EXHIBIT 10.3

 

When Recorded, Return To:

USA Commercial Mortgage Company

4484 South Pecos Road

Las Vegas, NV 89121

 

DEED OF TRUST, ASSIGNMENT OF RENTS,

SECURITY AGREEMENT AND FIXTURE FILING

 

THIS DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING
(“Deed of Trust”), made this XX day of XX, 2004, by and between (“Trustor”), a
Nevada corporation (“Trustee”), and (“Beneficiary”). Capitalized terms used
herein and not otherwise defined herein are used with the meanings set forth in
that certain Construction Loan Agreement (“Loan Agreement”) of even date
herewith between Trustor and Beneficiary.

 

WITNESSETH:

 

That for good and valuable consideration, including the indebtedness herein
recited and the trust herein created, the receipt of which is hereby
acknowledged, and for the purpose of securing, in such priority as Beneficiary
may elect, each of the following:

 

1. The due, prompt and complete payment, observance, performance and discharge
of each and every obligation, covenant and agreement contained in Trustor’s
promissory note of even date herewith in the initial principal amount of XX
Thousand Dollars ($XX,000.00) (the “Note”), together with interest thereon
specified therein, payable to the order of Beneficiary and any and all
modifications, extensions or renewals thereof, whether hereafter evidenced by
the Note or otherwise, and whether advanced now or in the future, in accordance
with NRS 106.370, or any amendment or recodification thereof; and

 

2. The payment of all other sums, with interest thereon at the rate of interest
provided for herein or in the Note, becoming due or payable under the provisions
of this Deed of Trust, the Loan Agreement or any other instrument or instruments
heretofore or hereafter executed by Trustor having reference to or arising out
of or securing the indebtedness represented by the Note; and

 

3. The payment of such additional sums and interest thereof which Beneficiary
may hereafter loan to Trustor, or to its successors or assigns, whether or not
evidenced by a promissory note or notes which are secured by this Deed of Trust,
in accordance with NRS 106.300 to 106.400, inclusive; and

 

4. The due, prompt and complete observance, performance and discharge of each
and every obligation, covenant and agreement of Trustor contained in the Loan
Agreement, the Note, this Deed of Trust or any other Loan Document;

 

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TRUSTOR DOES HEREBY irrevocably grant, transfer, bargain, sell, convey and
assign to Trustee, in trust, with power of sale and right of entry and
possession, and does grant to Beneficiary a security interest for the benefit
and security of Beneficiary under and subject to the terms and conditions
hereinafter set forth, in and to any and all of the following described property
which is (except where the context otherwise requires) herein collectively
called the “Mortgaged Property” whether now owned or held or hereafter acquired
and wherever located, including any and all substitutions, replacements and
additions to same:

 

(a) That certain real property located in Clark County, State of Nevada and more
particularly described in Exhibit “A,” attached hereto and incorporated herein
by this reference, together with all of the easements, rights, privileges,
franchises, appurtenances thereunto belonging or in any way appertaining to the
real property, including specifically but not limited to all appurtenant water,
water rights and water shares or stock of Trustor, any and all general
intangibles relating to the use and/or development of the real property,
including development allotments, governmental permits, approvals,
authorizations and entitlements, agreements to provide necessary utility or
municipal services, all engineering plans and diagrams, surveys and/or soil and
substrata studies, and all other rights, privileges and appurtenances related to
the said real property and all of the estate, right, title, interest, claim and
demand whatsoever of Trustor therein or thereto, either in law or in equity, in
possession or in expectancy, now owned or hereafter acquired (hereinafter
referred to as the “Property”);

 

(b) All structures, buildings and improvements of every kind and description now
or at any time hereafter located on the Property (hereinafter referred to as the
“Improvements”), including all equipment, apparatus, machinery, fixtures,
fittings, and appliances and other articles and any additions to, substitutions
for, changes in or replacements of the whole or any part thereof, now or at any
time hereafter affixed or attached to and which are an integral part of the
Improvements or the Property or any portion thereof, and such Improvements shall
be deemed to be fixtures and an accession to the freehold and a part of the
Property as between the parties hereto and all persons claiming by, through or
under such parties except that same shall not include such machinery and
equipment of Trustor, its contractors or subcontractors, or any tenant of any
portion of the Property or Improvements, which is part of and/or used in the
conduct of the normal business of Trustor or its tenant conducted upon the
Mortgaged Property, which is distinct and apart from the ownership, operation
and maintenance of the Mortgaged Property.

 

(c) All articles of tangible personal property and any additions to,
substitutions for, changes in or replacements of the whole or any part thereof
other than personal property which is or at any time has become toxic waste,
waste products or hazardous substances (hereinafter referred to as the “Personal
Property”), including without limitation all wall-beds, wall-safes, built-in
furniture and installations, shelving, partitions, door-tops, vaults, elevators,
dumb-waiters, awnings, window shades, venetian blinds, light fixtures, fire
hoses and brackets and boxes for the same, fire sprinklers, alarm systems,
drapery rods and brackets, screens, water heaters, incinerators, wall coverings,
carpeting, linoleum, tile, other floor coverings of whatever description,
communication systems, all specifically designed installations and furnishings,
office maintenance and other supplies and all of said

 

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articles of property, the specific enumerations herein not excluding the
general, now or at any time hereafter placed upon or used in any way in
connection with the ownership, operation or maintenance of the Property or the
Improvements or any portion thereof which Trustor owns or in which Trustor now
has or hereafter acquires an interest, and all building materials and equipment
now or hereafter delivered to the Property and intended to be installed or
placed in or about the Improvements. Such tangible, personal property shall, in
addition to all other tangible, personal property herein described or defined,
specifically include each and every item of tangible, personal property and any
substitutions for, changes in or replacements thereof which are used in the
operation of the Improvements. Notwithstanding the breadth of the foregoing, the
Personal Property shall not include (i) personal property which may be owned by
lessees or other occupants of the Mortgaged Property; (ii) inventory of any
lessee or occupant of the Mortgaged Property used in the normal course of the
business conducted thereon; (iii) material, equipment, tools, machinery, or
other personal property which is brought upon the Mortgaged Property only for
use in construction, maintenance or repair and which is not intended to remain
after the completion of such construction, maintenance or proper maintenance, of
the Mortgaged Property; or (iv) such items of tangible personal property which
have not been purchased or installed with proceeds of the Note and for which
Beneficiary shall have executed such documents as may be required to subordinate
to the lien or security interest of any purchase money lender or supplier of
such tangible personal property;

 

(d) All right, title and interest of Trustor, now owned or hereafter acquired in
and to and lying within the right-of-way of any street, road, alley or public
place, opened or proposed, vacated or extinguished by law or otherwise, and all
easements and rights of way, public or private, tenements, hereditaments,
appendages, rights and appurtenances how or hereafter located upon the Property
or now or hereafter used in connection with or now or hereafter belonging or
appertaining to the Property; and all right, title and interest in the Trustor,
now owned or hereafter acquired, in and to any strips and gores adjoining or
relating to the Property;

 

(e) All judgments, awards of damages, settlements and any and all proceeds
derived from such hereafter made as a result of or in lieu of any taking of the
Mortgaged Property or any part thereof, interest therein or any rights
appurtenant thereto under the power of eminent domain, or by private or other
purchase in lieu thereof, or for any damage (whether caused by such taking or
otherwise) to the Mortgaged Property or the Improvements thereon, including
change of grade of streets, curb cuts or other rights of access for any public
or quasi-public use or purpose under any law;

 

(f) All rents, incomes, issues and profits, revenues, royalties, bonuses,
rights, accounts, contract rights, insurance policies and proceeds thereof,
general intangibles and benefits of the Mortgaged Property, or arising from any
lease or similar agreement pertaining thereto (the “Rents and Profits”), and all
right, title and interest of Trustor in and to all leases of the Mortgaged
Property now or hereafter entered into and all right, title and interest of
Trustor thereunder, including, without limitation, cash or securities deposited
thereunder to secure performance by the lessees of their obligations thereunder,
whether said cash or securities are to be held until the expiration of the terms
of said leases or applied to one or more of the installments of rent coming due
immediately prior to

 

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the expiration of said terms with the right to receive and apply the same to
said indebtedness, and Trustee or Beneficiary may demand, sue for and recover
such payments but shall not be required to do so; and

 

(g) All proceeds of the conversion, voluntary or involuntary, of any of the
foregoing into cash or liquidated claims.

