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

 

Exhibit 2.23

 

Accessor’s Parcel Numbers: 001-16-501-012;

001-18-701-002; 001-18-302-004; 001-18-302-005;

001-18-302-010; 001-18-302-011; 001-18-701-006;

001-18-701-007; 002-24-601-021; 001-09-301-002;

001-09-301-003; 001-18-602-002; 001-18-602-008;

001-18-602-003; 001-18-602-004; 001-18-602-006;

001-18-602-007; 001-18-702-017; 001-18-702-019;

001-17-201-003; 001-17-201-006;

001-18-711-001 through 001-18-711-200

 

Send Tax Bills to:

c/o CasaBlanca Resorts, LLC

950 West Mesquite Blvd.

Mesquite, Nevada, 89027

 

WHEN RECORDED MAIL TO:

Paul, Hastings, Janofsky & Walker LLP

515 South Flower Street, 25th Floor

Los Angeles, California 90071

Attention:  Stacy M. Hopkins, Esq.

 

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

by and from

 

RBG, LLC;

VIRGIN RIVER CASINO CORPORATION;

CASABLANCA RESORTS, LLC;

B & B B, INC.; and

OASIS INTERVAL OWNERSHIP, LLC, collectively, “Grantor”

 

to

 

NEVADA TITLE COMPANY, “Trustee”

for the benefit of

 

WELLS FARGO FOOTHILL, INC.,
in its capacity as the arranger and administrative agent, its successors and assigns,
as its interests may appear, “Beneficiary”

 

Dated as of December 20, 2004

 

 

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

(Nevada)

 

THIS LEASEHOLD AND FEE DEED OF TRUST, FIXTURE FILING WITH ASSIGNMENT OF RENTS AND LEASES, AND SECURITY AGREEMENT (this “ Deed of Trust ”) is dated as of December 20, 2004, by and from RBG, LLC (“ RBG ”), a Nevada limited liability company, VIRGIN RIVER CASINO CORPORATION (“ Virgin River ”), a Nevada corporation, CASABLANCA RESORTS, LLC (“ Casablanca ”), a Nevada limited liability company, B & B B, INC. (“ B&BB ”), a Nevada corporation, and OASIS INTERVAL OWNERSHIP, LLC (“ Oasis ”), a Nevada limited liability company (RBG, Virgin River, Casablanca, B&BB and Oasis, collectively, “ Grantor ”), whose address is c/o CasaBlanca Resorts, 950 West Mesquite Blvd., Mesquite, Nevada, 89027, to NEVADA TITLE COMPANY (“ Trustee ”), whose address is 3320 West Sahara, Suite 200, Las Vegas, Nevada 89102 for the benefit of WELLS FARGO FOOTHILL, INC., a California corporation, in its capacity as the arranger and administrative agent, its successors and assigns, as its interests may appear (“ Agent ”) pursuant to the Credit Agreement (as defined below), whose address is 2450 Colorado Avenue, Suite 3000 West, Santa Monica, California 90404 (Agent, together with its successors and assigns, is referred to herein as  “ Beneficiary ”).

 

THE MAXIMUM AMOUNT OF PRINCIPAL TO BE SECURED HEREBY IS $15,000,000; PROVIDED THAT IN NO EVENT SHALL THE AGGREGATE PRINCIPAL BALANCE SECURED HEREBY, EXCLUSIVE OF INTEREST, FEES AND EXPENSES, FOR THE BENEFIT OF THE HOLDERS EXCEED $15,000,000.00.

 

RECITALS :

 

WHEREAS, (i) each Grantor, (ii) OASIS RECREATIONAL PROPERTIES, INC. (“ Oasis Recreational ”), a Nevada corporation, (iii) OASIS INTERVAL MANAGEMENT, LLC (“ Oasis Interval Management ”), a Nevada limited liability company, (iv) Agent, and (v) the Lenders (as defined in the Credit Agreement) have entered into that certain Credit Agreement dated as of December 20, 2004 (as amended, restated, supplemented or otherwise modified heretofore or hereinafter from time to time, the “ Credit Agreement ”), which Credit Agreement provides for a revolving loan in the principal amount as specified in said Credit Agreement.  Each Grantor, Oasis Recreational and Oasis Interval Management are collectively referred to herein as “ Borrowers ”.  Agent and the Lenders are unwilling to enter into the Credit Agreement and make available to Borrowers the credit facilities provided therein unless each Grantor, among other things, secures the Obligations of Borrowers under the Credit Agreement and the other Loan Documents (as such terms are defined in the Credit Agreement) by delivering this Deed of Trust.

 

WHEREAS, each Grantor is receiving a good and valuable benefit, the sufficiency and receipt of which is hereby acknowledged, from Agent and Lenders entering into the Credit Agreement with Borrowers.

 

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This instrument is to be governed by the provisions of NRS 106.300 through NRS 106.400 inclusive.  Without limiting the foregoing, any and all future advances by Agent or Lenders to Borrowers made for the improvement, protection or preservation, together with interest at the rate applicable to overdue principal set forth in the Credit Agreement, shall be automatically secured hereby unless such a document evidencing such advances specifically recites that it is not intended to be secured hereby and the payment of all sums expended or advanced by Agent or Lenders under or pursuant to the terms hereof or the Credit Agreement or to protect the security hereof, together with interest thereon as herein provided (without limiting the generality of the protections afforded by NRS Chapter 106) funds disbursed that, in the reasonable exercise of Agent’s judgment, are needed for improving property or to protect Lender’s security in the Trust Property are to be deemed obligatory advances hereunder and will be added to the total indebtedness by this Instrument and such indebtedness shall be increased accordingly.

 

The parties acknowledge that certain provisions of this Deed of Trust may be subject to the laws, rules and regulations of the Gaming Authorities (as defined herein).

