Exhibit 10.12

 
 
LOAN AGREEMENT
 
 
THIS LOAN AGREEMENT (the “Loan Agreement”) is made as of November 21, 2007 by
and between CONSOLIDATED MORTGAGE, LLC, a Nevada limited liability company
(“Borrower”), whose address is 1291 Galleria Drive, Henderson, Nevada 89014 and
DESERT CAPITAL TRS, INC., a Delaware corporation (“Lender”), whose address is
1291 Galleria Drive, Henderson, Nevada 89014.
 
RECITALS:
 
WHEREAS, concurrently herewith, pursuant to that certain Purchase Agreement
dated as of November 21, 2007 among Desert Capital REIT, Inc., a Maryland
corporation (“Parent”), Lender and Sandstone Equity Investors, LLC, a Delaware
limited liability company (“Buyer”) (such Purchase Agreement as the same may be
amended or otherwise modified from time to time is hereinafter referred to as
the “Purchase Agreement”), Buyer acquired all of the issued and outstanding
membership units of Borrower from Lender;
 
WHEREAS, pursuant to the Purchase Agreement, Lender agreed to finance Fifteen
Million Five Hundred Thousand Dollars ($15,500,000) of the purchase price to be
paid by Buyer to Lender in connection with such acquisition (the “Loan”); and
 
WHEREAS, Lender is willing to finance a portion of the purchase price through
the Loan to Borrower upon the terms and conditions of this Loan Agreement and
the other Loan Documents (hereinafter defined).
 
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter contained, the parties hereto hereby agree as follows:
 
AGREEMENTS:
 
1. Loan.  Lender hereby agrees to finance a portion of the purchase price
through the Loan to Borrower in the original principal amount of Fifteen Million
Five Hundred Thousand Dollars ($15,500,000), subject to the terms and conditions
set forth in this Loan Agreement and the other agreements, instruments and
documents evidencing, securing, governing, guaranteeing and/or pertaining to the
Loan (collectively, together with the Loan Agreement, referred to hereinafter as
the “Loan Documents”).
 
2. Promissory Note.  The Loan shall be evidenced by a promissory note (as the
same may be amended, modified, substituted, renewed, extended and increased, the
“Note”) duly executed by Borrower and payable to the order of Lender, in form
and substance reasonably acceptable to Lender.  Interest on the Note shall
accrue at the rate set forth therein.  The principal of and interest on the Note
shall be due and payable in accordance with the terms and conditions set forth
in the Note and in this Loan Agreement.
 
3. Collateral.  As collateral and security for the indebtedness evidenced by the
Note and any and all other indebtedness or obligations from time to time owing
by Borrower to Lender, Buyer shall pledge and grant to Lender, its successors
and assigns, a first and prior lien on and security interest in and to the
property described below, together with any and all PRODUCTS AND PROCEEDS
thereof (the “Collateral”):
 
All membership units of Borrower, now or hereafter issued and outstanding,
together with any and all books of account and other records relating in any way
to the foregoing.
 
The term “Collateral” shall also include all records and data relating to the
foregoing (including, without limitation, any computer software on which such
records and data may be located).  Buyer shall execute such pledge agreements,
security agreements, assignments and other agreements and documents as Lender
shall deem appropriate and otherwise require from time to time to more fully
create and perfect Lender’s lien and security interests in the Collateral.
 
4. Representations and Warranties.  Borrower hereby represents and warrants to
Lender as follows:
 
(a) Existence.  Borrower is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Nevada and all
other states where it is doing business, and has all requisite power and
authority to execute and deliver the Loan Documents to which it is a party.
 
(b) Binding Obligations.  The execution, delivery, and performance of this Loan
Agreement and all of the other Loan Documents by Borrower have been duly
authorized by all necessary action by Borrower, and constitute legal, valid and
binding obligations of Borrower, enforceable in accordance with their respective
terms, except as limited by bankruptcy, insolvency or similar laws of general
application relating to the enforcement of creditors’ rights and except to the
extent specific remedies may generally be limited by equitable principles.
 
