Document:

Exhibit 10.9

 

 

DEED OF
TRUST, SECURITY AGREEMENT, ASSIGNMENT OF RENTS

AND LEASES AND FIXTURE FILING (TENNESSEE)

 

by and from

 

WARNER MUSIC GROUP, INC., “Trustor”

 

to

 

KAY B. HOUSCH, a resident of Davidson County, “Trustee”

 

in favor of

 

BANK OF
AMERICA, N.A.,

in its capacity as Agent, “Beneficiary”

 

Dated as of February 29, 2004

 

MAXIMUM PRINCIPAL
INDEBTEDNESS FOR TENNESSEE RECORDING TAX PURPOSES IS $-0-;

TAX EQUAL TO $86,337.00 PAID ON $75,077,810.00 TO THE DAVIDSON COUNTY,
TENNESSEE

REGISTER’S OFFICE UNDER INSTRUMENT NO. 20040303-0024361

 

	
  Location:

  	
  21
  Music Square West

  
	
  Municipality:

  	
  Nashville

  
	
  County:

  	
  Davidson

  
	
  State:

  	
  Tennessee

  

 

THE
SECURED PARTY (BENEFICIARY) DESIRES THIS FIXTURE FILING

TO BE INDEXED AGAINST THE RECORD OWNER OF THE REAL ESTATE

DESCRIBED HEREIN

 

PREPARED
BY, RECORDING REQUESTED BY,

AND WHEN RECORDED MAIL TO:

 

Davis
Polk & Wardwell

450 Lexington Avenue

New York, New York 10017

Attention: Susan D. Kennedy, Esq.

 

 

DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF RENTS

AND LEASES AND FIXTURE FILING (TENNESSEE)

 

THIS DEED OF TRUST, SECURITY AGREEMENT,
ASSIGNMENT
OF RENTS AND LEASES AND FIXTURE FILING (TENNESSEE) (this “Deed of Trust”) is dated as of February 29, 2004 by
and from Warner Music Group, Inc., a
Delaware corporation (“Trustor”), whose
address is 75 Rockefeller Plaza, 12th Floor, New York, New York
10019, to Kay B. Housch, a resident of Davidson County, Tennessee (“Trustee”), with
an address at Suite 310, 222 Second Avenue North, Nashville, Tennessee 37201,
for the benefit of BANK OF AMERICA, N.A.,
a national association, as administrative agent (in such capacity, “Agent”) for the
Secured Parties as defined in the Credit Agreement (defined below), having an
address at Independence Center, 15th Floor, NC1-001-15-04, 101 North
Tryon Street, Charlotte, North Carolina 28255 (Agent, together with its
successors and assigns, “Beneficiary”).

 

This instrument covers property which is or may become so
affixed to real property as to become fixtures and also constitutes a fixture
filing under §
47-9-502(c)
of Tennessee Code Annotated.
NOTICE PURSUANT
TO § 47-28-104 OF TENNESSEE CODE
ANNOTATED: This Deed of Trust secures
future advances which are “obligatory advances” as defined in the aforesaid
statute. This Deed of Trust is for “commercial purposes” as defined in said
statute.

 

ARTICLE 1

DEFINITIONS

 

Section 1.1                                   Definitions.  All capitalized terms used herein without definition shall have the
respective meanings ascribed to them in that certain Credit Agreement dated as
of even date herewith, as the same may be amended, amended and restated,
supplemented or otherwise modified from time to time (the “Credit Agreement”), among WMG Acquisition Corp. and the Overseas Borrowers
Party thereto, as Borrowers (collectively “Borrower”), WMG Holdings Corp. and the other
Secured Parties identified therein. As used herein, the following terms shall
have the following meanings:

 

(a)
“Debtor Relief Laws”:  the
Bankruptcy Code of the United States, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar
debtor relief Laws of the United States or other applicable jurisdictions from
time to time in effect and affecting the rights of creditors generally.

 

(b) “Event
of Default”:  An Event of Default
under and as defined in the Credit Agreement.

 

(c) “Loan
Parties”:  collectively, each
Borrower and each Guarantor.

 

(d) “Obligations”:  means
all advances to, and debts, liabilities, obligations, covenants and duties of,
any Loan Party arising under any Loan Document or otherwise with respect to any
Loan, Letter of Credit, or Secured Hedge Agreement whether direct or indirect
(including those acquired by assumption), absolute or contingent, due or to become
due, now existing or hereafter arising and including interest and fees that
accrue after the commencement by or against any Loan Party of any proceeding
under any Debtor Relief Laws naming such Person as the debtor in such
proceeding, regardless of whether such interest and fees are allowed claims in
such proceeding. Without limiting the generality of the foregoing, the
Obligations of the Loan Parties under the Loan Documents include (a) the
obligation to pay principal, interest, Letter of Credit commissions, charges,
expenses, fees, Attorney Costs, indemnities and other amounts payable by any
Loan Party under any Loan Document and (b) the obligation of any Loan Party to
reimburse any amount in respect of any of the foregoing that any Lender, in its
sole discretion, may elect to pay or advance on behalf of such Loan Party. The
Credit Agreement

 

 

contains
a revolving credit facility which permits Borrower to borrow certain principal
amounts, repay all or a portion of such principal amounts, and reborrow the
amounts previously paid to the Secured Parties, all upon satisfaction of
certain conditions stated in the Credit Agreement. This Deed of Trust secures
all advances and re-advances under the Credit Agreement, including, without
limitation, those under the revolving credit facility contained therein.

 

(e) “Permitted Liens”:  Liens described in
Sections 7.01 of the Credit Agreement.

 

(f) “Secured Obligations”:  the payment of all
Obligations of Trustor now or hereafter existing under the Loan Documents and
the Secured Hedge Agreements (together, the “Finance
Documents”), whether direct or indirect, absolute or
contingent, and whether for principal, reimbursement obligations, interest,
fees, premiums, penalties, indemnifications, contract causes of action, costs,
expenses or otherwise.

 

(g) “Secured Hedge Agreement”:  any Swap Contract
required or permitted under Article 6 or Article 7 of the Credit Agreement that
is entered into by and between any Loan Party and any Hedge Bank.

 

(h) “Secured Parties”:  Secured Parties as
defined in the Credit Agreement and Trustee.

 

(i) “Trust Property”:  The fee interest in the
real property described in Exhibit A attached hereto and incorporated
herein by this reference, together with any greater estate in such real property
as hereafter may be acquired by Trustor (the “Land”), and all of Trustor’s right, title and
interest in and to (1) all improvements now owned or hereafter acquired by
Trustor, now or at any time situated, placed or constructed upon the Land (the “Improvements”; the
Land and Improvements are collectively referred to as the “Premises”), (2) all
materials, supplies, equipment, apparatus and other items of personal property
now owned or hereafter acquired by Trustor and now or hereafter attached to,
installed in or used in connection with any of the Improvements or the Land,
and water, gas, electrical, telephone, storm and sanitary sewer facilities and
all other utilities whether or not situated in easements (the “Fixtures”), (3) all goods, accounts, general intangibles,
instruments, documents, chattel paper and all other personal property of any
kind or character, including such items of personal property as defined in the
UCC (defined below), now owned or hereafter acquired by Trustor and now or
hereafter affixed to, placed upon, used in connection with, arising from or
otherwise related to the Premises (the “Personalty”), (4) all reserves, escrows or impounds required under the Credit
Agreement or any of the other Loan Documents and all deposit accounts maintained
by Trustor with respect to the Trust Property (the “Deposit Accounts”), (5) all leases, licenses,
concessions, occupancy agreements or other agreements (written or oral, now or
at any time in effect) to which Trustor is a party which grant to any Person a
possessory interest in, or the right to use, all or any part of the Trust
Property, together with all related security and other deposits (the “Leases”), (6) all of the rents, revenues,
royalties, income, proceeds, profits, security and other types of deposits, and
other benefits paid or payable by parties to the Leases for using, leasing,
licensing possessing, operating from, residing in, selling or otherwise
enjoying the Trust Property (the “Rents”), (7) all other agreements, such as
construction contracts, architects’ agreements, engineers’ contracts, utility
contracts, maintenance agreements, management agreements, service contracts,
listing agreements, guaranties, warranties, permits, licenses, certificates and
entitlements in any way relating to the construction, use, occupancy,
operation, maintenance, enjoyment or ownership of the Trust Property (the “Property Agreements”), excluding
any agreement to the extent that (but only as long as) the terms thereof
prohibit the assignment of, or granting a security interest in, such agreement
(it being understood and agreed, however, (i) that notwithstanding the
foregoing, all rights to payment for money due or to become due pursuant to any
such excluded agreement shall be subject to the security interests created by
this Deed of Trust and (ii) such excluded agreement shall otherwise be subject
to the security interests created by this Deed of Trust upon receiving any
necessary approvals or waivers permitting the assignment thereof), (8) all
rights, privileges, tenements, hereditaments, rights-of-way, easements,

 

2

 

appendages
and appurtenances appertaining to the foregoing, (9) all property tax refunds
payable to Trustor with respect to the Trust Property (the “Tax Refunds”), (10) all
accessions, replacements and substitutions for any of the foregoing and all
proceeds thereof (the “Proceeds”), (11) subject to the terms of the
Credit Agreement governing insurance proceeds, all insurance policies, unearned
premiums therefor and proceeds from such policies covering any of the above
property now or hereafter acquired by Trustor (the “Insurance”), and (12)
subject to the terms of the Credit Agreement governing condemnation awards, all
awards, damages, remunerations, reimbursements, settlements or compensation
heretofore made or hereafter to be made by any governmental authority
pertaining to any condemnation or other taking (or any purchase in lieu
thereof) of all or any portion of the Land, Improvements, Fixtures or
Personalty (the “Condemnation
Awards”). As used in this Deed of Trust, the term “Trust Property”
shall mean all or, where the context permits or requires, any portion of the
above or any interest therein.

 

(j) “UCC”:  The Uniform Commercial Code of Tennessee or, if the creation,
perfection and enforcement of any security interest herein granted is governed
by the laws of a state other than Tennessee, then, as to the matter in
question, the Uniform Commercial Code in effect in that state.

 

ARTICLE 2

GRANT[INSERT ONLY IF DEED OF TRUST IS CAPPED:  ;  REVOLVING
LOAN]

 

Section 2.1                                   Grant.  To secure the full and timely payment of the Obligations and the full
and timely performance of the Obligations, Trustor GRANTS, BARGAINS, ASSIGNS,
SELLS, CONVEYS and CONFIRMS, unto the Trustee for the benefit of Beneficiary
the Trust Property, subject, however, only to the matters set forth on Exhibit
B attached hereto (the “Permitted
Encumbrances”) and to Permitted Liens, TO HAVE AND TO HOLD the Trust Property
to Trustee, together with all the hereditaments and appurtenances thereunto
belonging or in anywise appertaining, and Trustor does hereby bind itself, its
successors and assigns to WARRANT AND FOREVER DEFEND the title to the Trust
Property unto Beneficiary.

 

Section 2.2                                   Treatment of Borrowings and
Repayments.  Pursuant to the Credit Agreement, the amount
of the Obligations may increase and decrease from time to time as the Secured
Parties advance, Borrower repays, and the Secured Parties re-advance sums
pursuant to the Credit Agreement.  For
purposes of this Deed of Trust, so long as the balance of the Obligations
equals or exceeds the maximum principal amount secured hereby (“Secured Amount”), the
amount of the Obligations secured by this Deed of Trust shall at all times equal
only the Secured Amount. Such Secured Amount represents only a portion of the
first sums advanced by the Secured Parties in respect of the Obligations.

 

Section 2.3                                   Reduction of Secured Amount.  The Secured Amount shall be reduced only by the last and final sums
that Borrower repays with respect to the Obligations and shall not be reduced
by any intervening repayments of the Obligations. So long as the balance of the
Obligations exceeds the Secured Amount, any payments and repayments of the
Obligations shall not be deemed to be applied against, or to reduce, the
portion of the Obligations secured by this Deed of Trust. Such payments shall
instead be deemed to reduce only such portions of the Obligations as are
secured by other collateral located outside of the State of Tennessee.

 

ARTICLE 3

WARRANTIES, REPRESENTATIONS AND COVENANTS

 

Trustor
warrants, represents and covenants to Beneficiary as follows:

 

Section 3.1                                   Title to Trust Property and
Lien of this Instrument.  Trustor owns the Trust Property free and
clear of any liens, claims or interests, except the Permitted Encumbrances and

 

3

 

Permitted
Liens. This Deed of Trust creates valid, enforceable first priority liens and
security interests against the Trust Property, except for Permitted
Encumbrances and Permitted Liens.

 

Section 3.2                                   First Lien Status.  Trustor shall preserve and protect the first lien and security interest
status of this Deed of Trust. If any lien or security interest other than a
Permitted Encumbrance or a Permitted Lien is asserted against the Trust
Property, Trustor shall promptly, and at its expense, (a) give Beneficiary a
detailed written notice of such lien or security interest (including origin,
amount and other terms), and (b) pay the underlying claim in full or take such
other action so as to cause it to be released or contest the same as required
by and in compliance with the Credit Agreement (including, if applicable under
the Credit Agreement, the requirement of providing a bond or other security
satisfactory to Beneficiary). Beneficiary has not consented and will not
consent to any contract or to any work or to the furnishing of any materials
which might be deemed to create a lien or liens superior to the lien of this
instrument, either under § 66-11-108 of Tennessee Code Annotated, or otherwise.