 

Trustor makes the foregoing grant to Trustee for the purposes herein set forth;
provided, however, that if the Trustor shall pay or cause to be paid to the
holder of the Note all amounts required to be paid under the provisions of the
Note, this Deed of Trust or any other Loan Documents, and at the time and in the
manner stipulated therein, and shall further pay or cause to be paid all other
sums payable hereunder and all indebtedness hereby secured, then, in such case,
the estate, right, title and interest of the Trustee and Beneficiary in the
Mortgaged Property shall cease, determine and become void, and upon proof being
given to the satisfaction of the Beneficiary that all amounts due to be paid
under the Note have been paid or satisfied, and upon payment of all fees, costs,
charges, expenses and liabilities chargeable or incurred or to be incurred by
Trustee or Beneficiary, and of any other sums as herein provided, the Trustee
shall, upon receipt of the written request of the Beneficiary, cancel, reconvey
and discharge this Deed of Trust.

 

TO HAVE AND TO HOLD THE MORTGAGED PROPERTY UNTO THE TRUSTEE ITS SUCCESSORS AND
ASSIGNS FOREVER, ALL IN ACCORDANCE WITH THE PROVISIONS HEREOF.

 

ARTICLE 1

TRUSTOR’S COVENANTS

 

Trustor covenants, warrants and agrees with Trustee and Beneficiary as follows:

 

1.1 Payment of Note. Trustor shall pay the principal and interest and other sums
coming due with respect to the Note, this Deed of Trust or any of the Loan
Documents at the time and place in the manner specified in and according to the
terms thereof.

 

1.2 Title. The Trustor warrants that:

 

(a) Trustor has good and marketable title to an indefeasible fee simple estate
in the Property described in Exhibit “A”, subject only to those liens, charges
or encumbrances set forth as Permitted Exceptions in the Loan Agreement; that
Trustor has full power and authority to grant, bargain, sell and convey the
Mortgaged Property in the manner and form herein done or intended hereafter to
be done; that this Deed of Trust is and shall remain a valid and enforceable
lien on the Mortgaged Property subject only to the Permitted Exceptions; that
Trustor and its successors and assigns shall preserve its title and interest in
and title to the Mortgaged Property and shall forever warrant and defend the
same and shall warrant and defend the validity and priority of the lien hereof

 

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forever against all claims and demands of all persons whomsoever, and that this
covenant shall not be extinguished by any exercise of power of sale or
foreclosure sale hereof, but shall run with the land; and

 

(b) Trustor has and shall maintain good and marketable title to the Improvements
and Personal Property, including any additions or replacements thereto, free of
all security interests, liens and encumbrances, if any, except the Permitted
Exceptions, or as otherwise disclosed to and accepted by Beneficiary in writing,
and has good right to subject the Improvements and Personal Property to the
security interest created hereunder. If the lien of this Deed of Trust on any
Improvements or Personal Property be subject to a lease agreement, conditional
sale agreement or chattel mortgage covering such property, then in the event of
any default hereunder all the rights, title and interest of the Trustor in any
and all deposits made thereon or therefor are hereby assigned to the Trustee,
together with the benefit of any payments now or hereafter made thereon. Trustor
hereby also transfers, sets over and assigns to Trustee, its successors and
assigns, all of Trustor’s right, title and interest in and to the Project
Documents, and all leases and use agreements of machinery, equipment and other
personal property of Trustor in the categories hereinabove set forth, under
which Trustor is the lessee of, or entitled to use such items, and Trustor
agrees to execute and deliver to Trustee or Beneficiary all such Project
Documents, leases and agreements when requested by Trustee or Beneficiary.
Trustor hereby covenants and agrees to well and punctually perform all covenants
and obligations under such Project Documents, leases or agreements as it so
chooses, but nothing herein shall obligate Trustee or Beneficiary to perform any
obligations of Trustor under such Project Documents, leases or agreements unless
Trustee or Beneficiary shall so choose; and

 

(c) Trustor will, at its own cost without expense to Trustee or Beneficiary, do,
execute, acknowledge and deliver all and every such further act, deed,
conveyance, mortgage, assignment, notice of assignment, transfer and assurance
as Trustee or Beneficiary shall from time to time reasonably require for the
better assuring, conveying, assigning, transferring and confirming unto Trustee
and Beneficiary the property and rights hereby conveyed or assigned or intended
now or thereafter so to be, or which Trustor may be or hereafter become bound to
convey or assign to Beneficiary for the intention of facilitating the
performance of the terms of this Deed of Trust or for the filing, registering,
perfecting or recording of this Deed of Trust and any other Loan Document and,
on demand, Trustor will execute, deliver and file or record one or more
financing statements, chattel mortgages or comparable security instruments more
effectively evidencing the lien hereof upon the Personal Property.

 

1.3 Business Existence. Trustor shall do all things necessary to preserve and
keep in full force and effect its rights and privileges to do business and to
conduct its business in the State of Nevada, and shall comply with all
regulations, rules, ordinances, statutes, orders and decrees of any governmental
authority or court applicable to the Trustor.

 

1.4 Payment of Taxes, Assessments, Insurance Premiums and Charges. Trustor shall
pay, prior to delinquency, all insurance premiums that become due and payable on
any insurance policies required hereunder, and all taxes, assessments, charges
and levies imposed by any Governmental

 

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Agency which are or may become a lien affecting the Property or any part of it,
including without limitation assessments on any appurtenant water stock; except
that Trustor need not pay and discharge any tax, assessment, charge or levy that
is being actively contested in good faith by appropriate proceedings, as long as
Trustor has established and maintains reserves adequate to pay such contested
liabilities in accordance with generally accepted accounting principles and, by
reason of nonpayment, none of the Mortgaged Property covered by the Loan
Documents or the lien or security interest of Beneficiary is in danger of being
lost or forfeited.

 

1.5 Maintenance and Repair. The Trustor shall, at its sole cost and expense,
keep the Mortgaged Property in good operating order, repair and condition and
shall not commit or permit any waste thereof, which condition, during the course
of any construction or reconstruction of the Improvements, shall be subject to
the normal constraints and effects of construction or reconstruction. Trustor
shall make all repairs, replacements, renewals, additions and improvements and
complete and restore promptly and in good workmanlike manner any Improvements
which may be damaged or destroyed thereon, and pay when due all costs incurred
therefor. Trustor shall not remove or demolish any of the Mortgaged Property
conveyed hereby, nor demolish or materially alter the Mortgaged Property without
the prior written consent of the Beneficiary. Trustor shall permit Trustee or
Beneficiary or their agents the opportunity to inspect the Mortgaged Property,
including the interior of any structures, at any reasonable times upon
twenty-four (24) hours telephonic notice.

 

1.6 Compliance with Laws. The Trustor shall comply with all laws, ordinances,
regulations, covenants, conditions and restrictions affecting the Mortgaged
Property or the operation thereof, and shall pay all fees or charges of any kind
in connection therewith; except that Trustor shall not be required to pay and
discharge any fee or charge that is being actively contested in good faith by
appropriate proceedings, as long as Trustor has established and maintains
reserves adequate to pay any liabilities contested pursuant to this Section in
accordance with generally accepted accounting principles, and, by reason of
nonpayment, none of the Mortgaged Property covered by the Loan Documents or the
lien or security interest of Beneficiary is in danger of being lost or
forfeited.

