Exhibit 10.26
STATE OF NEVADA
COUNTY OF ▇▇▇▇▇
DEED OF TRUST, SECURITY AGREEMENT AND FINANCING STATEMENT
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This Deed of Trust, Security Agreement and Financing Statement (hereinafter
termed "Agreement" or "Deed of Trust") is entered into between AUTOTOTE CBS,
INC., a Nevada corporation, whose mailing address is ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter termed Maker), and ▇▇▇▇▇ ▇. ▇▇▇▇▇, Trustee
(hereinafter termed "Trustee"), as Trustee, for the benefit of STANDARD LIFE AND
ACCIDENT INSURANCE COMPANY, whose mailing address is Attn: Mortgage and Real
Estate Investment Department, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(hereinafter termed "Noteholder").
I. DEFINITIONS
1.1 The term "Indebtedness" shall mean and include:
(1) Any and all sums becoming due and payable pursuant to the Note, as
hereinafter defined;
(2) Any and all other sums becoming due and payable by Maker to Noteholder
including such as may hereafter be borrowed by Maker from Noteholder (it being
contemplated that such future indebtedness may be incurred), and including, but
not limited to, advancements made by Noteholder pursuant to the terms and
conditions of this Agreement or any other instrument securing, executed in
connection with or otherwise relating to the Note; and
(3) All renewals, extensions, modifications, increases, consolidations and
rearrangements of any or all of the obligations of Maker defined herein under
the term Indebtedness, whether or not Maker executes any renewal, extension or
other such agreement.
1.2 The term "Collateral" shall mean and include (a) all of the goods,
articles of personal property, accounts, general intangibles, instruments,
documents, furniture, furnishings, equipment and/or fixtures of every kind and
nature whatever (including without limitation, the items described in subsection
(b) - (d) below) now or hereafter owned by Maker, in or hereafter placed in, or
used or which may become used, in connection with or in the operation of the
Mortgaged Premises, together with all additions thereto, replacements thereof,
substitutions therefor and all proceeds thereof; (b) all rents, rentals,
payments, compensations, revenues, profits, incomes, leases, licenses,
concession agreements, insurance policies, plans and specifications, contract
rights, accounts, escrowed funds, and general intangibles in any way relating to
the Mortgaged Property
or used or useful in the use, enjoyment, ownership or operation of the
Mortgaged Property; (c) all names, trade names, signs, marks, and trademarks
under which the Mortgaged Property, or any part thereof, is known or operated
and all of Maker's rights to carry on the business of Maker under all such name
or names and any variant or variance thereof; and (d) all deposits, awards,
damages, payments, escrowed monies, insurance proceeds, condemnation awards or
other compensation, and interests, fees, charges or payments accruing on or
received from or to be received on any of the foregoing in any way relating to
the Mortgaged Property, or the ownership, enjoyment or operation of the
Mortgaged Property together with all proceeds of the foregoing described in this
Section 1.2.
1.3 The term "Mortgaged Premises" shall mean and include (a) the real
property situated in the County of ▇▇▇▇▇, State of Nevada, described in Exhibit
"A" which is attached hereto and incorporated herein for all purposes; together
with all buildings and improvements of every kind and description now or
hereafter erected or placed thereon and all materials now or hereafter placed
thereon intended for construction, reconstruction, alteration and repairs of
such buildings and improvements, all of which materials shall be deemed to be
included as a part of said real property immediately upon the delivery thereof
to said real property; (b) all fixtures now or hereafter owned by Maker and
attached to, contained in or used in connection with said real property, and all
renewals and replacements thereof, including but not limited to (i) all
equipment, apparatus, machinery, motors, elevators, fittings and radiators, (ii)
all plumbing, heating, lighting, ventilating, refrigerating, incinerating,
air-conditioning and sprinkler equipment; (iii) all awnings, storm windows and
doors, mantels, cabinets, computer flooring, rugs, carpeting, linoleum, stoves,
shades, draperies, blinds and water heaters; (iv) such other goods and chattels
and personal property as are usually furnished by landlords in letting an
unfurnished building, or which shall be attached to said buildings and
improvements by nails, screws, bolts, pipe connections, masonry or in any other
manner; and (v) all built-in equipment as may be shown by plans and
specifications.
1.4 The term "Mortgaged Property" shall mean the Mortgaged Premises and
Collateral.
1.5 The term "Note" shall mean that certain Promissory Note of even date
herewith in the principal sum of $2,100,000.00 executed by Maker and payable to
the order of Noteholder, payable with interest in installments as stipulated
therein and providing for the right to declare the unpaid principal balance due
and payable upon the occurrence of an Event of Default and otherwise as provided
therein and providing for the reasonable attorneys' fees, and all notes given in
renewal, extension, modification,
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increase, consolidation or rearrangement of said Promissory Note or any portion
thereof.
II. CONVEYANCE IN TRUST
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In consideration of Ten Dollars ($10.00) cash in hand paid, of Noteholder's
advancing or extending to Maker the funds or credit constituting a part of the
Indebtedness, and the mutual covenants contained herein, the receipt and
sufficiency of which are hereby acknowledged, Maker hereby conveys to Trustee
the above-described Mortgaged Property, in trust, with power of sale, for the
purpose of securing the Indebtedness, and the full and complete performance of
each and every obligation, covenant, duty and agreement of Maker contained
herein or in the Note or any other instrument executed by Maker pertaining to
the Note or as security therefor; TO HAVE AND TO HOLD the Mortgaged Property,
together with the rights, privileges and appurtenances thereto belonging unto
the Trustee and his substitutes or successors forever, and Maker is hereby bound
to warrant and forever defend the Mortgaged Property unto the Trustee, his
substitutes or successors and their assigns, against the claims of all persons
claiming any interest in the Mortgaged Property or any part thereof save and
except only these items identified on Exhibit "B" attached hereto and
incorporated herein for all purposes (the "Permitted Exceptions").
III. ADDITIONAL SECURITY
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As further security for the Indebtedness and the full and complete
performance of each and every obligation, covenant, agreement and duty of Maker
contained herein or contained in any other instrument executed by Maker
pertaining to the Note or the security therefor:
A. Security Interest. Maker hereby grants and conveys to Noteholder a
security interest in and lien on all of the Collateral. This Agreement shall
serve as a Security Agreement created pursuant to Chapter 104 of the Nevada
Revised Statutes, the Nevada Uniform Commercial Code (the "NUCC"), and
Noteholder shall have and may exercise all rights, remedies and powers of a
secured party under the NUCC. Maker hereby represents, warrants and covenants
that (1) other than with respect to liens in favor of Banker's Trust Company
filed as File No. 91-10345 dated November 7, 1991 and File No. 94-05140 dated
May 2, 1994, respectively, in the Nevada Secretary of State's office ("Senior
Encumbrance"), Maker is the owner and holder of the Collateral free and clear of
any adverse claim, security interest or encumbrance, except those created herein
or which have been expressly subordinated to the security interest provided by
this Deed of Trust and by written subordination agreement approved in advance by
Noteholder prior to the date hereof; (2) it will defend the Collateral, and the
priority of the security interest
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created herein as a valid first security interest against all claims and demands
of any person at any time claiming the same or any interest therein; (3) there
are no financing statements executed by the Maker, as Debtor, now on file in any
public office except the Senior Encumbrance, those financing statements which
are being released contemporaneously with the delivery of this transaction or
which have been authorized by Noteholder or which have been expressly
subordinated to the security interest provided by this Deed of Trust and by
written subordination agreement approved in advance by Noteholder prior to the
date hereof; (4) it will deliver to Noteholder such other and further
agreements, financing statements and assignments as Noteholder may request and
authorizes Noteholder to file or record such statements in such offices and at
such times as it is deemed by Noteholder to be necessary or desirable.
B. Assignment of Condemnation Awards. To the extent of the full amount of
the Indebtedness secured hereby and of the cost and expenses (including
reasonable attorneys' fees) incurred by Noteholder in the collection of any
award or payment, Maker hereby assigns to Noteholder any and all awards or
payments, including all interest thereon, together with the right to receive the
same, which may be made with respect to the Mortgaged Property as a result of
(a) the exercise of the right of eminent domain, (b) the alteration of the grade
or of any street, or (c) any other injury to or decreased value in the Mortgaged
Property, as well as the right, but not the obligation, to, at Maker's expense,
participate in and make decisions concerning the progress of any proceeding
involving any such award or payment. Maker shall give Noteholder written notice
of any such action or proceeding immediately upon Maker's becoming aware of
same. All such damages, condemnation proceeds and consideration shall be paid
directly and solely to Noteholder whether or not an Event of Default has at such
time occurred, and after first applying said sums to the payment of all costs
and expenses (including reasonable attorneys' fees) incurred by Noteholder in
obtaining such sums, Noteholder may, at its option, apply the balance on the
Indebtedness, in any order and whether or not then due or to the restoration of
the Mortgaged Property, or release the balance to Maker. Said application or
release shall not cure or waive any default.
