suit or suits in equity or at law, whether for the specific
performance of any covenant or agreement herein contained or in aid of the
execution of any power herein granted, or for any foreclosure hereunder or for
the sale of the Trust Property under the judgment or decree of any court or
courts of competent jurisdiction, or for the appointment of a receiver pending
any foreclosure hereunder or the sale of the Trust Property under the order of a
court or courts of competent

                                       23

<PAGE>

jurisdiction or under executory or other legal process, or for the enforcement
of any other appropriate legal or equitable remedy. Any money advanced by
Trustee and/or Beneficiary in connection with any such receivership shall be a
demand obligation (which obligation Trustor hereby expressly promises to pay)
owing by Trustor to Trustee and/or Beneficiary and shall bear interest from the
date of such advance by Trustee and/or Beneficiary until paid at the
Post-Default Rate.

          SECTION 7.07 Separate Sales. To the extent allowed by applicable law,
the Trust Property may be sold in one or more parcels and in such manner and
order as Beneficiary, in its sole discretion, may elect, it being expressly
understood and agreed that the right of sale arising out of any Event of Default
shall not be exhausted by any one or more sales.

          SECTION 7.08 Possession of Trust Property. Trustor agrees to the full
extent that it lawfully may, that, in case one or more of the Events of Default
shall have occurred and be continuing, then, and in every such case, Trustee or
Beneficiary shall have the right and power to enter into and upon and take
possession of all or any part of the Trust Property in the possession of
Trustor, its successors or assigns, or its or their agents or servants, and may
exclude Trustor, its successors or assigns, and all Persons claiming by, through
or under Trustor, and its or their agents or servants wholly or partly
therefrom; and, holding the same, Trustee or Beneficiary may use, administer,
manage, operate and control the Trust Property and conduct the business thereof
to the same extent as Trustor, its successors or assigns, might at the time do
and may exercise all rights and powers of Trustor, in the name, place and stead
of Trustor, or otherwise as Trustee or Beneficiary shall deem best. All costs,
expenses and liabilities of every character incurred by Trustee and/or
Beneficiary in administering, managing, operating and controlling the Trust
Property shall constitute a demand obligation (which obligation Trustor hereby
expressly promises to pay) owing by Trustor to Trustee and/or Beneficiary and
shall bear interest from the date of expenditure until paid at the Post-Default
Rate, all of which shall constitute a portion of the Obligations and shall be
secured by this Deed of Trust and all of the other Loan Documents. Trustor
hereby irrevocably constitutes and appoints Beneficiary as Trustor's
attorney-in-fact (coupled with an interest) to perform such acts and execute
such documents as Beneficiary, in its sole discretion, shall deem appropriate,
including endorsement of Trustor's name on any instruments. Regardless of any
provision of this Deed of Trust, the Financing Agreement or any other Loan
Document, Beneficiary shall not be considered to have accepted any property
other than cash or immediately available funds in satisfaction of any obligation
of Trustor to Beneficiary, unless Beneficiary shall have given express written
notice of Beneficiary's election to the contrary.

          SECTION 7.09 Occupancy After Foreclosure. In the event that there is a
foreclosure sale hereunder and at the time of such sale Trustor or Trustor's
representatives, successors or assigns or any other person claiming any interest
in the Trust Property by, through or under Trustor, are occupying or using the
Trust Property or any part thereof, each and all shall immediately become the
tenant of the purchaser at such sale, which tenancy shall be a tenancy from day
to day, terminable at the will of either the landlord or tenant, at a reasonable
rental per day based upon the value of the property occupied, such rental to be
due daily to the purchaser. To the extent permitted by applicable law, the
purchaser at such sale shall, notwithstanding any language herein to the
contrary, have the sole option to demand immediate possession following the sale
or to permit the occupants to remain as tenants at will. In the event that the
tenant fails

                                       24

<PAGE>

to surrender possession of said property upon demand, the purchaser shall be
entitled to institute and maintain a summary action for possession of the Trust
Property (such as an action for forcible entry and detainer) in any court having
appropriate jurisdiction.

          SECTION 7.10 Remedies Cumulative, Concurrent and Nonexclusive. Every
right, power and remedy herein given to Trustee or Beneficiary shall be
cumulative and in addition to every other right, power and remedy herein
specifically given or now or hereafter existing in equity, at law or by statute
(including specifically those granted by the Applicable UCC). Each such right,
power and remedy, whether specifically herein given or otherwise existing, may
be exercised from time to time and so often and in such order as may be deemed
expedient by Trustee or Beneficiary, and the exercise, or the beginning of the
exercise, of any such right, power or remedy shall not be deemed a waiver of the
right to exercise, at the same time or thereafter, any other right, power or
remedy. Beneficiary shall be entitled to collect all costs and expenses incurred
in pursuing such remedies. No delay or omission by Trustee or Beneficiary in the
exercise of any such right, power or remedy shall impair any such right, power
or remedy or operate as a waiver thereof or of any other right, power or remedy
then or thereafter existing.

          SECTION 7.11 No Release of Obligations. Neither Trustor, any other
Borrower, nor any other Person now or hereafter obligated for the payment or
performance of all or any part of the Obligations shall be relieved of any such
obligation by reason of (a) the failure of Trustee or Beneficiary to comply with
any request of Trustor, any other Borrower or any other Person so obligated to
foreclose the Lien of this Deed of Trust to enforce any provision hereunder or
under the Financing Agreement; (b) the release, regardless of consideration, of
the Trust Property or any portion thereof or interest therein or the addition of
any other property to the Trust Property; (c) any agreement or stipulation
between any subsequent owner of the Trust Property and Beneficiary extending,
renewing, rearranging or in any other way modifying the terms of this Deed of
Trust without first having obtained the consent of, given notice to or paid any
consideration to Trustor, any other Borrower or any other Person, and in any
such event Trustor, all other Borrowers and all such other Persons shall
continue to be liable to make payment according to the terms of any such
extension or modification agreement unless expressly released and discharged in
writing by Beneficiary; or (d) any other act or occurrence save and except the
complete payment and performance of all of the Obligations.

          SECTION 7.12 Release of and Resort to Collateral. Beneficiary may
release, regardless of consideration, any part of the Trust Property without, as
to the remainder, in any way impairing, affecting, subordinating or releasing
the Lien or security interest created in or evidenced by this Deed of Trust or
its stature as a first and prior Lien and security interest in and to the Trust
Property, and without in any way releasing or diminishing the liability of any
Person liable for the payment or performance of the Obligations. Beneficiary may
resort to any other security for the Obligations held by Trustee or Beneficiary
in such manner and order as Beneficiary may elect.

          SECTION 7.13 Waiver of Redemption, Notice and Marshalling of Assets.
To the fullest extent permitted by applicable law, Trustor hereby irrevocably
and unconditionally waives and releases (a) all benefits that might accrue to
Trustor by virtue of any present or future moratorium law or other law exempting
the Trust Property from attachment, levy or sale on execution or providing for
any appraisement, valuation, stay of execution, exemption from civil

                                       25

<PAGE>

process, redemption or extension of time for payment; (b) except for notices
expressly provided for herein or in the Financing Agreement, all notices of any
Event of Default or of Beneficiary's intention to accelerate maturity of the
Obligations or of Trustee's or Beneficiary's election to exercise or actual
exercise of any right, remedy or recourse provided for hereunder or under the
Financing Agreement; and (c) any right to a marshalling of assets, a sale in
inverse order of alienation or to direct the application of proceeds, including
any rights under California Civil Code Sections 2899 and 3433, and all rights of
Trustor under California Civil Code Section 2822; (d) all rights and remedies
which Borrower may have or be able to assert by reason of the Laws of the State
of California pertaining to the rights and remedies of sureties and (e) any and
all conflicts with any provisions of any of the Loan Documents. If any law
referred to in this Deed of Trust and now in force, of which Trustor or its
successor or successors might take advantage despite the provisions hereof,
shall hereafter be repealed or cease to be in force, such law shall thereafter
be deemed not to constitute any part of the contract herein contained or to
preclude the operation or application of the provisions hereof. Beneficiary
shall have the right to determine the order in which any or all of the Trust
Property shall be subjected to the remedies provided herein. Beneficiary shall
have the right to determine the order in which any or all portions of the
Obligations are satisfied from the proceeds realized upon the exercise of the
remedies provided herein. Nothing contained herein shall be deemed to be a
waiver of Trustor's rights under Section 2924c of the California Civil Code.

          SECTION 7.14 Discontinuance of Proceedings. In case Beneficiary shall
have proceeded to invoke any right, remedy or recourse permitted hereunder or
under the Financing Agreement and shall thereafter elect to discontinue or
abandon same for any reason, Beneficiary shall have the unqualified right so to
do and, in such an event, Trustor and Beneficiary shall be restored to their
former positions with respect to the Obligations, this Deed of Trust, the
Financing Agreement, the Trust Property and otherwise, and the rights, remedies,
recourses and powers of Beneficiary shall continue as if same had never been
invoked.