(c) No Consent.  The execution, delivery and performance of this Loan Agreement
and the other Loan Documents, and the consummation of the transactions
contemplated hereby and thereby, do not (i) conflict with, result in a violation
of, or constitute a default under (A) any provision of its operating agreement
or any agreement or other instrument binding upon Borrower, or (B) any law,
governmental regulation, court decree or order applicable to Borrower, or (ii)
require the consent, approval or authorization of any third party.
 
(d) Financial Condition.  Each financial statement of Borrower supplied to the
Lender truly discloses and fairly presents Borrower’s financial condition as of
the date of each such statement.  There has been no material adverse change in
such financial condition or results of operations of Borrower subsequent to the
date of the most recent financial statement supplied to Lender.
 
(e) Litigation.  Except as disclosed on Schedule 4(e) attached hereto, there are
no actions, suits or proceedings, pending or, to the knowledge of Borrower,
threatened against or affecting Borrower or the properties of Borrower, before
any court or governmental department, commission or board, which, if determined
adversely to Borrower, would have a Material Adverse Effect (hereinafter
defined).  For the purposes hereof, “Material Adverse Effect” means a material
adverse effect on (i) the business, operations, property, condition (financial
or otherwise) or prospects of Borrower, (ii) the ability of Borrower to perform
its obligations under this Loan Agreement, any of the other Loan Documents or
Purchase Agreement, or (iii) the validity or enforceability of this Loan
Agreement, any of the other Loan Documents, the Purchase Agreement or the rights
or remedies of Lender hereunder or thereunder.
 
(f) Taxes; Governmental Charges.  Borrower has filed all federal, state and
local tax reports and returns required by any law or regulation to be filed by
it and has either duly paid all taxes, duties and charges indicated due on the
basis of such returns and reports, or made adequate provision for the payment
thereof, and the assessment of any material amount of additional taxes in excess
of those paid and reported is not reasonably expected.  Borrower knows of no
pending investigation of Borrower by any taxing authority or of any pending but
unassessed tax liability of Borrower other than taxes that are not yet due or
that are being contested in good faith and for which adequate reserves have been
established in accordance with generally accepted accounting principles
consistently applied.
 
(g)           Disclosure.                                No statement,
information, report, representation or warranty made by Borrower in this Loan
Agreement or in any other Loan Document or furnished to Lender in connection
with this Agreement or any transaction contemplated hereby contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the statements herein or therein not misleading.  There is no fact known to
Borrower (other than general economic conditions) that has a Material Adverse
Effect or that could reasonably be expected to have a Material Adverse Effect.
 
(h)           Compliance with
Laws.                                                      The Borrower is not
in violation in any material respect of any law, rule, regulation, order or
decree of any governmental authority or arbitrator.
 
(i)           Agreements.                                Borrower is not in
default in any respect in the performance, observance or fulfillment or any of
the obligations, covenants or conditions contained in any agreement or
instrument, except where such default or violation could not individually, or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
 
5. Conditions Precedent to Lender’s Obligation.  Lender’s obligation to enter
into this Loan Agreement and the other Loan Documents shall be subject to the
conditions precedent that, as of the date hereof and after giving effect thereto
(i) all representations and warranties made to Lender in this Loan Agreement and
the other Loan Documents shall be true and correct, as of the date hereof, (ii)
no material adverse change in the financial condition of Borrower since the
effective date of the most recent financial statements furnished to Lender by
Borrower shall have occurred and be continuing, (iii) no event has occurred and
is continuing, or would result from the Loan, which with notice or lapse of
time, or both, would constitute an Event of Default (as hereinafter defined),
and (iv) Lender’s receipt of all Loan Documents appropriately executed by
Borrower and all other proper parties.
 
6. Affirmative Covenants.  Until the Note and all other obligations and
liabilities of Borrower under this Loan Agreement, the other Loan Documents and
the Purchase Agreement are indefeasibly paid and finally satisfied in full,
Borrower agrees and covenants that it will, unless Lender shall otherwise
consent in writing:
 
(a) Accounts and Records.  Maintain its books and records in accordance with
generally accepted accounting principles consistently applied.
 
(b) Right of Inspection.  Permit Lender to visit its properties and
installations and to examine, audit and make and take away copies or
reproductions of Borrower’s books and records, at all reasonable times.
 