 

Section 3.3                                   Payment and Performance.  Trustor covenants and agrees that, so long as any part of the
Obligations shall remain unpaid, any Letter of Credit shall be outstanding, any
Secured Party shall have any Commitment or any Secured Hedge Agreement shall be
in effect, Trustor shall perform and observe all of the terms, covenants and
agreements set forth in the Loan Documents on its part to be performed or
observed (including without limitation the Subsidiary Guaranty) or that
Borrower has agreed to cause Trustor to perform or observe.

 

Section 3.4                                   Replacement of Fixtures.  Trustor shall not, without the prior written consent of Beneficiary,
permit any of the Fixtures owned or leased by Trustor to be removed at any time
from the Land or Improvements, unless the removed item is removed temporarily
for maintenance and repair or is permitted to be removed by the Credit
Agreement.

 

Section 3.5                                   Insurance; Condemnation
Awards and Insurance Proceeds.

 

(a) Insurance.  Trustor shall maintain or cause to be
maintained with financially sound and reputable insurance companies, insurance
with respect to the Trust Property against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts (after giving effect to any self-insurance
reasonable and customary for similarly situated Persons engaged in the same or
similar businesses as the Trustor) as are customarily carried under similar
circumstances by such Persons. Subject to Trustor’s right to self-insure set
forth in the foregoing sentence, each such policy of insurance shall name
Beneficiary as the loss payee (or, in the case of liability insurance, an
additional insured) thereunder for the ratable benefit of the Secured Parties,
and shall provide for at least 30 days’ prior written notice of any material
modification or cancellation of such policy. In addition to the foregoing, if
any portion of the Trust Property is located in an area identified by the
Federal Emergency Management Agency as an area having special flood hazards and
in which flood insurance has been made available under the National Flood
Insurance Act of 1968 (or any amendment or successor act thereto), then Trustor
shall maintain, or cause to be maintained, with a financially sound and
reputable insurer, flood insurance in an amount sufficient to comply with all
applicable rules and regulations promulgated pursuant to such Act.

 

(b) Condemnation Awards.
 All Condemnation Awards awarded to
Trustor shall be reinvested and/or applied in accordance with the terms of the
Credit Agreement, including without limitation Section 2.05(b) thereof.

 

(c) Insurance Proceeds.
 All proceeds of any insurance policies
required under the Loan Documents relating to the Trust Property shall be
reinvested and/or applied in accordance with the terms of the Credit Agreement,
including without limitation Section 2.05(b) thereof.

 

4

 

ARTICLE 4

DEFAULT AND
FORECLOSURE

 

Section 4.1                                   Remedies.  Upon the occurrence and during the continuance of an Event of Default,
Beneficiary and Trustee, or either of them, may, at their election, exercise
any or all of the following rights, remedies and recourses:

 

(a) Acceleration.  Subject to any provisions of the Loan
Documents providing for the automatic acceleration of the Obligations upon the
occurrence of certain Events of Default, declare the Obligations to be
immediately due and payable, without further notice, presentment, protest,
notice of intent to accelerate, notice of acceleration, demand or action of any
nature whatsoever (each of which hereby is expressly waived by Trustor),
whereupon the same shall become immediately due and payable.

 

(b) Entry on Trust
Property.  Enter the Trust Property
and take exclusive possession thereof and of all books, records and accounts
relating thereto or located thereon. If Trustor remains in possession of the
Trust Property following the occurrence and during the continuance of an Event
of Default, and without Beneficiary’s prior written consent, Beneficiary or
Trustee may invoke any legal remedies to dispossess Trustor.

 

(c) Operation of Trust
Property.  Hold, lease, develop,
manage, operate or otherwise use the Trust Property upon such terms and
conditions as Beneficiary or Trustee may deem reasonable under the
circumstances (making such repairs, alterations, additions and improvements and
taking other actions, from time to time, as Beneficiary or Trustee deems
necessary or desirable), and apply all Rents and other amounts collected by
Beneficiary in connection therewith in accordance with the provisions of Section
4.7.

 

(d) Sale.  Institute proceedings for sale of the Trust
Property, either by judicial action or by power of sale, in which case the
Trust Property may be sold for cash or credit in one or more parcels. With
respect to any notices required or permitted under the UCC, Trustor agrees that
ten (10) days’ prior written notice shall be deemed commercially reasonable. At
any such sale by virtue of any judicial proceedings, power of sale, or any
other legal right, remedy or recourse, the title to and right of possession of
any such property shall pass to the purchaser thereof, and to the fullest
extent permitted by law, Trustor shall be completely and irrevocably divested
of all of its right, title, interest, claim, equity, equity of redemption, and
demand whatsoever, either at law or in equity, in and to the property sold and
such sale shall be a perpetual bar both at law and in equity against Trustor,
and against all other Persons claiming or to claim the property sold or any
part thereof, by, through or under Trustor. Beneficiary or any of the Secured
Parties may be a purchaser at such sale. If Beneficiary or such other Secured
Party is the highest bidder, Beneficiary or such other Secured Party may credit
the portion of the purchase price that would be distributed to Beneficiary or
such other Secured Party against the Obligations in lieu of paying cash. In the
event this Deed of Trust is foreclosed by judicial action, appraisement of the
Trust Property is waived.

 

(e) Receiver.  Make application to a court of competent
jurisdiction for, and obtain from such court as a matter of strict right and
without notice to Trustor or regard to the adequacy of the Trust Property for
the repayment of the Obligations, the appointment of a receiver of the Trust
Property, and Trustor irrevocably consents to such appointment. Any such
receiver shall have all the usual powers and duties of receivers in similar
cases, including the full power to rent, maintain and otherwise operate the
Trust Property upon such terms as may be approved by the court, and shall apply
such Rents in accordance with the provisions of Section 4.7.

 

(f) Other.  Exercise, with respect to the Trust Property
only, all other rights, remedies and recourses granted under the Loan Documents
or otherwise available at law or in equity.

 

5

 

Section 4.2                                   Separate Sales.  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. The right of
sale arising out of any Event of Default shall not be exhausted by any one or
more sales.

 

Section 4.3                                   Remedies Cumulative,
Concurrent and Nonexclusive.  Beneficiary or Trustee shall have all rights,
remedies and recourses granted in the Loan Documents and available at law or
equity (including the UCC), which rights (a) shall be cumulative and
concurrent, (b) may be pursued separately, successively or concurrently against
Trustor or others obligated under the Loan Documents, or against the Trust
Property, or against any one or more of them, at the sole discretion of
Beneficiary, (c) may be exercised as often as occasion therefor shall arise,
and the exercise or failure to exercise any of them shall not be construed as a
waiver or release thereof or of any other right, remedy or recourse, and (d)
are intended to be, and shall be, nonexclusive. No action by Beneficiary or
Trustee in the enforcement of any rights, remedies or recourses under the Loan
Documents or otherwise at law or equity shall be deemed to cure any Event of
Default.

 

Section 4.4                                   Release of and Resort to
Collateral.  Beneficiary may release, regardless of
consideration and without the necessity for any notice to or consent by the
holder of any subordinate lien on the Trust Property, 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 the Loan Documents or their status as a first and prior lien and
security interest in and to the Trust Property. For payment of the Obligations,
Beneficiary or Trustee may resort to any other security in such order and
manner as Beneficiary may elect.

 

Section 4.5                                   Waiver of Redemption, Notice
and Marshalling of Assets.  To the fullest extent permitted by law,
Trustor hereby irrevocably and unconditionally waives and releases (a) to the
extent not inconsistent with the terms of the Credit Agreement and the
Subsidiary Guaranty, all benefit that might accrue to Trustor by virtue of any
present or future statute of limitations or law or judicial decision exempting
the Trust Property from attachment, levy or sale on execution or providing for
any stay of execution, exemption from civil process, rights of redemption
(whether statutory or at common law) or extension of time for payment, (b) all
notices of any Event of Default other than any notices specifically required to
be given under any Loan Document, (c) all notices of Beneficiary’s or Trustee’s
election to exercise or the actual exercise of any right, remedy or recourse
provided for under any Loan Document, other than any notices specifically
required to be given under any Loan Document, and (d) any right to a
marshalling of assets or a sale in inverse order of alienation.

 

Section 4.6                                   Discontinuance of
Proceedings.  If Beneficiary or Trustee or any other
Secured Party shall have proceeded to invoke any right, remedy or recourse
permitted under the Loan Documents and shall thereafter elect to discontinue or
abandon it for any reason, Beneficiary or Trustee or such other Secured Party,
as the case may be, shall have the unqualified right to do so and, in such an
event, Trustor, Trustee, Beneficiary and the other Secured Parties shall be
restored to their former positions with respect to the Obligations, the Loan
Documents, the Trust Property and otherwise, and the rights, remedies,
recourses and powers of Beneficiary and Trustee and the other Secured Parties
shall continue as if the right, remedy or recourse had never been invoked, but
no such discontinuance or abandonment shall waive any Event of Default which
may then exist or the right of Beneficiary or Trustee or any other Secured
Party thereafter to exercise any right, remedy or recourse under the Loan
Documents for such Event of Default.

 

Section 4.7                                   Application of Proceeds.  The proceeds of any sale of, and the Rents and other amounts generated
by the holding, leasing, management, operation or other use of the Trust
Property, shall be applied by Beneficiary (or the receiver, if one is
appointed) in the following order unless otherwise required by applicable law:

 

6

 

(a) first, to the payment of
the costs and expenses of taking possession of the Trust Property and of
holding, using, leasing, repairing, improving and selling the same, including,
without limitation (1) receiver’s fees and expenses, including the repayment of
the amounts evidenced by any receiver’s certificates, (2) court costs, (3)
attorneys’ and accountants’ fees and expenses, and (4) costs of advertisement;

 

(b) second, to the payment
of the Obligations and performance of the Secured Obligations in the manner and
order of preference provided under Section 8.03 of the Credit Agreement, and

 

(c) thereafter, the balance,
if any, after all of the Obligations have been indefeasibly paid in full, to
the Borrower or as other required under applicable law.

 

Section 4.8                                   Occupancy After Foreclosure.  Any sale of the Trust Property or any part thereof in accordance with Section
4.1(d) will divest all right, title and interest of Trustor in and to the
property sold. Subject to applicable law, any purchaser at a foreclosure sale
will receive immediate possession of the property purchased. If Trustor retains
possession of such property or any part thereof subsequent to such sale,
Trustor will be considered a tenant at sufferance of the purchaser, and will, if
Trustor remains in possession after demand to remove, be subject to eviction
and removal, forcible or otherwise, with or without process of law.

 

Section 4.9                                   Additional Advances and
Disbursements; Costs of Enforcement.

 

(a) Upon the occurrence and
during the continuance of any Event of Default, Beneficiary and Trustee and
each of the other Secured Parties shall have the right, but not the obligation,
to cure such Event of Default in the name and on behalf of Trustor. All sums
advanced and expenses incurred at any time by Beneficiary or Trustee or any
other Secured Party under this Section 4.9, or otherwise under this Deed
of Trust or any of the other Loan Documents or applicable law, shall, subject
to any limitations thereon contained in any Loan Document, be payable on demand
and shall bear interest from and including the date that such sum is advanced
or expense incurred, to and excluding the date of reimbursement, at the
interest rate applicable to Base Rate Loans pursuant to Section 2.08(a) of the
Credit Agreement (provided that
following the occurrence and during the continuance of any Event of Default,
interest shall accrue on such sums at the Default Rate applicable to Base Rate
Loans pursuant to Section 2.08(b) of the Credit Agreement), and all such sums,
together with interest thereon, shall be secured by this Deed of Trust.

 

(b) Trustor shall pay all
expenses (including reasonable attorneys’ fees and expenses) of or incidental
to the perfection and enforcement of this Deed of Trust, or the enforcement,
compromise or settlement of the Obligations or any claim under this Deed of
Trust, and for the curing thereof, or for defending or asserting the rights and
claims of Beneficiary in respect thereof, by litigation or otherwise.

 

Section 4.10                            No Beneficiary in Possession.  Neither the enforcement of any of the remedies under this Article 4,
the assignment of the Rents and Leases under Article 5, the security
interests under Article 6, nor any other remedies afforded to
Beneficiary under the Loan Documents, at law or in equity shall cause
Beneficiary or any other Secured Party to be deemed or construed to be a “mortgagee
in possession” of the Trust Property, to obligate Beneficiary or any other
Secured Party to lease the Trust Property or attempt to do so, or to take any
action, incur any expense, or perform or discharge any obligation, duty or
liability whatsoever under any of the Leases or otherwise.

 

7

 

ARTICLE 5

ASSIGNMENT OF RENTS AND LEASES

 

Section 5.1                                   Assignment.  In furtherance of and in addition to the assignment made by Trustor in Section
2.1 of this Deed of Trust, Trustor hereby absolutely and unconditionally
assigns, sells, transfers and conveys to Beneficiary all of its right, title
and interest in and to all Leases, whether now existing or hereafter entered
into, and all of its right, title and interest in and to all Rents. This
assignment is an absolute assignment and not an assignment for additional
security only. So long as no Event of Default shall have occurred and be
continuing, Trustor shall have a revocable license from Beneficiary to exercise
all rights extended to the landlord under the Leases, including the right to
receive and collect all Rents. The foregoing license is granted subject to the
conditional limitation that no Event of Default shall have occurred and be
continuing. Upon the occurrence and during the continuance of an Event of
Default, whether or not legal proceedings have commenced, and without regard to
waste, adequacy of security for the Obligations or solvency of Trustor, the
license herein granted shall automatically expire and terminate, without notice
to Trustor by Beneficiary (any such notice being hereby expressly waived by
Trustor to the extent permitted by applicable law).