 

ARTICLE 1
DEFINITIONS

 

Section 1.1                                    Definitions .  All capitalized terms used herein without definition shall have the respective meanings ascribed to them in the Credit Agreement.  As used herein, the following terms shall have the following meanings:

 

(a)                                   “ Applicable Gaming Laws ”: shall mean the laws, rules and regulations of the Gaming Authorities (as defined herein).

 

(b)                                  “ Event of Default ”: shall have the meaning ascribed to such term in Article 5 hereof.

 

(c)                                   “ Gaming Authorities ”: means any agency, authority, board, bureau, commission, department, office or instrumentality of any nature whatsoever of the United States federal government, any foreign government, any state, province or city or other political subdivision or otherwise, whether now or hereafter existing, or any officer or official thereof, including, without limitation, the Nevada Gaming Commission, the Nevada State Gaming Control Board, the Clark County Liquor and Gaming Licensing Board, the City of Mesquite and any other agency, in each case, with authority to regulate any gaming operation (or proposed gaming operation) owned, managed or operated by the Issuers or any of the subsidiaries.

 

(d)                                  “ Indebtedness ”: All obligations of Grantor and any of the Borrowers to Beneficiary, including, without limitation, (1) the repayment of all amounts outstanding from time to time under the Credit Agreement and the other Loan

 

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Documents, with such indebtedness maturing on the Maturity Date (as defined in the Credit Agreement), including principal, interest (including all interest that, but for the provisions of the Bankruptcy Code, would have accrued), and other amounts which may now or hereafter be advanced as Advances, (2) the full and prompt performance of any and all repayment, fee, and indemnification obligations with respect to any Letters of Credit, (3) fees, costs, expenses, charges and indemnification obligations accrued, incurred or arising in connection with any Loan Document, (4) any and all future advances made pursuant to the terms of the Credit Agreement, and (5) all other payment Obligations.  The Credit Agreement contains a revolving credit facility that permits Borrowers to borrow certain principal amounts, repay all or a portion of such principal amounts, and reborrow the amounts previously paid to Beneficiary, all upon satisfaction of certain conditions stated in the Credit Agreement.  This Deed of Trust secures all Advances and re-advances under the revolving credit feature of the Credit Agreement.

 

(e)                                   “ Intangible Property ”: means any and all intangible personal property, including, without limitation, (a) the rights to use all names and all derivations thereof now or hereafter used by any and each of the Grantors in connection with the Land, or the Improvements (as defined herein), including, without limitation, the names “RBG, LLC,” “Virgin River Casino Corporation,” “B & BB, Inc.,” “Oasis Hotel & Casino,” “Casablanca Hotel & Casino,” “Mesquite Star Hotel & Casino,” “Virgin River Convention Center,” “Virgin River Hotel & Casino,” “Oasis Recreational Properties, Inc.,” “Oasis Interval Ownership, LLC,” “Casablanca Golf Club,” “CasaBlanca Golf Course” and “Palms Golf Course” and any variations thereof, together with the goodwill associated therewith, and all names, logos, and designs used by any of the Grantors, or in connection with the Land or the Improvements or in which any of the Grantors has rights, with the exclusive right to use such names, logos and designs wherever they are now or hereafter used in connection with the Land or the Improvements, and any and all other trade names, trademarks or service marks, whether or not registered, now or hereafter used in the operation of the Land or the Improvements, including, without limitation, any interest as a licensee or franchisee, and, in each case, together with the goodwill associated therewith; (b) maps, plans, specifications, surveys, studies, tests, reports, data and drawings relating to the development of the Land or the Improvements and the construction of the Improvements, including, without limitation, all marketing plans, feasibility studies, soil tests, design contracts and all contracts and agreements of any and each of the Grantors relating thereto and all architectural, structural, mechanical and engineering plans and specifications, studies, data and drawings prepared for or relating to the development of the Land or the Trust Property or the construction, renovation or restoration of any of the Improvements or the extraction of minerals, sand, gravel or other valuable substances from the Land; (c) any and all books, records, customer lists (including lists or information derived from or related to the Player Tracking System described within the definition of “ Tangible Property ”), concession agreements, supply or service contracts, licenses, permits, governmental approvals (to the extent such licenses, permits and approvals may be pledged under applicable law), signs, goodwill, casino and hotel credit and charge records, supplier lists, checking accounts, safe deposit boxes (excluding the contents of such deposit boxes owned by persons other than any of the Grantors or any of their subsidiaries), cash,

 

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instruments, any and all “chattel paper” as such term is defined in Section 9-102 of the UCC, documents, unearned premiums, deposits, refunds, including but not limited to income tax refunds, prepaid expenses, rebates, tax and insurance escrow and impound accounts, if any, actions and rights in action, and all other claims, and all other contract rights and general intangibles resulting from or used in connection with the operation of the Trust Property and in which any of the Grantors now or hereafter has rights; (d) all of the Grantors’ documents, instruments, contract rights, and general intangibles including, without limitation, all insurance policies, permits, licenses, franchises and agreements required for the use, occupancy or operation of the Land, or any of the Improvements (to the extent such licenses, permits and approvals are not prohibited from being pledged under applicable law); (e) general intangibles, vacation license resort agreements or other time share license or right to use agreements with respect to the Land, the Improvements and/or the business being conducted thereon, including, without limitation, all rents, issues, profits, income and maintenance fees resulting therefrom; whether any of the foregoing is now owned or hereafter acquired and (f) any and all licenses, permits, variances, special permits, franchises, certificates, rulings, certifications, validations, exemptions, filings, registrations, authorizations, consents, approvals, waivers, orders, rights and agreements (including options, option rights and contract rights) now or hereafter obtained by any of the Grantors from any governmental, administrative or regulatory agency, authority, department, commission, board, bureau or instrumentality of the United States, any state of the United States, or any political subdivision thereof, including, without limitation, any gaming authority, or any court, arbitrator or quasi-judicial authority having or claiming jurisdiction over the Land, the Tangible Property, the Trust Property or any other element of the Trust Property or providing access thereto, or the operation of any business on, at, or from the Land, including, without limitation, any gaming licenses.