          SECTION 7.15 Application of Proceeds. After the occurrence and during
the continuance of an Event of Default, the proceeds of any sale of and any
other amounts generated by the holding, leasing, operating or other use of the
Trust Property shall be applied by Beneficiary (or the receiver, if one is
appointed), to the extent that funds are so available therefrom, in accordance
with the provisions of the Financing Agreement or if not so provided, then in
the following order of priority, except to the extent otherwise required by
applicable law:

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

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

                                       26

<PAGE>

          (C) third, to the payment of the Obligations in such order and manner
as Beneficiary determines in its sole discretion; and

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

Trustor shall be liable for any deficiency remaining.

          SECTION 7.16 Uniform Commercial Code Remedies. Beneficiary shall have
all of the rights, remedies and recourses with respect to the Personalty and the
Fixtures afforded to it by the Applicable UCC, including, without limitation,
(i) the right to conduct a unified sale of such Personalty and Fixtures in
connection with a judicial or power of sale foreclosure of any portion of the
Trust Property that constitutes real property, (ii) any the right to take
possession of the Personalty and the Fixtures or any part thereof, and (iii) to
take such other measures as Beneficiary may deem necessary for the care,
protection and preservation of the Personalty and the Fixtures, in addition to,
and not in limitation of, the other rights, remedies and recourses afforded by
this Deed of Trust and the other Loan Documents.

          SECTION 7.17 Indemnity. In connection with any action taken by
Trustee, Beneficiary and/or any Indemnitee pursuant to this Deed of Trust,
Trustee, Beneficiary, and/or any such Indemnitee and their respective
Indemnified Parties shall not be liable for any Loss sustained by Trustor
resulting from (a) an assertion that Beneficiary, or any such Indemnitee or an
Indemnified Party has received funds from the operations of the Trust Property
claimed by third Persons, or (b) any act or omission of Trustee, Beneficiary, or
any such Indemnitee or any such Indemnified Party in administering, managing,
operating or controlling the Trust Property, including in either case such Loss
as may result from the ordinary negligence of Trustee and/or Beneficiary or any
other Lender or an Indemnified Party, or which may result from strict liability,
whether under applicable law or otherwise, unless such Loss is caused by the
gross negligence, willful misconduct or bad faith of Trustee, Beneficiary and/or
such other Lender or such Indemnified Party, nor shall Trustee, Beneficiary
and/or any other Lender or an Indemnified Party be obligated to perform or
discharge any obligation, duty or liability of Trustor. Trustor shall and does
hereby agree to indemnify Trustee and/or Beneficiary and each of the other
Lenders and their respective Indemnified Parties for, and to hold Trustee,
Beneficiary and each such other Lender and each Indemnified Party harmless from,
any and all Losses which may or might be incurred by Trustee and/or Beneficiary
or any of such other Lenders or such Indemnified Parties by reason of this Deed
of Trust or the exercise of rights or remedies hereunder, including such Losses
as may result from the ordinary negligence of Trustee, Beneficiary or any other
Lender or an Indemnified Party, or which may result from strict liability,
whether under applicable law or otherwise, unless such Loss is caused by the
gross negligence, willful misconduct or bad faith of Trustee, Beneficiary or
such other Lender or such Indemnified Party. Should Trustee, Beneficiary and/or
any other Lender or an Indemnified Party make any expenditure on account of any
such Losses, the amount thereof, including costs, expenses and reasonable
attorneys' fees, shall be a demand obligation (which obligation Trustor hereby
expressly promises to pay) owing by Trustor to Trustee and/or Beneficiary and
shall bear interest from the date expended until paid at the Post-Default Rate,
shall be a part of the Obligations and shall be secured by this Deed of Trust
and the other Loan Documents. Trustor hereby assents to, ratifies and confirms
any and all actions of Trustee and/or Beneficiary with

                                       27

<PAGE>

respect to the Trust Property taken under this Deed of Trust. The liabilities of
Trustor, as set forth in this Section 7.18, shall survive the termination of
this Deed of Trust and the payment and performance of the Obligations.

          SECTION 7.18 Waiver of Lien. In accordance with California Code of
Civil Procedure Section 726.5, Beneficiary may waive its lien against the Trust
Property constituting real property or any portion thereof, together with
fixtures or personal property constituting real property thereon, to the extent
such Trust Property constituting real property is found to be environmentally
impaired, and may exercise any and all rights and remedies of an unsecured
creditor against Trustor and all of Trustor's assets and Trust Property
constituting real property for the recovery of any deficiency, including without
limitation seeking an attachment order under California Code of Civil Procedure
Section 483.010. No such waiver shall be final or binding on Beneficiary unless
and until a final money judgment is obtained against Trustor. As between
Beneficiary and Trustor, for purposes of California Code of Civil Procedure
Section 726.5, Trustor shall have the burden of proving that the release or
threatened release was not knowingly or negligently caused or contributed to, or
knowingly or willfully permitted or acquiesced to by Trustor or any related
party (or any affiliate or agent of Trustor or any related party) and that
Trustor made written disclosure of the release to Beneficiary or that
Beneficiary otherwise obtained actual knowledge thereof prior to the making of
the loan evidenced by the Financing Agreement. Notwithstanding anything to the
contrary contained in this Deed of Trust, the Financing Agreement or the other
Loan Documents, Trustor shall be fully and personally liable for all judgments
and awards entered against Trustor pursuant to California Code of Civil
Procedure 726.5 and such liability shall be an exception to any non-recourse or
exculpatory provision in this Deed of Trust or the other Loan Documents, if any,
and shall not be limited to the original principal amount of the obligations
secured by this Deed of Trust. Trustor's obligations hereunder shall survive the
foreclosure, deed in lieu of foreclosure, release, reconveyance or any other
transfer of the Trust Property constituting real property or this Deed of Trust.
For the purpose of any action brought under this Section, Trustor hereby waives
the defense of laches and any applicable statute of limitations. For purposes of
California Code of Civil Procedure 726.5, the acts, knowledge and notice of each
"726.5 Party" shall be attributed to and be deemed to have been performed by the
party or parties then obligated on and liable for payment of the Obligations. As
used herein, "726.5 Party" shall mean Trustor, any successor owner to Trustor of
all or any portion of the Trust Property constituting real property, any related
party of Trustor or any such successor and any affiliate or agent of Trustor,
any such successor or any such related party.

          SECTION 7.19 Action for Environmental Claims. In accordance with, and
subject to limitations of, California Code of Civil Procedure Section 736,
Beneficiary may seek a judgment that the Trustor has breached its covenants,
representations and/or warranties with respect to the environmental matters
contained in the Financing Agreement (the "Environmental Provisions"), and may
commence and maintain an action or actions in any court of competent
jurisdiction for enforcement of the Environmental Provisions and/or recovery of
any and all costs, damages, expenses, fees, penalties, fines, judgments,
indemnification payments to third parties, and other out-of-pocket costs or
expenses (including, without limitation, court costs, consultants' fees and
attorneys' fees, whether incurred in litigation or not and whether before or
after judgment), incurred or advanced by Beneficiary pursuant to the
Environmental Provisions (collectively, the "Environmental Costs"), excluding,
however, any Environmental Costs not

                                       28

<PAGE>

permitted to be recovered pursuant to Section 736 of the California Code of
Civil Procedure. Environmental Costs that are not permitted to be recovered
pursuant to Section 736 may be referred to hereinafter as the "Unsecured
Environmental Costs," and Environmental Costs other than the Unsecured
Environmental Costs may be referred to hereinafter as the "Secured Environmental
Costs." Any Unsecured Environmental Costs shall not be secured by this Deed of
Trust; however, nothing herein shall prevent Beneficiary from recovering any
Unsecured Environmental Costs pursuant to the Indemnity Agreement of even date
herewith among Trustor, Beneficiary and certain other parties, to the extent
they are recoverable in accordance with said Indemnity Agreement. All Secured
Environmental Costs incurred by Beneficiary shall bear interest at the default
rate provided under the Note. All Secured Environmental Costs together with
interest thereon at the rate then in effect under the Financing Agreement shall
be secured by this Deed of Trust and shall enjoy the same priority as the
Obligations. Trustor acknowledges and agrees that notwithstanding any term or
provision contained in this Deed of Trust, the Financing Agreement or in the
other Loan Documents, Environmental Costs shall be exceptions to any nonrecourse
or exculpatory provision, if any, and Trustor shall be fully and personally
liable for Environmental Costs. Such liability shall not be limited to the
original principal amount of the obligations secured by this Deed of Trust.
Trustor's obligations hereunder shall survive foreclosure, deed in lieu of
foreclosure, release, reconveyance or any other transfer of the Trust Property
constituting real property or this Deed of Trust. For the purposes of any action
brought under this subparagraph Trustor hereby waives the defense of laches and
any applicable statute of limitations.

                                  ARTICLE VIII

                                    TRUSTEE

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

          SECTION 8.02 Successor Trustee. From time to time, by a writing signed
and acknowledged by Beneficiary and filed for record in the office of the
recorder of the County in which the Land is situated, Beneficiary may appoint
another trustee to act in the place and stead of Trustee or any successor. Such
writing shall refer to this Deed of Trust and set forth the date,

                                       29

<PAGE>

book and page of its recordation. The recordation of such instrument of
substitution shall discharge Trustee herein named and shall appoint the new
trustee as the trustee hereunder with the same effect as if originally named
Trustee herein. A writing recorded pursuant to the provisions of this Section
8.02 shall be conclusive proof of the proper substitution of such new trustee.