IV. ABSOLUTE ASSIGNMENT OF RENTS
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In further consideration for the indebtedness evidenced by the Note, Maker
hereby absolutely and unconditionally assigns to Noteholder all rents, revenues,
profits and incomes from the Mortgaged Property or any portion thereof.
Provided, however, so long as no Event of Default has occurred, Maker is hereby
granted a license to collect and retain the currently accruing rents, income and
profits from the Mortgaged Property, but in no event
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for more than one (1) month in advance of such collection. If an Event of
Default shall occur, however, thereupon, and at any time thereafter such default
is continuing, Noteholder may terminate such license and may, without any
liability to Maker, take or have Trustee take possession and control of the
Mortgaged Property and/or receive and collect all rents, revenues, profits and
income, accrued or accruing thereafter so long as any of the Indebtedness
remains unpaid, applying so much thereof as may be collected first to the
expenses incident to taking possession and/or the collection thereof, and second
to the payment of the Indebtedness other than the Note and then to the amount of
the Note then remaining unpaid, at Noteholder's discretion, either principal or
interest, in any order, and whether then matured or not, paying the balance, if
any, to the Maker. It is intended by Maker and Noteholder that this assignment
of rents constitutes an absolute assignment and not an assignment for additional
security only and that Noteholder shall be entitled to exercise its rights
hereunder whether or not Noteholder is in possession of the Mortgaged Premises
at such time. Maker agrees to fulfill or perform each and every covenant of any
and all leases of the Mortgaged Property so as to keep them at all times in full
force and effect, and not to make any modification, consent to any modification
of, or cancel any lease of all or any part of the Mortgaged Property after the
lease has been executed by Maker and lessee, without the prior written consent
of Noteholder, which consent shall not be unreasonably withheld; the failure to
fulfill or perform any such covenant or the making of or consent to any such
modification or cancellation shall be an Event of Default. Nothing contained in
this Agreement or in any other document securing, evidencing or relating to the
Indebtedness shall preclude Noteholder from taking any action to cure or remedy
any default of the Landlord under any lease of all or any portion of the
Mortgaged Property, or any act, omission or occurrence which but for the passage
of time, the giving of notice, or both, would be a default under any such lease
and any amounts expended by Noteholder in connection with such cure or
remediation including, without limitation, reasonable attorneys fees and
expenses, shall be an advance under and secured by this Agreement and shall be
included in the Indebtedness and shall be paid by Maker to Noteholder on demand.
The preceding sentence shall not be construed to obligate Noteholder to cure any
such actual or potential lease defaults.
V. MAKER'S REPRESENTATIONS AND WARRANTIES
--------------------------------------
In order to induce Noteholder to lend the funds evidenced by the Note, Maker
represents and warrants that:
A. Accurate Loan Information. All information and financial statements
furnished or to be furnished to Noteholder by or on behalf of Maker in
connection with the Indebtedness
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secured by this Agreement is or at the time of delivery will be complete and
accurate in all material respects.
B. Valid Title. Maker is the lawful owner of the Mortgaged Property and has
good right and lawful authority to mortgage and pledge the same.
C. Freedom from Encumbrances. The Mortgaged Property is free from any and
all liens and encumbrances save and except only the Permitted Exceptions, and
Maker does warrant and will defend title to the Mortgaged Property against all
claims or demand by third parties whatsoever save and except only the Permitted
Exceptions.
D. Maintenance of Lien Priority. Maker shall take all steps necessary to
preserve and protect the validity and priority of the liens on the Mortgaged
Property created hereby. Maker shall execute, acknowledge and deliver such
additional instruments as Noteholder may deem reasonably necessary in order to
preserve, protect, continue, extend or maintain the liens and security interests
created hereby as first liens on the Mortgaged Property. All costs and expenses
incurred in connection with the protection, preservation, continuation,
extension or maintaining of the security interest and the liens herein created
as valid first and subsisting liens shall be paid by Maker.
E. Value of the Mortgaged Property. The value of the Mortgaged Property, as
established by an appraisal submitted to Maker, is substantially in excess of
the Indebtedness secured hereby. Maker acknowledges but for the Mortgaged
Property having a value in excess of the amount of the Indebtedness, Noteholder
would not make the loan evidenced by the Note and advance the funds hereunder.
Maker agrees that Noteholder shall at all times have the benefit of the
Mortgaged Property as the security for the Indebtedness even though the value
thereof may now or in the future exceed the amount of the Indebtedness secured
hereby.
F. Representations, Warranties and Covenants With Respect to a Corporate
Maker. Maker hereby represents, warrants and covenants that:
(1) It is, and shall continue to be, (a) duly organized and existing under
the laws of the State in which it is incorporated, (b) duly qualified to
transact business in each State where the conduct of its business requires it to
be qualified, and (c) duly authorized to execute and deliver the written
instruments comprising the Indebtedness in this instrument and to observe and
perform its duties thereunder and hereunder.
(2) Its officers executing the instruments comprising part or all of the
Indebtedness are the legally elected, qualified and acting officers of the
corporation and have been expressly
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authorized to execute this instrument by resolution of the corporation's Board
of Directors.
(3) It shall not, without Noteholder's prior written consent, which consent
shall not be unreasonably withheld, reorganize or consolidate or merge with any
other corporation.
G. Construction and Materials. Maker hereby warrants, represents and
covenants that:
(1) All persons and entities who have provided labor or materials to or for
the benefit of the Mortgaged Property by, through or under Maker or otherwise at
Maker's direction or request at any time prior to the date of this Agreement
have been paid in full* and, if requested by Noteholder, have provided Maker
with lien waivers or subordination agreements in form and content acceptable to
Noteholder.
H. Hazardous Waste. Maker hereby represents and warrants that, after due and
diligent inquiry, Maker is not aware of any facts or circumstances which may
give rise to any litigation, proceedings, investigations, citations or notices
of violations resulting from the use, presence, generation, manufacture,
storage, discovery or disposition of, on, under or about the Mortgaged Property
or the transport to or from the Mortgaged Property of any Hazardous Materials,
defined below. Maker hereby represents and warrants that the Mortgaged Property
is not in violation of and Maker covenants and agrees not to use or permit the
use of the Mortgaged Property for any purpose which would be in violation of,
any federal, state or local health or environmental statute, regulation,
ordinance or publication which is presently in effect or that may be promulgated
in the future, as such statutes, regulations, ordinances and publications may be
amended from time to time relating to Hazardous Materials, including, without
limitation, with respect to industrial hygiene or to health or environmental
conditions on, under, or about the Mortgaged Property (including, but not
limited to, soil and ground water conditions) or with respect to the owner's or
occupant's thereof. The foregoing representations and warranties shall survive
foreclosure under this Agreement and shall constitute continuing representations
and warranties to Noteholder, its successors and assigns. The term Hazardous
Materials, as used in this Agreement, shall include but not be limited to:
(i) petroleum, petroleum based products and oil;
(ii) asbestos of any form which is or could become friable, urea
formaldehyde foam insulation, transformers or other equipment
which contain dielectric fluid containing levels of
polychlorinated biphenyls (sometimes known as a "pcb");
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*except for (i) those sums in dispute or retained by the construction lender
of the Mortgaged Property, (ii) those persons or entities who have filed
mechanic's liens against the Mortgaged Property for which indemnity has been
provided by Maker to the title insurer, and (iii) those persons or entities who
have recently completed such labor or provided such materials but have not yet
submitted evidence of same,
(iii) tanks, whether empty, filled or partially filled
with any substance, material, chemical or other
waste;
(iv) those substances defined as "hazardous waste",
"radioactive waste". "solid waste". "toxic waste",
"pollutant", "hazardous material", "regulated
substance", "hazardous substance". "highly hazardous
substance", "extremely hazardous substance",
"petroleum", "asbestos", or "asbestos containing
material" in Nev. Rev. Stat. ch. 459, Nev. Rev.
Stat. ch. 444, Nev. Rev. Stat. ch. 445, Nev. Rev.
