DEED OF TRUST with Assignment of Rents, Security Agreement and Fixture Filing
Lease Assignment Agreement
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DEED OF TRUST with Assignment of Rents, Security Agreement and Fixture Filing
Lease Assignment Agreement
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DEED OF TRUST
with Assignment of Rents, Security Agreement and
NOTICE: THE OBLIGATIONS SECURED HEREBY PROVIDE FOR THE PERIODIC INCREASES AND/OR DECREASES IN THE APPLICABLE INTEREST RATE.
NOTICE: THE OBLIGATIONS SECURED HEREBY INCLUDE REVOLVING CREDIT OBLIGATIONS WHICH PERMIT BORROWING, REPAYMENT AND REBORROWING.
NOTICE: THIS DEED OF TRUST SECURES FUTURE ADVANCES. THE MAXIMUM AMOUNT OF PRINCIPAL SECURED IS $190 MILLION.
The parties to this Deed of Trust with Assignment of Rents, Security Agreement and Fixture Filing (“Deed of Trust”), dated as of June 10, 2004, are E-T-T ENTERPRISES L.L.C., a Nevada limited liability company (“Trustor”), as trustor, PRLAP, INC., as trustee (“Trustee”), and BANK OF AMERICA, N.A., a national banking association, as “Administrative Agent” for the “Lenders” including, without limitation, “the Swing Line Lender” (as each of those three terms is defined in the Credit Agreement), as beneficiary and secured party (“Beneficiary”). Capitalized terms used and not otherwise defined herein shall have the meanings given to them in that certain Credit Agreement, dated as of June 10, 2004 (“Credit Agreement”) by and among Herbst Gaming, Inc., a Nevada corporation (“Borrower”), each lender whose name is set forth on the signature pages therein and each lender that may hereafter become a party to the Credit Agreement pursuant to Section 10.6 therein (each a “Lender” and collectively, the “Lenders”), Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Banc of America Securities LLC, as a Co-Lead Arranger and Sole Book Manager, U.S. Bank, National Association, as a Co-Lead Arranger, Wells Fargo Bank, National Association, as Syndication Agent and Lehman Brothers Holdings, Inc., as Documentation Agent.
1. Grant in Trust and Secured Obligations .
1.1 Grant in Trust . For the purpose of securing payment and performance of the Secured Obligations defined and described in Section 1.2 , Trustor hereby irrevocably and unconditionally grants, bargains, conveys, sells, transfers and assigns to Trustee, in trust for the benefit of Beneficiary, with power of sale and right of entry and possession, all estate, right, title and interest which Trustor now has or may later acquire in and to the following property (all or any part of such property, or any interest in all or any part of it, as the context may require, the “Property”):
(a) The real property located in the County of Nye (the “County”), State of Nevada, as described in Exhibit A , together with all existing and future easements and rights affording access to it (the “Land”); together with
(b) All buildings, structures and improvements now located or later to be constructed on the Land, including, without limitation, all parking areas, roads, driveways, walks, fences, walls, docks, berms, landscaping, recreation facilities, drainage facilities, lighting facilities and other site improvements (the “Improvements”); together with
(c) All existing and future appurtenances, privileges, easements, franchises, hereditaments and tenements of the Land, including all minerals, oil, gas, other hydrocarbons and associated substances, sulphur, nitrogen, carbon dioxide, helium and other commercially valuable substances which may be in, under or produced from any part of the Land, all development rights and credits, air rights, water, water courses, water rights (whether riparian, appropriative or otherwise, and whether or not appurtenant), water stock and water permits (together with the statutory right to file applications to change, and any and all applications to change the same), including any water permits, easements, rights of way, rights of ingress and egress, drainage rights, gores or strips of land, any land lying in the streets, highways, ways, sidewalks, alleys, passages, roads or avenues, open or proposed, in front of or adjoining the Land and Improvements, any land in the bed of any body of water adjacent to the Land, any land adjoining the Land created by artificial means or by accretion, all air space and rights to use such air space, and all development and similar rights; together with