(c) Right to Additional Information.  Furnish Lender with such additional
information and statements, lists of assets and liabilities, tax returns, and
other reports with respect to Borrower’s financial condition and business
operations as Lender may request from time to time.
 
(d) Compliance with Laws.  Conduct its business in an orderly and efficient
manner consistent with good business practices, and perform and comply with all
statutes, rules, regulations and/or ordinances imposed by any federal, state or
local governmental unit or agency upon Borrower and its businesses, operations
and properties (including without limitation, all applicable environmental
statutes, rules, regulations and ordinances).
 
(e) Taxes.  Pay and discharge when due all of its indebtedness and obligations,
including without limitation, all assessments, taxes, governmental charges,
levies and liens, of every kind and nature, imposed upon Borrower or its
properties, income, or profits, prior to the date on which penalties would
attach, and all lawful claims that, if unpaid, might become a lien or charge
upon any of Borrower’s properties, income, or profits; provided, however,
Borrower will not be required to pay and discharge any such assessment, tax,
charge, levy, lien or claim so long as (i) the legality of the same shall be
contested in good faith by appropriate judicial, administrative or other legal
proceedings, and (ii) Borrower shall have established on its books adequate
reserves with  respect to such contested assessment, tax, charge, levy, lien or
claim in accordance with generally accepted accounting principles, consistently
applied.
 
(f) Insurance.  Maintain customary insurance, including but not limited to, fire
insurance, comprehensive property damage, public liability, worker’s
compensation, business interruption and other insurance deemed necessary or
otherwise reasonably required by Lender.
 
(g) Notice of Indebtedness.  Promptly inform Lender of the creation, incurrence
or assumption by Borrower of any actual or contingent liabilities not permitted
under this Loan Agreement.
 
(h) Notice of Litigation.  Promptly after the commencement thereof, notify
Lender of all actions, suits and proceedings before any court or any
governmental department, commission or board affecting Borrower or any of its
properties.
 
(i) Notice of Material Adverse Change.  Promptly inform Lender of (i) any and
all material adverse changes in Borrower’s financial condition, and (ii) all
claims made against Borrower which could materially affect the financial
condition of Borrower.
 
(j) Additional Documentation.  Execute and deliver, or cause to be executed and
delivered, any and all other agreements, instruments or documents which Lender
may reasonably request in order to give effect to the transactions contemplated
under this Loan Agreement, the other Loan Documents and the Purchase Agreement.
 
(k)           Notice of Default.                                           As
soon as possible and in any event within five (5) days after the occurrence of
each Event of Default (hereinafter defined), provide Lender with written notice
thereof setting forth the details of such Event of Default and the action that
Borrower has taken and proposes to take with respect thereto.
 
(l)           Notice of Material Adverse
Effect.                                                                           As
soon as possible and in any event within five (5) days after the occurrence
thereof, provide Lender with written notice of any matter that, individually or
when aggregated, could reasonably be expected to have a Material Adverse Effect.
 
(m)           Maintenance of Existence; Conduct of
Business.                                                                                                           Borrower
will preserve and maintain its existence and all of its leases, privileges,
licenses, permits, franchises, qualifications and rights that are necessary or
desirable to the ordinary conduct of Borrower’s business.  Borrower will conduct
its business in accordance with good business practices.
 
(n)           Compliance with
Agreements.                                                                Borrower
will comply in all material respects with all agreements, contracts and
instruments binding on it or affecting its properties or business.
 
7. Negative Covenants.  Until the Note and all other obligations and liabilities
of Borrower under this Loan Agreement, the other Loan Documents and the Purchase
Agreement are indefeasibly paid and finally satisfied in full, Borrower will
not, without the prior written consent of Lender:
 
(a) Nature of Business.  Make any material change in the nature of its business
as carried on as of the date hereof or engage in any business materially
different than the business in which it is engaged on the date hereof or which
is related directly to such business.
 
(b) Liquidations, Mergers, Consolidations. Liquidate, dissolve, merge or
consolidate with or into any other entity.
 
(c) Sale of Assets.  Sell, transfer or otherwise dispose of any of its assets or
properties, whether now owned or hereafter acquired, other than in the ordinary
course of business or obsolete or worn out property or property no longer useful
in the conduct of Borrower’s business.
 