 

(f)                                     “ Inventory ”: as such term is defined in Section 9-102 of the UCC, including without limitation and in any event, all goods (whether such goods are in the possession of the Grantors or a lessee, bailee or other person for sale, lease, storage, transit, processing, use or otherwise and whether consisting of whole goods, spare parts, components, supplies, materials or consigned or returned or repossessed goods) which are held for sale or lease or are to be furnished (or which have been furnished) under any contract of service or which are raw materials or work in progress or materials used or consumed in any of Grantor’s businesses;

 

(g)                                  “ Obligations ”: All of the agreements, covenants, conditions, warranties, representations and other obligations of Grantor and the Borrowers under the Credit Agreement and the other Loan Documents, including, but not limited to, the “Obligations,” as defined in the Credit Agreement, but specifically excluding the Bank Product Obligations (as defined in the Credit Agreement).  This Deed of Trust is not security or collateral for the Bank Product Obligations.

 

(h)                                  “ Permitted Liens ”: shall have the meaning ascribed to such term in the Credit Agreement.

 

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(i)                                      “ Personalty ”: means the Intangible Property and the Tangible Property.

 

(j)                                      “ Security Agreement ”: means that certain Security Agreement dated as of the date hereof by and among the Agent and the grantors listed on the signature pages thereof and those additional entities that may become parties thereto by executing the form of Supplement attached thereto as Annex 1 .

 

(k)                                   “ Tangible Property ”:  means any and all tangible personal property, including, without limitation, all goods, equipment, supplies, building and other materials of every nature whatsoever and all other tangible personal property constituting a part or portion of the Trust Property and/or used in the operation of any hotel, casino, restaurant, store, parking facility, special events arena, theme park, and any other commercial operations on the Trust Property, including but not limited to Inventory, communication systems, visual and electronic surveillance systems and transportation systems and not constituting a part of the real property subject to the liens of this Deed of Trust and including all property and materials stored on all or any portion of the Trust Property in which any and each of the Grantors has an interest and all tools, utensils, food and beverage, liquor, uniforms, linens, housekeeping and maintenance supplies, vehicles, fuel, advertising and promotional material, blueprints, surveys, plans and other documents relating to the Land or the Improvements, and all construction materials and all Fixtures (as defined herein), including, but not limited to, all gaming equipment and devices which are used in connection with the operation of the Trust Property and those items of Fixtures which are purchased or leased by any and each of the Grantors, machinery and any other item of personal property in which any of the Grantors now or hereafter owns or acquires an interest or right, and which are used or useful in the construction, operation, use and occupancy of the Trust Property; to the extent permitted by the applicable contract or applicable law, all financial equipment, computer equipment, Player Tracking Systems (including all computer hardware, operating software programs and all right, title and interest in and to any applicable license therefore), calculators, adding machines, video game and slot machines, and any other electronic equipment of every nature used or located on any part of the Trust Property, and all present and future right, title and interest of any of the Grantors in and to any casino operator’s agreement, license agreement or sublease agreement used in connection with the Trust Property.

 

(l)                                      “ Trust Property ”:  All of Grantor’s right, title and interest in and to (1) the fee interest in the real property described on Exhibit A attached hereto and incorporated herein by this reference, together with any greater estate therein now owned or as hereafter may be acquired by any Grantor (the “ Land ”), (2) all improvements now owned or hereafter acquired by any Grantor, now or at any time situated, placed or constructed upon the Land (the ” Improvements ”; the Land and Improvements are collectively referred to herein as the “ Premises ”), (3) all materials, supplies, equipment, apparatus and other items of personal property now owned or hereafter acquired by any Grantor and now or hereafter attached to or installed in any of the Improvements or the Land, and water, gas, electrical, telephone, storm and sanitary

 

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sewer facilities and all other utilities whether or not situated in easements (the “ Fixtures ”), (4) all reserves, escrows or impounds required under the Credit Agreement and all deposit accounts maintained by any Grantor with respect to the Trust Property (the “ Deposit Accounts ”), (5) those certain lease agreements described in Exhibit B-1 attached hereto and by this reference incorporated herein, as they may be amended, modified and extended thereof (collectively, the “ Ground Leases ”) by and between the Grantor named therein, as lessee, and that certain party referenced on said Exhibit B-1 , as lessor (“ Lessor ”), as the same may be amended, restated, renewed or extended from time to time, and the leasehold estates created thereby in that certain real property, located in the County of Clark, State of Nevada and described in Exhibit B-2 (the “ Leased Land ”), (6) all existing and future leases, subleases, licenses, concessions, occupancy agreements, lease guarantees or other agreements (written or oral, now or at any time in effect) which grant to any Person a possessory interest in, or the right to use or occupy, all or any part of the Trust Property, whether made before or after the filing by or against Grantor of any petition for relief under the Bankruptcy Code, together with any extension, renewal or replacement of the same and together with all related security and other deposits (and together with the Ground Leases, the “ Leases ”), (7) all of the rents, additional rents, revenues, royalties, income, proceeds, profits, early termination fees or payments, 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 or any part thereof, whether paid or accruing before or after the filing by or against Grantor of any petition for relief under the Bankruptcy Code, including, without limitation, all rights to payment for hotel room occupancy by hotel guests, which includes any payment or monies received or to be received in whole or in part, whether actual or deemed to be, for the sale of services or products in connection therewith and/or in connection with such occupancy, advance registration fees by hotel guests, tour or junket proceeds and deposits for conventions and/or party reservations (collectively, the “ Rents ”), (8) 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 ”), (9) all rights, privileges, tenements, hereditaments, rights-of-way, easements, appendages and appurtenances appertaining to the foregoing, (10) all property tax refunds, utility refunds and rebates, earned or received at any time (the “ Tax Refunds ”), (11) all accessions, replacements and substitutions for any of the foregoing and all proceeds thereof (the “ Proceeds ”), (12) all insurance policies, unearned premiums therefor and proceeds from such policies covering any of the above property now or hereafter acquired by Grantor (the “ Insurance ”), (13) any awards, damages, remunerations, reimbursements, settlements or compensation heretofore made or hereafter to be made by any governmental authority pertaining to the Land, Improvements or Fixtures (the “ Condemnation Awards ”), (14) all of Grantor’s rights to appear and defend any action or proceeding brought with respect to the Trust Property and to commence any action or proceeding to protect the interest of Grantor in the Trust Property, (15) all rights, powers, privileges, options and other benefits of Grantor as lessor under the Leases, including, without limitation, the immediate and