Stat. ch. 590, Nev. Rev. Stat. Sections
618.750-618.850, inclusive, Nev. Rev. Stat. Section
477.045, as now or hereafter amended, or in the
rules, orders and regulations now existing or
hereafter promulgated pursuant thereto, or in the
Uniform Fire Code, as adopted by and now or
hereafter in effect in the State of Nevada;
(iv) any substance, material, chemical or other waste
including, without limitation any explosive,
flammable substances, explosives or radioactive
materials, hazardous or toxic waste, hazardous or
toxic materials, hazardous, toxic or radioactive
substances, contaminants or pollutants and any of
the preceding which are defined as or included in
the definition of "Hazardous Substance," "Hazardous
Waste," "Hazardous Material" or "Toxic Substance" or
other similar or related terms under any applicable
local, state or federal statute, regulation,
ordinance or publication including but not limited
to:
(1) Resource Conservation and Recovery Act of 1976
(commonly referred to as the Solid Waste
Disposal Act), 42 U.S.C. 6901 et seq.
(2) Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42
U.S.C. 9601 et seq.
(3) Clean Air Act, 42 U.S.C. Sections 7401 et seq.
(4) The Water Pollution and Prevention and Control
Act (commonly referred to as the Clean Water
Act) 33 U.S.C. Sections 1251-et seq.
(5) Hazardous Materials Transportation Act, 49
U.S.C. Sections 1801 et seq.
(6) Insecticides and Environmental Pesticide
Control Act (commonly referred to as the
Federal Pesticide Act of 1978) 7 U.S.C. 136 et
seq.
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(7) Toxic Substances Control Act, 15 U.S.C. 2601 et
seq.
(8) Safe Drinking Water Act, 42 U.S.C. 300(f) et seq.
as such statutes, regulations, ordinances and
publications may be amended from time to time;
(v) any other material, substance, chemical or other waste,
exposure to which is prohibited, limited or regulated from
time to time by any federal, state or local statute,
regulation, ordinance or publication or may pose a hazard
to the health and/or safety of the occupants of the
Mortgaged Property or any other adjacent or nearby
property.
Maker hereby agrees to indemnify and hold Noteholder, its directors, officers,
employees, and agents, and any successors to Noteholder's interest in the chain
of title to the Mortgaged Property, their directors, officers, employees, and
agents (the "Indemnitees"), from and against any and all liability (i) including
all foreseeable and all unforeseeable consequential damages, directly or
indirectly arising out of the use, presence, generation, storage, transportation
or disposal of Hazardous Materials by Maker, its present or future tenants, any
prior owner, operator or tenant of the Mortgaged Property, or any third party,
and (ii) including, without limitation, the cost of any required or necessary
repair, cleanup or detoxification, claimed, threatened or asserted against any
such Indemnitee arising out of the use, presence, generation, storage,
transportation or disposal of Hazardous Materials on or about the Mortgaged
Property by Maker, its present tenants or any of its future tenants, any prior
owner, operator or tenant of the Mortgaged Property, or any third party during
or prior to Maker's operation or fee ownership of the Mortgaged Property.
Maker's obligations pursuant to the foregoing indemnity shall survive any
termination of the estate created by this Agreement as a result of the exercise
by Noteholder of any default remedies available to it at law or in equity. Maker
acknowledges and agrees that as a condition precedent to making the loan to
Maker evidenced by the Note secured by this Agreement, Noteholder has required
that Maker provide to the Indemnitees the indemnity set forth herein and that
Noteholder would not consummate the loan without this indemnity and that the
indemnity contained herein is a material inducement for Noteholder's agreement
to make the loan. Further, Maker agrees that the foregoing indemnification is
separate, independent of and in addition to its undertakings as Maker under the
Note, as Maker under this Agreement, as Assignor under the Absolute Assignment
of Leases and Rents and any and all other documents, agreements and undertakings
executed by Maker in favor of Noteholder pursuant to the Note. Maker agrees that
a separate action may be brought to enforce the provisions of this
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indemnification, whether in lieu of, prior to, or subsequent to a foreclosure
action or a trustee's sale under this Agreement, which shall in no way be deemed
to be an action on the Note or under this Agreement, whether or not Noteholder
would be entitled to a deficiency judgment following a foreclosure sale of the
Mortgaged Property.
VI. ADDITIONAL COVENANTS OF MAKER
As long as any of the Indebtedness remains unpaid, Maker covenants and
agrees that:
A. Payment of Indebtedness. Maker will pay the Indebtedness promptly when
due and payable.
B. Payment of Taxes and Other Assessments. Maker will pay all taxes,
assessments and other governmental, municipal or other public dues, charges,
fines, or impositions imposed or levied upon the Mortgaged Property or on the
interest created by this Agreement, or any tax or excise on rents or other tax,
however described, assessed or levied by any state, federal or local taxing
authority as a substitute, in whole or in part, for taxes assessed or imposed on
the Mortgaged Property or on the interest created by this Agreement, and at
least ten (10) days before said taxes, assessments and other governmental
charges are due will exhibit receipts therefor to Noteholder. If any property
tax or assessment is levied, assessed or imposed on Noteholder as a legal holder
of the Note or any interest in the documents securing, evidencing or relating to
the Note by any governmental authority, then unless all such taxes are paid by
Maker as they become due and payable and in the opinion of General Counsel of
Noteholder, such payment by Maker is lawful and does not place Noteholder in
violation of any law, Noteholder may, at its option, declare the Indebtedness
immediately due and payable.
C. Insurance. Maker shall keep the Mortgaged Property insured against loss
or damage by fire, windstorm, extended coverage perils, flood (in the event any
of the Mortgaged Premises is within a 100-year flood plain and flood insurance
is available pursuant to the United States Flood Disaster Protection Act of 1973
or any similar or successor statute or successor governmental authority),
vandalism, malicious mischief and such other hazards, casualties or other
contingencies and in such amounts (but in no event less than the greater of the
amount of the Indebtedness from time to time secured hereby or the full
replacement value thereof) as from time to time may be required by Noteholder,
and maintain business interruption insurance coverage, in an amount at least
adequate to cover twelve (12) months' principal and interest installments on the
Note and together with twelve (12) months' property taxes and insurance
premiums, with respect to the Mortgaged Property covering the risk of loss due
to the occurrence of any of the foregoing
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hazards, in each case and in such amounts, in such manner and in such companies
as the Noteholder may reasonably approve, and all such policies shall contain a
waiver of subrogation and provide that any losses payable thereunder shall
(pursuant to standard mortgagee clauses without contribution, including one
providing that such insurance as to the interest of Noteholder shall not be
invalidated by any act or omission or neglect of Maker, to be attached to each
policy) be payable to Noteholder. Maker shall cause duplicate originals of any
and all such insurance policies to be deposited with Noteholder. Maker will also
carry public liability insurance, in such form, amounts and with such companies
as Noteholder may from time to time reasonably require, with Noteholder included
thereon as a named insured. Any or all of such policies may be provided under a
blanket policy or policies provided such blanket policies allocate the amount of
insurance required hereunder to the Mortgaged Property. Maker shall cause
duplicate originals of any and all such insurance policies to be deposited with
Noteholder, or certificates of the insurers under such policies evidencing same.
At least ten (10) days prior to the date the premiums on each such policy or
policies shall become due and payable, Maker shall furnish to Noteholder
evidence of the payment of such premiums. Each of such policies shall contain an
agreement by the insurer that the same shall not be cancelled or modified
without at least ten (10) days' prior written notice to Noteholder. In the event
of loss under any such policy, Maker shall give immediate written notice to the
insurance carrier and to Noteholder. With respect to all insurance policies
except public liability insurance, Noteholder is hereby authorized, but not
required, on behalf of and at the expense of Maker, whether or not an Event of
Default has then occurred, to make proof of loss, to collect for, adjust or
compromise any losses under any insurance policy on the Mortgaged Property, to
appear in and prosecute any action arising from any of such insurance policies,
and to apply, at Noteholder's option, the loss proceeds (less reasonable
expenses of collection) on the Indebtedness, in any order and whether due or
not, or to the restoration of the Mortgaged Property, or to be released to
Maker, but any such application or release shall not cure or waive any default.
In case of a sale pursuant to the foreclosure provision hereunder, or any
conveyance of all or any part of the Mortgaged Property in extinguishment of the
Indebtedness, complete title to all insurance policies on or related to the
Mortgaged Property, and the unearned premiums of same shall pass to and vest in
the purchaser or grantee of the Mortgaged Property.