(d) Subject to Article 2 , below, all existing and future leases, subleases, subtenancies, licenses (except for gaming licenses and liquor licenses that are not transferable), occupancy agreements, concessions and any other agreement devising any portion of the Property or relating to the use and enjoyment of all or any part of the Land and Improvements, and any and all guaranties and other agreements relating to or made in connection with any of the foregoing, whether written or oral and whether in existence at or upon the recordation of this Deed of Trust or entered into after the recordation of this Deed of Trust (some or all collectively, as the context may require, “Leases”, which shall not include the Operating Lease), and all rents, security deposits, royalties, issues, profits, receipts, earnings, revenue, income, products and proceeds and other benefits of the Land and Improvements, whether now due, past due or to become due, including, without limitation, all prepaid rents, security deposits, fixed, additional
and contingent rents, deficiency rents and liquidated damages, license fees, occupancy charges, hotel room charges, cabana charges, casino revenues, show ticket revenues, food and beverage revenues, room service revenues, merchandise sales revenues, parking, maintenance, common area, tax, insurance, utility and service charges and contributions, proceeds of sale of electricity, gas, heating, air-conditioning, cable and other utilities and services, green fees, cart rental fees, instruction fees, membership charges, restaurant, snack bar and pro shop revenues, liquidated damages, and all other rights to payments, together with and any and all guaranties and other agreements relating to or made in connection with any of such leases (some or all collectively, as the context may require, “Rents”); together with
(e) All goods, materials, supplies, chattels, furniture, fixtures, equipment, machinery and other property now or later to be attached to, placed in or on, or used in connection with the use, enjoyment, occupancy or operation of all or any part of the Land and Improvements, whether stored on the Land or elsewhere, including all pumping plants, engines, pipes, ditches and flumes, and also all gas, electric, cooking, heating, cooling, air conditioning, lighting, refrigeration and plumbing fixtures and equipment, all water, sanitary and storm sewer, drainage, electricity, steam, gas, telephone, cable and other utility equipment and facilities, all plumbing, lighting, heating, ventilating, air conditioning, refrigerating, incinerating, compacting, fire protection and sprinkler, surveillance and security, vacuum cleaning, public address and communications equipment and systems, all kitchen and laundry appliances, screens, awnings, floor coverings, partitions, elevators, escalators, motors, machinery, pipes, fittings and other items of equipment and property of every kind and description, all of which shall be considered to the fullest extent of the law to be real property for purposes of this Deed of Trust; together with
(f) All building materials, equipment, work in process or other personal property of any kind, whether stored on the Land or elsewhere, which have been or later will be acquired for the purpose of being delivered to, incorporated into or installed in or about the Land or Improvements; together with
(g) All rights to the payment of money, accounts, accounts receivable, reserves, deferred payments, refunds, cost savings, payments and deposits, room revenues, food revenues, beverage revenues and casino revenues, whether now or later to be received from third parties (including all earnest money sales deposits) or deposited by Trustor with third parties (including all utility deposits), contract rights, development and use rights, governmental permits and licenses (except for gaming licenses and liquor licenses that are not transferable), authorizations, certificates, variances, consents and approvals, applications, architectural and engineering plans, specifications and drawings, as-built drawings, guaranties, warranties, management agreements, operating and/or licensing agreements, supply and service contracts for water, sanitary and storm sewer, drainage, electricity, steam, gas, telephone, cable, satellite, and other utilities, property and title insurance policies and proceeds thereof (including without limitation the right to assert, prosecute and settle claims under such policies), chattel paper, instruments, documents, notes, certificates of deposit, securities, other investments, drafts and letters of credit (other than letters of credit in favor of Beneficiary), which arise from or relate to
construction on the Land or to any business now or later to be conducted on it, or to the Land and Improvements generally; together with