 

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continuing right to claim for, receive, collect and receive all Rents payable or receivable under the Leases or pursuant thereto (and to apply the same to the payment of the Indebtedness and the Obligations), and to do all other things which Grantor or any lessor is or may become entitled to do under the Leases, (16) all water rights, water stock, water permits and other rights to the use of water that are now or that may be hereinafter used in connection with the said Trust Property, or any part thereof, or any improvements or appurtenances thereto, (17) all oil and gas and other mineral rights, if any, in or pertaining to the Land and all royalty, leasehold and other rights of each Grantor pertaining thereto, and (18) all right, title and interest of each Grantor in and to all Tangible Property and Intangible Property (except, with respect to Gaming Licenses, as prohibited by Applicable Gaming Laws) now or at any time hereafter located on or appurtenant to the Trust Property and used or useful in connection with the ownership, management or operation of the Trust Property, including, without limitations, the Personalty.  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.  THE TERM “TRUST PROPERTY” IS INTENDED TO EXCLUDE (I) ALL ITEMS OF PERSONAL PROPERTY IN WHICH BENEFICIARY HAS OBTAINED AND/OR PERFECTED A SECURITY INTEREST UNDER SEPARATE INSTRUMENTS AND (II) THE EXCLUDED ASSETS, AS SUCH TERM IS DEFINED IN THE SECURITY AGREEMENT.

 

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

 

ARTICLE 2
GRANT

 

Section 2.1                                    Grant .  For and in consideration of good and valuable consideration, the receipt and sufficiency whereof are hereby acknowledged, and in order to secure the indebtedness and other obligations of Grantor herein set forth, to secure the full and timely payment of the Indebtedness and the full and timely performance of the Obligations, Grantor hereby GRANTS, BARGAINS, ASSIGNS, TRANSFERS, SELLS, WARRANTS and CONVEYS, to Trustee the Trust Property, subject, however, to the Permitted Liens, TO HAVE AND TO HOLD the Trust Property and all parts, rights and appurtenances thereof to Trustee, IN TRUST, WITH POWER OF SALE, and Grantor does hereby bind itself, its successors and assigns to WARRANT AND FOREVER DEFEND the title to the Trust Property unto Trustee.

 

TO HAVE AND TO HOLD the Trust Property, together with all and singular the parts, rights, privileges, hereditaments, and appurtenances thereto in any ways belonging or appertaining, to the use, benefit, and behoof of Trustee, its successors and assigns, in trust for the benefit of Beneficiary, in fee simple forever.  Notwithstanding anything to the contrary contained in the immediately preceding sentence, Grantor hereby agrees and acknowledges that the Indebtedness secured by this

 

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Deed of Trust includes a revolving loan and is intended to secure future advances; accordingly, this Deed of Trust shall not be canceled by the full and complete repayment of the Indebtedness, so long as the Credit Agreement remains in force and effect.

 

ARTICLE 3
WARRANTIES, REPRESENTATIONS AND COVENANTS

 

Grantor warrants, represents and covenants to Beneficiary as follows:

 

Section 3.1                                    Title to Trust Property and Lien of this Instrument .  Each Grantor has (i) good, marketable and insurable fee simple title to the Land (as more particularly described on Exhibit A attached hereto) and owns all Improvements located thereon, (ii) good, marketable and insurable title in the leasehold estates comprising a portion of the Trust Property which were created pursuant to the Ground Leases, (iii) good title to the balance of the Trust Property owned by it, each of the foregoing free and clear of all Liens whatsoever except the Permitted Liens and (iv) subject to the Applicable Gaming Laws, full power and lawful authority to encumber the Trust Property in the manner and form set forth in this Deed of Trust.  This Deed of Trust creates valid, enforceable first priority liens and security interests against the Trust Property.

 

Section 3.2                                    First Lien Status .  Grantor shall preserve and protect the first lien and security interest status of this Deed of Trust and the other Loan Documents.  If any lien or security interest, other than the Permitted Liens, is asserted against the Trust Property, Grantor 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 in compliance with the requirements of the Credit Agreement (including the requirement of providing a bond or other security satisfactory to Beneficiary).

 

Section 3.3                                    Payment and Performance .  Grantor shall pay the Indebtedness when due under the Loan Documents and shall perform or cause the Borrowers to perform the Obligations in full when they are required to be performed.