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

          SECTION 8.04 Reconveyance. Upon written request of Beneficiary stating
all of the Obligations have been paid, performed and discharged, and the
Financing Agreement is terminated, and payment of its fees, Trustee shall
reconvey, without warranty, the Trust Property. The recitals in such
reconveyance of any matters or facts shall be conclusive proof of the
truthfulness thereof. The grantee in such reconveyance may be described as "the
person or persons legally entitled hereto" or such other description as required
by law in the State of California.

                                   ARTICLE IX

                                 MISCELLANEOUS

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

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

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

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

                                       30

<PAGE>

          SECTION 9.05 Notices. All notices or other communications required or
permitted to be given pursuant to this Deed of Trust shall be in writing and
shall be considered properly given if given in the manner and to the addresses
prescribed by Section 13.01 of the Financing Agreement to the parties and at the
addresses set forth in the first paragraph hereof, and to the parties and at the
addresses set forth in Section 13.01 of the Financing Agreement; provided,
however, that (a) service of notice as required by the laws of any State or
Commonwealth in which portions of the Trust Property may be situated shall for
all purposes be deemed appropriate and sufficient with the giving of such notice
thereunder, and (b) any party shall have the right to change its address for
notice hereunder to any other location within the continental United States by
the giving of ten (10) days' notice to the other party in the manner set forth
above.

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

          SECTION 9.07 Beneficiary's Right to Perform; Beneficiary's
Expenditures.

          (A) Trustor agrees that if Trustor fails to perform any act or take
any action which Trustor is required to perform or take hereunder or under the
Financing Agreement or to pay any money which Trustor is required to pay
hereunder or under the Financing Agreement, Beneficiary may, but shall not be
obligated to, perform or cause to be performed such act or take such action or
pay such money, to the extent and only to the extent permitted under the
Financing Agreement.

          (B) All costs and expenses incurred by Beneficiary (or any Indemnified
Party), including, without limitation, attorneys fees, costs and expenses, all
monies paid by (or on behalf of) Beneficiary and the monetary value of all
services performed by (or on behalf of Beneficiary) in connection with a Default
or Event of Default hereunder or under any other Loan Document, including,
without limitation, the (i) the enforcement of any term or provision of this
Deed of Trust or any other Loan Document, (ii) the performance by Beneficiary of
any obligation of Trustor under this Deed of Trust or any other Loan Document if
Beneficiary elects to so perform, in its sole and absolute discretion, and (iii)
any action Beneficiary elects to take, in its sole and absolute discretion, to
protect its interest in or the value of the Trust Property, shall be a demand
obligation owing by Trustor to Beneficiary, as the case may be, and to the
extent any payment is made to a third Person, Beneficiary, upon making such
payment, shall be subrogated to all of the rights of the Person receiving such
payment. All such costs and

                                       31

<PAGE>

expenses, monies and the monetary value of such services performed shall (x)
bear interest at the Post-Default Rate from the date of such incurrence, payment
or performance, as applicable, until paid, and (y) constitute (together with
such interest) a portion of the Obligations and shall be secured by this Deed of
Trust and all of the other Loan Documents. If Beneficiary shall elect to pay any
Imposition or other sums due with reference to the Trust Property, Beneficiary
may do so in reliance on any bill, statement or assessment procured from the
appropriate Governmental Authority or other issuer thereof. Attorneys' fees,
costs and expenses as used herein shall include, without limitation, such fees,
costs and expenses incurred in litigation or not, whether before or after
judgment and and consultants, court costs, expert witness fees, document
reproduction expenses, costs of exhibit preparation, courier charges, postage
and communication expenses. This provision is separate and several, and shall
survive merger into any judgment.

          Trustor shall and does hereby agree that, if all or a portion of the
Obligations has prior to the maturity date fixed in the Financing Agreement,
become due or been declared due by reason of an Event of Default the entire
amount then due under the terms of this Deed of Trust and the Financing
Agreement shall include all attorneys' fees and costs and expenses which are
actually incurred as stated above, notwithstanding the provisions of Section
2924c(d) and Section 2924d of the California Civil Code.

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

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

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

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

                                       32

<PAGE>

          SECTION 9.12 Applicable Law. THlS DEED OF TRUST, THE FINANCING
AGREEMENT AND THE LOAN DOCUMENTS HAVE BEEN DELIVERED IN THE STATE OF NEW YORK.
TRUSTOR AND BENEFICIARY FURTHER AGREE AND STIPULATE THAT THIS DEED OF TRUST, THE
FINANCING AGREEMENT AND THE LOAN DOCUMENTS HAVE BEEN DELIVERED IN THE STATE OF
NEW YORK WERE NEGOTIATED, EXECUTED AND DELIVERED IN THE STATE OF NEW YORK, AND
THAT THE STATE OF NEW YORK HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO
THE UNDERLYING TRANSACTION. IT IS THEREFORE THE INTENT OF TRUSTOR AND
BENEFICIARY THAT THIS DEED OF TRUST SHALL BE CONSTRUED AND INTERPRETED WITH, AND
GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT
TO NEW YORK CHOICE OF LAW PRINCIPLES); PROVIDED, HOWEVER, THAT THE LAWS OF THE
STATE OF CALIFORNIA SHALL APPLY TO THE CREATION, PERFECTION AND PROCEDURES
GOVERNING ENFORCEMENT OF ANY LIENS, SECURITY INTERESTS AND ENCUMBRANCES GRANTED
OR CREATED BY THIS DEED OF TRUST IN THE REAL OR PERSONAL PROPERTY LOCATED IN (OR
IN THE CASE OF INTANGIBLE PERSONAL PROPERTY, HAVING A SITUS IN) THE STATE OF
CALIFORNIA, AND THE MANAGEMENT, OPERATION, DISPOSITION AND REALIZATION OF THE
SECURITY PROVIDED THEREBY. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE
LAWS OF THE STATE OF NEW YORK SHALL APPLY TO (I) ALL MATTERS RELATING TO THE
CHARGING AND COLLECTION OF INTEREST UNDER THIS DEED OF TRUST AND WITH RESPECT TO
THE OBLIGATIONS, (II) THE ENFORCEMENT OF ALL RIGHTS UNDER THE FINANCING
AGREEMENT, AND THE LOAN DOCUMENTS OTHER THAN THIS DEED OF TRUST AND (III) THE
RIGHT TO SUE TRUSTOR OR ANY OTHER PERSON OBLIGATED UNDER THE LOAN AGREEMENT AND
THE LOAN DOCUMENTS TO COLLECT ANY OUTSTANDING OBLIGATIONS OR TO OBTAIN A
JUDGMENT FOR ANY DEFICIENCY FOLLOWING FORECLOSURE UNDER ANY ONE ACTION AND
ANTIDEFICIENCY RULES. TRUSTOR HEREBY AGREES THAT BENEFICIARY MAY ENFORCE ITS
RIGHTS UNDER THIS DEED OF TRUST AND ANY OF THE OTHER LOAN DOCUMENTS, INCLUDING
THE RIGHT TO SUE TRUSTOR OR ANY PERSON OBLIGATED UNDER THE LOAN DOCUMENTS TO
COLLECT ANY OUTSTANDING OBLIGATIONS OR TO OBTAIN A JUDGMENT FOR ANY DEFICIENCY
FOLLOWING FORECLOSURE, IN ACCORDANCE WITH NEW YORK LAW, AND TRUSTOR HEREBY
ACKNOWLEDGES THAT THE CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 580A, 580D AND
726 DO NOT APPLY TO THIS DEED OF TRUST, THE FINANCING AGREEMENT AND THE LOAN
DOCUMENTS AND, TO THE EXTENT THEY APPLY WAIVES TO THE MAXIMUM EXTENT PERMITTED
BY LAW ANY RIGHTS WHICH IT MAY HAVE UNDER THE SUCH SECTIONS.

          SECTION 9.13 Satisfaction of Prior Encumbrance. To the extent that
proceeds advanced pursuant to the Financing Agreement are used to pay
indebtedness secured by any outstanding Lien, security interest, charge or prior
encumbrance against the Trust Property, such proceeds shall be deemed to have
been advanced by Beneficiary at Trustor's request, and Beneficiary shall be
subrogated to any and all rights, security interests and Liens owned by any

                                       33

<PAGE>

owner or holder of such outstanding Liens, security interests, charges or
encumbrances, irrespective of whether said Liens, security interests, charges or
encumbrances are released, and it is expressly understood that, in consideration
of the payment of such other indebtedness by Beneficiary, Trustor hereby waives
and releases all demands and causes of action for offsets and payments to, upon
and in connection with the said indebtedness.

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

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

          SECTION 9.16 Release of Deed of Trust. If all of the Obligations shall
be paid, performed and discharged and the Financing Agreement is terminated,
Beneficiary shall forthwith cause satisfaction and discharge of this Deed of
Trust to be entered upon the record, at the sole cost and expense of Trustor,
and shall execute and deliver (or cause to be executed and delivered) such
instruments of satisfaction and discharge as may be appropriate, such
instruments to be duly acknowledged and in form for recording, at the sole cost
and expense of Trustor.

          SECTION 9.17 Limitation of Obligations with Respect to Trust Property.