 

1.7 Insurance. Trustor shall be responsible to provide, maintain and keep in
force or to cause to be maintained or kept in force, all policies of insurance
on the Mortgaged Property as required by the Loan Agreement.

 

1.8 Casualty. The Trustor will give the Beneficiary prompt notice of damage to
or destruction of any Improvements on the Property and in case of loss covered
by policies of insurance, Trustor hereby authorizes Beneficiary to make proof of
loss if not made promptly by the Trustor or any lessee. Any expenses that the
Beneficiary incurs in the collection of insurance proceeds, together with
interest thereon from date of any such expense at the per annum interest rate
set forth in the Note, shall be added to and become a part of the indebtedness
secured hereby. Trustor shall reimburse such expenses to Beneficiary, together
with accrued interest thereon, no later than seventy-two (72) hours after demand
therefor. Upon the occurrence of damage to or destruction of any Improvements,
if Beneficiary shall so elect in its sole and unfettered discretion, Beneficiary
shall make the net proceeds of insurance available for repair, restoration
and/or reconstruction under the conditions and

 

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in the manner specified in the following paragraph. If Beneficiary shall
otherwise determine, then Beneficiary shall apply such insurance proceeds to
reduce the indebtedness secured hereby then most remotely to be paid. The
foregoing notwithstanding, Beneficiary must apply insurance proceeds to the
repair, restoration, and/or reconstruction of the Improvements unless the
Beneficiary reasonably determines that the Mortgaged Property, so repaired,
restored or reconstructed, will be of insufficient value or condition to
adequately secure the Trustor’s obligations hereunder. If the Beneficiary shall
require that the Improvements be repaired or rebuilt then the repair,
restoration, replacement or rebuilding of the Improvements shall be to a
condition of at least equal value as prior to such damage or destruction.

 

Insurance proceeds made available for restoration, repair, replacement or
rebuilding of the Improvements shall be disbursed from time to time (provided no
default exists in the Note or this Deed of Trust or any other Loan Document at
the time of each such disbursement), in the manner set forth in the Loan
Agreement. The Beneficiary may require that plans and specifications for the
restoration, repair, replacement or rebuilding be submitted to and approved by
the Beneficiary prior to the commencement of the work. Beneficiary, at its
option, may apply any surplus which may remain out of said insurance proceeds
after payment of costs of building and restoration either on account of the
indebtedness secured hereby then most remotely to be paid, or pay it to any
person or persons entitled thereto. Application or release of proceeds under the
provisions hereby shall not cure or waive any default or notice of default
hereunder or invalidate any act done pursuant to such notice. No interest shall
be allowed on account of any such proceeds or any other funds held in the hands
of the Beneficiary or the disbursing party hereunder.

 

1.9 Condemnation. The Trustor, promptly upon learning of any proceeding for the
condemnation of the Mortgaged Property or any portion of it, shall notify
Beneficiary thereof. The Trustor hereby assigns, transfers and sets over unto
the Beneficiary all compensation, rights of action and the entire proceeds of
any award, up to the maximum amount of all amounts then due and payable under
the Note and the Loan Documents, including, without limitation, all interest,
costs, expenses and Advances (as that term is defined in Section 1.16, below),
and any claim for damages for any of the Mortgaged Property taken or damaged
under the power of eminent domain or by condemnation or by sale in lieu thereof.
Beneficiary may, at its option, commence, appear in and prosecute, in its own
name, any action or proceeding, or make any compromise or settlement, in
connection with such condemnation, taking under the power of eminent domain or
sale in lieu thereof, and Trustor hereby appoints Beneficiary as its true and
lawful attorney-in-fact for such purposes, such power being coupled with an
interest. In connection with any such action or proceeding, Trustor hereby
expressly waives its rights under NRS 37.115. After deducting therefrom all of
its expenses, including attorneys fees, the Beneficiary may elect, in its sole
discretion and notwithstanding the fact that the security given hereby may not
be impaired by a partial condemnation, to apply any part or all of the proceeds
of the award, in such order as Beneficiary may determine, upon or in reduction
of the indebtedness secured hereby whether due or not. Any application of all or
a portion of the proceeds of any such award to the indebtedness shall not cure
or waive any default or notice of default hereunder or invalidate any act done
pursuant to such notice. Trustor agrees to execute such further assignments of
any compensation, award, damages, right of action and proceeds as Beneficiary
may require.

 

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1.10 Indemnification. The Trustor shall appear in and defend any suit, action or
proceeding that might in any way, in the reasonable judgment of Beneficiary,
materially and detrimentally affect the value of the Mortgaged Property, the
title to the Mortgaged Property or the rights and powers of Trustee or
Beneficiary. Trustor shall, at all times, indemnify, hold harmless and on demand
reimburse Beneficiary for any and all loss, damage, reasonable expense or cost,
including cost of evidence of title and reasonable attorneys fees, arising out
of or incurred in connection with any such suit, action or proceeding, and the
sum of such expenditures shall be secured by this Deed of Trust and shall accrue
interest at the “Default Rate” as that term is defined in the Note and shall be
due and payable on demand. Trustor shall pay costs of suit, cost of evidence of
title and reasonable attorneys’ fees in any proceeding or suit brought by
Trustee or Beneficiary to foreclose this Deed of Trust.

 

1.11 Sale of Premises or Additional Financing Not Permitted. In order to induce
Beneficiary to make the loan secured hereby Trustor specifically agrees that:

 

(a) if the Mortgaged Property or any part thereof or any interest therein, shall
be sold, assigned, transferred, conveyed, pledged, mortgaged or encumbered with
financing other than that secured hereby or otherwise alienated by Trustor
whether voluntarily or involuntarily or by operation of law, except as shall be
specifically hereinafter permitted or without the prior written consent of
Beneficiary, then Beneficiary, at its option, may declare the Note secured
hereby and all other obligations hereunder to be forthwith due and payable.
Except as shall be otherwise specifically provided herein, any (a) change in the
legal or equitable ownership of the Mortgaged Property whether or not of record,
or (b) change in the form of entity or ownership (including the hypothecation or
encumbrance thereof) of the stock or any other ownership interest in Trustor
shall be deemed a transfer of an interest in the Mortgaged Property; provided,
however, that any transfer of the Mortgaged Property or any interest therein to
an entity which controls, is controlled by, or is under common control with
Trustor shall not be considered a transfer hereunder. In connection herewith,
the financial stability and managerial and operational ability of Trustor is a
substantial and material consideration to Beneficiary in its agreement to make
the loan to Trustor secured hereby. The transfer of an interest in the Mortgaged
Property may materially alter and reduce Beneficiary’s security for the
indebtedness secured hereby. Moreover, Beneficiary has agreed to make its loan
based upon the presumed value of the Mortgaged Property and the Rents and
Profits thereof. Therefore, it will be a diminution of Beneficiary’s security if
junior financing, except as shall be permitted by Beneficiary, or if other liens
or encumbrances should attach to the Mortgaged Property.

 

(b) Trustor may request Beneficiary to approve a sale or transfer of the
Mortgaged Property to a party who would become the legal and equitable owner of
the Mortgaged Property and would assume any and all obligations of Trustor under
the Loan Documents (the “Purchaser”). Beneficiary shall not be obligated to
consider or approve any such sale, transfer or assumption or request for the
same. However, upon such request, Beneficiary may impose limiting conditions and
requirements to its consent to an assumption. In connection with any such
transfer or assumption, Trustor agrees to pay a fee of two percent (2%) of the
amount of the indebtedness secured by this deed of trust at the time of the
transfer or assumption.