(h) All proceeds, including all rights and claims to, dividends of and demands for them, of the voluntary or involuntary conversion of any of the Land, Improvements or the other property described above into cash or liquidated claims, including proceeds of all present and future fire, hazard or casualty insurance policies (whether or not any such insurance policy is required by this Deed of Trust or any other Loan Document) and all condemnation awards or payments now or later to be made by any public body or decree by any court of competent jurisdiction for any taking or in connection with any condemnation or eminent domain proceeding, and all causes of action and their proceeds for any damage or injury to the Land, Improvements or the other property described above or any part of them, or breach of warranty in connection with the construction of the Improvements, including causes of action arising in tort, contract, fraud or concealment of a material fact; together with
(i) All books and records pertaining to any and all of the property described above, including computer readable memory and any computer hardware or software necessary to access and process such memory (“Books and Records”); together with
(j) All proceeds of, additions and accretions to, substitutions and replacements for, changes in, and greater right, title and interest in, to and under or derived from, any of the property described above and all extensions, improvements, betterments, renewals, substitutions and replacements thereof and additions and appurtenances thereto, including all proceeds of any voluntary or involuntary disposition or claim, right and remedy respecting any such property (arising out of any judgment, condemnation or award, or otherwise arising) and all goods, documents, general intangibles, chattel paper and accounts, wherever located, acquired with cash proceeds of any of the foregoing or its proceeds.
Notwithstanding the foregoing, the term “Property,” as used in this Deed of Trust, shall not include (i) any personal property or fixtures, the purchase of which was financed by a purchase money security interest, including any capital lease obligation, permitted under the Credit Agreement to the extent that the documents creating such purchase money security interest or capital lease prohibit the granting thereon, but only for so long as the related indebtedness remains outstanding, (ii) any capital stock or other equity interests in any gaming licenses, and (iii) any gaming licenses and liquor licenses which are not transferable.
Trustor shall and will warrant and forever defend the Property in the quiet and peaceable possession of the Trustee, its successors and assigns against all and every person or persons lawfully claiming or to claim the whole or any part thereof. Trustor agrees that any greater title to the Property hereafter acquired by Trustor during the term hereof shall be subject hereto.
1.2 Secured Obligations .
1.2.1 Trustor makes the grant, bargain, conveyance, sale, transfer and assignment set forth in Section 1.1 and grants the security interest set forth in Article 3 for the purpose of securing the following obligations (collectively, the “Secured Obligations”) in any order of priority that Beneficiary may choose:
(a) Except as specified in Section 1.2.2 below, the payment and performance of each obligation of Trustor pursuant to that certain Guaranty (the “Guaranty”), dated concurrently herewith, executed by Trustor in favor of Beneficiary. The Guaranty has been entered into by Trustor to, among other things, guaranty the payment and performance of all obligations of Borrower and any other “Obligor” (as defined in the Guaranty) to Beneficiary under the Credit Agreement and all related Loan Documents, pursuant to which the Lenders have extended or have agreed to extend to the Borrower certain secured revolving and term credit facilities, presently in the aggregate amount of $150,000,000, but subject to increase to $190,000,000 under certain circumstances (the “Commitment”), including, but not limited to the payment of all amounts owing under the Swing Line Loan Note, the payment of all amounts owing with respect to the Letters of Credit, including without limitation unreimbursed drawings and obligations to furnish cash collateral as provided in the Credit Agreement, and the payment of all amounts owing under any and all Secured Swap Contracts entered into by the Borrower with any Lender or Affiliate thereof;
(b) The payment and performance of all future advances and other obligations that Trustor or any other person or entity may owe to Beneficiary and/or any Lender (whether as principal, surety or guarantor), when a writing evidences Trustor’s and Beneficiary’s agreement that such advances or obligations be secured by this Deed of Trust;
(c) The payment and performance of all obligations of Trustor under this Deed of Trust;
(d) The payment and performance of all modifications, amendments, extensions and renewals, however evidenced, of any of the Secured Obligations described in clause (a), (b) or (c) above.