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

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

                                       34

<PAGE>

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

          SECTION 9.19 Limitation on Interest Payable. It is the intention of
the parties to conform strictly to the usury laws, whether state or federal,
that are applicable to the transaction of which this Deed of Trust is a part.
All agreements between Trustor and Beneficiary, or any Lender, whether now
existing or hereafter arising and whether oral or written, are hereby expressly
limited so that in no contingency or event whatsoever shall the amount paid or
agreed to be paid by Trustor for the use, forbearance or detention of the money
to be loaned under the Financing Agreement or any other Loan Document, or for
the payment or performance of any covenant or obligation contained herein or in
the Financing Agreement or any other Loan Document, exceed the maximum amount
permissible under applicable federal or state usury laws. If, under any
circumstances, fulfillment of any such provision, at the time performance of
such provision shall be due, shall involve exceeding the limit of validity
prescribed by applicable law, then the obligation to be fulfilled shall be
reduced to the limit of such validity. If, under any circumstances, Trustor
shall have paid an amount of money which is deemed to be interest and such
interest would exceed the highest lawful rate, such amount that would be
excessive interest under applicable usury laws shall be applied to the reduction
of the principal amount owing in respect of the Obligations and not to the
payment of interest, or if such excessive interest exceeds the unpaid balance of
principal and any other amounts due hereunder, the excess shall be refunded to
Trustor. All sums paid or agreed to be paid for the use, forbearance or
detention of the principal under any extension of credit by Beneficiary (or
Lender) shall, to the extent permitted by applicable law, and to the extent
necessary to preclude exceeding the limit of validity prescribed by applicable
law, be amortized, prorated, allocated and spread from the date of this Deed of
Trust until payment in full of the Obligations so that the actual rate of
interest on account of such principal amounts is uniform throughout the term
hereof.

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

          SECTION 9.21 Amount Secured; Last Dollar. So long as the balance of
the Obligations exceeds the portion of the Obligations secured by this Deed of
Trust, no payment on account of the Obligations shall be deemed to be applied
against or to reduce the portion of the

                                       35

<PAGE>

Obligations secured by this Deed of Trust, but shall, instead, be deemed to be
applied against only such portions of the Obligations that are not secured by
this Deed of Trust.

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

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

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

          SECTION 9.25 Suretyship Waivers. As used in this Section 9.25, the
term "Obligor" shall mean each any Obligor, other than the Trustor, obligated
for any of the Obligations secured by this Deed of Trust.

                                       36

<PAGE>

          (A) Representations and Warranties. Trustor represents and warrants to
Beneficiary that: (A) this Deed of Trust is executed, in part, at the request of
the Obligors; (B) this Deed of Trust complies with all agreements between each
Obligor regarding Trustor's execution hereof; (C) Beneficiary has made no
representation to any Trustor as to the creditworthiness of any Obligor; and (D)
Trustor has established adequate means of obtaining from each Obligor on a
continuing basis financial and other information pertaining to such Obligor's
financial condition. Trustor agrees to keep adequately informed from such means
of any facts, events or circumstances which might in any way affect such
Trustor's risks hereunder. Trustor further agrees that Beneficiary shall have no
obligation to disclose to Trustor any information or material about any Obligor
which is acquired by Beneficiary in any manner. The liability of Trustor
hereunder shall be reinstated and revived, and the rights of Beneficiary shall
continue if and to the extent that for any reason any amount at any time paid on
account of any Obligation is rescinded or must otherwise be restored by
Beneficiary, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, all as though such amount had not been paid. The
determination as to whether any amount so paid must be rescinded or restored
shall be made by Beneficiary in its sole discretion; provided however, that if
Beneficiary chooses to contest any such matter at the request of Trustor,
Trustor agrees to indemnify and hold Beneficiary harmless from and against all
costs and expenses, including reasonable attorneys' fees, expended or incurred
by Beneficiary in connection therewith, including without limitation, any
litigation with respect thereto.

          (B) General Suretyship Waivers.

               (i) Trustor waives any right to require Beneficiary to: (i)
     proceed against any Obligor or any other person; (ii) marshal assets or
     proceed against or exhaust any security held from any Obligor or any other
     person; (iii) take any action or pursue any other remedy in Beneficiary's
     power; or (iv) make any presentment or demand for performance, or give any
     notice of nonperformance, protest, notice of protest or notice of dishonor
     hereunder or in connection with any obligations or evidences of
     indebtedness held by Beneficiary as security for or which constitute in
     whole or in part the Obligations, or in connection with the creation of new
     or additional obligations.

               (ii) Trustor waives any defense to its obligations hereunder
     based upon or arising by reason of: (i) any disability or other defense of
     any Obligor or any other person; (ii) the cessation or limitation from any
     cause whatsoever, other than payment in full, of any Obligation; (iii) any
     lack of authority of any officer, director, partner, agent or any other
     person acting or purporting to act on behalf of any Obligor which is a
     corporation, partnership or other type of entity, or any defect in the
     formation of any such Obligor; (iv) the application by any Obligor of the
     proceeds of any Obligation for purposes other than the purposes represented
     by any Obligor to, or intended or understood by, Beneficiary or any
     Trustor; (v) any act or omission by Beneficiary which directly or
     indirectly results in or aids the discharge of any Obligor of any portion
     of the Obligations by operation of law or otherwise, or which in any way
     impairs or suspends any rights or remedies of Beneficiary against any
     Obligor; (vi) any impairment of the value of any interest in any security
     for the Obligations or any portion thereof, including without limitation,
     the failure to obtain or maintain perfection or recordation of any interest
     in any such security, the release of any such security without
     substitution, and/or

                                       37

<PAGE>

     the failure to preserve the value of, or to comply with applicable law in
     disposing of, any such security; or (vii) any modification of the
     Obligations, in any form whatsoever, including without limitation the
     renewal, extension, acceleration or other change in time for payment of, or
     other change in the terms of, the Obligations or any portion thereof,
     including increase or decrease of the rate of interest thereon. Until all
     Obligations shall have been paid in full, no Trustor shall have any right
     of subrogation, and Trustor waives any right to enforce any remedy which
     Beneficiary now has or may hereafter have against any Obligor or any other
     person, and waives any benefit of, or any right to participate in, any
     security now or hereafter held by Beneficiary. Trustor further waives all
     rights and defenses it may have arising out of: (1) any election of
     remedies by Beneficiary, even though that election of remedies, such as a
     non-judicial foreclosure with respect to any security for any portion of
     the Obligations, destroys Trustor's rights of subrogation or Trustor's
     rights to proceed against any Obligor for reimbursement; or (2) any loss of
     rights Trustor may suffer by reason of any rights, powers or remedies of
     any Obligor in connection with any anti-deficiency laws or any other laws
     limiting, qualifying or discharging any Obligor's obligations, whether by
     operation of Sections 726, 580a and 58Od of the Code of Civil Procedure as
     from time to time amended (to the extent California law applies or may be
     determined to apply), or otherwise, including any rights Trustor may have
     to a Section 580a fair market value hearing to determine the size of a
     deficiency following any trustee's foreclosure sale or other disposition of
     any security for any portion of the Obligations (to the extent California
     law applies or may be determined to apply).

               (iii) If any of said waivers is determined to be contrary to any
     applicable law or public policy, such waiver shall be effective to the
     extent permitted by applicable law or public policy.

          (C) Additional Suretyship Waivers.

               (i) Trustor hereby expressly waives and agrees not to assert or
     take advantage of any defense based upon:

                    (1) The incapacity, lack of authority, death or disability
          of any Obligor or any other person or entity;

                    (2) The failure of Beneficiary to commence an action against
          any Obligor or to proceed against or exhaust any security held by
          Beneficiary at any time, or to pursue any other remedy whatsoever at
          anytime;

                    (3) Any duty on the part of Beneficiary to disclose to
          Trustor any facts Beneficiary may now or hereafter know regarding any
          Obligor, regardless of whether Beneficiary has reason to believe (i)
          that any such facts materially increase the risk beyond that which
          Trustor intends to assume, or (ii) that such facts are unknown to
          Trustor, Trustor acknowledging that he, she or it is fully responsible
          for being and keeping informed of the financial condition and affairs
          of any Obligor;

                                       38

<PAGE>

                    (4) Lack of notice of default, demand of performance or
          notice of acceleration to any Obligor or any other party with respect
          to the Loans or any Obligor's obligations guarantied by Trustor;

                    (5) The consideration for the Loan Documents;

                    (6) The revocation or repudiation hereof by Trustor or the
          revocation or repudiation of any of the Loan Documents by any Obligor
          or any other person;

                    (7) The unenforceability in whole or in part of the Loan
          Documents against any Obligor;

                    (8) Any acts or omissions of Beneficiary which vary,
          increase or decrease the risk on Trustor;

                    (9) Any rights or defenses based upon an offset by Trustor
          against any obligation now or hereafter owed to Trustor by any
          Obligor;

                    (10) Any statute of limitations affecting the liability of
          Trustor hereunder, the liability of any Obligor or any other guarantor
          under the Loan Documents or the enforcement hereof, to the extent
          permitted by law;

                    (11) The application by any Obligor of the proceeds of the
          Loans or other financial accommodations under the Financing Agreement
          for purposes other than the purposes represented by any Obligor to
          Beneficiary and Trustor or intended or understood by Beneficiary or
          Trustor;