 

Section 5.2                                   Perfection Upon Recordation.  Trustor acknowledges that Beneficiary has taken all actions necessary
to obtain, and that upon recordation of this Deed of Trust, Beneficiary shall
have, to the extent permitted under applicable law, a valid and fully
perfected, first priority, present assignment of the Rents arising out of the
Leases and all security for such Leases. Trustor acknowledges and agrees that
upon recordation of this Deed of Trust, Beneficiary’s interest in the Rents
shall be deemed to be present and fully perfected, “choate” and enforced as to
Trustor and to the extent permitted under applicable law, all third parties,
including, without limitation, any subsequently appointed trustee in any case
under Title 11 of the United States Code (the “Bankruptcy Code”), without the necessity of commencing
a foreclosure action with respect to this Deed of Trust, making formal demand
for the Rents, obtaining the appointment of a receiver or taking any other
affirmative action.

 

Section 5.3                                   Bankruptcy Provisions.  Without limitation of the absolute nature of the assignment of the
Rents hereunder, Trustor and Beneficiary agree that (a) this Deed of Trust
shall constitute a “security agreement” for purposes of Section 552(b) of the
Bankruptcy Code, (b) the security interest created by this Deed of Trust
extends to property of Trustor that comprises the Trust Property and was
acquired before the commencement of a case in bankruptcy and to all amounts
paid as Rents and (c) such security interest shall extend to all Rents acquired
by the estate after the commencement of any case in bankruptcy.

 

Section 5.4                                   No Merger of Estates.  So long as part of the Secured Obligations remain unpaid and
undischarged, the fee and leasehold estates to the Trust Property shall not
merge, but shall remain separate and distinct, notwithstanding the union of
such estates either in Trustor, Beneficiary, any tenant or any third party by
purchase or otherwise.

 

ARTICLE 6

SECURITY AGREEMENT

 

Section 6.1                                   Security Interest.  This Deed of Trust constitutes a “security agreement” within the
meaning of the UCC and other applicable law and with respect to the Personalty,
Fixtures, Leases, Rents, Deposit Accounts, Property Agreements, Tax Refunds,
Proceeds, Insurance and Condemnation Awards. To this end, Trustor grants to
Beneficiary a first and prior security interest in the Personalty, Fixtures,
Leases, Rents, Deposit Accounts, Property Agreements, Tax Refunds, Proceeds,
Insurance, Condemnation Awards and all other Trust Property which is
collateral, a security interest in which may be perfected by the filing of a
financing statement, to secure the payment of the Obligations and performance
of the Secured Obligations, and agrees that Beneficiary shall have all the
rights and

 

8

 

remedies
of a secured party under the UCC with respect to such collateral. Any notice of
sale, disposition or other intended action by Beneficiary with respect to the
Personalty, Fixtures, Leases, Rents, Deposit Accounts, Property Agreements, Tax
Refunds, Proceeds, Insurance and Condemnation Awards sent to Trustor at least
ten (10) days prior to any action under the UCC shall constitute reasonable
notice to Trustor. In the event of any inconsistency between the terms of this
Deed of Trust and the terms of the Security Agreement with respect to the
collateral covered both therein and herein, the Security Agreement shall
control and govern to the extent of any such inconsistency.

 

Section 6.2                                   Financing Statements.  Trustor shall prepare and deliver to Beneficiary such financing
statements, and shall execute and deliver to Beneficiary such documents,
instruments and further assurances, in each case in form and substance
satisfactory to Beneficiary, as Beneficiary may, from time to time, reasonably
consider necessary to create, perfect and preserve Beneficiary’s security
interest hereunder. Trustor hereby irrevocably authorizes Beneficiary to cause
financing statements (and amendments thereto and continuations thereof) and any
such documents, instruments and assurances to be recorded and filed, at such
times and places as may be required or permitted by law to so create, perfect
and preserve Beneficiary’s security interest in the Trust Property hereunder.
Trustor represents and warrants to Beneficiary that Trustor’s jurisdiction of
organization is the State of Delaware. After the date of this Deed of Trust,
Trustor shall not change its name, type of organization, organizational
identification number (if any), jurisdiction of organization or location
(within the meaning of the UCC) without complying in full with the terms of the
Loan Documents with respect to any such changes.

 

Section 6.3                                   Fixture Filing.  This Deed of Trust shall also constitute a “fixture filing” for the purposes
of the UCC against all of the Trust Property which is or is to become fixtures.
The information provided in this Section 6.3 is provided so that this
Deed of Trust shall comply with the requirements of the UCC for a deed of trust
instrument to be filed as a financing statement. Trustor is the “Debtor” and
its name and mailing address are set forth in the preamble of this Deed of
Trust immediately preceding Article 1. Beneficiary is the “Secured Party”
and its name and mailing address from which information concerning the security
interest granted herein may be obtained are also set forth in the preamble of
this Deed of Trust immediately preceding Article 1. A statement
describing the portion of the Trust Property comprising the fixtures hereby
secured is set forth in Section 1.1(i) of this Deed of Trust. Trustor
represents and warrants to Beneficiary that Trustor is the record owner of the
Trust Property, the employer identification number of Trustor is 13-3565869.

 

ARTICLE 7

MISCELLANEOUS

 

Section 7.1                                   Notices.  Any notice required or permitted to be given under this Deed of Trust
shall be given in accordance with Section 10.02 of the Credit Agreement.

 

Section 7.2                                   Covenants Running with the
Land.
 All obligations contained in this Deed of Trust are intended by Trustor
and Beneficiary to be, and shall be construed as, covenants running with the
Trust Property. As used herein, “Trustor” shall refer to the party named in the
first paragraph of this Deed of Trust and to any subsequent owner of all or any
portion of the Trust Property. All Persons who may have or acquire an interest
in the Trust Property shall be deemed to have notice of, and be bound by, the
terms of the Credit Agreement and the other Loan Documents; provided, however, that no such party shall
be entitled to any rights thereunder without the prior written consent of
Beneficiary.

 

Section 7.3                                   Attorney-in-Fact.  Trustor hereby irrevocably appoints Beneficiary as its
attorney-in-fact, which agency is coupled with an interest and with full power
of substitution, with full authority in the place and stead of Trustor and in
the name of Trustor or otherwise (a) to execute and/or record any notices of
completion, cessation of labor or any other notices that Beneficiary deems
necessary and appropriate to protect Beneficiary’s interest, if Trustor shall
fail to do so promptly after written

 

9

 

request
by Beneficiary, (b) upon the issuance of a deed pursuant to the foreclosure of
this Deed of Trust or the delivery of a deed in lieu of foreclosure, to execute
all instruments of assignment, conveyance or further assurance with respect to
the Leases, Rents, Deposit Accounts, Property Agreements, Tax Refunds,
Proceeds, Insurance and Condemnation Awards in favor of the grantee of any such
deed and as may be necessary or desirable for such purpose, (c) to prepare and
file or record financing statements and continuation statements, and to
prepare, execute and file or record applications for registration and like papers
necessary to create, perfect or preserve Beneficiary’s security interests and
rights in or to any of the Trust Property, and (d) after the occurrence and
during the continuance of any Event of Default, to perform any obligation of
Trustor hereunder; provided, however, that
(1) Beneficiary shall not under any circumstances be obligated to perform any
obligation of Trustor; (2) any sums advanced by Beneficiary in such performance
shall be added to and included in the Obligations and shall bear interest at the
highest rate at which interest is then computed on any portion of the
Obligations; (3) Beneficiary as such attorney-in-fact shall only be accountable
for such funds as are actually received by Beneficiary; and (4) Beneficiary
shall not be liable to Trustor or any other person or entity for any failure to
take any action which it is empowered to take under this Section 7.3.

 

Section 7.4                                   Successors and Assigns.  This Deed of Trust shall be binding upon and inure to the benefit of
Beneficiary, the other Secured Parties and Trustor and their respective
successors and assigns. Trustor shall not, without the prior written consent of
Beneficiary, assign any rights, duties or obligations hereunder.

 

Section 7.5                                   No Waiver.  Any failure by Beneficiary or the other Secured Parties to insist upon
strict performance of any of the terms, provisions or conditions of this Deed
of Trust shall not be deemed to be a waiver of same, and Beneficiary and the
other Secured Parties shall have the right at any time to insist upon strict
performance of all of such terms, provisions and conditions.

 

Section 7.6                                   Credit Agreement.  If any conflict or inconsistency exists between this Deed of Trust and
the Credit Agreement, the Credit Agreement shall govern.

 

Section 7.7                                   Release or Reconveyance.  Upon payment in full of the Obligations and performance in full of the
Secured Obligations or upon a sale or other disposition of the Trust Property
permitted by the Credit Agreement, Beneficiary, at Trustor’s request and
expense, shall promptly release the liens and security interests created by
this Deed of Trust or reconvey the Trust Property to Trustor.

 

Section 7.8                                   Waiver of Stay, Moratorium
and Similar Rights.  Trustor agrees, to the full extent that it
may lawfully do so, that it will not at any time insist upon or plead or in any
way take advantage of any stay, marshalling of assets, extension, statutory or
equitable or common law rights of redemption or moratorium law now or hereafter
in force and effect so as to prevent or hinder the enforcement (consistent with
the terms of the Credit Agreement) of the provisions of this Deed of Trust or
the Secured Obligations, or any rights or remedies provided hereunder in favor
of Beneficiary or any other Secured Party.

 

Section 7.9                                   Applicable Law.  The provisions of this Deed of Trust regarding the creation, perfection
and enforcement of the liens and security interests herein granted shall be
governed by and construed under the laws of the state in which the Trust
Property is located. All other provisions of this Deed of Trust shall be
governed by the laws of the State of New York (including, without limitation,
Section 5-1401 of the General Obligations Law of the State of New York).

 

Section 7.10                            Headings.  The Article, Section and Subsection titles 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.

 

10

 

Section 7.11                            Severability.  If any provision of this Deed of Trust shall be held by any court of
competent jurisdiction to be unlawful, void or unenforceable for any reason,
such provision shall be deemed severable from and shall in no way affect the
enforceability and validity of the remaining provisions of this Deed of Trust.

 

Section 7.12                            Entire Agreement.  This Deed of Trust and the other Loan Documents embody the entire
agreement and understanding between Beneficiary and Trustor relating to the
subject matter hereof and thereof and supersede all prior agreements and
understandings between such parties relating to the subject matter hereof and
thereof.  Accordingly, the Loan Documents
may not be contradicted by evidence of prior, contemporaneous or subsequent
oral agreements of the parties. There are no unwritten oral agreements between
the parties.

 

Section 7.13                            Beneficiary as Agent;
Successor Agents.

 

(a) Agent has been appointed
to act as Agent hereunder by the other Secured Parties. Agent shall have the
right hereunder to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action
(including, without limitation, the release or substitution of the Trust
Property) in accordance with the terms of the Credit Agreement, any related
agency agreement among Agent and the other Secured Parties (collectively, as
amended, amended and restated, supplemented or otherwise modified or replaced
from time to time, the “Agency Documents”) and this Deed of Trust. Trustor and all other
Persons shall be entitled to rely on releases, waivers, consents, approvals,
notifications and other acts of Agent, without inquiry into the existence of
required consents or approvals of the Secured Parties therefor.

 

(b) Beneficiary shall at all
times be the same Person that is Agent under the Agency Documents. Written
notice of resignation by Agent pursuant to the Agency Documents shall also
constitute notice of resignation as Agent under this Deed of Trust. Removal of
Agent pursuant to any provision of the Agency Documents shall also constitute
removal as Agent under this Deed of Trust. Appointment of a successor Agent
pursuant to the Agency Documents shall also constitute appointment of a
successor Agent under this Deed of Trust. Upon the acceptance of any
appointment as Agent by a successor Agent under the Agency Documents, that
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or removed Agent as the
Beneficiary under this Deed of Trust, and the retiring or removed Agent shall
promptly (i) assign and transfer to such successor Agent all of its right,
title and interest in and to this Deed of Trust and the Trust Property, and
(ii) execute and deliver to such successor Agent such assignments and
amendments and take such other actions, as may be necessary or appropriate in
connection with the assignment to such successor Agent of the liens and
security interests created hereunder, whereupon such retiring or removed Agent
shall be discharged from its duties and obligations under this Deed of Trust.
After any retiring or removed Agent’s resignation or removal hereunder as
Agent, the provisions of this Deed of Trust and the Agency Documents shall
inure to its benefit as to any actions taken or omitted to be taken by it under
this Deed of Trust while it was Agent hereunder.