1.2.2 Notwithstanding any provision of this Deed of Trust or any other Loan Document, the obligations and liability of Trustor, any Borrower or any other person arising under Sections 5.09 and/or 10.04 of the Credit Agreement (and/or under any separate agreement relating to Hazardous Materials which states that it is not secured by real property) are not and shall not be Secured Obligations under this Deed of Trust.
1.2.3 All persons who may have or acquire an interest in all or any part of the Property will be considered to have notice of, and will be bound by, the terms of the Secured Obligations and each other agreement or instrument made or entered into in connection with each of the Secured Obligations. Such terms include any provisions in the Credit Agreement or the other Loan Documents which permit borrowing, repayment and reborrowing,
or which provide that the interest rate on one or more of the Secured Obligations may vary from time to time.
1.3 Future Advances (NRS 106.300, et seq) . It is the intention of Trustor, Beneficiary and the Lenders that this Deed of Trust is an “instrument” (as defined in NRS 106.330, as amended or recodified from time to time) which secures “future advances” (as defined in NRS 106.320, as amended or recodified from time to time) and which is governed pursuant to NRS 106.300 through 106.400, as amended or recodified from time to time (“NRS” means Nevada Revised Statutes). It is the intention of the parties that the Secured Obligations include the obligation of Trustor to repay “future advances” of “principal” (as defined in NRS 106.345, as amended or recodified from time to time) in an amount up to the Commitment (as further described above), and that the lien of this Deed of Trust secures the obligation of Trustor to repay all such “future advances” with the priority set forth in NRS 106.370(1), as amended or recodified from time to time.
2. Assignment of Rents and Leases .
2.1 Assignment . Trustor hereby irrevocably, absolutely, presently and unconditionally assigns, transfers and sets over to Beneficiary all of the right, title and interest which Trustor now has or may later acquire in and to the Rents and the Leases, and confers upon Beneficiary the right to collect such Rents and enforce the provisions of the Leases with or without taking possession of the Property. This is an absolute assignment, not an assignment for security only.
2.2 Grant of License . Beneficiary hereby confers upon Trustor a license (“License”) to collect and retain the Rents as they become due and payable, so long as no Event of Default, as defined in Section 6.2 , shall exist and be continuing. If an Event of Default has occurred and is continuing, Beneficiary shall have the right, which it may choose to exercise in its absolute discretion, to terminate this License without notice to or demand upon Trustor, and without regard to the adequacy of Beneficiary’s security under this Deed of Trust.
2.3 Collection and Application of Rents . Subject to the License granted to Trustor under Section 2.2 , Beneficiary has the right, power and authority to collect any and all Rents and exercise Trustor’s right, title and interest under the Leases. Trustor hereby appoints Beneficiary its attorney-in-fact to perform any and all of the following acts, if and at the times when Beneficiary in its absolute discretion may so choose:
(a) Demand, receive and enforce payment of any and all Rents and any other right, title and interest of Trustor under the Leases; or
(b) Give receipts, releases and satisfactions for any and all Rents and any other obligations and duties under the Leases; or
(c) Sue either in the name of Trustor or in the name of Beneficiary for any and all Rents and to enforce any other obligations and duties under the Leases.
Beneficiary’s right to the Rents and the Leases does not depend on whether or not Beneficiary takes possession of the Property as permitted under Section 6.3.3 . In Beneficiary’s absolute
discretion, Beneficiary may choose to collect Rents and exercise the right, title and interest of Trustor under the Leases either with or without taking possession of the Property. Beneficiary shall apply all Rents collected by it in the manner provided under Section 6.6 . If an Event of Default shall have occurred and Beneficiary is in possession of all or part of the Property and is collecting and applying Rents and exercising any right, title and interest of Trustor under the Leases as permitted under this Deed of Trust, then Beneficiary, Trustee and any receiver shall nevertheless be entitled to exercise and invoke every right and remedy afforded any of them under this Deed of Trust and at law and in equity, including the right to exercise the power of sale granted under Section 1.1 and Section 6.3.7 .