(d) Liens.  Create, incur, assume or permit to exist, any lien, security
interest or encumbrance on any of its property, assets or revenues, other than
(i) liens and security interests securing indebtedness owing to Lender, (ii)
liens and security interests securing indebtedness permitted by Section 7(e)
hereof, (iii) liens for taxes, assessments or similar charges that are (1) not
yet due or (2) being contested in good faith by appropriate proceedings and for
which Borrower has established adequate reserves, (iv) liens and security
interests existing as of the date hereof and described on Schedule 7(d) attached
hereto, and (v) liens placed upon equipment or machinery used in the ordinary
course of business of the Borrower at the time of acquisition thereof by the
Borrower to secure indebtedness incurred to pay all or a portion of the purchase
price thereof, provided that (x) the aggregate principal amount of all
indebtedness secured by liens permitted by this clause (v) incurred in any
fiscal year of Borrower, does not exceed that aggregate amount permitted by
Section 7(e) hereof, and (y) in all events, the liens encumbering the equipment
and machinery so acquired does not encumber any other asset of Borrower.
 
(e) Indebtedness.  Create, incur, assume or permit to exist, any indebtedness
for borrowed money or issue or assume any other note, debenture, bond or other
evidences of indebtedness, or guarantee any such indebtedness or such evidences
of indebtedness of others, other than (i) borrowings from Lender, (ii)
borrowings outstanding on the date hereof and described on Schedule 7(e)
attached hereto, and (iii) borrowings to the extent that both before and after
giving effect thereto, Borrower shall be in compliance with Section 8 hereof.
 
(f) Transfer of Ownership.  Permit the sale, pledge, or other transfer of any of
the ownership interests in Borrower or the issuance of any additional ownership
interests in Borrower.
 
(g) Change in Management.  Permit a change in the Chief Executive Officer of
Borrower.
 
(h) Loans.  Make any advances, loans, extensions of credit or capital
contribution to or investment in, or purchase or own, any stock, bonds, notes,
debentures or other securities of any person or entity except in the ordinary
course of its business.
 
(i) Transactions with Affiliates.  Enter into any transaction, including,
without limitation, the purchase, sale or exchange of property or the rendering
of any service, with any Affiliate (as hereinafter defined) of Borrower, except
in the ordinary course of and pursuant to the reasonable requirements of
Borrower’s business and upon fair and reasonable terms no less favorable to
Borrower than would be obtained in a comparable arm’s-length transaction with a
person or entity not an Affiliate of Borrower.  As used herein, the term
“Affiliate” means any individual or entity directly or indirectly controlling,
controlled by, or under common control with, another individual or entity.
 
(j) Distributions.  Borrower agrees not to declare or pay any Distributions
(hereinafter defined), make any other distributions with respect to any payment
on account of the purchase, redemption, or other acquisition or retirement of
any membership units of Borrower, or make any other distribution, sale, transfer
or lease of any of Borrower’s assets other than in the ordinary course of
business, except (i) any such amounts that are directly utilized for the payment
of principal or interest on indebtedness or other obligations owing from time to
time by Borrower or Buyer to Lender, and (ii) Distributions to Buyer to pay
taxes of Buyer (including the members of Buyer to the extent attributable to the
dividends received from Buyer) and Borrower as part of a consolidated group. As
used herein, “Distributions” shall mean all dividends and other distributions
made by Borrower to its members, other than salary, bonuses and other
compensation for services.  Unless otherwise specified, all accounting and
financial terms and covenants contained herein are to be determined according to
generally accepted accounting principles, consistently applied.
 
8. Financial Covenants.  Until the Note and all other obligations and
liabilities of Borrower and Buyer under this Loan Agreement, the other Loan
Documents and the Purchase Agreement are indefeasibly paid and finally satisfied
in full, Borrower will maintain the following financial covenants:
 
(a) Net Worth.  Borrower will maintain, at all times, its total assets less its
total liabilities at not less than $2,800,000.
 