 

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(c) In the event ownership of the Mortgaged Property, or any part thereof,
becomes vested in a person or persons other than Trustor, the Beneficiary may
deal with such successor or successors in interest with reference to the Note or
this Deed of Trust in the same manner as with Trustor, without in any way
releasing, discharging or otherwise affecting the liability of Trustor under the
Note, this Deed of Trust or the other Loan Documents. No sale of Trustor’s
interest in the Mortgaged Property, no forbearance on the part of Beneficiary,
no extension of the time for the payment of the Deed of Trust indebtedness or
any change in the terms thereof consented to by Beneficiary shall in any way
whatsoever operate to release, discharge, modify, change or affect the original
liability of the Trustor herein, either in whole or in part. Any deed conveying
the Mortgaged Property, or any part thereof, shall provide that the grantee
thereunder assume all of Trustor’s obligations under the Note, this Deed of
Trust and all other Loan Documents. In the event such deed shall not contain
such assumption, Beneficiary shall have all rights reserved to it hereunder in
the event of a default or if Beneficiary shall not elect to exercise such rights
and remedies, the grantee under such deed shall nevertheless assume such
obligations by acquiring the Mortgaged Property or such portion thereof subject
to this Deed of Trust. Nothing contained in this section waives the restrictions
against the transfer of the Mortgaged Property contained in Section 1.11(a).

 

1.12 Transfer of Personal Property. Trustor shall not voluntarily, involuntarily
or by operation of law sell, assign, transfer, hypothecate, pledge or otherwise
dispose of the Personal Property or any interest therein and shall not otherwise
do or permit anything to be done or occur that may impair the Personal property
as security hereunder, except that so long as this Deed of Trust is not in
default, Trustor shall be permitted to sell or otherwise dispose of the Personal
Property when absolutely worn out, inadequate, unserviceable or unnecessary for
use in the operation of the Property or in the conduct of the business of
Trustor, upon replacing the same or substituting for the same other Personal
Property at least equal in value to the initial value of that disposed of and in
such a manner so that said Personal Property is sold in connection with the sale
of the Property.

 

1.13 Title to Replacements and Substitutions. All right, title and interest of
Trustor in and to all extensions, improvements, betterments, renewals,
substitutes and replacements of, and all additions and appurtenances to the
Personal Property, Improvements or the Mortgaged Property which Trustor
hereafter acquires, receives by release, constructs, assembles or places on the
Mortgaged Property, and all conversions of the security constituted thereby,
immediately upon such acquisition, release, construction, assembling, placement
or conversion, as the case may be, and in each such case, without any further
deed of trust, conveyance, assignment or other act by Trustor, shall become
subject to the lien of this Deed of Trust as fully and completely, and with the
same effect and in the same priority as the lien of this Deed of Trust shall
have attached to the item so replaced or substituted immediately prior to such
replacement of substitution, as though now owned by Trustor and specifically
described in the granting clause hereof, but at any and all times Trustor will
execute and deliver to Trustee any and all such further assurances, deeds of
trust, conveyances or assignments thereof as Trustee or Beneficiary may
reasonably require for the purpose of expressly and specifically subjecting the
same to the lien of this Deed of Trust.

 

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1.14 Security Agreement. This Deed of Trust shall be self-operative and shall
constitute a Security Agreement and a Construction Mortgage as those terms are
defined in the Nevada Uniform Commercial Code (the “Code”) with respect to all
of those portions of the Mortgaged Property which constitute personal property
or fixtures governed by the Code, provided, however, Trustor hereby agrees to
execute and deliver on demand and hereby irrevocably constitutes and appoints
Beneficiary the attorney-in-fact of Trustor (such power coupled with an
interest) to execute, deliver and, if appropriate, to file with agreement,
financing statement or other instruments as Beneficiary may request or require
in order to impose or perfect the lien or security interest hereof more
specifically thereon. Notwithstanding the above, this Deed of Trust is intended
to serve as a fixture filing pursuant to the terms of the Code. This filing is
to be recorded in the real estate records in the county in which the Mortgaged
Property is located. In that regard, the following information is provided:

 

          Name of Debtor:

  Trustor

          Address of Debtor:

  See Section 5.12

          Name of Secured Party:

  Beneficiary

          Address of Secured Party:

  See Section 5.12

 

1.15 Management. The Trustor agrees that the Beneficiary shall have and reserves
the right to install professional management of the Mortgaged Property upon the
occurrence of an Event of Default as defined herein. Such installation shall be
at the sole discretion of the Beneficiary and nothing herein shall obligate the
Beneficiary to exercise its right to install professional management. The cost
of such management shall be borne by Trustor and shall be treated as an Advance
under Section 1.16. Nothing contained herein shall limit Beneficiary’s rights in
equity to obtain a receiver for the Mortgaged Property.

 

1.16 Advances. If Trustor shall fail to perform any of the covenants herein
contained or contained in any other Loan Document, the Beneficiary may, but is
not obligated to, pay any and all amounts necessary to perform same or cause
same to be performed on behalf of Trustor, and all sums so expended by
Beneficiary for payment of any item whatsoever, including, but not by limiting
the generality of the foregoing, payment of taxes, insurance premiums, lien
claimants or assessments shall be secured by this Deed of Trust and each such
payment shall be and all such payments shall be collectively referred to herein
as an “Advance.” The Trustor shall repay to Beneficiary on demand each and every
Advance and the sum of each such Advance shall accrue interest at the Default
Rate, as that term is defined in the Note, from the date of each Advance until
repaid to Beneficiary. Nothing herein contained, including the payment of such
amount or amounts by Beneficiary, shall prevent any such failure to perform on
the part of Trustor from constituting an Event of Default as defined herein. Any
Advance shall be deemed to be made under an obligation to do so.

 

1.17 Time. The Trustor agrees that time is of the essence hereof in connection
with all obligations of the Trustor herein, in the Note or any other Loan
Documents.

 

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1.18 Estoppel Certificates. The Trustor within ten (10) days after written
request shall furnish a duly acknowledged written statement setting forth the
amount of the debt secured by this Deed of Trust, and stating either that no
setoffs or defenses exist against the Deed of Trust debt, or, if such setoffs or
defenses are alleged to exist, the nature thereof.

 

1.19 Records. The Trustor agrees to keep adequate books and records of account
in accordance with generally accepted accounting principles consistently applied
and will permit the Beneficiary and Beneficiary’s agents, accountants and
attorneys, to visit and inspect the Mortgaged Property and examine its books and
records of account in respect to the Mortgaged Property, and to discuss its
affairs, finances and accounts with the Trustor, at such reasonable times as
Beneficiary may request upon twenty-four (24) hours telephonic notice.

 

1.20 Assignment of Rents and Profits. Trustor does hereby assign to Beneficiary
all Rents and Profits as follows:

 

(a) The Rents and Profits are hereby unconditionally assigned, transferred,
conveyed and set over to Beneficiary to be applied by Beneficiary in payment of
the principal and interest and all other sums payable on the Note, and all other
sums payable under this Deed of Trust. Prior to the happening of any Event of
Default as set forth in Article 2 hereof, Trustor shall have a license to
collect and receive all Rents and Profits. If an Event of Default has occurred
and is continuing, Trustor’s right to collect and receive Rents and Profits
shall cease and Beneficiary shall have the sole right, with or without taking
possession of the Property, to collect all Rents and Profits, including those
past due and unpaid. Any Rents and Profits received by Trustor after an Event of
Default has occurred and is continuing shall be deemed to be received by Trustor
in trust as trustee for Beneficiary and for the benefit of Beneficiary. Trustor
shall be required to account to Beneficiary for any rents and profits not
applied in accordance with the provisions of the Loan Documents. Nothing
contained in this Section 1.20(a) or elsewhere in this Deed of Trust shall be
construed to make Beneficiary a “mortgagee in possession” unless and until
Beneficiary actually takes possession of the Mortgaged Property either in person
or through an agent or receiver.

