Exhibit 10.63
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RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
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Sheppard, Mullin, Richter &
Hampton LLP
333 South Hope Street, 48th Floor
Los Angeles, CA 90071-1448
Attn: William M. Scott IV, Esq.
APN:
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Mail Property Tax Statements to
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c/o Herbst Gaming, Inc.
5195 Las Vegas Blvd.
Las Vegas, NV 89119
Attn: M. Higgins
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THIS SPACE ABOVE FOR RECORDER’S
USE
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DEED OF TRUST
with Assignment of Rents, Security Agreement
and
Fixture Filing
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.
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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
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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
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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.
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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,
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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
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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
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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
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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
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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
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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.
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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
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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,
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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