 

ARTICLE 8

LOCAL LAW PROVISIONS

 

Section 8.1                                   Power of Sale.  Beneficiary may require the Trustee, and the Trustee is hereby
authorized and empowered, to enter and take possession of the Trust Property
and to sell all or part of the Trust Property, at public auction, to the
highest bidder for cash, free from equity of redemption, any statutory or
common law right of redemption, homestead, dower, marital share, and all other
exemptions, after giving notice of the time, place and terms of such sale and
of the Trust Property to be sold, by advertising the terms of such sale and of
the Trust Property to be sold, by advertising the sale of the property for
twenty-one (21) days by three (3) weekly notices in some newspaper published in
the

 

11

 

county
and state where the Trust Property is situated, which notice may be given
before or after entry by the Trustee. The Trustee shall execute a conveyance to
the purchaser in fee simple and deliver possession to the purchaser, which the
Trustor warrants shall be given without obstruction, hindrance or delay. The
Trustee may sell all or any portion of the Trust Property, together or in lots
or parcels, and may execute and deliver to the purchaser or purchasers of such
property a conveyance in fee simple. The sale or sales by Trustee of less than
the whole of the Trust Property shall not exhaust the power of sale herein
granted, and Trustee is specifically empowered to make successive sale or sales
under such power until the whole of the Trust Property shall be sold; and if
the proceeds of such sale or sales of less than the whole of the Trust Property
shall be less than the aggregate of the Secured Obligations and the expenses
thereof, this Deed of Trust and the lien, security interest and assignment
hereof shall remain in full force and effect as to the unsold portion of the
Trust Property; provided, however, that Trustor shall never have any right to
require the sale or sales of less than the whole of the Trust Property, but
Beneficiary shall have the right at its sole election, to request the Trustee
to sell less than the whole of the Trust Property. Beneficiary may bid and
become the purchaser of all or any part of the Trust Property at any such sale,
and the amount of Beneficiary’s successful bid may be credited on the Secured
Obligations.

 

Section 8.2                                   Trustees.  The necessity of the Trustee herein named, or any successor in trust, making
oath or giving bond, is expressly waived.

 

The Trustee, or any one
acting in his or her stead, shall have, in their discretion, authority to
employ all proper agents and attorneys in the execution of this trust and/or in
the conducting of any sale made pursuant to the terms hereof, and to pay for
such services rendered out of the proceeds of the sale of the Trust Property,
should any be realized; and if no sale be made or if the proceeds of sale be
insufficient to pay the same, then Trustor hereby undertakes and agrees to pay
the cost of such services rendered to said Trustee. Trustee may rely on any
document believed by him or her in good faith to be genuine. All money received
by Trustee shall, until used or applied as herein provided, be held in trust,
but need not be segregated (except to the extent required by law), and Trustee
shall not be liable for interest thereon.

 

If the Trustee shall be made
a party to or shall intervene in any action or proceeding affecting the Trust
Property or the title thereto, or the interest of the Trustee or Beneficiary
under this Deed of Trust, the Trustee and Beneficiary shall be reimbursed by
Trustor, immediately and without demand, for all reasonable costs, charges, and
attorney’s fees incurred by them or either of them in any such case, and the
same shall be secured hereby as a further charge and lien upon the Trust
Property.

 

In the event of the death,
refusal, or of inability for any cause, on the part of the Trustee named
herein, or of any successor trustee, to act at any time when action under the
foregoing powers and trust may be required, or for any other reason
satisfactory to the Beneficiary, the Beneficiary is authorized, either in its
own name or through an attorney or attorneys in fact appointed for that
purpose, by written instrument duly registered, to name and appoint a successor
or successors to execute this trust, such appointment to be evidenced by
writing, duly acknowledged; and when such writing shall have been registered,
the substituted trustee named therein shall thereupon be vested with all the
right and title, and clothed with all the power of the Trustee named herein and
such like power of substitution shall continue so long as any part of the debt
secured hereby remains unpaid.

 

[The remainder of this page has
been intentionally left blank]

 

12

 

IN WITNESS WHEREOF, Trustor has on the date set forth in the
acknowledgement hereto, effective as of the date first above written, caused
this instrument to be duly EXECUTED AND DELIVERED by authority duly given.

 

 

	
   

  	
  TRUSTOR:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WARNER MUSIC GROUP, INC., a

  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Paul Robinson

  	
   

  
	
   

  	
   

  	
  Name:
  Paul Robinson

  
	
   

  	
   

  	
  Title:
  Vice President

  

 

 

STATE OF New York

 

COUNTY OF New York

 

Before me, Carroll Smith, a
Notary Public in and for said State and County aforesaid, personally appeared
Paul Robinson, with whom I am personally acquainted (or proved to me on the
basis of satisfactory evidence), and who, upon oath, acknowledged himself to be
the Vice President of Warner Music Group, Inc., the within named bargainor, a
corporation, and that  he, as such Vice
President, being duly authorized so to do, executed the foregoing instrument
for the purposes therein contained by signing the name of the corporation by
himself as such Vice President.

 

WITNESS my hand and seal at
office on this the 26th
day of February, 2004.

 

 

	
  /s/
  Carroll E. Smith

  	
   

  
	
  Notary
  Public

  
	
   

  
	
  [SEAL]

  
	
   

  
	
  My commission
  expires:

  
	
   

  
	
   

  	
   

  
	
  CARROLL E. SMITH

  	
   

  
	
  NOTARY PUBLIC, State of New York

  	
   

  
	
  No. 01SM6079992

  	
   

  
	
  Qualified in New York County

  	
   

  
	
  Commission Expires September 3, 2006

  	
   

  
			

 

 

EXHIBIT A

 

Legal Description

 

A tract of land in the First
Civil District of Metropolitan Nashville-Davidson County, Tennessee, and being
Lots 8, 9, 10 and 11 in O. H. Hayes Plan of Small Lots, as of record in Book 1,
page 69, Chancery Court, Davidson County, Tennessee, and being more fully
described according to a Boundary and As Built Survey dated June 13, 1989,
prepared by Ragan-Smith-Murphy & Associates, Inc. as follows:

 

Beginning at an iron pin set on
the west right of way line of Music Square East (50-foot right of way) at the
northeast corner of a tract of land conveyed to Ronald K. Kerr as of record in
Deed Book 7840, page 466, Register’s Office, for Davidson County, Tennessee,
and said pin also being 50.12 feet from the intersection of the north right of
way line of Roy Acuff Place and the west right of way line of Music Square
East, as measured along the west right of way line of Music Square East; thence
leaving said west right of way line and with the north line of Kerr, N 86
degrees 14 minutes 43 seconds W, a distance of 152.30 feet to an iron pin set
on the east right of way line of Alley No. 440 (a 16-foot alley); thence, with
the east line of said alley N 05 degrees 14 minutes 16 seconds E, a distance of
199.85 feet to an existing iron pin; said pin being the southwest corner of a
tract of land conveyed to Francis R. Zambon by deed recorded in Book 5136, page
585, Register’s Office for Davidson County, Tennessee; thence with the south
line of Zambon S 86 degrees 17 minutes 34 seconds E, a distance of 152.34 feet
to an existing iron pin on the west right of way line of Music Square East;
thence, with said west right of way line S 05 degrees 15 minutes 00 seconds W,
distance of 199.97 feet to the point of beginning and containing 30,440 square
feet or 0.699 acres, more or less.

 

Being the same property
conveyed to Warner Music Group, Inc., a Delaware corporation, by quitclaim deed
of record in Instrument #20031007-0148608, Register’s Office, Davidson County,
Tennessee.

 

Address:

21 Music Square West, Nashville, TN

 

No.
93-13, Parcel 134 and Parcel 136

 

 

EXHIBIT B

 

PERMITTED ENCUMBRANCES

 

Those exceptions set forth in
Schedule B of that certain policy of title insurance issued to Beneficiary by
Stewart Title Guaranty Company on or about the date hereof pursuant to
commitment number 2003192 dated December 22, 2003 (as updated and “marked” as
of the date hereof).Exhibit
10.10

 

 

DEED OF TRUST, SECURITY
AGREEMENT, ASSIGNMENT OF RENTS

AND LEASES AND FIXTURE FILING (CALIFORNIA)

 

by and from

 

WARNER BROS. RECORDS, INC., “Trustor”

 

to

 

MTC FINANCIAL INC. (dba TRUSTEE
CORPS), “Trustee”

 

in favor of

 

BANK OF AMERICA, N.A.,

in its capacity as Agent, “Beneficiary”

 

Dated as of February 29,
2004

 

	
  Location:

  	
  Burbank, California

  
	
  County:

  	
  Los Angeles

  

 

THE SECURED PARTY (BENEFICIARY)
DESIRES THIS FIXTURE FILING

TO BE INDEXED AGAINST THE RECORD OWNER OF THE REAL ESTATE

DESCRIBED HEREIN

 

PREPARED BY, RECORDING REQUESTED
BY,

AND WHEN RECORDED MAIL TO:

 

Davis Polk & Wardwell

450 Lexington Avenue

New York, New York 10017

Attention: Susan D. Kennedy, Esq.

 

 

DEED OF
TRUST, SECURITY AGREEMENT, ASSIGNMENT OF RENTS

AND LEASES AND FIXTURE FILING (CALIFORNIA)

 

THIS DEED OF TRUST,
SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND LEASES AND  FIXTURE FILING
(CALIFORNIA) (this “Deed of Trust”) is dated
as of February 29, 2004 by and from WARNER BROS. RECORDS, INC., a Delaware corporation (“Trustor”), whose address is 3300 Warner
Boulevard, Burbank, California 91505 to MTC FINANCIAL  INC. (dba TRUSTEE CORPS), a
California corpoation (“Trustee”) with an office at 2112 Business
Center Drive, Second Floor-Suite 201, Irvine, California 92612 for the benefit
of BANK OF AMERICA, N.A.,
a national association, as administrative agent (in such capacity, “Agent”) for
the Secured Parties as defined in the Credit Agreement (defined below); having
an address at Independence Center, 15th Floor, NC1-001-15-04, 101
North Tryon Street, Charlotte, North Carolina 28255 (Agent, together with its
successors and assigns, “Beneficiary”).

 

The maximum principal amount of obligations secured
by this instrument is $1,500,000,000 plus any Hedging Obligations (as defined
in the Credit Agreement) from time to time.

 

ARTICLE 1

DEFINITIONS

 

Section 1.1            Definitions. All capitalized terms used herein without
definition shall have the respective meanings ascribed to them in that certain
Credit Agreement dated as of even date herewith, as the same may be amended,
amended and restated, supplemented or otherwise modified from time to time (the
“Credit Agreement”), among WMG
Acquisition Corp. and the Overseas Borrowers named therein, as Borrowers
(collectively, “Borrower”), WMG Holdings Corp., Agent, as
Administrative Agent, Swing Line Lender and L/C Issuer and the other Secured
Parties identified therein. As used herein, the following terms shall have the
following meanings:

 

(a)   “Debtor Relief
Laws”: the Bankruptcy Code of the
United States, and all other liquidation, conservatorship, bankruptcy,
assignment for the benefit of creditors, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar debtor relief Laws of the
United States or other applicable jurisdictions from time to time in effect and
affecting the rights of creditors generally.

 

(b)   “Event of
Default”: An Event of Default
under and as defined in the Credit Agreement.

 

(c)   “Loan
Parties”: collectively,
each Borrower and each Guarantor.

 

(d)   “Obligations”: means all advances to, and debts,
liabilities, obligations, covenants and duties of, any Loan Party arising under
any Loan Document or otherwise with respect to any Loan or Letter of Credit or
Secured Hedge Agreement, whether direct or indirect (including those acquired
by assumption), absolute or contingent, due or to become due, now existing or
hereafter arising and including interest and fees that accrue after the
commencement by or against any Loan Party of any proceeding under any Debtor
Relief Laws naming such Person as the debtor in such proceeding, regardless of
whether such interest and fees are allowed claims in such proceeding. Without
limiting the generality of the foregoing, the Obligations of the Loan Parties
under the Loan Documents include (a) the obligation to pay principal, interest,
Letter of Credit commissions, charges, expenses, fees, Attorney Costs,
indemnities and other amounts payable by any Loan Party under any Loan Document
and (b) the obligation of any Loan Party to reimburse any amount in respect of
any of the foregoing that any Lender, in its sole discretion, may elect to pay
or advance on behalf of such Loan Party. The Credit Agreement contains a
revolving credit facility which permits Borrower to borrow certain principal
amounts, repay all or a portion of such principal amounts, and reborrow the
amounts previously paid to the Secured Parties,

 

 

all
upon satisfaction of certain conditions stated in the Credit Agreement. This
Deed of Trust secures all advances and re-advances under the Credit Agreement,
including, without limitation, those under the revolving credit facility
contained therein.

 

(e)   “Permitted
Liens”: Liens described
in Sections 7.01 of the Credit Agreement.

 

(f)    “Secured
Obligations”: the
payment of all Obligations of Trustor now or hereafter existing under the Loan
Documents and the Secured Hedge Agreements (together, the “Finance
Documents”), whether
direct or indirect, absolute or contingent, and whether for principal,
reimbursement obligations, interest, fees, premiums, penalties,
indemnifications, contract causes of action, costs, expenses or otherwise.

 

(g)   “Secured
Hedge Agreement”: any
Swap Contract required or permitted under Article 6 or Article 7 of
the Credit Agreement that is entered into by and between any Loan Party and any
Hedge Bank.

 

(h)   “Secured
Parties”: Secured Parties as
defined in the Credit Agreement and Trustee.