2.4 Beneficiary Not Responsible . Under no circumstances shall Beneficiary have any duty to produce Rents from the Property or maintain the Leases. Regardless of whether or not Beneficiary, in person or by agent, takes actual possession of the Land and Improvements, Beneficiary is not and shall not be deemed to be:
(a) a “mortgagee in possession” for any purpose; or
(b) responsible for performing any of the obligations under any Lease; or
(c) responsible for any waste committed by lessees or any other parties, any dangerous or defective condition of the Property, or any negligence in the management, upkeep, repair or control of the Property; or
(d) liable in any manner for the Property or the use, occupancy, enjoyment or operation of all or any part of it.
Notwithstanding the foregoing, this Section 2.4 shall not be construed as a waiver of any liability of Beneficiary to Trustor that would otherwise exist as a result of Beneficiary’s gross negligence or willful misconduct.
2.5 Leasing . Without Beneficiary’s prior written consent, Trustor shall not accept any deposit or prepayment of Rents for any period exceeding one (1) month, and Trustor shall not lease the Property or any part of it except strictly in accordance with the Loan Documents. Trustor shall not apply any Rents in any manner prohibited by the Loan Documents.
3. Grant of Security Interest .
3.1 Security Agreement . The parties intend for this Deed of Trust to create a lien on and security interest in the Property, and an absolute assignment of the Rents and the Leases, all in favor of Beneficiary. The parties acknowledge that some of the Property and some of the Rents and Leases may be determined under applicable law to be personal property or fixtures. To the extent such Property, Rents or Leases constitute personal property, Trustor, as debtor, hereby grants to Beneficiary, as secured party, a security interest in all such Property, Rents and Leases, to secure payment and performance of the Secured Obligations, and Trustor, as debtor, also has granted a security interest in such Property, Rents and Leases pursuant to that certain Security Agreement dated concurrently herewith, executed by the Borrower and each of
its Subsidiaries, as debtor, in favor of Beneficiary, as secured party, as modified from time to time. This Deed of Trust constitutes a security agreement under the Nevada Uniform Commercial Code, as amended or recodified from time to time, covering all such Property, Rents and Leases. To the extent any revenues generated in connection with the operation of the Property from time to time are not real property encumbered by the lien created by Section 1.1 , above, and are not absolutely assigned by the assignment set forth in Section 2.1 , above, it is the intention of the parties that such revenues shall constitute “proceeds, products, offspring, rents or profits” (as defined in and for the purposes of Section 552(b) of the United States Bankruptcy Code, as such section may be modified or supplemented) of the Land and Improvements, and/or “fees, charges, accounts, or other payments for the use or occupancy of rooms and other public facilities in hotels, motels or other lodging properties,” as applicable (as such terms are defined in and for the purpose of Section 552(b) of the United States Bankruptcy Code, as such Section may be modified or supplemented).
3.2 Financing Statements . Trustor consents to one or more financing statements and such other documents as Beneficiary may from time to time require to perfect or continue the perfection of Beneficiary’s security interest in any Property, Rents or Leases. As provided in Section 5.11 , Trustor shall pay all fees and costs that Beneficiary may incur in filing such documents in public offices and in obtaining such record searches as Beneficiary may reasonably require. If Trustor fails to execute any financing statements or other documents for the perfection or continuation of any security interest, Trustor hereby appoints Beneficiary as its true and lawful attorney-in-fact (which appointment is irrevocable and coupled with an interest) to execute any such documents on its behalf. If any financing statement or other document is filed in the records normally pertaining to personal property, that filing shall never be construed as in any way derogating from or impairing this Deed of Trust or the rights or obligations of the parties under it.