                    (12) An election of remedies by Beneficiary, including any
          election to proceed against any collateral by judicial or nonjudicial
          foreclosure, whether real property or personal property that is
          security for the any Obligor's obligations under the Loan Documents,
          or by deed in lieu thereof, and whether or not every aspect of any
          foreclosure sale is commercially reasonable, and whether or not any
          such election of remedies destroys or otherwise impairs the
          subrogation rights of Trustor or the rights of Trustor to proceed
          against any Obligor or any other guarantor by way of subrogation or
          for reimbursement or contribution, or all such rights;

                    (13) Any statute or rule of law which provides that the
          obligation of a surety must be neither larger in amount nor in any
          other aspects more burdensome than that of the principal obligor;

                    (14) Beneficiary's election, in any proceeding instituted
          under Title 11 of the United States Code (the "Bankruptcy Code"), of
          the application of Bankruptcy Code Section 111l(b)(2) or any
          successor statute;

                    (15) Any borrowing or any grant of a security interest under
          Bankruptcy Code Section 364; and

                                       39

<PAGE>

                    (16) Any other suretyship defense that may be available to
          Trustor. Without limiting the generality of the foregoing (to the
          extent California law applies or may be determined to apply), Trustor
          also waives (y) any defense based upon Beneficiary's election to waive
          its lien as to all or any security for the Loans or for the guarantor
          of any other person pursuant to California Code of Civil Procedure
          ("CCP ") Section 726.5, under any similar law in any other state that
          may be applicable because any Obligor's obligations are secured by a
          lien on real property in such state, or otherwise, and (z) any and all
          benefits which might otherwise be available to Trustor under
          California Civil Code ("Civil Code") Sections 2809, 2810, 2815, 2819,
          2839, 2845 through 2850, 2899 and 3433.

               (ii) Trustor understands and acknowledges that if Beneficiary
     forecloses judicially or nonjudicially against any real property that is
     security for any Obligor's obligations under the Loan Documents (other than
     this Deed of Trust), that foreclosure could impair or destroy any ability
     that Trustor may have to seek reimbursement, contribution or
     indemnification from any such Obligor based on any right Trustor may have
     of subrogation, reimbursement, contribution or indemnification for any
     amounts paid by Trustor under the Loan Documents or realized by Beneficiary
     by way of foreclosure of this Deed of Trust. Trustor further understands
     and acknowledges that in the absence of this provision, the potential
     impairment or destruction of Trustor's rights, if any, may (to the extent
     California law applies or may be determined to apply) entitle Trustor to
     assert a defense to its obligations under this Deed of Trust and the Loan
     Documents based on CCP Section 580d as interpreted in Union Bank vs.
     Gradsky. By executing this Deed of Trust, Trustor freely, irrevocably and
     unconditionally:

                    (1) waives and relinquishes that defense, and agrees that
          Trustor will be fully liable for its obligations under the Loan
          Documents and the Trust Property will continue to be security for the
          Obligations, even though Beneficiary may foreclose judicially or
          nonjudicially against any real property that is security for the any
          Obligor's obligations under the Loan Documents;

                    (2) agrees that Trustor will not assert that defense in any
          action or proceeding that Beneficiary may commence to enforce the
          obligations of Trustor under this Deed of Trust and the Loan
          Documents;

                    (3) acknowledges and agrees that the rights and defenses
          waived by Trustor under the Loan Documents include any right or
          defense that Trustor may have or be entitled to assert based upon or
          arising out of any one or more of the following: (i) CCP Sections 580a
          (which if Trustor had not given this waiver, would otherwise limit
          Trustor's liability (and the extent of the Obligations to which the
          Trust Property would be exposed) after any nonjudicial foreclosure
          sale to the difference between the amount of the Obligations and the
          fair market value of the property or interests sold at such
          nonjudicial foreclosure sale against any real property that is
          security for the an Obligor's obligations under the Loan Documents
          rather than the actual proceeds of such sale), 580b and 580d (which if
          Trustor had not given this waiver, would otherwise limit Beneficiary's
          right to recover a deficiency judgment (or to foreclose this Deed of
          Trust and otherwise

                                       40

<PAGE>

          pursue the Trust Property) with respect to purchase money obligations
          and after any nonjudicial foreclosure sale against any real property
          that is security for the an Obligor's obligations under the Loan
          Documents, respectively), or 726 (which, if Trustor had not given this
          waiver, among other things, would otherwise require Beneficiary to
          exhaust all of its security against an Obligor or Obligors before
          Beneficiary would be entitled to exercise its remedies under this Deed
          of Trust or pursue a personal judgment for a deficiency against the
          any Obligor); or (ii) Civil Code Section 2848; and

                    (4) acknowledges and agrees that Beneficiary is relying on
          this waiver in making the Loan or other financial accommodations under
          the Financing Agreement, and that this waiver is a material part of
          the consideration that Beneficiary is receiving for making the Loans
          or other financial accommodations under the Financing Agreement.
          WITHOUT LIMITING THE FOREGOING, TRUSTOR WAIVES ALL RIGHTS AND DEFENSES
          THAT TRUSTOR HAS BECAUSE ANY OBLIGOR'S OBLIGATIONS UNDER THE LOAN
          DOCUMENTS ARE SECURED BY REAL PROPERTY. THIS MEANS, AMONG OTHER
          THINGS:

                         a. BENEFICIARY MAY COLLECT FROM TRUSTOR OR EXERCISE ITS
               REMEDIES UNDER THIS DEED OF TRUST WITHOUT FIRST FORECLOSING ON
               ANY REAL OR PERSONAL PROPERTY COLLATERAL PLEDGED BY ANY OBLIGOR;
               AND

                         b. IF BENEFICIARY FORECLOSES ON ANY REAL PROPERTY
               COLLATERAL PLEDGED BY ANY OBLIGOR:

                              (i) THE AMOUNT OF THE OBLIGATIONS MAY BE REDUCED
                         ONLY BY THE PRICE FOR WHICH THAT COLLATERAL IS SOLD AT
                         THE FORECLOSURE SALE, EVEN IF THE COLLATERAL IS WORTH
                         MORE THAN THE SALE PRICE; AND

                              (ii) BENEFICIARY MAY COLLECT FROM TRUSTOR AND
                         EXERCISE ITS REMEDIES UNDER THIS DEED OF TRUST EVEN IF
                         BENEFICIARY, BY FORECLOSING ON THE REAL PROPERTY
                         COLLATERAL, HAS DESTROYED ANY RIGHT TRUSTOR MAY HAVE TO
                         COLLECT FROM ANY OBLIGOR.

          THIS IS AN UNCONDITIONAL AND IRREVOCABLE WAIVER OF ANY RIGHTS AND
          DEFENSES TRUSTOR HAS BECAUSE ANY OBLIGOR'S OBLIGATIONS UNDER THE LOAN
          DOCUMENTS ARE SECURED BY REAL PROPERTY. THESE RIGHTS AND DEFENSES
          INCLUDE, BUT ARE

                                       41

<PAGE>

          NOT LIMITED TO, ANY RIGHTS OR DEFENSES BASED UPON CCP SECTIONS 580a,
          580b, 580d OR 726.

          SECTION 9.26 Beneficiary Statement. Beneficiary may collect a fee not
to exceed the maximum allowed by applicable law for furnishing the statement of
obligation as provided in Section 2943 of the Civil Code of California.

          SECTION 9.27 Request for Notice. Pursuant to Section 2924b(d) of the
California Civil Code, Trustor and Beneficiary request that a copy of any notice
of default and a copy of any notice of sale be mailed to Trustor and
Beneficiary, respectively, at the address for such party set forth herein

          SECTION 9.28 Release and Reconveyance. Lender will release and
reconvey its interest under this Deed of Trust to the Trust Property as required
by Section 7.04 of the Financing Agreement.

             [NO FURTHER TEXT ON THIS PAGE; SIGNATURE PAGE FOLLOWS]

                                       42

<PAGE>

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

                                        TRUSTOR:

                                        LAKES SHINGLE SPRINGS, INC., a
                                        Minnesota corporation

                                        By: /s/ Timothy J. Cope
                                            ------------------------------------
                                            Timothy J. Cope,
                                            Chief Financial Officer

<PAGE>

                                 ACKNOWLEDGEMENT

STATE OF  NEW YORK   )
                     )   ss:
COUNTY OF NEW YORK   )

On February 15, 2006 before me personally appeared Timothy J. Cope, 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 executed the same in his authorized capacity(ies),
and that by his signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.

WITNESS my hand and official seal.

                                        /s/ Thomas W. Caplis
                                        ----------------------------------------
                                        Notary Public

                                        (SEAL)

<PAGE>

                                    EXHIBIT A

                                LEGAL DESCRIPTION

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE UNINCORPORATED AREA, COUNTY
OF EL DORADO, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:

PARCEL A:

PARCEL 2, AS SHOWN ON THE PARCEL MAP FILED APRIL 4, 1978 IN BOOK 19 OF PARCEL
MAPS, AT PAGE 81, EL DORADO COUNTY RECORDS.

APN: 319-110-180-100

PARCEL B:

PARCEL 3, AS SHOWN ON THE PARCEL MAP FILED APRIL 4, 1978 IN BOOK 19 OF PARCEL
MAPS, AT PAGE 81, EL DORADO COUNTY RECORDS.