(b) Fixed Charge Coverage Ratio.  Borrower will maintain as of the end of each
fiscal year, a ratio of (a) net income after taxes plus depreciation,
amortization, other non-cash expenses, interest expense, lease expense and
installment payments made pursuant to Section 2.2(b) of the Purchase Agreement
for the 12 month period ending with such fiscal year, less any Distributions
during such 12 month period, to (b) interest expense, lease expense, installment
payments made pursuant to Section 2.2(b) of the Purchase Agreement, current
maturities of long-term debt and current maturities of long-term leases for such
12 month period, of not less than 1.0 to 1.0.
 
(c)           Working Capital.  Borrower will maintain, at all times, its
current assets(excluding prepaid expenses), less its current liabilities at an
amount not less than $250,000.
 
9. Reporting Requirements.  Until the Note and all other obligations and
liabilities of Borrower and Buyer under this Loan Agreement, the other Loan
Documents and the Purchase Agreement are indefeasibly paid and finally satisfied
in full, Borrower will, unless Lender shall otherwise consent in writing,
furnish to Lender:
 
(a) Interim Financial Statements.  As soon as available, and in any event within
forty-five (45) days after the end of each of the first three quarters of each
fiscal year of Borrower, a balance sheet and income statement of Borrower as of
the end of such fiscal quarter, all in form and substance and in reasonable
detail satisfactory to Lender and duly certified (subject to year-end review
adjustments) by the President and/or Chief Financial Officer of Borrower (i) as
being true and correct in all material aspects to the best of his or her
knowledge and (ii) as having been prepared in accordance with generally accepted
accounting principles, consistently applied.
 
(b) Annual Financial Statements.  As soon as available and in any event within
ninety (90) days after the end of each fiscal year of Borrower, a balance sheet
and income statement of Borrower as of the end of such fiscal year, in each case
audited by independent public accountants of recognized standing acceptable to
Lender.
 
(c) Compliance Certificate.  A certificate signed by the Chief Financial Officer
of Borrower, within forty-five (45) days  after  the  end  of  each quarter of
each fiscal year, stating that Borrower is in full compliance with all of its
obligations under this Loan Agreement and all other Loan Documents and is not in
default of any term or provisions hereof or thereof, and demonstrating
compliance with all financial ratios and covenants set forth in this Loan
Agreement.
 
(d) Tax Returns.  Copies of Borrower’s income tax returns (federal and state, if
any) within thirty (30) days after filing.
 
10. Events of Default.  Each of the following shall constitute an “Event of
Default” under this Loan Agreement:
 
(a) The failure, refusal or neglect of Borrower to pay when due any part of the
principal of, or interest on, the Note or any other indebtedness or obligations
owing to Lender by Borrower from time to time and such failure shall continue
for five (5) days.
 
(b) Any representation or warranty made or deemed made by Borrower or any
Obligated Party (hereinafter defined) (or any of their respective officers) in
any Loan Document, Purchase Agreement or in any certificate, report, notice or
financial statement furnished at any time in connection with this Loan Agreement
or the Purchase Agreement shall be false, misleading or erroneous in any
material respect when made or deemed to have been made.
 
(c) The failure of Borrower or any Obligated Party to timely and properly
observe, keep or perform any covenant, agreement, warranty or condition required
herein or in any of the other Loan Documents and such failure shall continue for
ten (10) days after written notice thereof has been given to Borrower or such
Obligated Party.
 
(d) The failure of Borrower or any Obligated Party to timely and properly
observe, keep or perform any covenant, agreement, warranty or condition required
in the Purchase Agreement or in any of the documents or agreements delivered in
connection therewith.
 
(e) The occurrence of any event which permits the acceleration of the maturity
of any indebtedness owing by Borrower or any Obligated Party to any third party
under any agreement or understanding.
 