4. Fixture Filing . This Deed of Trust constitutes a financing statement filed as a fixture filing under NRS 104.9502(2) of the Nevada Uniform Commercial Code, as amended or recodified from time to time, covering any Property which now is or later may become fixtures attached to the Land or Improvements. In connection therewith, the addresses of Trustor, as debtor, and Beneficiary, as secured party, are as set forth in Section 8.11 , below. The foregoing address of Beneficiary, as secured party, is also the address from which information concerning the security interest may be obtained by any interested party. The property subject to this fixture filing is described in Section 1.1 , above. Portions of the property subject to this fixture filing as identified in this Section are or are to become fixtures related to the real estate described in Exhibit A attached hereto.
5. Rights and Duties of the Parties .
5.1 Representations and Warranties . Trustor represents and warrants that, except as previously disclosed to Beneficiary in a writing making reference to this Section 5.1 :
(a) Trustor has or will have good title to all Property (other than personal property utilized by Trustor under such equipment leases and similar financing arrangements as were disclosed to Beneficiary in writing prior to the execution of this
Deed of Trust or as are hereafter entered into by Trustor in accordance with the Credit Agreement);
(b) Subject to applicable gaming laws and regulations of the State of Nevada, Trustor has the full and unlimited power, right and authority to encumber the Property and assign the Rents and the Leases;
(c) This Deed of Trust creates a first and prior lien on and security interest in the Property;
(d) The Property includes all property and rights which may be reasonably necessary to promote the present beneficial use and enjoyment of the Land and Improvements;
(e) Trustor owns any Property which is personal property free and clear of any security agreements, reservations of title or conditional sales contracts, and there is no financing statement affecting such personal property on file in any public office (other than personal property utilized by Trustor under such equipment leases and similar financing arrangements as were disclosed to Beneficiary in writing prior to the execution of this Deed of Trust or as are hereafter entered into by Trustor in accordance with the Credit Agreement);
(f) Trustor’s place of business, or its chief executive office if it has more than one place of business, is located at the address specified below; and
(g) None of the Property is located in an area having or identified as having special flood hazards or any similar designation under the National Flood Insurance Act of 1968, as amended or recodified from time to time, or the Flood Disaster Protection Act of 1973, as amended or recodified from time to time.
5.2 Taxes and Assessments . Trustor shall pay prior to delinquency all taxes, levies, charges and assessments, including assessments on appurtenant water stock, imposed by any public or quasi-public authority or utility company which are (or if not paid, may become) a lien on or security interest in all or part of the Property or any interest in it, or which may cause any decrease in the value of the Property or any part of it. If any such taxes, levies, charges or assessments become delinquent, Beneficiary may require Trustor to present evidence that they have been paid in full, on ten (10) days’ written notice by Beneficiary to Trustor. This Section 5.2 is subject to the right granted in Section 5.11 of the Credit Agreement to contest in good faith certain taxes, assessments, charges and levies.
5.3 Performance of Secured Obligations . Trustor shall promptly pay and perform each Secured Obligation in accordance with its terms.
5.4 Liens, Charges and Encumbrances . Trustor shall immediately discharge any lien on or security interest in the Property to which Beneficiary has not consented in writing. Subject to any applicable rights to contest set forth in the Credit Agreement, Trustor shall pay, prior to delinquency, each obligation secured by or reducible to a lien, security interest, charge or encumbrance which now does or later may encumber or appear to encumber all or part of the
Property or any interest in it, whether the lien, security interest, charge or encumbrance is or would be senior or subordinate to this Deed of Trust.
5.5 Damages and Insurance and Condemnation Proceeds .
5.5.1 Trustor hereby absolutely and irrevocably assigns to Beneficiary, and authorizes the payor to pay to Beneficiary, the following claims, causes of action, awards, payments and rights to payment:
(a) All awards of damages and all other compensation payable directly or indirectly because of a condemnation, proposed condemnation or taking for public or private use which affects all or part of the Property or any interest in it; and
(b) All other awards, claims and causes of action, arising out of any warranty affecting all or any part of the Property, or for damage or injury to or decrease in value of all or part of the Property or any interest in it; and
(c) All proceeds of any insurance policies payable because of loss sustained to all or part of the Property; and
(d) All interest which may accrue on any of the foregoing.