 

(i)    “Trust
Property”: The fee
interest in the real property described in Exhibit A attached hereto and
incorporated herein by this reference, together with any greater estate in such
real property as hereafter may be acquired by Trustor (the “Land”), and all of
Trustor’s right, title and interest in and to (1) all improvements now owned or
hereafter acquired by Trustor, now or at any time situated, placed or
constructed upon the Land (the “Improvements”; the Land and Improvements are
collectively referred to as the “Premises”), (2) all
materials, supplies, equipment, apparatus and other items of personal property
now owned or hereafter acquired by Trustor and now or hereafter attached to,
installed in or used in connection with any of the Improvements or the Land,
and water, gas, electrical, telephone, storm and sanitary sewer facilities and
all other utilities whether or not situated in easements (the “Fixtures”), (3) all
goods, accounts, general intangibles, instruments, documents, chattel paper and
all other personal property of any kind or character, including such items of
personal property as defined in the UCC (defined below), now owned or hereafter
acquired by Trustor and now or hereafter affixed to, placed upon, used in
connection with, arising from or otherwise related to the Premises (the “Personalty”), (4)
all reserves, escrows or impounds required under the Credit Agreement or
any of the other Loan Documents and all deposit accounts maintained by Trustor
with respect to the Trust Property (the “Deposit Accounts”), (5) all leases, licenses, concessions, occupancy agreements or
other agreements (written or oral, now or at any time in effect) to which
Trustor is a party which grant to any Person a possessory interest in, or the
right to use, all or any part of the Trust Property, together with all related
security and other deposits (the “Leases”), (6) all of the rents, revenues, royalties,
income, proceeds, profits, security and other types of deposits, and other
benefits paid or payable by parties to the Leases for using, leasing, licensing
possessing, operating from, residing in, selling or otherwise enjoying the
Trust Property (the “Rents”),
(7) all other
agreements, such as construction contracts, architects’ agreements, engineers’
contracts, utility contracts, maintenance agreements, management agreements,
service contracts, listing agreements, guaranties, warranties, permits, licenses,
certificates and entitlements in any way relating to the construction, use,
occupancy, operation, maintenance, enjoyment or ownership of the Trust Property
(the “Property Agreements”),
excluding any agreement to the extent that (but only as long as) the
terms thereof prohibit the assignment of, or granting a security interest in,
such agreement (it being understood and agreed, however, (i) that
notwithstanding the foregoing, all rights to payment for money due or to become
due pursuant to any such excluded agreement shall be subject to the security
interests created by this Deed of Trust and (ii) such excluded agreement shall
otherwise be subject to the security interests created by this Deed of Trust
upon receiving any necessary approvals or waivers permitting the assignment
thereof), (8) all rights, privileges, tenements, hereditaments, rights-of-way,
easements, appendages and appurtenances appertaining to the foregoing, (9) all
property tax refunds payable to Trustor with respect to the Trust Property (the
“Tax Refunds”), (10)
all accessions, replacements and

 

2

 

substitutions
for any of the foregoing and all proceeds thereof (the “Proceeds”),
(11) subject to the terms of the Credit Agreement governing insurance
proceeds, all insurance policies, unearned premiums therefor and proceeds from
such policies covering any of the above property now or hereafter acquired by
Trustor (the “Insurance”), and
(12) subject to the terms of the Credit Agreement governing condemnation
awards, all awards, damages, remunerations, reimbursements, settlements or
compensation heretofore made or hereafter to be made by any governmental
authority pertaining to any condemnation or other taking (or any purchase in
lieu thereof) of all or any portion of the Land, Improvements, Fixtures or
Personalty (the “Condemnation
Awards”). As used in this Deed of Trust, the term “Trust
Property” shall mean all or, where the context permits or requires, any portion
of the above or any interest therein.

 

(j)    “UGC”: The
Uniform Commercial Code of California or, if the creation, perfection and
enforcement of any security interest herein granted is governed by the laws of
a state other than California, then, as to the matter in question, the Uniform
Commercial Code in effect in that state.

 

ARTICLE 2

GRANT[INSERT ONLY IF DEED OF TRUST IS CAPPED: ; REVOLVING LOAN]

 

Section 2.1            Grant. To
secure the full and timely payment of the Obligations and the full and timely
performance of the Secured Obligations, Trustor GRANTS, BARGAINS, ASSIGNS,
SELLS, CONVEYS and CONFIRMS, unto the Trustee for the benefit of Beneficiary,
with POWER OF SALE as described herein and RIGHT OF ENTRY AND POSSESSION, the
Trust Property, subject, however, only to the matters set forth on Exhibit B
attached hereto (the “Permitted
Encumbrances”) and to Permitted
Liens, TO HAVE AND TO HOLD the Trust Property to Trustee and Beneficiary, and
Trustor does hereby bind itself, its successors and assigns to WARRANT AND
FOREVER DEFEND the title to the Trust Property unto Beneficiary.

 

ARTICLE 3

WARRANTIES, REPRESENTATIONS AND COVENANTS

 

Trustor warrants, represents
and covenants to Beneficiary as follows:

 

Section 3.1            Title to Trust Property and
Lien of this Instrument. Trustor
owns the Trust Property free and clear of any liens, claims or interests,
except the Permitted Encumbrances and Permitted Liens. This Deed of Trust
creates valid, enforceable first priority liens and security interests against
the Trust Property, except for Permitted Encumbrances and Permitted Liens.

 

Section 3.2            First Lien Status. Trustor shall preserve and protect the first
lien and security interest status of this Deed of Trust. If any lien or
security interest other than a Permitted Encumbrance or a Permitted Lien is asserted
against the Trust Property, Trustor shall promptly, and at its expense, (a)
give Beneficiary a detailed written notice of such lien or security interest
(including origin, amount and other terms), and (b) pay the underlying claim in
full or take such other action so as to cause it to be released or contest the
same as required by and in compliance with the Credit Agreement (including, if
applicable under the Credit Agreement, the requirement of providing a bond or
other security satisfactory to Beneficiary).

 

Section 3.3            Payment and Performance. Trustor covenants and agrees that, so long as
any part of the Obligations shall remain unpaid, any Letter of Credit shall be
outstanding, any Secured Party shall have any Commitment or any Secured Hedge
Agreement shall be in effect, Trustor shall perform and observe all of the
terms, covenants and agreements set forth in the Loan Documents on its part to
be performed or observed (including without limitation the Subsidiary Guaranty)
or that Borrower has agreed to cause Trustor to perform or observe.

 

3

 

Section 3.4            Replacement of Fixtures. Trustor shall not, without the prior written
consent of Beneficiary, permit any of the Fixtures owned or leased by Trustor
to be removed at any time from the Land or Improvements, unless the removed
item is removed temporarily for maintenance and repair or is permitted to be
removed by the Credit Agreement.

 

Section 3.5            Insurance; Condemnation
Awards and Insurance Proceeds.

 

(a)   Insurance. Trustor shall maintain or cause to be maintained with financially
sound and reputable insurance companies, insurance with respect to the Trust
Property against loss or damage of the kinds customarily insured against by
Persons engaged in the same or similar business, of such types and in such
amounts (after giving effect to any self-insurance reasonable and customary for
similarly situated Persons engaged in the same or similar businesses as the
Trustor) as are customarily carried under similar circumstances by such
Persons. Subject to Trustor’s right to self-insure set forth in the foregoing
sentence, each such policy of insurance shall name Beneficiary as the loss
payee (or, in the case of liability insurance, an additional insured)
thereunder for the ratable benefit of the Secured Parties, and shall provide
for at least 30 days’ prior written notice of any material modification or
cancellation of such policy. In addition to the foregoing, if any portion of
the Trust Property is located in an area identified by the Federal Emergency
Management Agency as an area having special flood hazards and in which flood
insurance has been made available under the National Flood Insurance Act of
1968 (or any amendment or successor act thereto), then Trustor shall maintain,
or cause to be maintained, with a financially sound and reputable insurer,
flood insurance in an amount sufficient to comply with all applicable rules and
regulations promulgated pursuant to such Act.

 

(b)   Condemnation Awards. All Condemnation Awards awarded to Trustor
shall be reinvested and/or applied in accordance with the terms of the Credit
Agreement, including without limitation Section 2.05(b) thereof, the
provisions of which are incorporated herein by this reference.

 

(c)   Insurance Proceeds. All proceeds of any insurance policies
required under the Loan Documents relating to the Trust Property shall be
reinvested and/or applied in accordance with the terms of the Credit Agreement,
including without limitation Section 2.05(b) thereof, the provisions of
which are incorporated herein by this reference.

 

ARTICLE 4 

DEFAULT
AND FORECLOSURE

 

Section 4.1            Remedies. Upon
the occurrence and during the continuance of an Event of Default, Beneficiary
and Trustee, or either of them, may, at their election, exercise any or all of
the following rights, remedies and recourses:

 

(a)   Acceleration. Subject to any provisions of the Loan
Documents providing for the automatic acceleration of the Obligations upon the
occurrence of certain Events of Default, declare the Obligations to be
immediately due and payable, without further notice, presentment, protest,
notice of intent to accelerate, notice of acceleration, demand or action of any
nature whatsoever (each of which hereby is expressly waived by Trustor), whereupon
the same shall become immediately due and payable.

 

(b)   Entry on Trust Property. Enter the Trust Property and take exclusive
possession thereof and of all books, records and accounts relating thereto or
located thereon. If Trustor remains in possession of the Trust Property
following the occurrence and during the continuance of an Event of Default, and
without Beneficiary’s prior written consent, Beneficiary or Trustee may invoke
any legal remedies to dispossess Trustor.

 

4

 

(c)   Operation of Trust Property. Hold, lease, develop, manage, operate or
otherwise use the Trust Property upon such terms and conditions as Beneficiary
or Trustee may deem reasonable under the circumstances (making such repairs,
alterations, additions and improvements and taking other actions, from time to
time, as Beneficiary or Trustee deems necessary or desirable), and apply all
Rents and other amounts collected by Beneficiary in connection therewith in
accordance with the provisions of Section 4.7.

 

(d)   Sale. Institute proceedings for sale of the Trust Property, either by
judicial action or by power of sale, in which case the Trust Property may be
sold for cash or credit in one or more parcels. With respect to any notices
required or permitted under the UCC, Trustor agrees that ten (10) days’ prior
written notice shall be deemed commercially reasonable. At any such sale by
virtue of any judicial proceedings, power of sale, or any other legal right,
remedy or recourse, the title to and right of possession of any such property
shall pass to the purchaser thereof, and to the fullest extent permitted by
law, Trustor shall be completely and irrevocably divested of all of its right,
title, interest, claim, equity, equity of redemption, and demand whatsoever,
either at law or in equity, in and to the property sold and such sale shall be
a perpetual bar both at law and in equity against Trustor, and against all
other Persons claiming or to claim the property sold or any part thereof, by, through
or under Trustor. Beneficiary or any of the Secured Parties may be a purchaser
at such sale. If Beneficiary or such other Secured Party is the highest bidder,
Beneficiary or such other Secured Party may credit the portion of the purchase
price that would be distributed to Beneficiary or such other Secured Party
against the Obligations in lieu of paying cash. In the event this Deed of Trust
is foreclosed by judicial action, appraisement of the Trust Property is waived.

 

(e)   Receiver. Make application to a court of competent jurisdiction for, and obtain
from such court as a matter of strict right and without notice to Trustor or
regard to the adequacy of the Trust Property for the repayment of the
Obligations, the appointment of a receiver of the Trust Property, and Trustor
irrevocably consents to such appointment. Any such receiver shall have all the
usual powers and duties of receivers in similar cases, including the full power
to rent, maintain and otherwise operate the Trust Property upon such terms as
may be approved by the court, and shall apply such Rents in accordance with the
provisions of Section 4.7.

 

(f)    Other. Exercise, with respect to the Trust Property only, all other rights,
remedies and recourses granted under the Loan Documents or otherwise available
at law or in equity.

 

Section 4.2            Separate Sales. 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. The right of sale arising out of any Event of Default shall not be
exhausted by any one or more sales.

 

Section 4.3            Remedies Cumulative,
Concurrent and Nonexclusive.  Beneficiary or Trustee shall have all rights,
remedies and recourses granted in the Loan Documents and available at law or
equity (including the UCC), which rights (a) shall be cumulative and
concurrent, (b) may be pursued separately, successively or concurrently against
Trustor or others obligated under the Loan Documents, or against the Trust
Property, or against any one or more of them, at the sole discretion of
Beneficiary, (c) may be exercised as often as occasion therefor shall arise,
and the exercise or failure to exercise any of them shall not be construed as a
waiver or release thereof or of any other right, remedy or recourse, and (d)
are intended to be, and shall be, nonexclusive. No action by Beneficiary or
Trustee in the enforcement of any rights, remedies or recourses under the Loan
Documents or otherwise at law or equity shall be deemed to cure any Event of
Default.

 

Section 4.4            Release of and Resort to
Collateral.  Beneficiary may release, regardless of
consideration and without the necessity for any notice to or consent by the
holder of any subordinate lien on the Trust Property, any part of the Trust
Property without, as to the remainder, in any

 

5

 

way
impairing, affecting, subordinating or releasing the lien or security interest
created in or evidenced by the Loan Documents or their status as a first and
prior lien and security interest in and to the Trust Property. For payment of
the Obligations, Beneficiary or Trustee may resort to any other security in
such order and manner as Beneficiary may elect.

 

Section 4.5            Waiver of Redemption, Notice and Marshalling of Assets. To the fullest extent permitted by law,
Trustor hereby irrevocably and unconditionally waives and releases (a) to the
extent not inconsistent with the terms of the Credit Agreement and the
Subsidiary Guaranty, all benefit that might accrue to Trustor by virtue of any
present or future statute of limitations or law or judicial decision exempting
the Trust Property from attachment, levy or sale on execution or providing for
any stay of execution, exemption from civil process, redemption or extension of
time for payment, (b) all notices of any Event of Default other than any
notices specifically required to be given under any Loan Document, (c) all
notices of Beneficiary’s or Trustee’s election to exercise or the actual
exercise of any right, remedy or recourse provided for under any Loan Document,
other than any notices specifically required to be given under any Loan
Document, and (d) any right to a marshalling of assets or a sale in inverse
order of alienation.