(f) If Borrower or any Obligated Party: (i) becomes insolvent, or makes a
transfer in fraud of creditors, or makes an assignment for the benefit of
creditors, or admits in writing its inability to pay its debts as they become
due; (ii) generally is not paying its debts as such debts become due; (iii) has
a receiver, trustee or custodian appointed for, or take possession of, all or
substantially all of the assets of such party, either in a proceeding brought by
such party or in a proceeding brought against such party and such appointment is
not discharged or such possession is not terminated within sixty (60) days after
the effective date thereof or such party consents to or acquiesces in such
appointment or possession; (iv) files a petition for relief under the United
States Bankruptcy Code or any other present or future federal or state
insolvency, bankruptcy or similar laws (all of the foregoing hereinafter
collectively called “Applicable Bankruptcy Law”) or an involuntary petition for
relief is filed against such party under any Applicable Bankruptcy Law and such
involuntary petition is not dismissed within sixty (60) days after the filing
thereof, or an order for relief naming such party is entered under any
Applicable Bankruptcy Law, or any composition, rearrangement, extension,
reorganization or other relief of debtors now or hereafter existing is requested
or consented to by such party; (v) fails to have discharged within a period of
thirty (30) days any attachment, sequestration or similar writ levied upon any
property of such party; or (vi) fails to pay within thirty (30) days any final
money judgment against such party.
 
(g) If Borrower or any Obligated Party is an entity, the liquidation,
dissolution, merger or consolidation of any such entity.
 
(h) The entry of any judgment against Borrower or any Obligated Party or the
issuance or entry of any attachment or other lien against any of the property of
Borrower or any Obligated Party the scheduled payments for which exceed,
individually or in the aggregate, $500,000 per year, if undischarged, unbonded
or undismissed within thirty (30) days after such entry.
 
Nothing contained in this Loan Agreement shall be construed to limit the events
of default enumerated in any of the other Loan Documents and all such events of
default shall be cumulative.  The term “Obligated Party”, as used herein, shall
mean any party other than Borrower who secures, guarantees and/or is otherwise
obligated to pay all or any portion of the indebtedness evidenced by the Note or
the obligations under the Purchase Agreement.
 
11. Remedies.
 
(a) General.                      Upon the occurrence of any one or more of the
foregoing Events of Default, the entire unpaid principal balance of the Note,
together with all accrued but unpaid interest thereon, and all other
indebtedness owing to Lender by Borrower at such time shall, at the option of
Lender, become immediately due and payable without notice, demand, presentation,
notice of dishonor, notice of intent to accelerate, notice of acceleration,
protest or notice of protest of any kind, all of which are expressly waived by
Borrower.  All rights and remedies of Lender set forth in this Loan Agreement,
in any of the other Loan Documents and afforded by applicable law, by equity or
otherwise may also be exercised by Lender, at its option to be exercised in its
sole discretion, upon the occurrence of an Event of Default.  Upon the
occurrence of an Event of Default under Section 10(f), the outstanding principal
balance of and accrued and unpaid interest on the Note and all other obligations
of the Borrower under the Loan Documents shall thereupon become immediately due
and payable without notice, demand, presentment, notice of dishonor, notice of
acceleration, notice of intent to accelerate, protest, or other formalities of
any kind, all of which are hereby expressly waived by Borrower.
 
(b)           Setoff.                      If an Event of Default shall have
occurred and then be continuing, Lender is hereby authorized at any time and
from time to time, without notice to Borrower (any such notice being hereby
expressly waived by Borrower), to set off and apply any and all amounts at any
time held and other indebtedness or amounts at any time owing by Lender to or
for the credit or account of Borrower against any and all of the obligations of
Borrower now or hereafter existing under this Loan Agreement, the Note or any
other Loan Document, irrespective of whether or not Lender shall have made any
demand under this Loan Agreement, the Note or any other Loan Document.  Lender
agrees promptly to notify Borrower after any such setoff and application,
provided that the failure to give such notice shall not affect the validity of
such setoff and application.  The rights and remedies of Lender under this
Section 11(b) are in addition to other rights and remedies (including, without
limitation, rights of setoff) that Lender may have.
 
12. Rights Cumulative.  All rights of Lender under the terms of this Loan
Agreement shall be cumulative of, and in addition to, the rights of Lender under
any and all other agreements between Borrower and Lender (including, but not
limited to, the other Loan Documents), and not in substitution or diminution of
any rights now or hereafter held by Lender under the terms of any other
agreement.
 
13. Waiver and Agreement.  Neither the failure nor any delay on the part of
Lender to exercise any right, power or privilege herein or under any of the
other Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.  No
waiver of any provision in this Loan Agreement or in any of the other Loan
Documents and no departure by Borrower therefrom shall be effective unless the
same shall be in writing and signed by Lender, and then shall be effective only
in the specific instance and for the purpose for which given and to the extent
specified in such writing.  No modification or amendment to this Loan Agreement
or to any of the other Loan Documents shall be valid or effective unless the
same is signed by the party against whom it is sought to be enforced.
 