5.5.2 Trustor shall immediately notify Beneficiary in writing if:
(a) Any damage occurs or any injury or loss is sustained in the amount of $250,000 or more to all or part of the Property, or any action or proceeding relating to any such damage, injury or loss is commenced; or
(b) Any offer is made, or any action or proceeding is commenced, which relates to any actual or proposed condemnation or taking of all or part of the Property.
5.5.3 If Beneficiary chooses to do so, Beneficiary may in its own name appear in or prosecute any action or proceeding to enforce any cause of action based on warranty, or for damage, injury or loss to all or part of the Property and, while any Event of Default remains uncured, Beneficiary may make any compromise or settlement of the action or proceeding. Beneficiary, if it so chooses, may participate in any action or proceeding relating to condemnation or taking of all or part of the Property, and may join Trustor in adjusting any loss covered by insurance. Trustor hereby irrevocably appoints Beneficiary its true and lawful attorney-in-fact for all such purposes. The power of attorney granted hereunder is coupled with an interest and is irrevocable. Trustor shall not settle, adjust or compromise any such action or proceeding without the prior written approval of Beneficiary, which shall not be unreasonably withheld or delayed.
5.5.4 All proceeds of these assigned claims, other property and rights which Trustor may receive or be entitled to (collectively, “Proceeds”) shall be paid to Beneficiary. In each instance, Beneficiary shall apply such Proceeds first toward reimbursement of all of Beneficiary’s costs and expenses of recovering the Proceeds, including attorneys’ fees.
If, in any instance, each and all of the following conditions (the “Restoration Conditions”) are satisfied in Beneficiary’s reasonable judgment, Beneficiary shall permit Trustor to use the balance of such Proceeds (“Net Claims Proceeds”) to pay costs of repairing or reconstructing the Property in the manner described below:
(a) The plans and specifications, cost breakdown, construction contract, construction schedule, contractor and payment and performance bond for the work of repair or reconstruction must all be reasonably acceptable to Beneficiary; and
(b) Beneficiary must receive evidence reasonably satisfactory to it that, after repair or reconstruction, the Property will be at least as valuable as it was immediately before the damage or condemnation occurred; and
(c) The Net Claims Proceeds must be sufficient in Beneficiary’s reasonable determination to pay for the total cost of repair or reconstruction, including all associated development costs and interest projected to be payable on the Secured Obligations until the repair or reconstruction is complete; or Trustor must provide its own funds in an amount equal to the difference between the Net Claims Proceeds and a reasonable estimate, made by Trustor and found acceptable by Beneficiary, of the total cost of repair or reconstruction; and
(d) No Event of Default shall have occurred and be continuing.
If Beneficiary finds that such conditions have been met, Beneficiary shall hold the Net Claims Proceeds and any funds which Trustor is required to provide in an interest-bearing passbook savings account and shall disburse them to Trustor on a monthly basis in accordance with Beneficiary’s customary construction lending procedures. However, if an Event of Default has occurred and is continuing, Beneficiary may apply the Net Claims Proceeds to pay or prepay (without premium) some or all of the Secured Obligations in such order and proportions as Beneficiary in its absolute discretion may choose (subject to the provisions for priority of application of payments set forth in the Credit Agreement). Any and all Proceeds (including, without limitation, any Net Claims Proceeds) held by Beneficiary from time to time shall be collateral for the Secured Obligations, and Trustor hereby grants to Beneficiary a security interest in and lien on such Proceeds and all rights and remedies available under applicable laws with respect to such Proceeds, including, without limitation, all rights and remedies under the Nevada Uniform Commercial Code. Trustor shall execute and deliver to Beneficiary and the Lenders any and all documents reasonably requested by Beneficiary in order to confirm, create and perfect such security interest in and lien on such Proceeds. In the event that any Proceeds are applied to pay any Secured Obligations, then Beneficiary shall have no obligation to disburse or release such applied Proceeds to Trustor under this Section 5.5 . If no Event of Default shall have occurred and be continuing, any funds remaining upon completion of the repair or reconstruction shall be returned to Trustor.