 

(b) Trustor agrees to execute such other assignments of Rents and Profits
applicable to the Mortgaged Property as the Beneficiary may from time to time
request while this Deed of Trust and the debt secured hereby are outstanding.
Trustor shall not (i) execute (except as noted above) an assignment of any of
its right, title or interest in the Rents and Profits or any portion thereof,
(ii) execute any lease of any portion of the Mortgaged Property without
Beneficiary’s prior approval; or (iii) in any other manner impair the value of
the Mortgaged Property or the security of the Beneficiary for the payment of the
indebtedness.

 

(c) Trustor covenants and agrees that it shall at all times promptly and
faithfully perform, or cause to be performed, all of the covenants, conditions
and agreements contained in all leases of the Mortgaged Property now or
hereafter existing, on the part of the lessor thereunder to be kept and
performed.

 

(d) Nothing herein shall obligate the Beneficiary to perform the duties of the
Trustor as landlord or lessor under any such leases or tenancies.

 

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(e) The Trustor shall furnish to the Beneficiary, within fifteen (15) days after
a request by the Beneficiary to do so, a written statement, certified as true
and correct by the Trustor, containing the names of all lessees, if any, or
occupants of the Mortgaged Property, the terms of their respective leases or
tenancies, the spaces occupied and the rentals paid.

 

1.21 Compliance with Covenants. Trustor warrants that it is not in violation of
any covenant, condition or restriction regarding the ownership, use or occupancy
of the Mortgaged Property and that the use of the Improvements, upon completion
thereof, shall not constitute a violation of any such covenant, condition or
restriction. If Trustor shall fail to perform any obligations set forth in such
covenants, conditions or restrictions, the Beneficiary may, but is not obligated
to, pay any and all amounts necessary to perform same or cause another to
perform same on behalf of Trustor, and this Deed of Trust shall secure all sums
that Beneficiary expends for any such payment or performance, which sums shall
be an Advance under the terms of this Deed of Trust. Trustor’s failure to
perform its obligations under any such declaration or mutual arrangement shall
constitute an Event of Default.

 

ARTICLE 2

DEFAULT

 

2.1 Events of Default. The occurrence of any of the following events shall be an
Event of Default: (a) default in the payment or performance of any obligations
secured hereby or contained herein, subject to the cure period set forth in
Section 7.1(b) of the Loan Agreement; or (b) the occurrence of any “Event of
Default” pursuant to the Loan Agreement.

 

ARTICLE 3

REMEDIES

 

Upon the occurrence of any Event of Default, Trustee and Beneficiary shall have
the following rights and remedies:

 

3.1 Acceleration of Maturity. Beneficiary may declare the entire principal of
the Note then outstanding (if not then due and payable thereunder) and all other
obligations of Trustor hereunder or under the Note, to be due and payable
immediately, and, subject to applicable provisions of law, upon any such
declaration the principal of the Note and accrued and unpaid interest, and all
other amounts to be paid under the Note, this Deed of Trust or any other Loan
Document shall become and be immediately due and payable, anything in the Note
or in this Deed of Trust to the contrary notwithstanding.

 

3.2 Default Interest. Irrespective of whether Beneficiary exercises any other
right set forth in this Article 3, after the Maturity Date or any acceleration
thereof, or upon any Event of Default, through and including the date such
default is cured, the entire principal balance under the Note shall thereafter
earn interest at the Default Rate, as defined in the Note.

 

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3.3 Operation of Mortgaged Property. Beneficiary in person or by agent may, but
is not obligated to, and without notice or demand upon, or consent from, Trustor
and without releasing Trustor from any obligation hereunder; (i) make any
payment or do any act which Trustor has failed to make or do; (ii) enter upon,
take possession of, manage and operate the Mortgaged Property or any part
thereof; (iii) make or enforce, or if the same be subject to modification or
cancellation, modify or cancel leases upon such terms or conditions as
Beneficiary deems proper; (iv) obtain and evict tenants, and fix or modify
rents, make repairs and alterations and do any acts which Beneficiary deems
proper to protect the security hereof; and (v) with or without taking
possession, in its own name or in the name of Trustor, use or otherwise collect
and receive the Rents and Profits and all other benefits, including those past
due and unpaid, and apply the same, less costs and expenses of operation and
collection, including reasonable attorneys fees, upon any indebtedness secured
hereby, and in such order as Beneficiary may determine.

 

3.4 Judicial Remedies. Beneficiary may bring an action in any court of competent
jurisdiction to foreclose this Deed of Trust or to enforce any of the covenants
and agreements hereof and to take such steps to protect and enforce its rights
whether by action, suit or proceeding in equity or at law for the specific
performance of any covenant, condition or agreement in the Note, this Deed of
Trust or any other Loan Document, or in aid of the execution of any power herein
granted, or for any foreclosure hereunder, or for the enforcement of any other
appropriate legal or equitable remedy or otherwise as the Beneficiary shall
elect.

 

3.5 Maintenance of Mortgaged Property. Beneficiary may have a receiver appointed
by a court of competent jurisdiction for the purpose of collecting rents and
managing the Mortgaged Property, and Trustor hereby consents in advance to such
appointment. The Trustee or Beneficiary personally, or by their agents or
attorneys, or by the receiver appointed by the court, may enter into and upon
all or any part of the Mortgaged Property, and may exclude the Trustor, its
agents and servants wholly therefrom, and having and holding the same, may use,
operate, manage and control the Mortgaged Property and conduct the business
thereof, either personally or by its superintendents, managers, agents,
servants, attorneys or receivers. Upon every such entry, any party occupying the
Mortgaged Property in accordance with this Article 3, at the expense of the
Mortgaged Property or Trustor, may from time to time maintain and restore the
Mortgaged Property or any part thereof either by purchase, repair or
construction, and in the course of such purchase, repair or construction may
make such changes in the Improvements as it may deem desirable and may insure
the same. Likewise, from time to time, at the expense of the Mortgaged Property,
the Trustee or Beneficiary or any such party may make all necessary or proper
repairs, renewals and replacements of the Personal Property and such useful
alterations, betterments and improvements thereto and thereon as to it may seem
advisable. In every such case the Trustee or Beneficiary or any such party shall
have the right to manage and operate the Mortgaged Property and to carry on the
business thereof and exercise all rights and powers of the Trustor with respect
thereto either in the name of the Trustor or otherwise, as it shall deem best,
and shall be entitled to collect and receive the Rents and Profits of the
Mortgaged Property and every part thereof and after deducting the expenses of
conducting the

 

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business thereof and of all maintenance, repairs, renewals, replacements,
alterations, additions, betterments and improvements and amounts necessary to
pay for taxes, assessments, insurance and prior or other proper charges upon the
Mortgaged Property or any part thereof, as well as just and reasonable
compensation for the agents, clerks, servants and other employees by it properly
engaged and employed, the Beneficiary shall apply the monies arising as
aforesaid, in the order as is set forth in the Note.

 

3.6 Rights of Secured Party. Beneficiary shall have all of the remedies of a
Secured Party under the Code, including without limitation, the right and power
to sell, or otherwise dispose of the Personal Property or any part thereof, and
for that purpose may take immediate and exclusive possession of the Personal
Property, or any part thereof, and with or without judicial process to the
extent permitted by law, enter upon any premises on which the Personal Property
or any part thereof may be situated and remove the same therefrom without being
deemed guilty of trespass and without liability for damages thereby occasioned,
or at Beneficiary’s option Trustor shall assemble the Personal Property and make
it available to the Beneficiary at the place and the time designated in the
demand. Beneficiary shall be entitled to hold, maintain, preserve and prepare
the Personal Property for sale. Beneficiary, without removal of the Personal
Property from the Mortgaged Property, may render the Personal Property
inoperable and dispose of the Personal Property on the Mortgaged Property. To
the extent permitted by law, Trustor expressly waives any notice of sale or
other disposition of the Personal Property and any other right or remedy of
Beneficiary existing after default hereunder, and to the extent any such notice
is required and cannot be waived, Trustor agrees that as it relates to this
Section 3.6 only, if such notice is mailed, postage prepaid, to the Trustor at
the address set forth in Section 5.12 hereof at least ten (10) days before the
time of the sale or disposition, such notice shall be deemed reasonable and
shall fully satisfy any requirement for giving of said notice.