 

Section 3.4                                    Replacement of Fixtures .  Grantor shall not, without the prior written consent of Beneficiary, permit any of the Fixtures to be removed at any time from the Land or Improvements, unless the removed item is removed temporarily for maintenance and repair or, if removed permanently, is obsolete and is replaced by an article of equal or better suitability and value, owned by Grantor subject to the liens and security interests of this Deed of Trust and the other Loan Documents, and free and clear of any other lien or security interest except such as may be permitted under the Credit Agreement or first approved in writing by Beneficiary.

 

Section 3.5                                    Inspection .  Grantor shall permit Beneficiary and its agents, representatives and employees to inspect the Trust Property and all books and records of Grantor located thereon, and to conduct such environmental and engineering

 

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studies as Beneficiary may require.  Provided that no Event of Default exists, all such testing and investigation shall be conducted at reasonable times and upon reasonable prior notice to Grantor.  Beneficiary shall restore the Trust Property to the condition it was in immediately prior to such testing and investigation.

 

Section 3.6                                    Contracts .  Each material contract which is part of the Trust Property (each, a “ Contract ”), (i) is the genuine, legal, valid, and binding obligation of each Grantor, (ii) is enforceable against each Grantor party thereto in accordance with its terms, (iii) is in full force and effect and is, to the best knowledge of each Grantor, not subject to any setoffs, defenses, overdue taxes, counterclaims or other claims, nor have any of the foregoing been asserted or alleged as to any Contract, and (iv) is, to the best knowledge of each Grantor, in all material respects, in compliance with all applicable laws, whether federal, state, local or foreign (“ Applicable Laws ”).  No Grantor nor, to the best knowledge of each Grantor, any other party to any Contract is in default in the performance or observance of any of the terms thereof.  No party to any Contract is the United States government or an instrumentality thereof.

 

Section 3.7                                    Leases .  Grantor has delivered to Beneficiary true, correct and complete copies of all Leases, including all amendments thereof and modifications thereto.  Each Lease and each Ground Lease (i) is the genuine, legal, valid and binding obligation of each Grantor that is a party thereto, (ii) is enforceable against each Grantor that is a party thereto and, to the best knowledge of each Grantor, each other party thereto, in accordance with its terms, (iii) is in full force and effect and, to the best knowledge of each Grantor, is not subject to any setoffs, defenses, taxes, counterclaims or other claims, nor have any of the foregoing been asserted or alleged as to any Lease, and (iv) is, to the best knowledge of each Grantor, in compliance with all Applicable Laws.

 

Section 3.8                                    Construction of Improvements . All Improvements have been and will be constructed in all material respects in accordance with Applicable Laws and all requirements of Governmental Authorities and governmental approvals. To the best knowledge of each Grantor, the Improvements are free from latent and patent defects, and do not require any material repairs, reconstruction or replacement on the date hereof (except for any material repairs, reconstruction or replacement that do not have a material adverse effect on the value of the Improvements and do not materially and adversely affect any Grantor’s use and operation of the Improvements).

 

Section 3.9                                    Other Covenants .  All of the covenants in the Credit Agreement are incorporated herein by reference and, together with covenants in this Article 3 , shall, to the extent applicable, be covenants running with the land.

 

Section 3.10                             Condemnation Awards and Insurance Proceeds .

 

(a)                                   Condemnation Awards .  There are no pending or, to the best knowledge of each Grantor, threatened condemnation or eminent domain proceedings against the Trust Property or any part thereof.  Grantor, immediately upon obtaining knowledge of the institution of any proceedings for the condemnation of the

 

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Trust Property or any portion thereof, will notify Beneficiary of the pendency of such proceedings.  Except as set forth in the Credit Agreement, Beneficiary may participate in any such proceedings and Grantor from time to time will deliver to Beneficiary all instruments requested by it to permit such participation.  Grantor assigns all awards and compensation to which it is entitled for any condemnation or other taking, or any purchase in lieu thereof, to Beneficiary and authorizes Beneficiary to collect and receive such awards and compensation and to give proper receipts and acquittances therefor, subject to the terms of the Credit Agreement. Grantor hereby waives all rights to such awards and compensation described in the foregoing sentence.  Grantor, upon request by Beneficiary, shall make, execute and deliver any and all instruments requested for the purpose of confirming the assignment of the aforesaid awards and compensation to Beneficiary free and clear of any liens, charges or encumbrances of any kind or nature whatsoever.

 

(b)                                  Insurance Proceeds .  Grantor assigns to Beneficiary all proceeds of any insurance policies insuring against loss or damage to the Trust Property.  Except as set forth in the Credit Agreement, Grantor authorizes Beneficiary to collect and receive such proceeds and authorizes and directs the issuer of each of such insurance policies to make payment for all such losses directly to Beneficiary, instead of to Grantor and Beneficiary jointly, as more specifically described in the Credit Agreement.  In the event that the issuer of such insurance policy fails to disburse directly or solely to Beneficiary but disburses instead either solely to Grantor or to Grantor and Beneficiary, jointly, Grantor shall immediately endorse and transfer such proceeds to Beneficiary.  Upon Grantor’s failure to do so, Beneficiary may execute such endorsements or transfers from and in the name of Grantor, and Grantor hereby irrevocably appoints Beneficiary as Grantor’s agent and attorney-in-fact so to do.

 

Section 3.11                             Costs of Defending and Upholding the Lien .  If any action or proceeding is commenced to which action or proceeding Trustee or Beneficiary is made a party or in which it becomes necessary for Trustee or Beneficiary to defend or uphold the lien of this Deed of Trust including any extensions, renewals, amendments or modifications thereof, Grantor shall, on demand, reimburse Trustee and Beneficiary for all expenses (including, without limitation, reasonable attorneys’ fees and reasonable appellate attorneys’ fees) incurred by Trustee or Beneficiary in any such action or proceeding and all such expenses shall be secured by this Deed of Trust.  In any action or proceeding to foreclose this Deed of Trust or to recover or collect the Indebtedness, the provisions of law relating to the recovering of costs, disbursements and allowances shall prevail unaffected by this covenant.