5.5.5 Trustor hereby specifically, unconditionally and irrevocably waives all rights of a property owner granted under applicable law, including NRS 37.115, as amended or recodified from time to time, which provide for allocation of condemnation proceeds between a property owner and a lienholder, and any other law or successor statute of similar
import. Trustor hereby specifically, unconditionally and irrevocably waives all right to recover against Beneficiary or any Lender (or any officer, employee, agent or representative of Beneficiary or any Lender) for any loss incurred by Trustor from any cause insured against or required by any Loan Document to be insured against; provided, however, that this waiver of subrogation shall not be effective with respect to any insurance policy if the coverage thereunder would be materially reduced or impaired as a result.
5.5.6 Notwithstanding anything to the contrary set forth in this Section 5.5 , so long as no Event of Default remains uncured, the proceeds of any casualty or condemnation for which the gross value of the applicable damage and/or taking is less than $250,000 shall be paid to Trustor rather than to Beneficiary (and shall be delivered to Trustor if received by Beneficiary), and Trustor shall not be required to obtain Beneficiary’s consent to settle, adjust or compromise any action or proceeding relating to any such casualty or condemnation (nor shall Beneficiary be entitled to participate in such action or proceeding).
5.6 Maintenance and Preservation of Property .
5.6.1 Except as permitted in the Credit Agreement, Trustor shall not remove or demolish the Property or any part of it, or alter, restore or add to the Property, or initiate or allow any change in any zoning or other land use classification which affects the Property or any part of it, except as permitted or required by the Credit Agreement or with Beneficiary’s express prior written consent in each instance; provided that, without Beneficiary’s consent, Trustor shall be entitled to remove personal property in the ordinary course of Trustor’s business so long as any such personal property is replaced with property of comparable value.
5.6.2 If all or part of the Property becomes damaged or destroyed, Trustor shall promptly and completely repair and/or restore the Property in a good and workmanlike manner in accordance with sound building practices, regardless of whether or not Beneficiary agrees to disburse insurance proceeds or other sums to pay costs of the work of repair or reconstruction under Section 5.5 .
5.6.3 Trustor shall not commit or allow any act upon or use of the Property which would violate: (i) any applicable law or order of any Governmental Agency, whether now existing or later to be enacted and whether foreseen or unforeseen (except to the extent that noncompliance would not cause a Material Adverse Effect or a License Revocation); or (ii) any public or private covenant, condition, restriction or equitable servitude affecting the Property. Trustor shall not bring or keep any article on the Property or cause or allow any condition to exist on it, that could invalidate or would be prohibited by any insurance coverage required to be maintained by Trustor on the Property or any part of it under this Deed of Trust.
5.6.4 Trustor shall not commit or allow waste of the Property.
5.6.5 Trustor shall perform all other acts which from the character or use of the Property may be reasonably necessary to maintain and preserve its value. Without limiting the generality of the forgoing, Trustor shall protect and preserve all easements, rights-of-way and other appurtenances to the Land and/or Improvements. Trustor shall not cause or allow any such easement, right-of-way and other appurtenance to be cancelled, rejected or otherwise terminated,
or modified (except for such terminations that occur pursuant to the terms of such easement, right of way and other appurtenance).
5.7 Insurance .
5.7.1 Trustor shall maintain the following insurance with respect to the Property:
(a) Trustor shall provide, maintain and keep in force at all times during any period of construction with respect to the portion of the Property affected by such construction a policy or policies of builder’s “all risk” insurance in nonreporting form in an amount not less than the full insurable completed value of such portion of the Property on a replacement cost basis. The policy or policies shall