D. Escrow for Taxes and Insurance. Maker shall pay, in addition to the
installments payable under the Note, on the same day as such installments are
due and payable, a sum equal to 1/12th of the estimated annual taxes, hazard and
rental insurance premiums, and special assessments, if any, next due on the
Mortgaged Property. If the amount so paid is not sufficient to
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pay such taxes, insurance premiums and assessments when due, then Maker will
immediately deposit with Noteholder amounts sufficient to pay the same. Funds
deposited by Maker pursuant to this provision shall be used to pay such taxes,
insurance premiums and assessments when due, provided that Maker has furnished
Noteholder with all tax statements, premium notices and other such notices at
least thirty (30) days prior to the date that any such taxes, premiums and
assessments may be due. If there is a default under the provisions of the Note
or of this Agreement, Noteholder may elect, at any time after default, to apply
the funds accumulated under this provision against the Indebtedness in any
manner or order. No interest shall accrue or be allowed on any payments under
the provisions of this paragraph. Noteholder shall not be required to deposit or
hold monies in an account special or separate from its general funds. Maker
expressly releases Noteholder from any liability to Maker arising out of the
maintenance by Noteholder of an escrow as provided herein or for payment of any
sums out of such escrow except for the gross negligence of Noteholder. Maker
further indemnifies Noteholder against claims arising out of payment of taxes or
insurance premiums where Maker has failed to provide Noteholder with tax
statements and premium notices as required hereby. The maintenance by Noteholder
of an escrow for taxes and insurance shall not relieve Maker of its obligations
under this Agreement respecting taxes and insurance on the Mortgaged Property.
E. Waste, Demolition, Alteration or Replacement. Maker will cause the
Mortgaged Property and every part thereof to be maintained, preserved and kept
in safe and good repair, working order and condition, will not commit or permit
waste thereon, will not remove, demolish or alter the design or structural
character of any building now or hereafter erected on the Mortgaged Premises,
without the prior written consent of Noteholder, and will comply with all laws
and regulations of any governmental authority with reference to the Mortgaged
Property and the manner and use of the same, and will from time to time make all
necessary and proper repairs, renewals, additions and restorations thereto so
that the value and efficient use thereof shall be fully preserved and
maintained. Except in the ordinary course of business, Maker agrees not to
remove any of the fixtures or personal property included in the Mortgaged
Property without the prior written consent of Noteholder and unless immediately
replaced with like property of at least equal value. Maker shall act as
necessary to continue or cause the continuance of such income producing activity
as is presently conducted upon or contemplated for the Mortgaged Property.
F. Inventory of Personal Property. Upon request of Noteholder, Maker shall
deliver to Noteholder an inventory describing and showing the make, model,
serial number and location of all fixtures and personal property from time to
time used in the management, maintenance and operation of the
12
Mortgaged Property (other than inventory or property, if any, expressly excluded
from the operation of this Agreement by separate written agreement) with a
certification by Maker that said inventory is a true and complete schedule of
such fixtures and personal property used in the management, maintenance and
operation of the Mortgaged Property and that such items specified in the
inventory constitute all of the fixtures and personal property required in the
management, maintenance and operation of the Mortgaged Property and that such
items are owned by Maker free and clear of security interests, liens,
conditional sales contracts or title retention arrangements, except for
Permitted Exceptions. Maker hereby grants to Noteholder a security interest in
all such items of fixtures and personal property under the terms and conditions
of this Agreement.
G. Financial Statement. Maker will furnish to Noteholder within one hundred
twenty (120) days after the first day of each and every January (the "Financial
Statement Due Date") until the Indebtedness secured hereby has been fully paid,
the annual audited financial statements of Maker covering the operation of the
Mortgaged Property, each such statement prepared in accordance with generally
accepted accounting principles and each such statement prepared and signed by an
independent certified public accountant approved by and acceptable to
Noteholder. The financial statements shall contain the Maker's certification
that, during the period of time covered by the particular statement, (i) no
activity has been conducted upon the Mortgaged Property in violation of any
state, federal or local law, ordinance or regulation pertaining to Hazardous
Materials, industrial hygiene or environmental conditions, and (ii) the
Mortgaged Property complies with the Americans with Disabilities Act.
If Maker does not deliver the financial statements as and when required by
this paragraph, there shall be added to the Indebtedness and Maker agrees to pay
upon demand Two Hundred Dollars ($200.00) for each calendar month or part
thereof following the Financial Statement Due Date until the required financial
statements are delivered to Noteholder.
H. Restrictions upon Sale, Transfer or Mortgaging the Mortgaged Property or
the Interest in Maker. Maker acknowledges that Noteholder is relying on the
credit worthiness and skill of Maker in advancing sums secured hereby. Except
for a natural person's transfer by will or applicable state intestacy laws
(collectively, "Permitted Transfers"): (i) if the Maker should sell, trade,
convey, transfer, mortgage, assign, exchange, pledge or encumber (including,
without limiting these provisions or any similar references in this Agreement,
the granting of a security interest in) all or any part of the Mortgaged
Property, or any interest of Maker therein, absolutely or as security for a debt
or other obligation, whether done in a direct or indirect method
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or enter into any contractual arrangements to do so, or (ii) if a shareholder of
Maker should sell, trade, convey, transfer, mortgage, assign, exchange, pledge
or encumber (including, without limiting these provisions or any similar
references in this Agreement, the granting of a security interest in) more than
30% in the aggregate of its interest in Maker or if such shareholder of Maker
shall otherwise be diluted, or (iii) if Maker shall in any way, voluntarily or
involuntarily be divested of title or of any interest in the Mortgaged Property,
then the Noteholder, at its option, may elect to accelerate the maturity of the
Note and declare the entire amount of the Indebtedness immediately due and
payable whereupon Maker shall have thirty (30) days to pay the full sum of the
Indebtedness including, without limitation, principal and interest, whether or
not any such sale, trade, conveyance, transfer, mortgage, assignment, exchange,
pledge, or encumbrance might diminish the value of the security for the
Indebtedness or increase the likelihood of an Event of Default or increase the
likelihood of the Noteholder having to resort to any other security for the
Indebtedness after default or add or remove liability of any party for payment
or performance of the Indebtedness. Maker further agrees that the foregoing
restriction shall be effective and remain in full force and effect throughout
the term of this Agreement and shall be applicable to Maker, each shareholder of
Maker and their respective heirs, executors, administrators, successors and
assigns. The consent by the Noteholder to any one such sale, trade, conveyance,
transfer, mortgage, assignment, exchange, pledge, or encumbrance (one or more of
the preceding a "Transaction") shall not waive or forfeit the right of
Noteholder to elect to accelerate the Indebtedness to maturity as to any other
Transaction. Maker further covenants and agrees to give written notice to
Noteholder in the event there occurs any Transaction which would violate the
terms and conditions of this provision. The term "Transaction" shall include any
voluntary or involuntary act or omission of Maker. Nothing herein contained
shall prevent Noteholder from accelerating the Note at any time in the event
Maker enters into such a transaction and does not notify Noteholder of same. The
Maker may request Noteholder to waive the right to declare the entire amount of
the Indebtedness immediately due and payable and Noteholder may, in its absolute
discretion, consent or refuse to consent to the Transaction. As a condition of
consenting to the Transaction, Noteholder may, in its absolute discretion, make
one or more of the following requirements:
(1) That the rate of interest contained in the Note be increased to a rate
acceptable to Noteholder;
(2) That a transfer fee in such amount as may be determined by Noteholder,
be paid;
(3) That a principal payment be made against the Note;
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(4) That the proposed transferee execute an assumption agreement or other
document as Noteholder may reasonably require; or
(5) That any other requirement deemed appropriate by Noteholder be
satisfied.
No Transaction pursuant to the foregoing provisions of this Subsection H or
described in Section 8.1(5) below shall in any way release Maker or any other
party liable on any of the Indebtedness or liable under any instrument securing,
evidencing or relating to the Indebtedness from any such liability.
I. Delivery of Substitute Note. Maker will, if the Note is mutilated,
destroyed, lost or stolen, deliver to Noteholder, in substitution therefor, a
new promissory note containing the same terms and conditions as the Note with a
notation thereon of the unpaid principal and accrued but unpaid interest. Maker
shall be furnished with satisfactory evidence of the mutilation, destruction,
loss or theft of the Note, and also such security or indemnity as may be
reasonably requested by Maker; provided, however, that if the original
noteholder named herein is the then noteholder under this Deed of Trust, an
unqualified indemnity from the original noteholder named herein, together with
an affidavit in form and content reasonably acceptable to Maker, shall be deemed
to be satisfactory security or indemnification.
J. Compliance with Covenants, Conditions, Restrictions and Recorded
Documents. Maker shall, and shall cause the Mortgaged Property, to fully and
timely comply with all restrictions covenants, conditions and agreements
benefitting, burdening or imposed on the Mortgaged Property or any portion
thereof or the owner of all or such portion of the Mortgaged Property.
VII. TERMINATION OF TRUST
Upon receipt of written request from Noteholder reciting that all sums
secured hereby have been paid and upon surrender of this Agreement and the Note
secured hereby for cancellation and payment of its fees Trustee shall reconvey
without warranty the property then held hereunder. The recitals in such
reconveyance of any matters of fact shall be conclusive proof of the truth
thereof. The grantee in such reconveyance may be described in general terms as
"the person or persons legally entitled thereto."