 

Section 3.12                             TRANSFER OF THE SECURED PROPERTY .  EXCEPT AS EXPRESSLY PERMITTED PURSUANT TO THE TERMS OF THE CREDIT AGREEMENT, GRANTOR SHALL NOT SELL, TRANSFER, PLEDGE, ENCUMBER, CREATE A SECURITY INTEREST IN, GROUND LEASE, OR OTHERWISE HYPOTHECATE, ALL OR ANY PORTION OF THE TRUST PROPERTY WITHOUT THE PRIOR WRITTEN CONSENT OF BENEFICIARY.  THE CONSENT BY BENEFICIARY TO ANY SALE, TRANSFER, PLEDGE,

 

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ENCUMBRANCE, CREATION OF A SECURITY INTEREST IN, GROUND LEASE, OR OTHER HYPOTHECATION OF, ANY PORTION OF THE TRUST PROPERTY SHALL NOT BE DEEMED TO CONSTITUTE A NOVATION OR A CONSENT TO ANY FURTHER SALE, TRANSFER, PLEDGE, ENCUMBRANCE, CREATION OF A SECURITY INTEREST IN, GROUND LEASE, OR OTHER HYPOTHECATION, OR TO WAIVE THE RIGHT OF BENEFICIARY, AT ITS OPTION, TO DECLARE THE INDEBTEDNESS SECURED HEREBY IMMEDIATELY DUE AND PAYABLE, WITHOUT NOTICE TO GRANTOR OR ANY OTHER PERSON OR ENTITY, EXCEPT AS MAY BE REQUIRED PURSUANT TO THE TERMS OF ANY APPLICABLE GROUND LEASE, UPON ANY SUCH SALE, TRANSFER, PLEDGE, ENCUMBRANCE, CREATION OF A SECURITY INTEREST, GROUND LEASE, OR OTHER HYPOTHECATION TO WHICH BENEFICIARY SHALL NOT HAVE CONSENTED.

 

Section 3.13                             Security Deposits .  To the extent required by law, or after an Event of Default has occurred and during its continuance, if required by Beneficiary, all security deposits of tenants of the Trust Property shall be treated as trust funds not to be commingled with any other funds of Grantor.  Within twenty (20) days after request by Beneficiary, Grantor shall furnish satisfactory evidence of compliance with this Section 3.13 , as necessary, together with a statement of all security deposits deposited by the tenants and copies of all Leases not theretofore delivered to Beneficiary, as requested thereby, certified by Grantor.

 

ARTICLE 4

 

LEASEHOLD PROVISIONS

 

Section 4.1                                    Deed of Trust Subject to Ground Leases . This Deed of Trust is made subject to whatever rights and interest each Lessor may have under the Ground Leases and the covenants, conditions and restrictions set forth therein.  This Deed of Trust shall not be construed so as to constitute a default under any Ground Lease pursuant to Applicable Law or the terms of such Ground Lease, and this Deed of Trust and the lien created hereby shall be of no further force and effect if deemed by a court of competent jurisdiction to violate the terms of such Ground Lease or Applicable Law.

 

Section 4.2                                    Certain Covenants .  Each Grantor, jointly and severally, covenants and agrees as follows:

 

(a)                                   Each Grantors shall pay all rents, additional rents and other sums to be paid by such Grantor under any Ground Lease and shall diligently perform and observe all covenants, agreements and obligations of the lessee set forth in the Ground Lease to which such Grantor is a party, and not to commit, suffer or permit any material breach thereof.  If any Grantor shall default under any of the Ground Leases, Beneficiary shall have the right, but not the obligation, to take any action necessary or desirable to cure any default by such Grantor in the performance of any of the terms, covenants and conditions of such Ground Lease, Beneficiary being authorized to enter upon the Premises for such purposes. Any default by any Grantor as lessee under any of

 

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the Ground Leases or breach of an obligation thereunder shall be a default hereunder, provided that such shall not constitute a default hereunder until the expiration of any applicable lessee notice and grace period under the applicable Ground Leases and the failure of any Grantor to cure such default or breach under the applicable Ground Lease to which it is a party within such grace period.

 

(b)                                  Each Grantor shall give prompt notice to Beneficiary of the actual receipt by it of written notice of default served on such Grantor by any Lessor, and shall promptly furnish to Beneficiary all information that it may reasonably request concerning the performance by any Grantor of the covenants contained in any Ground Lease, including, without limitation, evidence of payment of ground rent, taxes, insurance premiums and operating expenses.

 

(c)                                   So long as this Deed of Trust is in effect, there shall be no merger of any Ground Lease or any interest therein nor of the leasehold estates created thereby with the fee estate in the Leased Land or any portion thereof by reason of the fact that such Ground Lease or such interest therein or such leasehold estate may be held directly or indirectly by or for the account of any person who shall hold the fee estate in the Leased Land or any portion thereof or any interest of the applicable Lessor. In case any Grantor acquires the fee title or any other estate, title or interest in the Leased Land covered by the Ground Lease, this Deed of Trust shall attach to and cover and be a lien upon the fee title or such other estate so acquired, and such fee title or other estate shall, without further assignment, mortgage or conveyance, become and be subject to the lien of and covered by this Deed of Trust.  Each Grantor shall notify Beneficiary of any such acquisition by any such Grantor and, on written request by Beneficiary, shall at its own expense cause to be executed and recorded all such other and further assurances or other instruments in writing as may in the opinion of Beneficiary be required to carry out the intent and meaning hereof.