 

Section 4.6            Discontinuance of Proceedings. If Beneficiary or Trustee or any other
Secured Party shall have proceeded to invoke any right, remedy or recourse
permitted under the Loan Documents and shall thereafter elect to discontinue or
abandon it for any reason, Beneficiary or Trustee or such other Secured Party,
as the case may be, shall have the unqualified right to do so and, in such an
event, Trustor, Trustee, Beneficiary and the other Secured Parties shall be
restored to their former positions with respect to the Obligations, the Loan
Documents, the Trust Property and otherwise, and the rights, remedies,
recourses and powers of Beneficiary and Trustee and the other Secured Parties
shall continue as if the right, remedy or recourse had never been invoked, but
no such discontinuance or abandonment shall waive any Event of Default which
may then exist or the right of Beneficiary or Trustee or any other Secured
Party thereafter to exercise any right, remedy or recourse under the Loan
Documents for such Event of Default.

 

Section 4.7            Application of Proceeds. The proceeds of any sale of, and the Rents
and other amounts generated by the holding, leasing, management, operation or
other use of the Trust Property, shall be applied by Beneficiary (or the
receiver, if one is appointed) in the following order unless otherwise required
by applicable law:

 

(a)   first, to the payment of the costs and
expenses of taking possession of the Trust Property and of holding, using,
leasing, repairing, improving and selling the same, including, without
limitation (1) receiver’s fees and expenses, including the repayment of the
amounts evidenced by any receiver’s certificates, (2) court costs, (3)
attorneys’ and accountants’ fees and expenses, and (4) costs of advertisement;

 

(b)   second, to the payment of the Obligations and
performance of the Secured Obligations in the manner and order of preference
provided under Section 8.03 of the Credit Agreement, and

 

(c)   thereafter, the balance, if any, after all of
the Obligations have been indefeasibly paid in full, to the Borrower or as
other required under applicable law.

 

Section 4.8            Occupancy After Foreclosure. Any sale of the Trust Property or any part
thereof in accordance with Section 4.1(d) will divest all right,
title and interest of Trustor in and to the property sold. Subject to
applicable law, any purchaser at a foreclosure sale will receive immediate
possession of the property purchased. If Trustor retains possession of such
property or any part thereof subsequent to such sale, Trustor will be
considered a tenant at sufferance of the purchaser, and will, if

 

6

 

Trustor
remains in possession after demand to remove, be subject to eviction and
removal, forcible or otherwise, with or without process of law.

 

Section 4.9            Additional Advances and
Disbursements; Costs of Enforcement.

 

(a)   Upon the occurrence and during the
continuance of any Event of Default, Beneficiary and Trustee and each of the
other Secured Parties shall have the right, but not the obligation, to cure
such Event of Default in the name and on behalf of Trustor. All sums advanced
and expenses incurred at any time by Beneficiary or Trustee or any other
Secured Party under this Section 4.9, or otherwise under this Deed
of Trust or any of the other Loan Documents or applicable law, shall, subject
to any limitations thereon contained in any Loan Document, be payable on demand
and shall bear interest from and including the date that such sum is advanced
or expense incurred, to and excluding the date of reimbursement, at the
interest rate applicable to Base Rate Loans pursuant to Section 2.08(a) of
the Credit Agreement (provided that following the
occurrence and during the continuance of any Event of Default, interest shall
accrue on such sums at the Default Rate applicable to Base Rate Loans pursuant
to Section 2.08(b) of the Credit Agreement), and all such sums, together
with interest thereon, shall be secured by this Deed of Trust.

 

(b)   Trustor shall pay all expenses (including
reasonable attorneys’ fees and expenses) of or incidental to the perfection and
enforcement of this Deed of Trust, or the enforcement, compromise or settlement
of the Obligations or any claim under this Deed of Trust, and for the curing
thereof, or for defending or asserting the rights and claims of Beneficiary in
respect thereof, by litigation or otherwise.

 

Section 4.10         No Beneficiary in Possession. Neither the enforcement of any of the
remedies under this Article 4, the assignment of the Rents and
Leases under Article 5, the security interests under Article 6,
nor any other remedies afforded to Beneficiary under the Loan Documents, at law
or in equity shall cause Beneficiary or any other Secured Party to be deemed or
construed to be a “mortgagee in possession” of the Trust Property, to obligate
Beneficiary or any other Secured Party to lease the Trust Property or attempt
to do so, or to take any action, incur any expense, or perform or discharge any
obligation, duty or liability whatsoever under any of the Leases or otherwise.

 

ARTICLE 5

ASSIGNMENT OF RENTS AND
LEASES

 

Section 5.1            Assignment. In furtherance of and in addition to the
assignment made by Trustor in Section 2.1 of this Deed of Trust,
Trustor hereby absolutely and unconditionally assigns, sells, transfers and
conveys to Beneficiary all of its right, title and interest in and to all
Leases, whether now existing or hereafter entered into, and all of its right,
title and interest in and to all Rents. This assignment is an absolute
assignment and not an assignment for additional security only. So long as no
Event of Default shall have occurred and be continuing, Trustor shall have a
revocable license from Beneficiary to exercise all rights extended to the
landlord under the Leases, including the right to receive and collect all
Rents. The foregoing license is granted subject to the conditional limitation
that no Event of Default shall have occurred and be continuing. Upon the
occurrence and during the continuance of an Event of Default, whether or not
legal proceedings have commenced, and without regard to waste, adequacy of
security for the Obligations or solvency of Trustor, the license herein granted
shall automatically expire and terminate, without notice to Trustor by
Beneficiary (any such notice being hereby expressly waived by Trustor to the
extent permitted by applicable law).

 

Section 5.2            Perfection Upon Recordation. Trustor acknowledges that Beneficiary has
taken all actions necessary to obtain, and that upon recordation of this Deed
of Trust, Beneficiary shall have, to the extent permitted under applicable law,
a valid and fully perfected, first priority, present assignment of the Rents
arising out of the Leases and all security for such Leases. Trustor
acknowledges

 

7

 

and
agrees that upon recordation of this Deed of Trust, Beneficiary’s interest in
the Rents shall be deemed to be present and fully perfected, “choate” and
enforced as to Trustor and to the extent permitted under applicable law, all
third parties, including, without limitation, any subsequently appointed
trustee in any case under Title 11 of the United States Code (the “Bankruptcy Code”), without
the necessity of commencing a foreclosure action with respect to this Deed of
Trust, making formal demand for the Rents, obtaining the appointment of a
receiver or taking any other affirmative action.

 

Section 5.3            Bankruptcy Provisions. Without limitation of the absolute nature of
the assignment of the Rents hereunder, Trustor and Beneficiary agree that (a)
this Deed of Trust shall constitute a “security agreement” for purposes of Section 552(b)
of the Bankruptcy Code, (b) the security interest created by this Deed of Trust
extends to property of Trustor that comprises the Trust Property and was
acquired before the commencement of a case in bankruptcy and to all amounts
paid as Rents and (c) such security interest shall extend to all Rents acquired
by the estate after the commencement of any case in bankruptcy.

 

Section 5.4            No Merger of Estates. So long as part of the Secured Obligations
remain unpaid and undischarged, the fee and leasehold estates to the Trust
Property shall not merge, but shall remain separate and distinct,
notwithstanding the union of such estates either in Trustor, Beneficiary, any
tenant or any third party by purchase or otherwise.

 

ARTICLE 6

SECURITY AGREEMENT

 

Section 6.1            Security Interest. This Deed of Trust constitutes a “security
agreement” on personal property within the meaning of the UCC and other
applicable law and with respect to the Personalty, Fixtures, Leases, Rents,
Deposit Accounts, Property Agreements, Tax Refunds, Proceeds, Insurance and
Condemnation Awards. To this end, Trustor grants to Beneficiary a first and
prior security interest in the Personalty, Fixtures, Leases, Rents, Deposit
Accounts, Property Agreements, Tax Refunds, Proceeds, Insurance, Condemnation
Awards and all other Trust Property which is collateral, a security interest in
which may be perfected by the filing of a financing statement, to secure the
payment of the Obligations and performance of the Secured Obligations, and
agrees that Beneficiary shall have all the rights and remedies of a secured
party under the UCC with respect to such property. Any notice of sale,
disposition or other intended action by Beneficiary with respect to the
Personalty, Fixtures, Leases, Rents, Deposit Accounts, Property Agreements, Tax
Refunds, Proceeds, Insurance and Condemnation Awards sent to Trustor at least
ten (10) days prior to any action under the UCC shall constitute reasonable
notice to Trustor. In the event of any inconsistency between the terms of this
Deed of Trust and the terms of the Security Agreement with respect to the
collateral covered both therein and herein, the Security Agreement shall
control and govern to the extent of any such inconsistency.

 

Section 6.2            Financing Statements. Trustor shall prepare and deliver to
Beneficiary such financing statements, and shall execute and deliver to
Beneficiary such documents, instruments and further assurances, in each case in
form and substance satisfactory to Beneficiary, as Beneficiary may, from time
to time, reasonably consider necessary to create, perfect and preserve
Beneficiary’s security interest hereunder. Trustor hereby irrevocably
authorizes Beneficiary to cause financing statements (and amendments thereto
and continuations thereof) and any such documents, instruments and assurances
to be recorded and filed, at such times and places as may be required or
permitted by law to so create, perfect and preserve Beneficiary’s security
interest in the Trust Property hereunder. Trustor represents and warrants to
Beneficiary that Trustor’s jurisdiction of organization is the State of
Delaware. After the date of this Deed of Trust, Trustor shall not change its
name, type of organization, organizational identification number (if any),
jurisdiction of organization or location (within the meaning of the UCC)
without complying in full with the terms of the Loan Documents with respect to
any such changes. Any sale of

 

8

 

any
personal property hereunder shall be conducted in any manner permitted by Section 9601
of Division 9 of the UCC or any other applicable section of the UCC.

 

Section 6.3            Fixture Filing. This Deed of Trust shall also constitute a “fixture
filing” for the purposes of the UCC against all of the Trust Property which is
or is to become fixtures. The information provided in this Section 6.3
is provided so that this Deed of Trust shall comply with the requirements of
the UCC for a deed of trust instrument to be filed as a financing statement.
Trustor is the “Debtor” and its name and mailing address are set forth in the
preamble of this Deed of Trust immediately preceding Article 1.
Beneficiary is the “Secured Party” and its name and mailing address from which
information concerning the security interest granted herein may be obtained are
also set forth in the preamble of this Deed of Trust immediately preceding Article 1.
A statement describing the portion of the Trust Property comprising the
fixtures hereby secured is set forth in Section 1.1(i) of this Deed
of Trust. Trustor represents and warrants to Beneficiary that Trustor is the
record owner of the Trust Property, the employer identification number of
Trustor is 95-1976532 and the organizational identification number of Trustor
is 0042563.

 

ARTICLE 7

MISCELLANEOUS

 

Section 7.1            Notices. Any notice required or permitted to be given
under this Deed of Trust shall be given in accordance with Section 10.02
of the Credit Agreement, the provisions of which are incorporated herein by
this reference, except that notices required by applicable law shall be given
solely in the manner specified by such law.

 

Section 7.2            Covenants Running with the
Land.
All obligations contained in
this Deed of Trust are intended by Trustor and Beneficiary to be, and shall be
construed as, covenants running with the Trust Property. As used herein, “Trustor”
shall refer to the party named in the first paragraph of this Deed of Trust and
to any subsequent owner of all or any portion of the Trust Property. All
Persons who may have or acquire an interest in the Trust Property shall be
deemed to have notice of, and be bound by, the terms of the Credit Agreement
and the other Loan Documents; provided,
however, that no such party shall be entitled to any rights thereunder
without the prior written consent of Beneficiary.

 

Section 7.3            Attorney-in-Fact. Trustor hereby irrevocably appoints
Beneficiary as its attorney-in-fact, which agency is coupled with an interest
and with full power of substitution, with full authority in the place and stead
of Trustor and in the name of Trustor or otherwise (a) to execute and/or record
any notices of completion, cessation of labor or any other notices that
Beneficiary deems necessary and appropriate to protect Beneficiary’s interest,
if Trustor shall fail to do so promptly after written request by Beneficiary,
(b) upon the issuance of a deed pursuant to the foreclosure of this Deed of
Trust or the delivery of a deed in lieu of foreclosure, to execute all
instruments of assignment, conveyance or further assurance with respect to the
Leases, Rents, Deposit Accounts, Property Agreements, Tax Refunds, Proceeds,
Insurance and Condemnation Awards in favor of the grantee of any such deed and
as may be necessary or desirable for such purpose, (c) to prepare and file or
record financing statements and continuation statements, and to prepare,
execute and file or record applications for registration and like papers
necessary to create, perfect or preserve Beneficiary’s security interests and
rights in or to any of the Trust Property, and (d) after the occurrence and
during the continuance of any Event of Default, to perform any obligation of
Trustor hereunder; provided, however, that
(1) Beneficiary shall not under any circumstances be obligated to perform any
obligation of Trustor; (2) any sums advanced by Beneficiary in such performance
shall be added to and included in the Obligations and shall bear interest at
the highest rate at which interest is then computed on any portion of the
Obligations; (3) Beneficiary as such attorney-in-fact shall only be accountable
for such funds as are actually received by Beneficiary; and (4) Beneficiary
shall not be liable to Trustor or any other person or entity for any failure to
take any action which it is empowered to take under this Section 7.3.