VIII. EVENTS OF DEFAULT
8.1 Acts Constituting Default. Maker will be in default under this Agreement
upon the happening of any of the following events or conditions, or the
happening of any other Event of Default as defined elsewhere in this Agreement
(herein collectively referred to as an "Event of Default"):
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(1) Maker fails to make when due any payment of principal or interest under
the Indebtedness, or otherwise breaches any of the provisions contained in the
Note.
(2) Maker fails to keep or perform any of the covenants, conditions or
stipulations contained in this Agreement or in any instruments securing,
evidencing or relating to the Indebtedness other than any event or condition
specified in section 8.1(1), 8.1(3), 8.1(4), 8.1(5), 8.1(6), or 8.1(7).
(3) Any warranty or representation made in this Agreement by Maker is
determined by Noteholder to be untrue in any material respect.
(4) Any person, corporation, or other entity that (a) owns all or any part
of the Mortgaged Property, (b) is liable for the payment of all or any part of
the Indebtedness, or (c) is a guarantor of all or any part of the Indebtedness
(i) admits in writing its inability to pay its debts generally as they become
due, (ii) files a petition or answer in bankruptcy as a Debtor or seeking
reorganization or an arrangement or otherwise to take advantage of any State or
Federal bankruptcy or insolvency law, (iii) makes an assignment for the benefit
of creditors, (iv) files a petition for or consents to the appointment of a
receiver for its assets or any part thereof, or (v) without its consent has a
petition filed in any bankruptcy or insolvency proceeding or an order, decree or
judgment entered by a court of competent jurisdiction appointing a receiver of
the Mortgaged Property or approving a petition filed against it seeking
reorganization or an arrangement of it or its assets or debts under any
bankruptcy or insolvency law and such petition, order, decree or judgment is not
dismissed, vacated, set aside or stayed within sixty (60) days from the date of
entry.
(5) Except for Permitted Transfers, Maker sells, trades, conveys, transfers,
mortgages, assigns, exchanges, pledges or encumbers (including, without limiting
these provisions or any similar references in this Agreement, the granting of a
security interest in) the Mortgaged Property, the Collateral or any portion
thereof or interest therein, or, except for Permitted Transfers, Maker or any
shareholder of Maker sells, trades, conveys, transfers, mortgages, assigns,
exchanges, pledges or encumbers (including, without limiting any of the
provisions of this subparagraph, the granting of a security interest in) more
than 30% in the aggregate of its interest in Maker, or any such event occurs
involuntarily to Maker or such shareholder of Maker, all without the prior
written consent of Noteholder.
(6) The corporate authority and right of Maker to do business in the State
of Nevada is terminated, withdrawn, cancelled or modified.
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(7) Maker's existence as a legal entity for any reason, by operation of law
or otherwise, is modified or terminates.
8.2 Concurrency of Cure Periods. All notice and cure periods provided herein
or in the Note shall run concurrently with any notice or cure periods provided
by law. Without limiting the foregoing, Noteholder or the Trustee shall be
entitled to cause a notice of breach and election to sell to be recorded and
mailed if any event occurs which, with the giving of notice and/or passage of
time, would constitute a default hereunder or an event of default under the Note
or would entitle Noteholder to accelerate the Indebtedness secured hereby and
the recording and mailing to Trustor of such notice of breach and election to
sell shall constitute notice of a failure to perform pursuant hereto or thereto.
IX. RIGHTS OF NOTEHOLDER UPON DEFAULT
9.1 Acceleration of Indebtedness. Upon occurrence of an Event of Default or
at any time thereafter, subject to NRS 107.080, Noteholder may at its option and
without demand or notice to Maker, accelerate the maturity of the Note and
declare the Indebtedness secured hereby immediately due and payable. Unless
otherwise provided herein, Maker hereby waives, to the extent permitted by
applicable law, presentment for payment, protest and demand, notice of protest,
demand, dishonor and default, notice of intent to declare the Indebtedness
immediately due and payable and notice of the declaration that the Indebtedness
is immediately due and payable, and any and all rights Maker may have to a
hearing before any judicial authority prior to the exercise by Noteholder of any
of its rights under this Agreement or any other agreements securing or executed
in connection with the Indebtedness, all to the extent authorized by law.
9.2 Operation of Property. Upon occurrence of an Event of Default and the
expiration of any applicable cure or grace period, if any, or at any time
thereafter, Noteholder may, to the full extent permitted by law, in addition to
all other rights and remedies, forthwith after any such default enter upon and
take possession of the Mortgaged Property, complete any buildings or other
improvements under construction, construct new improvements and make
modifications to any of the foregoing. In connection therewith Noteholder shall
have the power to file any and all notices and obtain any and all permits and
licenses which Noteholder, in its sole and absolute discretion, deems necessary
or appropriate, including but not limited to the filing of notices of completion
and the obtaining of certificates of occupancy. Noteholder shall also have the
right to receive all of the rents, issues and profits of the Mortgaged Property,
overdue, due or to become due, and to apply the same, after payment of all
necessary charges and expenses, including
17
attorneys' fees, on account of the indebtedness secured hereby. Noteholder may
do any and all of the foregoing in its own name or in the name of Trustor and
Trustor hereby irrevocably appoints Noteholder as its attorney-in-fact for such
purposes. Noteholder may also, at any time after such default, apply to any
court of competent jurisdiction for the appointment of a receiver and Trustor
agrees that such appointment shall be made upon a prima facie showing of a
claimed default without reference to any offsets or defenses against such
default. Such receiver shall have all the rights and powers provided Noteholder
pursuant to this section or otherwise provided hereunder or by law. Said
receiver may borrow monies and issue certificates therefor. Said certificates
shall be a lien on the Mortgaged Property subordinate only to this Agreement;
provided, however, that should any of said certificates be acquired by
Noteholder the amount thereof shall constitute additional indebtedness secured
hereby. Such receiver may lease all or any portion of the Mortgaged Property on
such terms and for such a term (which may extend beyond the terms of such
receiver's appointment and/or, if Noteholder so consents, sale of the Mortgaged
Property hereunder) as such receiver may deem appropriate in its sole and
absolute discretion. The entering upon and taking possession of the Mortgaged
Property pursuant to this section and the collection of the rents, issues and
profits therefrom shall not cure or waive any default or notice of default
hereunder or invalidate any act of Noteholder pursuant thereto.
9.3 Judicial Proceedings. Upon the occurrence of an Event of Default, and
the expiration of any applicable cure or grace period, if any, or at any time
thereafter, or upon the breach of any covenant, term or condition herein
contained, Noteholder, in lieu of or in addition to causing the Trustee to
exercise the power of sale hereafter given, may proceed by suit for a
foreclosure of its lien on the Mortgaged Property, or to ▇▇▇ Maker for damages
on, arising out of said default or breach, or for specific performance of any
provision contained herein, or to enforce any other appropriate legal or
equitable right.
9.4 Foreclosure Sale.
(1) Procedure. Upon occurrence of an Event of Default, or at any time
thereafter, Noteholder may, subject to NRS 107.080, declare all sums secured
hereby immediately due by delivery to Trustee of a written notice of breach and
election to sell (which notice Trustee shall cause to be recorded and mailed as
required by law) and shall surrender to Trustee this Agreement and the Note.
After three (3) months shall have elapsed following recordation of any such
notice of breach, Trustee shall sell the property subject hereto at such time
and at such place in the State of Nevada as Trustee, in its sole discretion,
shall deem
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best to accomplish the objects of these trusts, having first given notice of
such sale as then required by law. In the conduct of any such sale Trustee may
act itself or through any auctioneer, agent or attorney. The place of sale may
be either in the county in which the property to be sold, or any part thereof,
is situated, or at an office of the Trustee located in the State of Nevada.
(a) Upon the request of Noteholder or if required by law
Trustee shall postpone sale of all or any portion of said
property or interest therein by public announcement at the time
fixed by said notice of sale, and shall thereafter postpone said
sale from time to time by public announcement at the time
previously appointed.
(b) At the time of sale so fixed, Trustee shall sell the
property so advertised or any part thereof or interest therein
either as a whole or in separate parcels, as Noteholder may
determine in its sole and absolute discretion, to the highest
bidder for cash in lawful money of the United States, payable at
time of sale, and shall deliver to such purchaser a deed or
deeds or other appropriate instruments conveying the property so
sold, but without covenant or warranty, express or implied.