 

(d)                                  No Grantor shall surrender any Ground Lease (except a surrender upon the expiration of the term of the applicable Ground Lease or upon the termination by the Lessor thereunder pursuant to the provisions thereof) to the Lessor thereunder, or any portion thereof or of any interest therein, and no termination of any Ground Lease, by any Grantor as lessee thereunder, shall be valid or effective, and subject to the terms of the applicable Ground Lease, such Ground Lease shall not be surrendered or canceled, amended, other than in immaterial respects, or subordinated to any fee mortgage, to any lease, or to any other interest, either orally or in writing, without the prior written consent of Beneficiary so long as this Deed of Trust is in effect. Any attempted surrender, amendment (except in immaterial respects) cancellation or termination of any Ground Lease other than as expressly permitted pursuant to the terms thereof by any Grantor without obtaining the prior written consent of Beneficiary shall be null and void and without force and effect on the Ground Lease, and such attempt shall constitute a default hereunder.  Notwithstanding the foregoing, prior written consent of Beneficiary is not required in connection with the termination and buyout of the M.D.W. Lease (as defined on Exhibit B-1 ) by and among M.D.W. Mesquite, L.L.C., RBG and Robert R. Black, Sr.

 

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(e)                                   If and to the extent required by the terms of the Ground Lease, Grantor shall promptly after the execution and delivery of this Deed of Trust or of any instrument or agreement supplemental thereto, notify each Lessor in writing of the execution and delivery thereof and deliver to each such Lessor a copy of each such Deed of Trust, instrument or agreement, as the case may be.

 

(f)                                     If any Ground Lease is terminated prior to the natural expiration of its term by reason of default of any Grantor, and if, pursuant to any provision of the Ground Lease, or otherwise, Beneficiary or its designee shall acquire from the Lessor thereunder a new lease of the Leased Land, or of any part of the Leased Land, Grantor shall have no right, title or interest in or to such new lease or the leasehold estate created thereby.

 

(g)                                  Each Grantor hereby, jointly and severally, warrants the quiet and peaceful possession of the Trust Property to Trustee for the benefit of Beneficiary for so long as the Deed of Trust is in effect and further warrants and agrees to defend the leasehold estate created under each Ground Lease for the remainder of the term set forth therein against each and every person claiming the same or any part thereof.

 

(h)                                  In the event of the termination, rejection, or disaffirmance of any Ground Lease by any Lessor (or by any receiver, trustee, custodian, or other party that succeeds to the rights of any Lessor) pursuant to any section or chapter of the Bankruptcy Code, or any similar law, whether state, federal or otherwise, relating to insolvency, reorganization or liquidation, or for the relief of debtors (each such law referred to herein as a “Bankruptcy Law” and all such laws collectively referred to herein as “ Bankruptcy Laws ”), each Grantor hereby presently, absolutely, and irrevocably grants and assigns to Beneficiary the sole and exclusive right to make or refrain from making any election available to lessees under any Bankruptcy Law (including, without limitation, the election available pursuant to Section 365(h) of the Bankruptcy Code or any successor provision), and each Grantor agrees that any such election, if made by any Grantor without the prior written consent of Beneficiary (which Beneficiary would not anticipate granting due to the importance of the Ground Lease as security), shall be void and of no force or effect.

 

(i)                                      In the event there is a termination, rejection, or disaffirmance of any Ground Lease by any Lessor (or by any receiver, trustee, custodian, or other party that succeeds to the rights of any Lessor) and Beneficiary elects to have the applicable Grantor remain in possession under any legal right such Grantor may have to occupy the premises leased pursuant to any Ground Lease then (i) such Grantor shall remain in such possession and shall perform all acts necessary for such Grantor to retain its right to remain in such possession, whether such acts are required under the then existing terms and provisions of the applicable Ground Lease or otherwise, (ii) all of the terms and provisions of this Deed of Trust and the lien created hereby shall remain in full force and effect and shall be extended automatically to such possession, occupancy, and interest of such Grantor, to all rights of such Grantor to such possession, occupancy, and interest, and to all of such Grantor’s rights and remedies against the Lessor under the

 

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Bankruptcy Laws, and (iii) each Grantor hereby agrees with Beneficiary that if any Grantor shall seek to offset against the rent reserved in any Ground Lease any damages or other amounts pursuant to any right of offset available to lessees under any Bankruptcy Laws for any damages sustained by reason of the failure by the applicable Lessor to perform their obligations, then not less than thirty (30) days prior to effecting any such offset, Grantor shall give written notice to Beneficiary of the amount of the proposed offset and the basis therefor, and if Beneficiary objects, within thirty (30) days after receipt of such notice, to the offset on the basis that it may constitute a breach of the Ground Lease, then such Grantor shall not effect the offset of any amounts so objected to by Beneficiary and Grantor agrees that any such election, if made by any Grantor without the prior written consent of Beneficiary, shall be void and of no force or effect.

 

(j)                                      Each Grantor shall use its respective commercially reasonable efforts (not including the payment of any money or other consideration to any third party) to obtain from time to time, promptly after request by Beneficiary, from any Lessor and deliver to Beneficiary, at no cost to Beneficiary, a Lessor’s estoppel certificate thereunder in such form as may reasonably be requested by Beneficiary.  Notwithstanding the foregoing, the failure by Grantor to obtain an estoppel certificate from any Lessor shall not be deemed an Event of Default hereunder, provided that Grantor have used their respective commercially reasonable efforts to obtain such estoppel certificate.