 

9

 

Section 7.4            Successors and Assigns. This Deed of Trust shall be binding upon and
inure to the benefit of Beneficiary, the other Secured Parties and Trustor and
their respective successors and assigns. Trustor shall not, without the prior
written consent of Beneficiary, assign any rights, duties or obligations
hereunder.

 

Section 7.5            No Waiver. Any
failure by Beneficiary or the other Secured Parties to insist upon strict
performance of any of the terms, provisions or conditions of this Deed of Trust
shall not be deemed to be a waiver of same, and Beneficiary and the other
Secured Parties shall have the right at any time to insist upon strict
performance of all of such terms, provisions and conditions.

 

Section 7.6            Credit Agreement. If any conflict or inconsistency exists
between this Deed of Trust and the Credit Agreement, the Credit Agreement shall
govern.

 

Section 7.7            Release or Reconveyance. Upon payment in full of the Obligations and
performance in full of the Secured Obligations or upon a sale or other
disposition of the Trust Property permitted by the Credit Agreement,
Beneficiary, at Trustor’s request and expense, shall promptly release the liens
and security interests created by this Deed of Trust or reconvey the Trust
Property to Trustor.

 

Section 7.8            Waiver of Stay, Moratorium and Similar Rights. Trustor agrees, to the full extent that it
may lawfully do so, that it will not at any time insist upon or plead or in any
way take advantage of any stay, marshalling of assets, extension, redemption or
moratorium law now or hereafter in force and effect so as to prevent or hinder
the enforcement (consistent with the terms of the Credit Agreement) of the
provisions of this Deed of Trust or the Secured Obligations, or any rights or
remedies provided hereunder in favor of Beneficiary or any other Secured Party.

 

Section 7.9            Applicable Law. This Deed of Trust shall be governed by, and
construed in accordance with, the laws of the State of New York (including,
without limitation, Section 5-1401 of the General Obligations Law of the
State of New York, but excluding its conflicts of law rules), except that the
provisions of this Deed of Trust regarding the creation, perfection and
enforcement of the liens and security interests herein granted shall be
governed by and construed under the laws of the state in which the Trust
Property is located.

 

Section 7.10         Headings. The
Article, Section and Subsection titles 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 7.11         Severability. If any provision of this Deed of Trust shall
be held by any court of competent jurisdiction to be unlawful, void or
unenforceable for any reason, such provision shall be deemed severable from and
shall in no way affect the enforceability and validity of the remaining
provisions of this Deed of Trust.

 

Section 7.12         Entire Agreement. This Deed of Trust and the other Loan
Documents embody the entire agreement and understanding between Beneficiary and
Trustor relating to the subject matter hereof and thereof and supersede all
prior agreements and understandings between such parties relating to the
subject matter hereof and thereof. Accordingly, the Loan Documents may not be
contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties. There are no unwritten oral agreements between the
parties.

 

Section 7.13         Beneficiary as Agent;
Successor Agents.

 

(a)   Agent has been appointed to act as Agent
hereunder by the other Secured Parties. Agent shall have the right hereunder to
make demands, to give notices, to exercise or refrain from

 

10

 

exercising
any rights, and to take or refrain from taking any action (including, without
limitation, the release or substitution of the Trust Property) in accordance
with the terms of the Credit Agreement, any related agency agreement among
Agent and the other Secured Parties (collectively, as amended, amended and
restated, supplemented or otherwise modified or replaced from time to time, the
“Agency Documents”) and this Deed of Trust. Trustor and
all other Persons shall be entitled to rely on releases, waivers, consents,
approvals, notifications and other acts of Agent, without inquiry into the
existence of required consents or approvals of the Secured Parties therefor.

 

(b)   Beneficiary shall at all times be the same
Person that is Agent under the Agency Documents. Written notice of resignation
by Agent pursuant to the Agency Documents shall also constitute notice of
resignation as Agent under this Deed of Trust. Removal of Agent pursuant to any
provision of the Agency Documents shall also constitute removal as Agent under
this Deed of Trust. Appointment of a successor Agent pursuant to the Agency
Documents shall also constitute appointment of a successor Agent under this
Deed of Trust. Upon the acceptance of any appointment as Agent by a successor
Agent under the Agency Documents, that successor Agent shall thereupon succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring or removed Agent as the Beneficiary under this Deed of Trust, and the
retiring or removed Agent shall promptly (i) assign and transfer to such
successor Agent all of its right, title and interest in and to this Deed of
Trust and the Trust Property, and (ii) execute and deliver to such successor
Agent such assignments and amendments and take such other actions, as may be
necessary or appropriate in connection with the assignment to such successor
Agent of the liens and security interests created hereunder, whereupon such
retiring or removed Agent shall be discharged from its duties and obligations
under this Deed of Trust. After any retiring or removed Agent’s resignation or
removal hereunder as Agent, the provisions of this Deed of Trust and the Agency
Documents shall inure to its benefit as to any actions taken or omitted to be
taken by it under this Deed of Trust while it was Agent hereunder.

 

ARTICLE 8

LOCAL LAW PROVISIONS

 

Section 8.1            Inspection. Without
limiting the generality of the foregoing, Trustor agrees that the Secured
Parties will have the same right, power and authority to enter and inspect the
Premises as is granted to a secured lender under California Civil Code § 2929.5,
and that Beneficiary will have the right to appoint a receiver to enter and
inspect the Premises at reasonable times and after reasonable notice to the
extent such authority is provided under applicable law, including the authority
given to the Beneficiary under C.C.P. § 564(c).

 

Section 8.2            Environmental Provisions. Without limiting any other rights or remedies
of the Beneficiary or any other Secured Party, Trustor acknowledges and agrees
that the provisions of the Credit Agreement and the other Loan Documents
relating to environmental matters, including without limitation, Sections 5.09
and 10.03 of the Credit Agreement, are “environmental provisions,” as that term
is defined in C.C.P. § 736(f)(2), made by Trustor relating to the real
property security. Trustor, the Beneficiary and the other Secured Parties
intend for the foregoing sections to serve as the Beneficiary’s and the other
Secured Parties’ written demand and Trustor’s response concerning the
environmental condition of the Premises as required by C.C.P. § 726.5. To
the extent that any of Trustor’s obligations hereunder are not made valid and
enforceable under C.C.P. § 736(a), such obligations shall, to the fullest
extent not prohibited by law, be enforceable under the laws of the State of
California other than C.C.P. § 736, as provided in C.C.P. § 736(d).

 

Section 8.3            Remedies.

 

(a)   Where the Trust Property consists of real
property and personal property, any reinstatement of the obligation secured
hereby, following default and an election by the Beneficiary to

 

11

 

accelerate
the maturity of said obligation, which is made by Trustor or any other person
or entity permitted to exercise the right of reinstatement under Section 2924c
of the California Civil Code or any successor statute, shall, in accordance
with the terms of Section 9604(a)(3)(C) of the UCC, not prohibit the
Beneficiary from conducting a sale or other disposition of any personal
property or fixtures or from otherwise proceeding against or continuing to
proceed against any personal property or fixtures in any manner permitted by
the UCC; nor shall any such reinstatement invalidate, rescind or otherwise
affect any sale, disposition or other proceeding held, conducted or instituted
with respect to any personal property or fixtures prior to such reinstatement
or pending at the time of such reinstatement. Any sums paid to Beneficiary in
effecting any reinstatement pursuant to Section 2924c of the California
Civil Code shall be applied to the Secured Obligations and to the Beneficiary’s
and Trustee’s reasonable costs and expenses in the manner required by Section 2924c.

 

(b)   Should the Beneficiary elect to sell any
portion of the Trust Property which is real property or which is personal
property or fixtures that Beneficiary has elected under Section 9604(a)(l)(B)
of the UCC to sell together with real property in accordance with the laws
governing a sale of real property, the Beneficiary or the Trustee shall give
such notice of default and election to sell as may then be required by law.
Thereafter, upon the expiration of such time and the giving of such notice of
sale as may then be required by law, and without the necessity of any demand on
Trustor, the Trustee, at the time and place specified in the notice of sale,
shall sell said real property or part thereof at public auction to the highest
bidder for cash in lawful money of the United States. The Trustee may, and upon
request of the Beneficiary shall, from time to time, postpone any sale
hereunder by public announcement thereof at the time and place noticed
therefor.

 

(c)   If the Trust Property consists of several
lots, parcels or items of Trust Property, the Beneficiary may: (i) designate
the order in which such lots, parcels or items shall be offered for sale or
sold, or (ii) elect to sell such lots, parcels or items through a single sale,
or through two or more successive sales, or in any other manner the Beneficiary
deems in its best interest. Should the Beneficiary desire that more than one
sale or other disposition of the Trust Property be conducted, the Beneficiary
may, at its option, cause the same to be conducted simultaneously, or
successively, on the same day, or at such different days or times and in such
order as the Beneficiary may deem to be in its best interests, and no such sale
shall terminate or otherwise affect the lien of this Deed of Trust on any part
of the Trust Property not sold until all Secured Obligations have been fully
paid and the other conditions set forth in the Credit Agreement for release of
liens have been satisfied. In the event the Beneficiary elects to dispose of
the Trust Property through more than one sale, Trustor agrees to pay the costs
and expenses of each such sale and of any judicial proceedings wherein the same
may be made, including reasonable compensation to the Trustee and the
Beneficiary, their agents and counsel, and to pay all expenses, liabilities and
advances made or incurred by the Trustee or Beneficiary in connection with such
sale or sales, together with interest on all such advances made by the Trustee
or Beneficiary at the lower of the Default Rate and the maximum rate permitted by
law to be charged by the Trustee or Beneficiary.

 

Section 8.4            Additional Provisions.

 

(a)   Notwithstanding anything to the contrary
contained herein, the Beneficiary’s rights and remedies under California Code
of Civil Procedure Section 736 shall not be waived, limited or otherwise
adversely affected by virtue of a full or partial credit bid upon foreclosure
of this Deed of Trust.

 

(b)   GRANTOR PLEASE NOTE: IN THE EVENT OF YOUR
DEFAULT, THIS DEED OF TRUST AND APPLICABLE LAW PERMITS THE TRUSTEE TO SELL THE TRUST
PROPERTY AT A SALE HELD WITHOUT SUPERVISION BY ANY COURT AFTER EXPIRATION OF A
PERIOD PRESCRIBED BY LAW. UNLESS YOU PROVIDE AN ADDRESS FOR THE GIVING OF
NOTICE, YOU MAY NOT BE ENTITLED TO OTHER NOTICE OF THE COMMENCEMENT OF SALE
PROCEEDINGS. BY EXECUTION OF THIS DEED OF TRUST, YOU CONSENT TO THIS

 

12

 

PROCEDURE.
IF YOU HAVE ANY QUESTIONS CONCERNING IT, YOU SHOULD CONSULT YOUR LEGAL ADVISOR.
BENEFICIARY AND TRUSTEE URGE YOU TO GIVE BENEFICIARY PROMPT NOTICE OF ANY
CHANGE IN YOUR ADDRESS SO THAT YOU MAY RECEIVE ANY NOTICE OF DEFAULT AND NOTICE
OF SALE GIVEN PURSUANT TO THIS DEED OF TRUST.

 

(c)   Without limitation of the foregoing, Trustor
hereby specifically, unconditionally and irrevocably waives all rights of a
property owner granted under California Code of Civil Procedure Section 1265.225(a),
which provides for allocation of condemnation proceeds between a property owner
and a lienholder, and any other law or successor statute of similar import.

 

Section 8.5            Waivers.