Noteholder and Trustee may bid and purchase at such sale. To the
extent of the Indebtedness secured hereby, Noteholder need not
bid for cash at any sale of all or any portion of the Property
pursuant hereto, but the amount of any successful bid by
Noteholder shall be applied in reduction of said Indebtedness.
Trustor hereby agrees, if it is then still in possession, to
surrender, immediately and without demand, possession of said
property to any purchaser.
(c) Noteholder, from time to time before Trustee's sale,
may rescind any notice of breach and election to sell by
executing, delivering and causing Trustee to record a written
notice of such rescission. The exercise by Noteholder of such
right of rescission shall not constitute a waiver of any breach
or default then existing or subsequently occurring, or impair
the right of Noteholder to execute and deliver to Trustee, as
above provided, other notices of breach and election to sell,
nor otherwise affect any term, covenant or condition hereof or
under any obligation secured hereby, or any of the rights,
obligations or remedies of the parties thereunder.
(2) Collateral. on the happening of any Event of Default or at any time
thereafter, Noteholder or Trustee shall have and may exercise with respect to
the Collateral all rights, remedies and powers of a Secured Party under the NUCC
with reference to the Collateral or any other items in which a security interest
has been granted herein, including without limitation the right and power to
sell at public or private sale or sales or otherwise
19
dispose of, lease or utilize the Collateral and any part or parts thereof in any
manner to the fullest extent authorized or permitted under the NUCC after
default by Maker without regard to preservation of the Collateral or its value
and without the necessity of a court order, and apply the proceeds thereof first
toward the payment of all costs and expenses and reasonable attorneys' fees
incurred by Noteholder or Trustee, and the balance toward the payment of the
Indebtedness whether or not then due, and in such order or manner as Noteholder
may elect. In the Event of Default, and the expiration of any applicable cure or
grace period, if any, Noteholder shall have, among other rights, the right to
take possession of the Collateral and to enter upon any premises where the same
may be situated for the purpose of repossessing the same, without being guilty
of trespass and without liability for damages occasioned thereby, except for
Noteholder's willful misconduct, and to take any action deemed appropriate or
desirable by Noteholder, at its option and its sole discretion, to repair,
restore or otherwise prepare the Collateral for sale or lease or other use or
disposition as authorized herein. To the extent permitted by law, Maker
expressly waives any notice of sale or any other disposition of the Collateral
and any rights or remedies of Maker or the formalities prescribed by law
relative to the sale or disposition of the Collateral or to the exercise of any
other right or remedy of Noteholder existing after default. To the extent that
such notice is required and cannot be waived, Maker agrees that if such notice
is mailed postage prepaid to Maker at the address shown herein at least five (5)
days before the time of the sale or disposition, such notice shall be deemed
reasonable and shall fully satisfy any requirement for giving said notice.
Maker agrees that Trustee or Noteholder may proceed to sell or dispose of
both the real and personal property covered herein in accordance with the rights
and remedies granted under this Agreement with respect to the real property
covered hereby. Maker hereby grants Noteholder the right, at its option, after
default by Maker to transfer at any time to itself or its nominee the
Collateral or any part thereof and to receive the monies, income, proceeds and
benefits attributable to the same and to hold the same as Collateral or to apply
it on the Indebtedness, whether or not then due, and in such order and manner as
Noteholder may elect. Maker covenants and agrees that all recitals and any
instrument transferring, assigning, leasing or making other disposition of the
Collateral or any part thereof shall be full proof of the matters stated therein
and no other proof shall be required to establish the legal propriety of the
sale or other action taken by Noteholder or Trustee and that all prerequisites
of sale shall be presumed conclusively to have been performed or to have
occurred. All rights to a marshalling of the assets of Maker, including such
rights with respect to the
20
Collateral and the Mortgaged Premises, are hereby waived to the extent permitted
by applicable law.
(3) Maker's Warranties After Sale. Maker hereby authorizes and empowers the
Trustee to execute and deliver to the purchaser or purchasers of any of the
Mortgaged Property sold in foreclosure sales good and sufficient deeds of
conveyance thereto by fee simple title, subject to those title exceptions listed
in the Mortgagee Policy of Title Insurance delivered to and approved by
Noteholder in connection with this Agreement and the title of such purchaser or
purchasers when so made by the Trustee, Maker binds itself to warrant and
forever defend.
(4) Application of Proceeds. The proceeds of any and all foreclosure sales
of the Mortgaged Property shall be applied as follows: (i) to the payment of all
necessary actions and expenses incident to the execution of said sale or sales,
including a reasonable fee to the Trustee not exceeding five percent (5%) of the
gross proceeds of the sale or sales of the Mortgaged Property, (ii) to the
payment of the Indebtedness in such order as determined by Noteholder, to the
amount of the accrued interest and principal legally due thereon and all other
sums secured hereby, and to the payment of reasonable attorneys' fees as in the
Note provided, and (iii) the remainder, if any, shall be paid to Maker or such
other person or persons entitled thereto by law.
(5) Multiple Sales. Upon the occurrence of any Event of Default and the
expiration of any applicable cure or grace period, if any, or at any time
thereafter, the Noteholder shall have the option to proceed with foreclosure in
satisfaction of said Event of Default, either through the courts or by directing
the Trustee to proceed with foreclosure as provided for in this Agreement, but
without declaring the whole Indebtedness due, and provided that if any sale is
made because of such Event of Default, such sale may be made subject to the
unmatured part of the Note and Indebtedness secured by this Agreement, and such
sale, if so made, shall not in any manner affect the unmatured part of the
Indebtedness secured by this Agreement, but as to such unmatured part of the
Indebtedness this Agreement shall remain in full force and effect as though no
sale had been made under the provisions of this paragraph. Several sales may be
made under the provisions of this paragraph without exhausting the right of sale
for any remaining part of the Indebtedness whether then matured or unmatured,
the purpose hereof to provide for a foreclosure and sale of the Mortgaged
Property for any matured part of the Indebtedness without exhausting any power
of foreclosure and the power to sell the Mortgaged Property for any other part
of the Indebtedness, whether matured at the time or subsequently maturing.
21
(6) Waiver of Appraisement Laws. To the extent permitted by applicable law,
Maker waives the benefit of all laws now existing or hereafter enacted providing
for (i) any appraisement before sale of any portion of the Mortgaged Property
(commonly known as Appraisement Laws), or (ii) any extension of time for the
enforcement of the collection of the Indebtedness or any creation or extension
of a period of redemption from any sale made in collecting the Indebtedness
(commonly known as Stay Laws and Redemption Laws).
(7) Prerequisites of Sales. In case of any foreclosure sale of the Mortgaged
Property, all prerequisites to the sale shall be presumed to have been
performed, and in any conveyance given hereunder, all statements of facts, or
other recitals therein made as to the nonpayment of money secured or as to the
request of the Trustee to enforce this trust, or as to the proper and due
appointment of any substitute trustee, or as to the advertisement of sale, or
time, place and manner of sale, or as to any other preliminary fact or thing,
shall be taken in all courts of law or equity as prima facie evidence that the
facts so stated or recited are true.
XI. USE OF INSURANCE PROCEEDS
11.1 Holding of Proceeds. Notwithstanding the provisions of Article VI,
Section C, any insurance proceeds paid to Noteholder will be first applied in
payment of the reasonable expenses, if any, incurred by Noteholder in the
collection of said insurance proceeds and the balance, if any, will be held and
disbursed by Noteholder in accordance with the following provisions:
A. (1) Should there exist an Event of Default at the time of the casualty or
should there occur at any time thereafter an Event of Default; (2) should either
the tenant of any portion of the Mortgaged Property or the Maker terminate a
lease as a result of said damage, or, whether or not a result of such damages,
at any time prior to the commencement of reconstruction; (3) should any
insurance proceeds be remaining after the completion of all restoration work; or
(4) should Maker fail to comply with the requirements for disbursing the
insurance proceeds, then in any of the said events, Noteholder may, at its
option, apply the insurance proceeds on the Indebtedness, in any order and
whether due or not, or to the restoration of the Mortgaged Property, or to be
released to Maker, but any such application or release shall not cure or waive
any default.
B. If the insurance proceeds have not been disbursed under the provisions of
subparagraph A hereof, or if under subparagraph A Noteholder elects to permit
the insurance proceeds to be used for restoration of the Mortgaged Property, the
proceeds will be held and disbursed as follows:
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(1) Should the insurance proceeds be less than $25,000.00, Maker shall
immediately commence and complete the work of restoring the damaged property and
Noteholder will disburse the portion of the insurance proceeds to pay actual
costs to replace, repair and restore the damaged property to Maker upon (i)
completion of the restoration work to a condition satisfactory to Noteholder,
(ii) submission of a written report by Maker that all restoration work has been
completed, and (iii) receipt by Noteholder of such evidence as Noteholder may
require that all mechanics and materialmen performing work or supplying
materials for the restoration work have been fully paid.