ANT 319-110-190-100

                                   Exhibit A-l<PAGE>
                                                                   Exhibit 10.11

                              EMPLOYMENT AGREEMENT

     This Agreement (the "Agreement") is made and entered into effective as of
this 15th day of February, 2006 by and between Lyle Berman, an individual
resident of the State of Nevada (the "Executive") and Lakes Entertainment, Inc.,
a Minnesota corporation, including its subsidiaries and affiliates (the
"Company").

                                    RECITALS

     WHEREAS, Executive currently is employed at will by the Company; and

     WHEREAS, the Board of Directors of the Company (the "Board") has determined
that it is in the best interests of the Company to continue to employ Executive
as a member of the senior management team of the Company; and

     WHEREAS, the Board and the Executive wish to enter into this Agreement to
document the terms of the Executive's employment with the Company and provide
Executive with new and valuable consideration for his services in the form of
improved job security in the event Company terminates Executive's employment
without "Cause" (as defined below); and

     WHEREAS, the Board wishes to encourage the Executive to continue his
employment with the Company and the Board believes that this objective can be
best served by providing for a compensation arrangement for the Executive upon
the Executive's termination of employment under certain circumstances in the
event of a Change Of Control (as hereinafter defined).

     NOW, THEREFORE, in consideration of: a) the mutual promises and covenants
and the respective undertakings of the Company and Executive set forth below;
and b) the payment to the Executive by the Company of One Thousand Dollars
($1000), the adequacy and sufficiency of which is hereby acknowledged, the
Company and Executive agree as follows:

                                    AGREEMENT

     1. Employment. The Company hereby employs Executive, and Executive accepts
such employment and agrees to perform services for the Company, for the period
and upon the other terms and conditions set forth in this Agreement.

     2. Term. The term of this Agreement and Executive's employment hereunder
will be a period of 36 months commencing on the above-referenced date and
expiring 36 months therefrom (the "Term"). The Term will be automatically
extended for successive additional one-year periods ("Additional Employment
Terms") unless, at least 60 days prior to the end of the Term or an Additional
Employment Term, the Company or the Executive has notified the other in writing
that the Agreement will terminate at the end of the then current term. A notice
of non-extension by the Company prior to the end of the Term or during any
Additional Employment Term will be treated consistent with subsection 8a of this
Agreement. A notice of non-extension by the Executive during the Term or any
Additional Employment Term will be treated as a termination by the Executive
with employment separation benefits as described in subsection 8d of this
Agreement.

<PAGE>

     3. Base Salary. Company shall pay Executive an annual base salary in the
amount of Five Hundred Thousand and No/100 Dollars ($500,000) ("Base Salary"),
or such other amount as may from time-to-time be determined by Company in its
sole discretion. Such salary shall be paid in equal installments in the manner
and at the times as other employees of Company are paid.

     4. Incentive Compensation. Executive shall participate in Company's
incentive compensation program from time-to-time established and approved by the
Company's Board of Directors, such participation to be on the same terms and
conditions as from time-to-time apply to senior executives of the Company.

     5. Benefits. Company shall provide to Executive such benefits as are
provided by Company to other senior executives of the Company. Executive shall
pay for the portion of the cost of such benefits as is from time-to-time
established by the Company as the portion of such cost to be paid by senior
executives of the Company.

     6. Costs and Expenses. Company and Executive acknowledge that Executive
will incur travel and other expenses while traveling on business for Company and
performing Executive's duties under this Agreement, and that it will be
inefficient for both Company and Executive to provide for Company to reimburse
Executive for such expenses as are not paid directly by Company.

     Accordingly, Company shall pay to Executive during each calendar month (or
portion thereof) a monthly travel and expense fee in the amount of Six Hundred
Dollars ($600), which travel and expense fee shall be full and complete payment
to Executive for all such expenses. Company and Executive acknowledge that the
actual amount of such expenses incurred by Executive during any given calendar
month may be more or less than the amount of such travel and expense fee.

     7. Duties. The duties to be performed by Executive shall be designated from
time-to-time by the Board and will include responsibility for operating
Company's business.

     8. Termination.

          a. At the Expiration of the Term.

          If the Executive's employment with the Company terminates at the end
of the Term or any Additional Employment Term, the Company will have no further
obligation to the Executive under this Agreement, except for accrued and unpaid
Base Salary and benefits that the Executive has accrued pursuant to any
applicable benefit plans, practices, policies and programs provided by the
Company, earned but unused vacation for that calendar year, and unreimbursed
business-related expenses, in accordance with Company policy.

          b. Automatic Termination Due to Death or Disability.

               (1) If the Executive suffers any "Disability" (as defined below),
this Agreement and Executive's employment hereunder will automatically terminate
on the date the Board determines that Executive suffers from a Disability.
"Disability" means the inability of

                                       2

<PAGE>

the Executive to perform the essential functions of his position, with or
without reasonable accommodation, because of physical or mental illness or
incapacity, for a period of time ending when the Company must replace Executive
to avoid an undue hardship on the Company's business and operations. Upon
termination for Disability, the Company will pay to Executive an amount equal to
six months of his then Base Salary and provide during that period of time the
benefits as described in section 8c(3) below.

               (2) This Agreement will automatically terminate on the date of
Executive's death.

          c. Termination Without Cause or Constructive Termination.

          The provisions of this section 8c shall apply following any
termination of Executive which is either (i) without "Cause" (as defined below);
or (ii) a "Constructive Termination" (as defined below) notwithstanding any
provision otherwise in any stock option agreement between the Company and the
Executive which provides for the grant to Executive of the right to purchase
shares of stock of the Company. In the event that Executive's employment is
terminated, at any time, and such termination is either (i) without Cause; or
(ii) a Constructive Termination:

               (1) Severance Payment.

               Executive shall be entitled to receive his Base Salary (including
any accrued vacation) through his termination date and shall also be entitled to
receive severance benefits equal to his accrued and unpaid Base Salary, plus the
equivalent of bonus or incentive compensation (based upon the average bonus
percentage rate for the two (2) fiscal years of the Company preceding such
termination) for twelve (12) months, or for the period of time remaining in the
Term, whichever is longer (the "Severance Period"), payable in a lump sum
payment; and

               (2) Benefits.

               During the Severance Period, Executive and his dependents shall
continue to be entitled to all medical and dental insurance benefits of the type
that they received immediately prior to the date of such termination (or, in the
event their participation in a plan pursuant to which any such benefits are
provided is barred by the terms of such plan, benefits which are not less
favorable to them than the benefits under such plan), except to the extent
essentially equivalent and no less favorable benefits are provided to them by a
subsequent Company; provided, that Executive and his dependents shall continue
to bear the same portion of the cost of such benefits, if any, as they bore
immediately prior to the date of such termination. Upon conclusion of the
Severance Period, Executive may elect to continue his coverage at his expense as
permitted by the federal COBRA law and applicable Minnesota state law.

               (3) Termination of the Severance Period.

          The Severance Period and the Company's obligations in subsections (2)
and (3) above during the Severance Period will end immediately upon Executive
obtaining employment

                                       3

<PAGE>

with any other person or entity in any capacity, whether as an employee or
independent contractor, or starting his own business.

               (4) Waiver of Claims.

          The Company's obligations to provide severance benefits in sections
8c(2) and 8c(3) above, and section 8(b)(1), are conditioned on Executive signing
a general release of legal claims and covenant not to sue in form and content
satisfactory to the Company.

               (5) Compliance with Code Section 409A.

          Company and Executive hereby agree to cooperate in good faith in
preparing and executing any written amendments to this Agreement (such as
restrictions on the timing of severance pay or deferred compensation payments)
that are reasonably necessary to timely comply with Code Section 409A, to the
extent that any compensation, severance pay or other benefits payable to
Executive under this Agreement are deemed to constitute a nonqualified deferred
compensation plan under Code Section 409A. All parties acknowledge that such any
amendment must be completed by the end of 2005, pursuant to guidance yet to be
issued by the Internal Revenue Service, unless the Internal Revenue Service
extends the time for such amendments to a later date.

          d. Termination by the Executive.

          The Executive may terminate this Agreement and his employment
hereunder at any time during the Term (or during any Additional Employment
Term), by providing the Company written notice of his intent to terminate at
least sixty (60) days prior to the effective date of his termination. During
this sixty-day period, the Executive must execute his duties and
responsibilities in accordance with the terms of this Agreement. If Executive
resigns, other than in a Constructive Termination, he will not be entitled to
any severance pay, or other compensation or benefits, except accrued and unpaid
Base Salary and benefits that the Executive accrued prior to the effective date
of his termination pursuant to any applicable benefit plan, earned but unused
vacation for that calendar year, and payment for unreimbursed business-related
expenses in accordance with Company policy.

          e. Termination by the Company for Cause.

          The Company will have the right to immediately terminate this
Agreement and Executive's employment hereunder for "Cause" (as defined below).
In the event of such termination for Cause, the Executive will only be entitled
to payment for accrued and unpaid Base Salary and benefits that the Executive
accrued prior to the effective date of his termination pursuant to any
applicable benefit plan, earned but unused vacation for that calendar year, and
payment for unreimbursed business-related expenses in accordance with Company
policy.

          f. Stock Options.