 

3.7 Foreclosure. All rights, powers and privileges granted to or conferred upon
a beneficiary and trustee under a deed of trust in accordance with the laws of
the State of Nevada are hereby adopted and incorporated into this Deed of Trust
by this reference and in accordance with such rights, powers and privileges:

 

(a) The Trustee may, and upon the written request of Beneficiary shall, with or
without entry, personally or by its agents or attorneys insofar as applicable
pursuant to and in accordance with the laws of Nevada:

 

(i) subject to the provisions of the Loan Agreement, cause any or all of the
Mortgaged Property to be sold under the power of sale granted by this Deed of
Trust or any of the other Loan Documents in any manner permitted by applicable
law. For any sale under the power of sale granted by this Deed of Trust, Trustee
or Beneficiary must record and give all notices required by law and then, upon
the expiration of such time as is required by law, may sell the Mortgaged
Property, and all estate, right, title, interest, claim and demand of Trustor
therein, and all rights of redemption thereof, at one or more sales, as an
entirety or in parcels, with such

 

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elements of real and/or personal property (and, to the extent permitted by
applicable law, may elect to deem all of the Mortgaged Property to be real
property for purposes thereof), and at such time or place and upon such terms as
Trustee and Beneficiary may determine and shall execute and deliver to the
purchaser or purchasers thereof a deed or deeds conveying the property sold, but
without any covenant or warranty, express or implied, and the recitals in the
deed or deeds of any facts affecting the regularity or validity of a sale will
be conclusive against all persons. In the event of a sale, by foreclosure or
otherwise, of less than all of the Mortgaged Property, this Deed of Trust shall
continue as a lien and security interest on the remaining portion of the
Mortgaged Property; or

 

(ii) institute proceedings for the complete or partial foreclosure of this Deed
of Trust as a mortgage; and in this connection Trustor does hereby expressly
waive to the extent permitted by law its right of redemption after a mortgage
foreclosure sale; or

 

(iii) apply to any court of competent jurisdiction for the appointment of a
receiver or receivers for the Mortgaged Property and of all the earnings,
revenues, rents, issues, profits and income thereof, which appointment is hereby
consented to by Trustor; or

 

(iv) take such steps to protect and enforce its rights whether by action, suit
or proceeding in equity or at law for the specific performance of any covenant,
condition or agreement in the Note or in this Deed of Trust, or in aid of the
execution of any power herein granted, or for any foreclosure hereunder, or for
the enforcement of any other appropriate legal or equitable remedy or otherwise
as Beneficiary shall select.

 

(b) The Trustee may adjourn from time to time any sale by it made under or by
virtue of this Deed of Trust by announcement at the time and place appointed for
such sale or sales and, except as otherwise provided by any applicable provision
of law, the Trustee without further notice or publication, may make such sale at
the time and place to which the sale shall be so adjourned.

 

(c) Upon the completion of any sale or sales made by the Trustee under or by
virtue of this Section, the Trustee shall execute and deliver to the accepted
purchaser or purchasers a good and sufficient instrument, or good and sufficient
instruments, conveying, assigning and transferring all estate, right, title and
interest in and to the property and rights sold, but without any covenant or
warranty, express or implied. The recitals in such deed of any matters or facts
shall be conclusive proof of the truthfulness thereof to the extent permitted by
law. Any such sale or sales made under or by virtue of this Section whether made
under the power of sale herein granted or under or by virtue of judicial
proceedings or of a judgment or decree of foreclosure and sale, shall operate to
divest all the estate, right, title, interest, claim and demand whatsoever,
whether at law or

 

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in equity, of the Trustor in and to the properties and rights so sold, and shall
be a perpetual bar both at law and in equity against the Trustor and against any
and all persons claiming or who may claim the same, or any part thereof from
through or under the Trustor.

 

(d) In the event of any sale made under or by virtue of this Section whether
made under the power of sale herein granted or under or by virtue of judicial
proceedings or of a judgment or decree of foreclosure and sale, the entire
principal of and interest on the Note and all accrued interest on the Note, and
all other sums required to be paid by the Trustor pursuant to the Note and this
Deed of Trust shall be due and payable, anything in the Note or in this Deed of
Trust to the contrary notwithstanding.

 

(e) The purchase money proceeds or avails of any sale made under or by virtue of
this Section, together with any other sums which then may be held by the Trustee
or Beneficiary under this Deed of Trust whether under the provisions of this
Section or otherwise, shall be applied as required by Section 40.462 of the
Nevada Revised Statutes.

 

(f) Upon any sale made under or by virtue of this Section, whether made under
the power of sale herein granted or granted in accordance with the laws of the
state in which the Property is located or under or by virtue of judicial
proceedings or of a judgment or decree of foreclosure and sale, the Beneficiary
may bid for and acquire the Mortgaged Property or any part thereof and in lieu
of paying cash therefor may make settlement for the purchase price by crediting
upon the indebtedness of the Trustor secured by this Deed of Trust the net sales
price after deducting therefrom the expenses of the sale and the cost of the
action and any other sums which the Beneficiary is authorized to deduct under
this Deed of Trust. The Beneficiary upon so acquiring the Mortgaged Property, or
any part thereof shall be entitled to hold, lease, rent, operate, manage and
sell the same in any manner provided by applicable laws.

 

3.8 Sales of Lots. In the event the Beneficiary shall institute judicial
proceedings to foreclose the lien hereof, and shall be appointed as
mortgagee-in-possession of the Mortgaged Property, the Beneficiary during such
time as it shall be mortgagee-in-possession of the Mortgaged Property pursuant
to an order or decree entered in such judicial proceedings, shall have, and the
Trustor hereby gives and grants to the Beneficiary, the right, power and
authority to sell any of the Lots for such prices and upon conditions and
provisions as such mortgagee-in-possession may deem desirable. Trustor expressly
acknowledges and agrees that while the Beneficiary is a mortgagee-in-possession
of the Mortgaged Property pursuant to an order or decree entered in such
judicial proceedings, such Beneficiary shall be the attorney-in-fact of the
Trustor for the purpose of selling the Lots for the prices and upon the terms,
conditions and provisions deemed desirable to such Beneficiary and with like
effect as if the Trustor had made such sales of Lots as the owner in fee simple
of the Mortgaged Property free and clear of any conditions or limitations
established by this Deed of Trust. Trustor hereby grants the aforementioned
power and authority to Beneficiary coupled with an interest, and it shall not be
revocable by Trustor.

 

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3.9 Action by Beneficiary or Agent. Subject to and in accordance with applicable
law, Beneficiary may take any of the actions referred to in this Article, either
in person or by agent, with or without bringing any action or proceeding, as may
a receiver appointed by a court, and they may take any such action irrespective
of whether any notice of default or election to sell has been given hereunder
and without regard to the adequacy of the security for the indebtedness hereby
secured.

 

3.10 Marshalling of Assets. To the extent allowed by applicable law, Trustor on
its own behalf and on behalf of its successors and assigns hereby expressly
waives all rights to require a marshalling of assets by Trustee or Beneficiary
or to require Trustee or Beneficiary to first resort to the sale of any portion
of the Mortgaged Property which Trustor might have been retained before
foreclosing upon and selling any other portion as may be conveyed by Trustor
subject to this Deed of Trust.

 

3.11 Occupancy by Trustor. If at the time of a trustee’s sale hereunder Trustor
occupies the portion of the Mortgaged Property so sold or any part thereof,
Trustor shall immediately become the tenant of the purchaser at such sale, which
tenancy shall be a tenancy from day to day, terminable at the will of either the
tenant or any such purchaser, at a reasonable rental per day based upon the
value of the portion of the Mortgaged Property so occupied, such rental to be
due and payable daily to the purchaser. An action of unlawful detainer shall lie
if the tenant holds over after a demand in writing from the purchaser for
possession of such Mortgaged Property.