(2) Should the insurance proceeds equal or be in excess of $25,000.00, but
less than $100,000.00, Maker shall cause plans and specifications ("Plans") for
the restoration of the damaged property to be submitted to Noteholder for
approval, which approval shall not be unreasonably withheld. Upon receipt of
Noteholder's approval, Maker shall forthwith commence and complete the
restoration of the damaged property in accordance with the approved Plans.
Noteholder will disburse the portion of the insurance proceeds to pay the actual
costs to repair and restore the damaged property to Maker upon (i) completion of
the restoration work to a condition satisfactory to Noteholder, (ii) submission
of a written report by Maker that all restoration work has been completed, and
(iii) receipt by Noteholder of such evidence as Noteholder may require that all
mechanics and materialmen performing work or supplying materials for the
restoration work have been completely paid.
(3) If the insurance proceeds are equal or in excess of $100,000.00: (a)
Plans for the restoration of the damaged property and a cost estimate will both
be prepared by an architect employed by Maker and acceptable to Noteholder. The
Plans and cost estimates will be submitted to Noteholder for approval, which
approval shall not be unreasonably withheld. Upon receipt of Noteholder's
approval, Maker will promptly commence and diligently pursue the restoration
work in accordance with the approved Plans. (b) If prior to the commencement of,
or at any time during the restoration work, Noteholder shall determine that the
total cost of the restoration work shall exceed the balance of the insurance
proceeds held in its possession, Maker shall immediately pay, in cash, to
Noteholder the amount of such excess costs. Until the amount of said excess
costs is paid to Noteholder, Noteholder shall not be obligated to disburse any
of the insurance proceeds held by it. The insurance proceeds and the amount of
excess costs paid by Maker are hereinafter called "Construction Funds". The
amount of such excess costs paid by Maker shall be disbursed prior to the
disbursement of any of the insurance proceeds held by Noteholder. (c) The
Construction Funds will be made available to Maker as restoration repair work
progresses pursuant to certificates of the architect approved by Noteholder,
submitted not more than
23
once every thirty (30) days. There shall be delivered to Noteholder such other
evidences as Noteholder may reasonably request, from time to time, during the
restoration work, as to the progress of the work, the compliance with the
approved Plans, the total cost of restoration work to date of request, the total
cost needed to complete the restoration work, lien waivers or evidence of no
liens against the Mortgaged Property. If at any time during the course of the
restoration work, Noteholder learns of facts concerning the restoration work
which is materially adverse to Noteholder, or payment or nonpayment of mechanics
and materialmen, or inaccuracy of any information furnished with respect to it,
Noteholder may withhold the disbursement of funds until such time as it is
prudent to continue to disburse the Construction Funds or may determine not to
make any further disbursements of the Construction Funds and instead to apply
all such funds remaining to the payment of the Indebtedness then outstanding,
whether due or not at such time and in such order as determined by Noteholder.
C. Noteholder shall not be required to hold any funds received by it
described in this Article X in any account special or separate from Noteholder's
general account. No such funds shall be required to be placed in any interest
bearing account, and any interest earned thereon shall constitute additional
insurance proceeds to be applied as provided in this Agreement.
XI. SPECIAL CONDITIONS
This instrument is expressly made subject to the following special
conditions.
11.1 Successor Trustees. Noteholder may, at any time, by instrument in
writing, appoint a successor or successors to the Trustee named herein or acting
hereunder, which instrument, executed and acknowledged by Noteholder, and
recorded in the office of the County Recorder, ▇▇▇▇▇ County, Nevada, shall be
conclusive proof of the proper substitution of such successor trustee, who shall
have all the estate, powers, duties and trusts in the premises vested in or
conferred on the original trustee. If there be more than one trustee, either may
act alone and execute these trusts upon the request of Noteholder and his acts
shall be deemed to be the acts of all trustees, and the recital in any
conveyance executed by such sole trustee of such requests shall be conclusive
evidence thereof, and of the authority of such sole trustee to act.
11.2 Waiver and Election. The exercise of any right or remedy by Noteholder
shall not be considered as a waiver of any right or remedy nor shall any
acceptance by Noteholder of Maker's partial payment or partial performance of
obligations under the Note or hereunder, nor shall any failure or delay by
Noteholder in exercising any of its rights or remedies as to any Event of
24
Default which may occur, operate as a waiver by Noteholder of its rights or
remedies with respect to the occurrence of any other or further Event of Default
or to the recurrence of the same Event of Default. The filing of a suit to
foreclose the Deed of Trust granted by this Agreement either on any matured
portion of the Indebtedness or for the whole of the Indebtedness, shall never be
considered an election so as to preclude foreclosure under power of sale after a
dismissal of the suit; nor shall the filing of the necessary notices for
foreclosure, as provided in this Agreement, preclude the exercise by Noteholder
of any other right or remedy including, without limitation, the prosecution of a
later suit thereon.
11.3 Intentionally Omitted.
11.4 Enforceability. If any provision hereof is presently or at any time
becomes invalid or unenforceable, the other provisions hereof shall remain in
full force and effect, and the remaining provisions hereof shall be construed in
favor of the Trustee and the Noteholder to effectuate the provisions hereof.
11.5 Application of Payments. If the lien or liens created by this Agreement
are invalid or unenforceable as to any part of the Indebtedness or if such lien
or liens are invalid or unenforceable as to any part of the Mortgaged Property,
the unsecured or partially unsecured portion of the Indebtedness shall be
completely paid prior to the payment of the remaining and secured or partially
secured portion of the Indebtedness and all payments made on the Indebtedness,
whether voluntary or under foreclosure or other enforcement action or
procedures, shall be considered to have been first paid on and applied to the
full payment of that portion of the Indebtedness which is not secured or not
fully secured by the lien or liens created herein.
11.6 Meaning of Particular Terms. Whenever used, the singular number shall
include the plural, the plural the singular and the use of any gender shall
include all genders. The words "Maker" and "Noteholder" shall include their
heirs, executors, administrators, successors and assigns, and the word "Trustee"
shall include his or her successors and substitute trustees.
11.7 Advances by Noteholder. If Maker shall fail to comply with the
provisions with respect to the securing of insurance, payment of taxes,
assessments, and other charges, the keeping of the Mortgaged Property in repair,
or any other term or covenant herein contained, Noteholder may, but shall not be
obligated to, incur such expenses as deemed necessary by Noteholder, and make
advances to perform such provisions, terms or covenants, and where necessary
enter the Mortgaged Property for the purpose of performing any such term or
covenant. Noteholder is further empowered, but not obligated, to make advances
for any expenditure deemed advisable by Noteholder for the preservation
25
of the Mortgaged Property or for the continuation of the operation thereof.
Maker agrees to repay all sums so advanced or expended, and all expenses
incurred by Noteholder in connection with the exercise of any of its rights
under this Agreement, upon demand, with interest from the date such advances or
expenditures are made, determined on the same basis as matured principal in the
Note and all sums so advanced or expended, with interest, shall be secured
hereby.
11.8 Release or Extension by Noteholder. Noteholder, without notice, may
release any part of the Mortgaged Property or any person liable for the
Indebtedness without in any way affecting the liens hereof on any part of the
Mortgaged Property not expressly released and may agree in writing with any
party with an interest in the Mortgaged Property to extend the time for payment
of all or any part of the Indebtedness or to waive the prompt and full
performance of any term, condition or covenant of any instrument securing,
evidencing or relating to the Indebtedness.
11.9 Partial Payments. Acceptance by Noteholder of any payment of less than
the amount due on the Indebtedness shall be deemed acceptance on account only
and the failure to pay the entire amount then due shall be and continue to be a
default; and at any time thereafter and until the entire amount due on the
Indebtedness has been paid, Noteholder shall be entitled to exercise all rights
conferred on it by the terms of this Agreement upon the occurrence of an Event
of Default.
11.10 Titles not to be Considered. All section, subsection, paragraph or
other titles contained in this Agreement are for reference purposes only and
this Agreement shall be construed without reference to said titles.
11.11 Construction of Agreement. This Agreement may be construed as a
mortgage, deed of trust, chattel mortgage, conveyance, assignment, security
agreement, pledge, financing statement, hypothecation or contract, or any one or
more of them, in order fully to effectuate the lien hereof and the purposes and
agreements herein set forth.