 

(a)   Trustor,
in addition to, and without limitation of any other waivers contained in this
Deed of Trust, unconditionally waives any defense to the enforcement of this
Deed of Trust, including:

 

i.                      All presentments, demands for performance, notices
of nonperformance, protests, notices of protest and notices of dishonor with
respect to the Secured Obligations, and notices of acceptance of this Deed of
Trust;

 

ii.                     Any right to require the Beneficiary to
proceed against Borrower or any guarantor at any time or to proceed against or
exhaust any security held by the Beneficiary at any time or to pursue any other
remedy whatsoever at any time;

 

iii.                    The defense of any statute of limitations
affecting the liability of Trustor hereunder, the liability of any of the
Borrower or any guarantor under the Loan Documents, or the enforcement hereof,
to the extent permitted by law;

 

iv.                    Any defense arising by reason of any
invalidity or unenforceability of (or any limitation of liability in) any of
the Loan Documents or any disability of Trustor or any guarantor or of any
manner in which Beneficiary has exercised its rights and remedies under the
Loan Documents, or by any cessation from any cause whatsoever of the liability
of Trustor or the Borrower or any guarantor;

 

v.                     Without limitation on clause iv above, any
defense based upon any lack of authority of the officers, directors, partners
or agents acting or purporting to act on behalf of Trustor or the Borrower or
any principal of Trustor or the Borrower or any defect in the formation of
Trustor or the Borrower or any principal of Trustor or the Borrower;

 

vi.                    Any defense based upon the application by
Trustor or the Borrower of the proceeds of the Loans for purposes other than
the purposes represented by Trustor or the Borrower to the Beneficiary or
intended or understood by the Beneficiary or Trustor;

 

vii.                   Any defense based upon an election of
remedies by the Beneficiary, including any election to proceed by judicial or
nonjudicial foreclosure of any security, whether real property or personal
property security, or by deed in lieu thereof, and whether or not every aspect
of any foreclosure sale is commercially reasonable, or any election of
remedies, including remedies relating to real property or personal property
security, which destroys or otherwise impairs the subrogation rights of Trustor
or the rights of Trustor to proceed against any of the Borrower or any
guarantor for reimbursement, or both (including, without limitation, California
Code of Civil Procedure Sections 580a, 580b, 580d and 726);

 

viii.                  Any defense based upon 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 a principal;

 

13

 

ix.                    Any defense based upon the Beneficiary’s
election, in any proceeding instituted under the Federal Bankruptcy Code, of
the application of Section 1111(b)(2) of the Federal Bankruptcy Code or
any successor statute;

 

x.                     Any defense based upon any borrowing or any
grant of a security interest
under Section 364 of the Federal Bankruptcy Code;

 

xi.                    Any duty of the Beneficiary to advise Trustor
of any information known to the Beneficiary regarding the financial condition
of the Borrower and all other circumstances affecting the Borrower’s ability to
perform its obligations to the Beneficiary, it being agreed that Trustor
assumes the responsibility for being and keeping informed regarding such
condition or any such circumstances;

 

xii.                   Any right of subrogation, reimbursement,
exoneration, contribution or indemnity, or any right to enforce any remedy
which the Beneficiary now has or may hereafter
have against the Borrower or any benefit of, or any right to participate in, any
security now or hereafter held by the Beneficiary; and

 

xiii.                  Without limiting the generality of the
foregoing or any other provision hereof, any rights and benefits which might
otherwise be available to Trustor under California Civil Code Sections 2787 to
2855, inclusive, 2899, and 3433.

 

Section 8.6            Subrogation. Trustor understands that the exercise by the
Beneficiary of certain rights and remedies may affect or eliminate Trustor’s
right of subrogation against the Borrower or any guarantor and that Trustor may
therefore incur partially or totally nonreimbursable liability hereunder.
Nevertheless, Trustor hereby authorizes and empowers Beneficiary, its
successors, endorsees and assigns, to exercise in its or their sole discretion,
any rights and remedies, or any combination thereof, which may then be
available, it being the purpose and intent of Trustor that the obligations
hereunder shall be absolute, continuing, independent and unconditional under
any and all circumstances. Notwithstanding any other provision of this Deed of
Trust to the contrary, Trustor hereby subordinates to the repayment in full of
all of the Borrower’s and each other obligor’s obligations under the Loan
Documents any claim or other rights which Trustor may now have or hereafter
acquire against the Borrower or any guarantor of all or any of the obligations
of the Borrower hereunder that arise from the existence or performance of such
of the Borrower’s obligations under any of the Loan Documents, including any
right of subrogation, reimbursement, exoneration, contribution or
indemnification, any right to participate in any claim or remedy of the
Beneficiary against the Borrower or any Collateral which the Beneficiary now
has or hereafter acquires, whether or not such claim, remedy or right arises in
equity or under contract, statute or common law, by any payment made hereunder
or otherwise, including, without limitation, the right to take or receive from
the Borrower, directly or indirectly, in cash or other property or by setoff or
in any other manner, payment or security on account of such claim or other
rights. Trustor understands that: (i) Section 580d of the California Code
of Civil Procedure generally prohibits a deficiency judgment against a borrower
after a non-judicial foreclosure; (ii) Trustor’s subrogation rights may be
destroyed by a non-judicial foreclosure under the Deed of Trust (because
Trustor may not be able to pursue the Borrower for a deficiency judgment by
reason of the application of Section 580d of the California Code of Civil
Procedure); and (iii) under Union Bank v. Gradsky, 265 Cal. App. 2nd 40
(1968), a lender may be stopped from pursuing a guarantor for a deficiency
judgment after a non-judicial foreclosure (on the theory that a guarantor
should be exonerated if a lender elects a remedy that eliminates the guarantor’s
subrogation rights) absent an explicit waiver. Without limitation on the
generality of the other waivers contained in this Deed of Trust, Trustor hereby
waives (A) the defense that might otherwise be available under Gradsky, supra
(or any similar judicial decision or statute) in the event the Beneficiary
pursues a non-judicial foreclosure, and (B) all rights and defenses arising out
of an election of remedies by the creditor, even though that election of
remedies, such as a nonjudicial foreclosure with respect to

 

14

 

security
for a guaranteed obligation, has destroyed the guarantor’s rights of
subrogation and reimbursement against the principal by the operation of Section 580d
of the Code of Civil Procedure or otherwise. In addition, Trustor waives all
rights and defenses that Trustor may have because the debtor’s debt is secured
by real property. This means, among other things that the creditor may collect
from the guarantor without first foreclosing on any real or personal property
collateral pledged by the debtor, and if the creditor forecloses on any real
property collateral pledged by the debtor: (i) the amount of the debt may be
reduced only by the price for which the collateral is sold at the foreclosure
sale, even if the collateral is worth more than the sale price; and (ii) the
creditor may collect from the guarantor even if the creditor, by foreclosing on
the real property collateral, has destroyed any right the guarantor may have to
collect from the debtor. This is an unconditional and irrevocable waiver of any
rights and defenses the guarantor may have because the debtor’s debt is secured
by real property. These rights and defenses include, but are not limited to,
any rights or defenses based upon Section 580a, 580b, 580d or 726 of the
Code of Civil Procedure.

 

Section 8.7            Independent Obligations. The obligations of Trustor hereunder are
independent of the obligations of the Borrower and, in the event of any default
hereunder, a separate action or actions may be brought and prosecuted against
Trustor to foreclose this Deed of Trust whether or not Trustor is the alter ego
of the Borrower and whether or not the Borrower is joined therein or a separate
action or actions are brought against the Borrower. The Beneficiary’s rights
hereunder shall not be exhausted until all of the Secured Obligations have been
fully paid and performed.

 

Section 8.8            Subordination. Without limitation on the waiver and release
contained above: (i) Trustor subordinates all present and future indebtedness
owing by the Borrower to Trustor to the obligations at any time owing by the
Borrower to the Beneficiary under the Credit Agreement and the other Loan
Documents; (ii) Trustor assigns all such indebtedness to the Beneficiary as
security for the Secured Obligations, and (iii) Trustor agrees to make no claim
on such indebtedness until all obligations of Borrower under the Credit
Agreement and the other Loan Documents have been fully discharged. Trustor
further agrees not to assign all or any part of such indebtedness unless the
Beneficiary is given prior notice and such assignment is expressly made subject
to the terms of this Deed of Trust. If the Beneficiary so requests, (i) all instruments
evidencing such indebtedness shall be duly endorsed and delivered to the
Beneficiary, (ii) all security for such indebtedness shall be duly assigned and
delivered to the Beneficiary, (iii) such indebtedness shall be enforced,
collected and held by Trustor as trustee for the Beneficiary and shall be paid
over to the Beneficiary on account of the Secured Obligations but without
reducing or affecting in any manner the liability of Trustor under the other
provisions of this Deed of Trust, and (iv) Trustor shall execute, file and
record such documents and instruments and take such other action as the
Beneficiary deems necessary or appropriate to perfect, preserve and enforce the
Beneficiary’s rights in and to such indebtedness and any security therefor. If
Trustor fails to take any such action, the Beneficiary, as attorney-in-fact for
Trustor, is hereby authorized to do so in the name of Trustor. The foregoing
power of attorney is coupled with an interest and cannot be revoked.

 

Section 8.9            Other Collateral. Trustor acknowledges that this Deed of Trust
is one of a number of mortgages, deeds of trust and other security documents (“Other Security Instruments”) that secure
the Secured Obligations and the obligations of the Borrower and other obligors
under the Loan Documents (the “Other
Obligations”). Trustor agrees that the lien of
this Deed of Trust shall be absolute and unconditional and shall not in any
manner be affected or impaired by any acts or omissions whatsoever of the
Beneficiary, and without limiting the generality of the foregoing, the lien
hereof shall not be impaired by any acceptance by the Beneficiary of any
security for or guarantees of the Secured Obligations and/or the Other
Obligations, or by any failure, neglect or omission on the part of the
Beneficiary to realize upon or protect any Obligation or Other Obligation or
any collateral security therefor including the Other Security Instruments. The
lien hereof shall not in any manner be impaired or affected by any release
(except as to the Premises released), sale, pledge, surrender, compromise,
settlement, renewal, extension, indulgence, alteration, changing, modification
or disposition of any of the

 

15

 

Secured
Obligations or Other Obligations or of any of the collateral security therefor,
including the Other Security Instruments or of any guarantee thereof, and, to
the fullest extent permitted by applicable law, the Beneficiary may at its
discretion foreclose, exercise any power of sale, or exercise any other remedy
available to it under any or all of the Other Security Instruments without
first exercising or enforcing any of its rights and remedies hereunder. Such
exercise of Beneficiary’s rights and remedies under any or all of the Other Security
Instruments shall not in any manner impair the indebtedness hereby secured or
the lien of this Deed of Trust and any exercise of the rights or remedies of
the Beneficiary hereunder shall not impair the lien of any of the Other
Security Instruments or any of the Trustee’s or Beneficiary’s rights and
remedies thereunder. To the fullest extent permitted by applicable law, Trustor
specifically consents and agrees the Beneficiary may exercise its rights and
remedies hereunder and under the Other Security Instruments separately or
concurrently and in any order that it may deem appropriate and waives any
rights of subrogation.

 

Section 8.10         Trustee. The Trustee accepts appointment hereunder
when this Deed of Trust, duly executed and acknowledged, is made a public
record. The Beneficiary may remove the Trustee at any time or from time to time
and appoint a successor trustee, and upon such appointment, all powers, duties,
rights and authority of Trustee shall thereupon become vested in such
successor. Such substitute trustee shall be appointed in any manner permitted
or authorized by applicable law, including without limitation by written
instrument duly recorded in the county or counties where the real property
encumbered hereby is located, which appointment may be executed by any
authorized agent of the Beneficiary or in any other manner permitted by
applicable law. The Trustee shall be entitled to receive, and Trustor shall
pay, reasonable and customary compensation to the Trustee for its services
rendered hereunder after any Event of Default and reimbursement to the Trustee
for its expenses (including attorneys’ fees and expenses) in connection
herewith or the exercise of any right, power or remedy hereunder

 

[The remainder of this page has been intentionally left blank]

 

16

 

IN WITNESS WHEREOF, Trustor has on the date set forth in the
acknowledgement hereto, effective as of the date first above written, caused
this instrument to be duly EXECUTED AND DELIVERED by authority duly given.

 

	
   

  	
  TRUSTOR:

  	
  WARNER BROS. RECORDS, INC.,

  
	
   

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Paul Robinson

  	
   

  
	
   

  	
   

  	
  Name: Paul Robinson

  
	
   

  	
   

  	
  Title: Vice President

  

 

 

ACKNOWLEDGMENT

 

	
  State of New York

  	
  )

  
	
   

  	
  )

  
	
  County of New York

  	
  )

  

 

On February 26,
2004, before me, the undersigned, a notary public in and for said State,
personally appeared Paul Robinson personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed
the same in his/her respective authorized capacity, and that by his/her
signatures on the instrument, the person or the entity upon behalf of which the
person acted, executed the instrument.

 

	
  WITNESS my hand and official seal.

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
  /s/ Carroll E. Smith

  	
  (seal)

  
	
   

  	
   

  	
   

  
	
  Capacity of signatory:

  	
   

  
	
  CARROLL
  E. SMITH

  	
   

  	
   

  
	
  NOTARY PUBLIC, State of
  New York

  	
   

  	
   

  
	
  No. 01SM6079992

  	
   

  	
   

  
	
  Qualified in New York
  County

  	
   

  	
   

  
	
  Commission Expires September 3,
  2006

  	
   

  	
   

  
					

 

 

EXHIBIT A

 

LEGAL DESCRIPTION

 

THE
LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF LOS
ANGELES, DESCRIBED AS FOLLOWS:

 

PARCEL 1:

 

LOTS 38 AND 39 OF TRACT NO.
7553, IN THE CITY OF BURBANK, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS
SHOWN

 

ON MAP RECORDED IN BOOK 99
PAGES 16 AND 17 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

 

PARCEL 2:

 

A NON-EXCLUSIVE EASEMENT FOR
VEHICULAR INGRESS AND EGRESS AS SET FORTH IN THAT CERTAIN DECLARATION OF
COVENANTS, CONDITIONS RESTRICTIONS AND EASEMENTS DATED AUGUST 1, 1989
EXECUTED BY 3300 RIVERSIDE DRIVE CORPORATION, A DELAWARE CORPORATION, AS MORE
PARTICULARLY DESCRIBED THEREIN AND RECORDED AUGUST 7, 1989, AS INSTRUMENT
NO. 89-1263386, OFFICIAL RECORDS.

 

END
OF LEGAL DESCRIPTION

 

 

EXHIBIT B

PERMITTED ENCUMBRANCES

 

Those exceptions set forth in Schedule B of that certain policy of
title insurance issued to Beneficiary by Stewart Title of California, Inc. on
or about the date hereof pursuant to order number 040207595 dated 12/17/03
(Reference: 03151269).

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