 

3.12 Non-Waiver of Default. The entering upon and taking possession of the
Mortgaged Property, the collection of any Rents or Profits or other benefits and
the application thereof, as aforesaid, shall not cure or waive any default,
whenever occurring, or affect any notice of default hereunder or invalidate any
act done pursuant to such notice; and, notwithstanding continuance in possession
of the Mortgaged Property, or any part thereof by Beneficiary, Trustee or a
receiver and the collection, receipt and application of Rents and Profits or
other benefits, Beneficiary shall be entitled to exercise every right provided
for in this Deed of Trust or by law upon or after the occurrence of a default,
including the right to exercise the power of sale.

 

3.13 Remedies Cumulative. No remedy herein conferred upon or reserved to Trustee
or Beneficiary is intended to exclude any other remedy herein or by law
provided, but each shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute. No delay or omission of Trustee or Beneficiary to exercise any right or
power accruing upon any Event of Default shall impair any right or power or
shall be construed to be a waiver of any Event of Default or any acquiescence
therein; and every power and remedy given by this Deed of Trust to Trustee or
Beneficiary may be exercised from time to time as often as Trustee or
Beneficiary deem expedient. If additional security exists for the performance of
the obligations secured hereby, to the extent permitted by law, the holder of
the Note, at its sole option, and without limiting or affecting any of the
rights or remedies hereunder, may exercise any of the rights and remedies to
which it may be entitled hereunder either concurrently with whatever rights it
may have in connection with such other security or in such order as it may
determine. Nothing in this Deed of Trust shall affect the obligation of Trustor
to pay the principal and interest due under the Note in the manner and at the
time and place specified therein.

 

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ARTICLE 4

TRUSTEE

 

4.1 Acceptance of Trust, Notice of Indemnification. Trustee accepts this trust
when this Deed of Trust, duly executed and acknowledged, becomes a public record
as provided by law. Trustee is not obligated to notify any party hereto of
pending sale under any other deed of trust or of any action or proceeding in
which Trustor, Beneficiary or Trustee is a party, and Trustee shall not be
obligated to perform any act required of it hereunder unless the performance of
such act is requested in writing in the manner required by law and Trustee is
reasonably indemnified against loss, cost, liability and expense.

 

4.2 Substitution of Trustee. From time to time with or without cause for
whatever reason, by a writing signed and acknowledged by Beneficiary and filed
for record in the Office of the Recorder of the County in which the Mortgaged
Property is situated, Beneficiary may appoint another trustee to act in the
place of Trustee or any successor. Such writing shall refer to this Deed of
Trust and set forth the date, book and page of its recordation. The recordation
of such instrument of substitution shall discharge trustee herein named and
shall appoint the new trustee as the Trustee hereunder with the same effect as
if originally named herein. A writing recorded pursuant to this paragraph shall
be conclusive proof of the proper substitution of such new trustee.

 

4.3 Trustee’s Powers. At any time, or from time to time, without liability
therefor and without notice, upon written request of Beneficiary and
presentation of the Note secured hereby, and without affecting the personal
liability of any person for payment of the indebtedness secured hereby or the
effect of this Deed of Trust upon the remainder of said Mortgaged Property,
Trustee may (i) reconvey any part of said Mortgaged Property, (ii) consent in
writing to the making of any map or plat thereof, (iii) join in granting any
easement thereon, or (iv) join in any extension agreement or any agreement
subordinating the lien or charge hereof.

 

4.4 Reconveyance of Trust. Upon written request of Beneficiary stating that all
sums secured hereby have been paid and upon surrender to Trustee of this Deed of
Trust and the Note or notes secured hereby for cancellation and retention and
payment of its fees, Trustee shall reconvey, without warranty, the Mortgaged
Property then held hereunder. The recitals in such reconveyance of any matters
or facts shall be conclusive proof of the truthfulness thereof. The grantee in
such reconveyance may be described as “the person or persons legally entitled
thereto.”

 

4.5 Indemnification of Trustee. Trustee may rely on any document that he
believes in good faith to be genuine. All money received by Trustee shall, until
used or applied as herein provided, be held in trust, but need not be segregated
(except to the extent required by law), and Trustee shall not be liable for
interest thereon. Trustor shall indemnify Trustee against all liability and
expenses which he may incur in the performance of his duties hereunder, except
for its own negligence.

 

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ARTICLE 5

MISCELLANEOUS

 

5.1 Non-Waiver. By accepting payment of any sum secured hereby after its due
date or by accepting late performance of any obligation secured hereby,
Beneficiary shall not waive its right against any person obligated directly or
indirectly hereunder or on any indebtedness hereby secured, either to require
prompt payment when due of all other sums so secured or to declare a default for
failure to make payment except as to such payment that Beneficiary accepts. No
exercise of any right or remedy by Trustee or Beneficiary hereunder shall
constitute a waiver of any other right or remedy herein contained or provided by
law.

 

No delay or omission of the Trustee or Beneficiary in the exercise of any right,
power or remedy accruing hereunder or arising otherwise shall impair any such
right, power or remedy, or constitute a waiver of any default or acquiescence
therein.

 

Receipts of rents, awards, and any other monies or evidences thereof, pursuant
to the provisions of this Deed of Trust and any disposition of the same by
Trustee or Beneficiary shall not constitute a waiver of the power of sale or
right of foreclosure by Trustee or Beneficiary in the event of a default or
failure of performance by Trustor of any covenant or agreement contained herein
or the Note secured hereby.

 

5.2 Right to Release. Without affecting the liability of any other person for
the payment of any indebtedness herein mentioned (including Trustor should it
convey said Mortgaged Property) and without affecting the lien or priority
hereof upon any property not released, Beneficiary may, without notice, release
any person so liable, extend the maturity or modify the terms of any such
obligation, or grant other indulgences, release or reconvey or cause to be
released or reconveyed at any time all or any part of the Mortgaged Property,
take or release any other security or make compositions or other arrangements
with debtors. Beneficiary may also accept additional security, either
concurrently herewith or hereafter, and sell same or otherwise realize thereon
either before, concurrently with, or after sale hereunder.

 

5.3 Protection of Security. Should Trustor fail to make any payment or to
perform any covenant as herein provided, Beneficiary may (but without obligation
so to do, without notice to or demand upon Trustor, and without releasing
Trustor from any obligation hereof): (i) make or do the same in such manner and
to such extent as Beneficiary may deem necessary to protect the security hereof,
and Trustor hereby authorizes Beneficiary to enter upon the Mortgaged Property
for such purposes; (ii) commence, appear in and defend any action or proceeding
purporting to affect the security hereof or the rights or powers of Beneficiary;
and/or (iii) pay, purchase, contest, or compromise any encumbrance, charge or
lien which in the judgment of Beneficiary is prior or superior hereto and, in
exercising any such power, incur any liability and expend whatever amounts in
its absolute discretion it may deem necessary therefor, including cost of
evidence of title and reasonable attorneys’ fee. Any expenditures in connection
herewith shall be deemed an Advance and shall constitute part of the
indebtedness secured by this Deed of Trust

 

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5.4 Rules of Construction. When the identity of the parties hereto or other
circumstances make it appropriate, the masculine gender includes the feminine
and/or neuter, and the singular number includes the plural. The headings of each
article, section or paragraph are for information and convenience only and do
not limit or construe the contents of any provision hereof.

 

5.5 Severability. If any term of this Deed of Trust or the application thereof
to any person or circumstances shall, to any extent, be invalid or
unenforceable, the remainder of this Deed of Trust, or the application of such
term to persons or circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each term of this Deed of
Trust shall be valid and enforceable to the fullest extent.