11.12 Additional Taxes. Maker agrees that if any state, federal or municipal
government, or any of its subdivisions having jurisdiction, shall levy, assess
or charge any tax, assessment or imposition upon this Agreement or the credit or
indebtedness secured hereby or the Note or the interest of Noteholder in the
Mortgaged Premises or upon Noteholder by reason of any of the foregoing
(excepting therefrom any income tax on interest payments on the principal
portion of the Indebtedness secured hereby) then, Maker shall pay all such taxes
to or for Noteholder as they become due and payable, and provided further that
in the event of passage of any law or regulation permitting,
26
authorizing or requiring the tax, assessment or imposition to be levied,
assessed or charged, which law or regulation prohibits Maker from paying the
tax, assessment or imposition, to or for Noteholder, then all sums hereby
secured shall become immediately due and payable at the option of the
Noteholder. Maker agrees to exhibit to Noteholder at any time upon request,
official receipts showing payment of all taxes, assessments and charges which
Maker is required or elects to pay hereunder. Maker agrees that if the United
States Government or any department or bureau thereof shall at any time require
revenue stamps to be affixed to the Note or this Agreement, Maker will upon
demand pay for stamps in the required amount and deliver them to Noteholder and
Maker agrees to indemnify Noteholder against liability on account of such
revenue stamps, whether such liability arises before or after payment of the
Note and whether or not this Mortgage shall have been released.
11.13 Indemnification. Except for Noteholder's willful misconduct, Maker
agrees to indemnify Noteholder from all loss, damage and expense, including
reasonable attorneys' fees, incurred in connection with any suit or proceeding
in or to which Noteholder may be made a party for the purpose of protecting the
lien of this Deed of Trust.
11.14 Additional Documents. Maker agrees that upon request of Noteholder it
will from time to time execute, acknowledge and deliver all such additional
instruments and further assurances of title and will do or cause to be done all
such further acts and things as may be reasonably necessary fully to effectuate
the intent of this Deed of Trust. The Maker within ten (10) days upon request in
person or by mail will furnish a duly acknowledged written statement setting
forth the amount of the debt secured by this Agreement, the date to which
interest has been paid and stating either that no offsets or defenses exist
against the debt secured hereby, or, if such offsets or defenses are alleged to
exist, the nature thereof.
11.15 Disclosure. Maker agrees to disclose to Noteholder upon request, the
then ownership of the beneficial interest in any trust which then holds legal
title to the Mortgaged Property and shall cause the owner(s) of such beneficial
interest to furnish sufficient evidence to Noteholder for it to determine the
identity of all of the parties which compose such owner(s).
11.16 Subrogation. In the event the Note is given for money advanced in the
payment of a sum owing upon another note or indebtedness, Maker hereby
acknowledges that it has and does hereby request Noteholder to advance the money
necessary to satisfy the present owner of said other note or indebtedness,
whether or not a release or transfer of said other note or indebtedness be
executed by such owner, and Maker hereby contracts and agrees that Noteholder
and Noteholder's assigns be
27
and they hereby are, subrogated to all the rights, liens, remedies, equities,
superior title and benefits held, owned, possessed or enjoyed at any time by any
owner or holder of said other note or indebtedness, to secure payment to
Noteholder of the Note hereby secured and said other note or indebtedness, and
all liens securing same are hereby extended to the maturity date of the Note
hereby secured to additionally secure such Note.
11.17. Time. Time is of the essence of this Agreement.
11.18. Multiple Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be an original instrument and which, taken
together, constitute one and the same agreement.
11.19. Trustee's Acceptance. Trustee accepts these trusts when this Deed of
Trust, duly executed and acknowledged, is made a public record as provided by
law.
11.20. Governing Law. The laws of the State of Nevada shall govern the
validity, construction, performance and effect of this Agreement.
11.21. Statutory Covenants. Where not inconsistent with the above, the
following covenants, Nos. 1; 2 (full replacement value); 3; 4 (Default Rate
under the Note); 5; 6; 7 (a reasonable percentage); 8 and 9 of NRS 107.030 are
hereby adopted and made a part of this Deed of Trust.
EXECUTED this 31st day of August, 1995.
AUTOTOTE CBS, INC., a
Nevada corporation
BY: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
NAME: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
TITLE: Executive Vice President
-------------------------
"MAKER"
▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
This instrument was acknowledged before me on 31st of August 1995 by ▇▇▇▇▇▇
▇▇▇▇▇▇▇ as Executive Vice President of AUTOTOTE CBS, INC., a Nevada corporation.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------
[SEAL] ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
My commission expires:
29
LEGAL DESCRIPTION
THAT PORTION OF "▇▇▇▇▇▇ AIRPORT CENTER UNIT NO. 1" AS SHOWN BY MAP THEREOF ON
FILE IN BOOK 33, PAGE 72 OF PLATS IN THE ▇▇▇▇▇ COUNTY RECORDER'S OFFICE, ▇▇▇▇▇
COUNTY, NEVADA, LYING WITHIN THE NORTHEAST QUARTER (NE 1/4) OF THE NORTHWEST
QUARTER (NW 1/4) OF SECTION 3, TOWNSHIP 22 SOUTH, RANGE 61 EAST, M.D.M., ▇▇▇▇▇
COUNTY, NEVADA AND DESCRIBED AS FOLLOWS:
COMMENCING AT THE NORTHWEST CORNER OF THE NORTHEAST QUARTER (NE 1/4) OF THE
NORTHWEST QUARTER (NW 1/4) OF SAID SECTION 3; THENCE NORTH 88 DEGREES 18'45"
EAST ALONG THE NORTH LINE OF SAID SECTION 3, A DISTANCE OF 532.63 FEET TO THE
INTERSECTION WITH THE CONTROL LINE OF ▇▇▇▇▇ DRIVE (75.00 FEET WIDE); THENCE
SOUTH 01 DEGREES 41'15" EAST ALONG SAID CONTROL LINE, 80.00 FEET; THENCE SOUTH
88 DEGREES 18'45"" WEST, 35.00 FEET TO THE POINT OF BEGINNING ON THE WESTERLY
RIGT-OF-WAY LINE OF ▇▇▇▇▇ DRIVE; THENCE SOUTH 01 DEGREES 41'15" EAST ALONG SAID
RIGHT-OF-WAY LINE, 122.35 FEET; THENCE CURVING TO THE LEFT ALONG THE ARC OF A
300.00 FOOT RADIUS CURVE OF SAID RIGHT-OF-WAY LINE, CONCAVE NORTHEASTERLY,
THROUGH A CENTRAL ANGLE OF 17 DEGREES 25'57", AN ARC LENGTH OF 91.28 FEET TO A
POINT TO WHICH A RADIAL LINE BEARS SOUTH 70 DEGREES 52'48" WEST; THENCE SOUTH 70
DEGREES 52'48" WEST ALONG THE SOUTHWESTERLY PROLONGATION OF SAID RADIAL LINE,
5.00 FEET TO A POINT ON THE NORTHERLY RIGHT-OF-WAY LINE OF TRADE CENTER DRIVE
(60.00 FEET WIDE); THENCE WESTERLY ALONG SAID RIGHT-OF-WAY LINE, THE FOLLOWING
THREE (3) COURSES: FROM A TANGENT BEARING SOUTH 19 DEGREES 07'12" EAST, CURVING
TO THE RIGHT ALONG THE ARC OF A 25.00 FOOT RADIUS CURVE, CONCAVE NORTHWESTERLY,
THROUGH A CENTRAL ANGLE OF 80 DEGREES 24'22", AN ARC LENGTH OF 35.08 FEET;
THENCE SOUTH 61 DEGREES 17'10" WEST, 99.12 FEET; THENCE CURVING TO THE RIGHT
ALONG THE ARC OF A 180.00 FOOT RADIUS CURVE, CONCAVE NORTHWESTERLY, THROUGH A
CENTRAL ANGLE OF 35 DEGREES 00'00", AN ARC LENGTH OF 109.96 FEET TO A POINT ON
THE WESTERLY RIGHT-OF-WAY LINE OF TRADE CENTER DRIVE; THENCE DEPARTING SAID
RIGHT-OF-WAY LINE NORTH 83 DEGREES 42'50" WEST, 77.21 FEET; THENCE NORTH
01 DEGREES 41'15" WEST, 325.72 FEET TO A POINT ON THE SOUTHERLY RIGHT-OF-WAY
LINE OF SUNSET ROAD; THENCE NORTH 88 DEGREES 18'45" EAST ALONG SAID RIGHT-OF-WAY
LINE 245.00 FEET; THENCE CURVING TO THE RIGHT ALONG THE ARC OF A 30.00 FOOT
RADIUS CURVE, CONCAVE SOUTHWESTERLY, THROUGH A CENTRAL ANGLE OF 90 DEGREES
00'00", AN ARC LENGTH OF 47.12 FEET TO THE POINT OF BEGINNING.
EXHIBIT "A"