 

(k)                                   If at any time any Grantor fails to comply in any material respect with any of such Grantor’s material obligations under any Ground Lease and the Lessor notifies Beneficiary thereof, then Beneficiary or Trustee may, but without obligation to do so and after providing reasonable notice to the applicable Grantor (provided that no notice shall be required in the event of an emergency or if the Ground Lease is in danger of being terminated) and without releasing any Grantor from any obligation hereunder or removing or waiving any default hereunder, perform on behalf of the applicable Grantor any such obligations, and any and all costs and expenses (including, without limitation, attorneys’ fees) incurred by Beneficiary or Trustee in connection therewith shall be repayable upon demand by the Grantor, with interest thereon as set forth in the Credit Agreement, and shall be secured hereby; provided that the foregoing shall not be construed to require Beneficiary or Trustee to incur any expense or take any action with respect to any Grantor’s failure to comply with any of the Grantors’ obligations under any Ground Lease.

 

(l)                                      Each Grantor, promptly upon receiving written notice of a breach by any Lessor (or by any receiver, trustee, custodian, or other party that succeeds the rights of such Lessor) or of any inability of any Lessor to perform the terms and provisions of any Ground Lease (including, without limitation, by reason of a termination, rejection, or disaffirmance by such Lessor pursuant to any Bankruptcy Laws), which would materially impair the value of any Ground Lease, shall notify Beneficiary in writing of any such breach or inability.  Each Grantor hereby assigns to Beneficiary the proceeds of any claims that such Grantor may have against such Lessor for any such breach or inability by such Lessor.  So long as no Event of Default has

 

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occurred and is continuing, the applicable Grantor shall have the sole right to proceed against such Lessor on such Grantor’s and Beneficiary’s behalf and to receive and retain all proceeds of such claims except as otherwise provided in the Credit Agreement; during the continuance of an Event of Default, Beneficiary shall have the sole right to proceed against any Lessor, and each Grantor shall cooperate with Beneficiary in such endeavor.  Each Grantor shall, at its expense, diligently prosecute any such proceedings, shall deliver to Beneficiary copies of all papers served in connection therewith, and shall consult and cooperate with Beneficiary and its attorneys and agents, in the carrying on and defense of any such proceedings.

 

(m)                                Notwithstanding anything to the contrary in this paragraph, if there is an Event of Default which remains uncured, then Beneficiary shall have the right, but not the obligation, to conduct and control, through counsel of Beneficiary’s choosing, all litigation and other proceedings under the Bankruptcy Laws relating to any Lessor; and any expenses incurred by Beneficiary in such litigation and proceedings shall be additional indebtedness of the Grantor secured by this Deed of Trust, shall bear interest as set forth in the Credit Agreement and shall be payable by the Grantors upon demand.  No settlement of any such proceeding shall be made by the Grantors without Beneficiary’s prior written consent.

 

(n)                                  In addition to any and all other assignments contained in this Deed of Trust, each Grantor hereby absolutely, presently and unconditionally assigns, transfers, and set over to Beneficiary all of such Grantor’s claims and rights to the payment of damages, and any other remedies available to such Grantor, arising from any rejection of any Ground Lease by any Lessor thereunder pursuant to any Bankruptcy Law. This assignment constitutes a present, absolute, irrevocable, and unconditional assignment of the foregoing claims, rights and remedies, and shall continue in effect until all the indebtedness and obligations secured by this Deed of Trust shall have been satisfied and discharged in full.

 

Notwithstanding the foregoing, so long as no uncured Event of Default has occurred and is continuing, each Grantor shall have an absolute license to assert and settle any and all such claims, and to receive and apply all proceeds thereof as Trustee shall determine in its discretion.

 

ARTICLE 5
DEFAULT

 

Section 5.1                                    Events of Default .  The occurrence of any of the following events shall constitute an event of default under this Deed of Trust (each an “ Event of Default ”):

 

(a)                                   an “Event of Default” (as such term is defined in the Credit Agreement) shall have occurred;

 

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(b)                                  any Grantor’s material breach of any of the covenants set forth in this Deed of Trust; or

 

(c)                                   if any material misstatement or misrepresentation exists now or hereafter in any warranty or representation set forth in Article 3 hereof.

 

ARTICLE 6
REMEDIES AND FORECLOSURE

 

Section 6.1                                    Remedies .  If an Event of Default occurs and is continuing beyond any applicable notice and cure period, Beneficiary may, at Beneficiary’s election and by or through Trustee or otherwise, exercise any or all of the following rights, remedies and recourses:

 

(a)                                   To the extent permitted under the Credit Agreement, declare the Indebtedness 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 Grantor), whereupon the same shall become immediately due and payable.

 

(b)                                  Notify all tenants of the Premises and all others obligated on leases of any part of the Premises that all rents and other sums owing on leases have been assigned to Beneficiary and are to be paid directly to Beneficiary, and to enforce payment of all obligations owing on leases, by suit, ejectment, cancellation, releasing, reletting or otherwise, whether or not Beneficiary has taken possession of the Premises, and to exercise whatever rights and remedies Beneficiary may have under any assignment of rents and leases.  Upon the occurrence of an Event of Default beyond any applicable notice and cure period, Beneficiary shall be the attorney-in-fact of Grantor with respect to any and all matters pertaining to the Trust Property with full power and authority to give instructions with respect to the collection and remittance of payments, to endorse check, to enforce the rights and remedies of Grantor, and to execute on behalf of Grantor and in Grantor’s name any instruction, agreement or other writing required therefor.  This power shall be irrevocable and deemed to be a power coupled with an interest.

 

(c)                                   As and to the extent permitted by law, enter the Trust Property, either personally or by its agents, nominees or attorneys, and take exclusive possession thereof and thereupon, Beneficiary may (i) use, operate, manage, control, insure, maintain, repair, restore and otherwise deal with all and every part of the Premises and conduct business thereat; (ii) complete any construction