          If, and only if, Executive's employment is terminated under this
Section 8, all outstanding options to purchase shares of stock in the Company
shall immediately vest and

                                        4

<PAGE>

become immediately exercisable and Executive or Executive's legal representative
shall have until the date which is two (2) years after the date on which
Executive ceases to be employed by the Company to exercise Executive's right to
purchase shares of stock of the Company under any such option agreements
(whether entered into before or after the date of this Agreement).

     9. Termination Following a Change Of Control.

          a. Severance Payment. In the event that Executive's employment is
terminated within two (2) years following a Change Of Control (as hereinafter
defined) and such termination is either (i) Without Cause; or (ii) is a
Constructive Termination, Executive shall receive, in addition to all
compensation due and payable to or accrued for the benefit of Executive as of
the date of termination, a lump sum payment, within five (5) days of the
determination of the Accounting Firm (as hereinafter defined) required under
paragraph (c) of this section, equal to two (2) times Executive's Annual
Compensation (as hereinafter defined) (the "Severance Payment"); and all
outstanding options to purchase shares of stock in the Company shall immediately
vest and become immediately exercisable and, Executive or Executive's legal
representative shall have until the date which is two (2) years after the date
on which Executive ceases to be employed by the Company to exercise Executive's
right to purchase shares of stock of the Company under any such option
agreements (whether entered into before or after the date of this Agreement).
Company shall also use its best efforts to convert any then existing life
insurance and accidental death and disability insurance policies to individual
policies in the name of the Executive. The provisions of this section 9a shall
apply following any Change Of Control (as defined below) notwithstanding any
provision otherwise in any stock option agreement between the Company and the
Executive which provides for the grant to Executive of the right to purchase
shares of stock of the Company.

          b. Excise Tax.

               (1) Anything in this Agreement to the contrary notwithstanding,
in the event that it shall be determined that any payment or distribution by the
Company to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise would constitute an "excess parachute payment" within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the "IRC"),
Executive shall be paid an additional amount (the "Gross-Up Payment") such that
the net amount retained by the Executive after deduction of any excise tax
imposed under Section 4999 of the IRC, and any federal, state and local income
and employment tax and excise tax imposed upon the Gross-Up Payment shall be
equal to the Severance Payment. For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to pay federal income tax and
employment taxes at the highest marginal rate of federal income and employment
taxation in the calendar year in which the Gross-Up Payment is to be made and
state and local income taxes at the highest marginal rate of taxation in the
state and locality of the Executive's residence on the effective date of the
Executive's termination or resignation, net of the maximum reduction in federal
income taxes that may be obtained from the deduction of such state and local
taxes.

               (2) All calculations to be made under this Section 9 shall be
made by the Company's independent public accountant immediately prior to the
Change of Control (the "Accounting Firm"), which firm shall provide its
conclusions and any supporting calculations

                                       5

<PAGE>

both to the Company and the Executive within 10 days of the effective date of
the Executive's resignation or termination, as the case may be. Any such
determination by the Accounting Firm shall be binding upon the Company and the
Executive. Within five days after the Accounting Firm's determination, the
Company shall pay (or cause to be paid) or distribute (or cause to be
distributed) to or for the benefit of the Executive such amounts as are then due
to the Executive under this Agreement.

               (3) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than twenty (20) business days after the
Executive knows of such claim and Executive shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid.
The Executive shall not pay such claim prior to the expiration of the thirty day
period following the date on which he gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:

                    (a) give the Company any information reasonably requested by
the Company relating to such claim;

                    (b) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company;

                    (c) cooperate with the Company in good faith in order to
effectively contest such claim; and

                    (d) permit the Company to participate in any proceedings
relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax, including interest and
penalties, with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 9, the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearing and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest to
resolution before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided further, however, that if the Company directs the Executive
to pay such claim and sue for a refund the Company shall advance the amount of
such payment to the Executive, on an interest-free basis and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or

                                       6

<PAGE>

income tax, including interest or penalties with respect thereto, imposed with
respect to such advance or with respect to any imputed income with respect to
such advance; and provided further that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Executive
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

               (4) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to this Section, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of subsection (a), (b) and (c) of
this Section) promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable thereto). If,
after the receipt by the Executive of an amount advanced by the Company pursuant
to this Section, a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of thirty days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.

               (5) All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in subsections (1) and (2) above shall
be borne solely by the Company.

               (6) Following a Change of Control and for a period of not less
than three years after the effective date of the resignation or termination of
the Executive, the Executive shall be entitled to indemnification and, to the
extent available on commercially reasonable terms, insurance coverage therefor,
with respect to the various liabilities as to which the Executive has been
customarily indemnified prior to the Change of Control. In the event of any
discrepancies between the provisions of this paragraph and the terms of any
Company insurance policy covering executive or any indemnification contract by
and between the Company and Executive, such insurance policy or indemnification
contract shall control.

     10. Certain Definitions.

          a. Annual Compensation. For the purposes of this Agreement, Annual
Compensation shall mean Executive's annual base salary plus annual bonus or
incentive compensation (computed at par levels), an amount equal to the annual
cost to Executive of obtaining annual health care coverage comparable to that
currently provided by Company, an amount equal to any normal matching
contributions made by Company on Executive's behalf in Company's 401(k) plan,
annual automobile allowance, if any, and an amount equal to the annual cost to
Executive of obtaining life insurance and insurance coverage for accidental
death and disability insurance comparable to that provided by Company.

                                       7

<PAGE>

          b. Change of Control.

               (1) For the purposes of this Agreement, a "Change of Control"
shall mean:

                    (a) The acquisition by any person, entity or "group", within
the meaning of Section 13(d) (3) or 14(d) (2) of the Securities Exchange Act of
1934 (the "Exchange Act") (excluding, for this purpose, (A) the Company, (B) any
employee benefit plan of the Company or its subsidiaries which acquires
beneficial ownership of voting securities of the Company or (C) Lyle Berman or
the four irrevocable trusts for the benefit of Mr. Berman's children) of
beneficial ownership, (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 25% or more of either the then outstanding shares of common
stock or the combined voting power of the Company's then outstanding voting
securities entitled to vote generally in the election of directors; or

                    (b) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director subsequent
to the date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Directors of the
Company, as such terms are used in Rule 14 a-11 of Regulation 14A promulgated
under the Exchange Act) shall be, for purposes of this Agreement, considered as
though such person were a member of the Incumbent Board; or

                    (c) Approval by the shareholders of the Company of (A) a
reorganization, merger or consolidation, in each case, with respect to which
persons who were the shareholders of the Company immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own more
than 50% of the combined voting power of the reorganized, merged or consolidated
company's then outstanding voting securities entitled to vote generally in the
election of directors of the reorganized, merged or consolidated company, or (B)
a liquidation or dissolution of the Company or (C) the sale of all or
substantially all of the assets of the Company.

          c. Cause.

               (1) For the purposes of this Agreement, "Cause" shall mean
termination of the Executive by the Company for any of the following reasons:

                    (a) the commission of a felony;

                    (b) the theft or embezzlement of property of Company or the
commission of any act involving moral turpitude;

                    (c) the failure of Executive to substantially perform his
material duties and responsibilities under this Agreement for any reason other
than the Executive's death or Disability, which failure if, in the opinion of
the Company such failure is

                                       8

<PAGE>

curable, is not cured within thirty (30) days after written notice of such
failure from the Board specifying such failure;

                    (d) the Executive's material violation of a significant
Company policy; which violation the Executive fails to cure within 30 days after
written notice of such violation from the Company specifying such failure; or
which violation the Company, in its opinion, deems noncurable; or

                    (e) the revocation of any gaming license issued by any
governmental entity to Executive as a result of any act or omission by the
Executive.

          d. Constructive Termination.

               (1) For the purposes of this Agreement, "Constructive
Termination" shall mean:

                    (a) a material, adverse change of Executive's
responsibilities, authority, position, titles, duties or reporting requirements
(including directorships);

                    (b) an material adverse change in Executive's annual
compensation or benefits;

                    (c) a requirement to relocate in excess of fifty (50) miles
from Executive's then current place of employment without Executive's consent;
or

                    (d) the breach by the Company of any material provision of
this Agreement or failure to fulfill any other contractual duties owed to the
Executive.

For the purposes of this definition, Executive's responsibilities, authority,
position, titles, duties and reporting requirements are to be determined as of
the date of this Agreement. For purposes of this section, all determinations of
Constructive Termination shall be made in good faith by mutual determination of
Executive and Company. If Executive and Company cannot mutually agree on whether
a Constructive Termination occurred, the sole issue of whether a Constructive
Termination occurred shall be submitted to arbitration as set forth in section
16 below.

               (2) Notwithstanding the provisions of subsection (a) above, no
termination by the Executive will constitute a Constructive Termination unless
the Executive shall have provided written notice to the Company of his intention
to so terminate this Agreement, which notice sets forth in reasonable detail the
conduct that the Executive believes to be the basis for the Constructive
Termination, and the Company will thereafter have failed to correct such conduct
(or commence action to correct such conduct and diligently pursue such
correction to completion) within 30 days following the Company's receipt of such
notice.