 

5.6 Successors in Interest. This Deed of Trust applies to, inures to the benefit
of, and is binding not only on the parties hereto, but on their heirs,
executors, administrators, successors and assigns. All obligations of Trustor
hereunder are joint and several. The term “Beneficiary” shall mean the holder
and owner, including pledges, of the Note secured hereby, whether or not named
as Beneficiary herein and any owner or holder of the beneficial interest under
this Deed of Trust.

 

5.7 Governing Law; Jurisdiction; Waiver of Jury Trial.

 

(a) This Deed of Trust shall be construed according to and governed by the laws
of the State of Nevada.

 

(b) BORROWER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL,
(i) SUBMITS TO PERSONAL JURISDICTION IN THE STATE OF NEVADA OVER ANY SUIT,
ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THE NOTE, THIS
INSTRUMENT OR ANY OTHER OF THE LOAN DOCUMENTS, (ii) AGREES THAT ANY SUCH ACTION,
SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION SITTING IN CLARK COUNTY, NEVADA, (iii) SUBMITS TO THE JURISDICTION
OF SUCH COURTS, AND, (iv) TO THE FULLEST EXTENT PERMITTED BY LAW, AGREES THAT IT
WILL NOT BRING ANY ACTION, SUIT OR PROCEEDING IN ANY FORUM OTHER THAN CLARK
COUNTY, NEVADA (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO BRING ANY
ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM). BORROWER FURTHER CONSENTS AND
AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH
SUIT, ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE
PREPAID, TO THE BORROWER AT THE ADDRESS FOR NOTICES DESCRIBED IN SECTION 5.12
HEREOF, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY
RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE
VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY
LAW).

 

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(c) BORROWER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL,
WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO THE
INDEBTEDNESS SECURED HEREBY OR ANY CONDUCT, ACT OR OMISSION OF LENDER, TRUSTEE
OR BORROWER, OR ANY OF THEIR DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES,
AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH LENDER, TRUSTEE OR
BORROWER, IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE.

 

5.8 Modifications. This Deed of Trust may only be amended, modified or changed,
and any waiver of any provision hereof shall only be effective, if memorialized
in a writing signed by the party against whom enforcement of any such waiver,
amendment, change, modification or discharge is sought.

 

5.9 No Merger. If both the Lessor’s and Lessee’s estates under any lease or any
portion thereof which constitutes a part of the Mortgaged Property shall at any
time become vested in one owner, this Deed of Trust and the lien created hereby
shall not be destroyed or terminated by application of the doctrine of merger,
and, in such event, Beneficiary shall continue to have and enjoy all of the
rights and privileges of Beneficiary as to the separate estates. In addition,
upon the foreclosure of the lien created by this Deed of Trust on the Mortgaged
Property pursuant to the provisions hereof, any leases or subleases then
existing shall not be destroyed or terminated by application of the law of
merger or as a matter of law or as a result of such foreclosure unless
Beneficiary or any purchaser at any such foreclosure sale shall so elect. No act
by or on behalf of Beneficiary or any such purchaser shall constitute a
termination of any lease or sublease unless Beneficiary or such purchaser shall
have given written notice thereof to such tenant or subtenant.

 

5.10 Attorneys’ Fees. Trustor agrees to pay the reasonable costs or expenses,
including attorneys’ fees, that Beneficiary reasonably incurs for any of the
following relating to this Deed of Trust (or any other instrument evidencing or
securing this loan): (a) the interpretation, performance or enforcement thereof;
(b) the enforcement of any statute, regulation or judicial decision; (c) any
collection effort; or (d) any suit or action for the interpretation, performance
or enforcement thereof, whether Beneficiary commences or defends it, or, any
other judicial or nonjudicial proceeding instituted by Beneficiary or any other
person, to reclaim, seek relief from a judicial or statutory stay, sequester,
protect, preserve or enforce Beneficiary’s interest in this Deed of Trust or any
other security for the Note, including but not limited to proceedings under
federal bankruptcy law, in eminent domain, under the probate code, or in
connection with any state or federal tax lien, regardless of whether suit or
action is commenced or defended as to (a), (b), and (c). Such fees and costs
shall be added to the principal of the Note and shall bear interest at the
Default Rate. The foregoing notwithstanding, in any action commenced by Trustor
or Beneficiary against the other to enforce the provisions of this Deed of Trust
or any other instrument evidencing or securing this loan, the prevailing party
of such action shall be entitled to recover its reasonable attorneys’ fees (as
set forth above) from the non-prevailing party and the non-prevailing party
shall not be entitled to recover its attorneys’ fees.

 

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5.11 Conflict. If the term of any other Loan Document, except the Note, shall be
in conflict with this Deed of Trust, then this Deed of Trust shall govern to the
extent of the conflict. If the term of this Deed of Trust shall be in conflict
with the Note, the Note will then govern to the extent of the conflict.

 

5.12 Notices. All notices to be given pursuant to this Deed of Trust shall be
sufficient if given by personal service, by guaranteed overnight delivery
service, by telex, telecopy or telegram or by being mailed postage prepaid,
certified or registered mail, return receipt requested, to the addresses of the
parties hereto as set forth below, or to such other address as a party may
request in writing. Any time period provided in the giving of any notice
hereunder shall commence upon the date of personal service, the date after
delivery to the guaranteed overnight delivery service, the date of sending the
telex, telecopy or telegram or two (2) days after mailing certified or
registered mail.

 

TRUSTOR’S ADDRESS:

    

BENEFICIARIES’ ADDRESSES:

   USA Commercial Mortgage Company      4484 South Pecos Road      Las Vegas,
Nevada 89121      Attn. Joseph D. Milanowski

 

5.13 Request for Notice of Default. Trustor requests that a true and correct
copy of any notice of default and any notice of sale be sent to Trustor at the
address set forth in Section 5.12 hereof.

 

5.14 Late Charges. As set forth and defined in the Note, there shall be due to
Beneficiary a Late Charge of five percent (5%) of the amount of any payment
which is received by Beneficiary so as to incur a Late Charge, and all such Late
Charges are secured hereby.

 

5.15 Statutory Covenants. Where not inconsistent with the above, the following
covenants, Nos. 1; 2 (full replacement value); 3; 4 (twenty percent [20%] per
annum); 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.

 

5.16 Non-Assumption. Notice is hereby given that Trustor’s obligations under
this Deed of Trust may not be assumed except as permitted by Section 1.11
hereof. Unless otherwise provided herein, any transfer of Trustor’s interest in
the Mortgaged Property or any attempted assumption of Trustor’s obligations
under the Deed of Trust not so approved shall constitute a default hereunder and
shall permit Beneficiary to accelerate the Maturity Date of the Note. Reference
to applicable sections of the Loan Documents must be made for the full text of
such provisions.

 

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5.17 Review of Covenants, Conditions and Restrictions. No covenant, condition or
restriction or any rule or regulation or any other document or agreement,
however, denominated, which shall purport to apply to the ownership, operation,
maintenance or governance of the Mortgaged Property or any part thereof, nor any
article of incorporation bylaw or any other document or agreement, however
denominated, which shall purport to establish an organization for the operation,
maintenance of governance of the Mortgaged Property or any part thereof, shall
be approved, executed and/or recorded without the express prior written consent
of Beneficiary.

 

5.18 Loan Agreement. Performance of Trustor’s obligations under that certain
Loan Agreement of even date herewith by and between Trustor and Beneficiary are
secured by this Deed of Trust, and a default thereunder shall constitute an
Event of Default under this Deed of Trust.

 

IN WITNESS WHEREOF, the undersigned have caused this instrument to be signed as
of the date first above written.

 

TRUSTOR:

                   By:  

 

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STATE OF NEVADA

  )               ) ss.     

COUNTY OF CLARK

  )     

 

This instrument was acknowledged before me on this          day of
                    , 2004 by                      as                      of
                     .

 

Notary Public

   

(My Commission Expires:                                          )

 

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EXHIBIT “A”

 

DESCRIPTION OF PROPERTY

 

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