14. Benefits.  This Loan Agreement shall be binding upon and inure to the
benefit of Lender and Borrower, and their respective successors and assigns,
provided, however, that Borrower may not, without the prior written consent of
Lender, assign any rights, powers, duties or obligations under this Loan
Agreement or any of the other Loan Documents.
 
15. Notices.  All notices, requests, demands or other communications required or
permitted to be given pursuant to this Agreement shall be in writing and given
by (i) personal delivery, (ii) expedited delivery service with proof of
delivery, or (iii) United States mail, postage prepaid, registered or certified
mail, return receipt requested, sent to the intended addressee at the address
set forth on the first page hereof and shall be deemed to have been received
either, in the case of personal delivery, as of the time of personal delivery,
in the case of expedited delivery service, as of the date of first attempted
delivery at the address and in the manner provided herein, or in the case of
mail, upon deposit in a depository receptacle under the care and custody of the
United States Postal Service.  Either party shall have the right to change its
address for notice hereunder to any other location within the continental United
States by notice to the other party of such new address at least thirty (30)
days prior to the effective date of such new address.
 
16. Construction.  This Loan Agreement and the other Loan Documents have been
executed and delivered in the State of Nevada, shall be governed by and
construed in accordance with the laws of the State of Nevada, and shall be
performable by the parties hereto in the county in Nevada where the Lender’s
address set forth on the first page hereof is located.
 
17. Invalid Provisions.  If any provision of this Loan Agreement or any of the
other Loan Documents is held to be illegal, invalid or unenforceable under
present or future laws, such provision shall be fully severable and the
remaining provisions of this Loan Agreement or any of the other Loan Documents
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance.
 
18. Expenses.  Borrower shall pay all costs and expenses (including, without
limitation, reasonable attorneys’ fees) in connection with (i) any action
required in the course of administration of the indebtedness and obligations
evidenced by the Loan Documents, and (ii) any action in the enforcement of
Lender’s rights upon the occurrence of Event of Default.
 
19. Assignment of the Loan.  Borrower agrees that Lender may, at its option,
sell or assign its interest in the Loan and its rights under this Loan Agreement
to a third party and, in connection with such sale, Lender may disclose any and
all financial and other information available to Lender concerning Borrower to
each prospective purchaser.
 
20. Conflicts.  In the event any term or provision hereof is inconsistent with
or conflicts with any provision of the other Loan Documents, the terms and
provisions contained in this Loan Agreement shall be controlling.
 
21. Counterparts.  This Loan Agreement may be separately executed in any number
of counterparts, each of which shall be an original, but all of which, taken
together, shall be deemed to constitute one and the same instrument.
 
22. Electronic and Facsimile Documents and Signatures.  For purposes of
negotiating and finalizing this Loan Agreement, if this document or any document
executed in connection with it is transmitted electronically or by facsimile
machine (“fax”), it shall be treated for all purposes as an original
document.  Additionally, the signature of any party on this document transmitted
electronically or by way of a facsimile machine shall be considered for all
purposes as an original signature.  Any such electronically transmitted or faxed
document shall be considered to have the same binding legal effect as an
original document.  At the request of any party, any electronically transmitted
or faxed document shall be re-executed by each signatory party in an original
form.
 
NOTICE OF NO ORAL AGREEMENTS
 
For the purpose of this Notice, the term “WRITTEN AGREEMENT” shall include the
document set forth above, together with each and every other document relating
to and/or securing the same loan transaction, regardless of the date of
execution.
 
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.
 
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO.
 
[Signature Page Follows.]
 

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BORROWER                                                                           LENDER:
 
CONSOLIDATED MORTGAGE, LLC
DESERT CAPITAL TRS, INC.

 
 
By:_/s/ Todd B.
Parriott                                                                                     By:_/s/
Todd B. Parriott     
       Todd B.
Parriott                                                                                                  
Todd B. Parriott
       President                                                                                                              
President