     11. Confidentiality.

     Except to the extent required by law, Executive shall keep confidential and
shall not, without the Company's prior, express written consent, disclose to any
third party, other than as reasonably necessary or appropriate in connection
with Executive's performance of his duties

                                       9

<PAGE>

under this Agreement or any employment agreement, if any, the Company's
"Confidential Information." "Confidential Information" means any information
that Executive learns or develops during the course of employment that derives
independent economic value from being not generally known or readily
ascertainable by other persons who could obtain economic value from its
disclosure or use, or any information that Company reasonably believes to be
Confidential Information. It includes, but is not limited to, trade secrets,
customer lists, financial information, business plans and may relate to such
matters as research and development, operations, site selection/analysis
processes, management systems and techniques, costs modeling or sales and
marketing.

     The provisions of this section 11 shall remain in effect after the
expiration or termination of this Agreement and Executive's employment
hereunder.

     12. Agreement Not to Compete.

     In consideration of the improved job security and other benefits of this
Agreement, Executive hereby agrees as follows.

          a. During the Term and the Restricted Period (as defined below), the
Executive shall not, whether individually, as a director, manager, member,
stockholder, partner, owner, employee, consultant or agent of any business, or
in any other capacity, other than on behalf of the Company or a subsidiary or
affiliate, organize, establish, own, operate, manage, control, engage in,
participate in, invest in, permit his name to be used by, act as a consultant or
advisor to, render services for (alone or in association with any person, firm,
corporation or business organization), or otherwise assist any person or entity
that engages in or owns, invests in, operates, manages or controls any venture
or enterprise which develops, operates or manages or proposes to develop,
operate or manage casinos or casino resort developments (the "Business") in the
geographic locations where the Company and/or its subsidiaries and/or affiliates
engages or proposes to engage in such Business. Notwithstanding the foregoing,
nothing in this Agreement shall prevent the Executive from owning for passive
investment purposes not intended to circumvent this Agreement, less than five
percent (5%) of the publicly traded common equity securities of any company
engaged in the Business (so long as the Executive has no power to manage,
operate, advise, consult with or control the competing enterprise and no power,
alone or in conjunction with other affiliated parties, to select a director,
manager, general partner, or similar governing official of the competing
enterprise other than in connection with the normal and customary voting powers
afforded the Executive in connection with any permissible equity ownership). For
purposes of this Agreement, the Restricted Period shall mean the period until
the loan evidenced by that Financing Agreement dated as of January 2006 by and
among Lakes Entertainment, Inc. certain other entities as PKLS Funding LLC is
paid in full. The provisions of this section 12. a. shall remain in effect
during the entire Restricted Period, without regard to any expiration or
termination of this Agreement or of Executive's employment hereunder.

          b. On or before the date that is two years after the date on which
Executive's employment by the Company is terminated for any reason, Executive
agrees that he will not, without the prior written consent of the Company's
Board, directly or indirectly engage in any of the following actions:

                                       10

<PAGE>

               (1) Solicit, on Executive's own behalf or for any entity that is
in competition with the Company, any person or entity, including for example
Indian tribes, that is doing business with the Company or is an active prospect
to do business with the Company for the purpose of diverting Company's business
or active business opportunities in competition with Company; or

               (2) Solicit for employment, endeavor to entice away from the
Company or otherwise interfere with the Company's relationship with any person
who is employed by or otherwise engaged to perform services for the Company,
whether for Executive's own account or for the account of any other individual,
partnership, firm or corporation or other business entity.

          c. If the scope of Executive's agreement under this section 12 is
determined by any court of competent jurisdiction to be too broad to permit the
enforcement of all of the provisions of this section 12 to their fullest extent,
then the provisions of this section 12 shall be construed (and each of the
parties hereto hereby confirm its intent is that such provisions be so
construed) to be enforceable to the fullest extent permitted by applicable law.
To the maximum extent permitted by applicable law, Executive hereby consents to
the judicial modification of the provisions of this section 12 in any proceeding
brought to enforce such provisions in such a manner that renders such provisions
enforceable to the maximum extent permitted by applicable law.

          d. The provisions of this Section 12.b. and 12.c.. shall remain in
full force and effect after the expiration or termination of this Agreement or
of Executive's employment hereunder.

     13. Acknowledgments; Irreparable Harm.

     Executive agrees that the restrictions on competition, solicitation and
disclosure in this Agreement are fair, reasonable and necessary for the
protection of the interests of the Company. Executive further agrees that a
breach of any of the covenants set forth in sections 11 and 12 of this Agreement
will result in irreparable injury and damage to the Company for which the
Company would have no adequate remedy at law, and Executive further agrees that
in the event of a breach, the Company will be entitled to an immediate
restraining order and injunction to prevent such violation or continued
violation, without having to prove damages, in addition to any other remedies to
which the Company may be entitled to at law or in equity.

     14. Notification to Subsequent Companies.

     Executive grants the Company the right to notify any future Company or
prospective Company of Executive concerning the existence of and terms of this
Agreement and grants the Company the right to provide a copy of this Agreement
to any such subsequent Company or prospective Company.

     15. Full Settlement.

     The Company's obligations to make the payments provided for in this
Agreement and otherwise to perform it obligations hereunder shall not be
affected by any set-off, counterclaim,

                                       11

<PAGE>

recoupment, defense or other claim, right or action which the Company may have
against Executive or others. Executive will not be obligated to seek other
employment, and except as provided in section 8c(4) above, take any other action
by way of mitigation of the amounts payable to Executive under any of the
provisions of this Agreement.

     16. Resolution of Disputes.

     Any controversy, claim or dispute arising out of or relating to this
Agreement or the breach of this Agreement, other than such a matter arising from
a violation or threatened violation of sections 11 and 12, shall be settled by
arbitration in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association, and a judgment upon
the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction. The award rendered in any arbitration proceeding under this
section will be final and binding. Any demand for arbitration must be made and
filed within 60 days of the date the requesting party knew or reasonably should
have known of the event giving rise to the controversy or claim. Any claim or
controversy not submitted to arbitration in accordance with this section will be
considered waived, and therefore, no arbitration panel or court will have the
power to rule or make any award on such claims or controversy. Any such
arbitration will be conducted in the Minneapolis, Minnesota metropolitan area.
Both Company and Executive recognize that each would give up any right to a jury
trial, but believe the benefits of arbitration significantly out-weigh any
disadvantage. Both further believe arbitration is likely to be both less
expensive and less time-consuming than litigation of any dispute there might be.

     17. Withholding.

     The Company may withhold from any amounts payable under this Agreement the
minimum Federal, state and local taxes as shall be required to be withheld
pursuant to any applicable law, statute or regulation.

     18. Successors and Assigns.

     This Agreement is binding upon, and shall inure to the benefit of the
Company and the Executive, and all successors and assigns of the Company. This
Agreement shall be binding upon and inure to the benefit of the Executive and
his heirs and personal representatives. The Company will require any successor
(whether direct or indirect, by purchase, merger or consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company to
assume expressly and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such agreement,
prior to the effectiveness of any such succession shall be a material breach of
this Agreement and shall entitle the Executive to any severance benefits payable
pursuant to sections 8 and 9 hereof.

     19. Miscellaneous.

          a. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Minnesota, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.

                                       12

<PAGE>

This Agreement may not be amended or modified except by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.

          b. All notices and other communications under this Agreement shall be
in writing and shall be given by hand to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:

          IF TO THE EXECUTIVE:

          Lyle Berman
          Lakes Entertainment, Inc.
          130 Cheshire Lane
          Minnetonka, MN 55305-1062

          IF TO THE COMPANY:

          Lakes Entertainment, Inc.
          Attn: Damon Schramm, General Counsel
          130 Cheshire Lane
          Minnetonka, MN 55305

or to such other address as either party furnishes to the other in writing in
accordance with this paragraph (b) of section 19. Notices and communications
shall be effective when actually received by the addressee.

          c. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement. If any provision of this Agreement shall be held invalid or
unenforceable in part, the remaining portion of such provision, together with
all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with the law.

          d. Notwithstanding any other provision of this Agreement, the Company
may withhold from amounts payable under this Agreement all federal, state, local
and foreign taxes that are required to be withheld by applicable laws or
regulations.

          e. The Executive's or the Company's failure to insist upon strict
compliance with any provision of, or to assert any right under, this Agreement
shall not be deemed to be a waiver of such provision or right or of any other
provision of or right under this Agreement.

          f. This Agreement may be executed in several counterparts, each of
which shall be deemed an original, and said counterparts shall constitute but
one and the same instrument.

     20. Entire Agreement.

     This Agreement constitutes the entire agreement between the parties,
supersedes all prior agreements and understandings between the parties with
respect to the subject matter hereof and

                                       13

<PAGE>

may not be modified or terminated orally. No modification, termination or
attempted waiver of this Agreement shall be valid unless in writing and signed
by the party against whom the same is sought to be enforced.

          IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and pursuant to the due authorization of its Board, the Company has caused
this Agreement to be executed in its name and on its behalf, all as of the day
and year first written above.

LAKES ENTERTAINMENT, INC.:              EXECUTIVE:

By: /S/ Timothy J. Cope                 By: /S/ Lyle Berman
    ---------------------------------       ------------------------------------
     Timothy J. Cope                        Lyle Berman
Its: President and Chief Financial      Its: CEO
     Officer

                                       14

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}]]