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Exhibit 10.42
 
MORTGAGE

Definitions:   The following capitalized words and terms shall have the
following meanings when used in this Mortgage. Unless specifically stated to the
contrary, all references to dollar amounts shall mean dollar amounts in lawful
money of the United States of America. Words and terms used in the singular
shall include the plural, and the plural shall include the singular, as the
context may require. Words and terms not otherwise defined in this Mortgage
shall have the meanings attributed to such terms in the Uniform Commercial Code:

Borrower:   The word “Borrower” means D.L. Claire Capital Corporation and
includes all co-signers and co-makers signing the Note.

Environmental Laws:   The words “Environmental Laws” means any and all State,
Federal and local statutes, regulations and ordinances relating to the
protection of human health or the environment, including without limitation the
Comprehensive Environmental Response, compensation and Liability Act of 1980, as
amended, 42 U.S.C. Section 9801, et seq. (“CERCLA”), the Superfund Amendments
and Reauthorization Act of 1986, Pub. L. No. 99-499 (“SARA”), the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other
applicable State or Federal laws, rules or regulations adopted pursuant thereto.

Event of Default:   The words “Event of Default” mean any of the events of
default set forth in the Note.

Grantor:   The word “Grantor” means Gateway Venture Holdings, Inc.

Guarantor:   The word “Guarantor” means any guarantor, surety or accommodation
party of any or all of the Indebtedness.

Guaranty:   The word “Guaranty” means the guaranty from the Grantor to the
Lenders, including without limitation a guaranty of all or part of the Note.

Hazardous Substances:   The words “Hazardous Substances” mean materials that
because of their quantity, concentration or physical, chemical or infectious
characteristics, may cause or pose a present or potential harm to human health
or the environment when improperly used, treated, stored disposed of, generated,
manufactured, transported or otherwise handled. The words “Hazardous Substances”
are used in their very broadest sense and include without limitation any and all
hazardous or toxic substances, materials or waste as defined or listed under the
Environmental laws. The term “Hazardous Substances” also includes, without
limitation, petroleum and petroleum by-products or any fraction thereof and
asbestos.

 
 

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Improvements:   The word “Improvements” means all existing and future
improvements, buildings, structures, mobile homes affixed on the Real Property,
facilities, additions, replacements and other construction on the Real Property.

Lenders:   The word “Lenders” means CAMOFI Master LDC and CAMHZN Master LDC, and
their respective successors and assigns.

Mortgage:   The word “Mortgage” means this Mortgage between Grantor and Lenders.

Note:   The word “Note” means the promissory note dated as of October 31, 2007
in the original principal amount of $650,000 from the Borrower to the Lenders,
together with all renewals of, extensions of, modifications of, refinancings of,
consolidations of, and substitutions for the promissory note or agreement.

Personal Property:   The words “Personal Property” mean all the equipment,
fixtures and other articles of personal property now or hereafter owned by
Grantor, and now or hereafter attached or affixed to the Real Property; together
with all accessions, parts and additions to, all replacements of, and all
substitutions for, any such property; and together with all proceeds (including
without limitation all insurance proceeds and refunds of premiums, from any sale
or other disposition of the Property.

Property:   The word “Property” means collectively the Real Property and the
Personal Property.

Real Property:   The words “Real Property” mean the real property, interests and
rights as further described in this Mortgage.

Related Documents:   The words “Related Documents” mean all promissory notes,
credit agreements, loan agreements, environmental agreements, guaranties,
security agreements, mortgages, deeds of trust, security deeds, collateral
mortgages, and all other instruments agreements and documents, whether now or
hereafter existing, executed in connection with the Indebtedness.

Rents:   The word “Rents” means all present and future rents, revenue, income,
issues, royalties, profits and other benefits derived from the Properties.

THIS MORTGAGE, dated as of October 31, 2007, is made and executed between
Gateway Venture Holdings, Inc. (“Grantor”) and CAMOFI Master LDC and CAMHZN
Master LDC, whose address is 350 Madison Avenue, New York, New York, 10017
(“Lenders”).

GRANT OF MORTGAGE:   For valuable consideration, Grantor mortgages and conveys
to Lenders all of Grantor’s right, title and interest in and to the following
described real property, together with all existing or subsequently erected
buildings, improvements and fixtures; all easements, rights of way, and
appurtenances; all water, Page 3 of 8 water rights, watercourses and ditch
rights (including stock in utilities with ditch or irrigation rights); and all
other rights, royalties and profits relating to the real property, including
without limitation all minerals, oil, gas, geothermal and similar matters, (the
“Real Property”) located in Clark County, State of Nevada: The Real Property is
specifically described as follows:

 
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PARCEL 1:

SITUATE IN THE CITY OF NORTH LAS VEGAS, CLARK COUNTY NEVADA LYING WITHIN THE
NORTHWEST ONE-QUARTER OF THE NORTHWEST ONEQUARTER OF THE SOUTHWEST ONE-QUARTER
OF SECTION 36, TOWNSHIP 19 SOUTH, RANGE 61 EAST, M.D.M., BEING A PORTION OF LOT
1 A'; SHOWN ON THE OFFICIAL PLAT OF PANATTONI CREEKSIDE IN THE OFFICE OF THE
CLARK COUNTY, NEVADA RECORDER IN BOOK 128 OF PLATS ON PAGE 5O, MORE PARTICULARLY
DESCRIBED AS FOLLOWS:

COMMENCING AT THE BRASS CAP IN WELL MONUMENT STAMPED PLS 4541 WHICH MARKS THE
NORTHWEST CORNER OF SAID SOUTHWEST ONEQUARTER; THENCE ALONG THE NORTH LINE
THEREOF, SAID LINE ALSO BEING THE CENTERLINE OF WASH BURN ROAD AS SHOWN ON SAID
PARCEL MAP, NORTH 89°44'24" EAST, 669.80 FEET TO THE NORTHEAST CORNER OF THE
NORTHWEST ONE-QUARTER OF THE NORTHWEST ONEQUARTER OF SAID SOUTHWEST ONE-QUARTER;
THENCE ALONG THE EAST LINE THEREOF, SOUTH 00°41'19" EAST, 663.53 FEET TO THE
SOUTHEAST CORNER OF THE NORTHWEST ONE-QUARTER OF THE NORTHWEST ONEQUARTER OF
SAID SOUTHWEST ONE-QUARTER; THENCE ALONG THE SOUTH LINE THEREOF, SOUTH 89°46'17"
WESl-135.48 FEET; THENCE NORTH 00°40'29" WEST, 480.75 FEET TO THE POINT OF
BEGINNING; THENCE CONTINUING NORTH 00°40'29" WEST 100.00 FEET THENCE NORTH
89°19'31" E:AST, 71.50 FEET; THENCE SOUTH 00°40'29" EAST, 29.00 FEET; THENCE
SOUTH 89°19'31" WEST, 3.81 FEET; THENCE SOUTH 00°40'29" EAST, 42.00 FEET THENCE
NORTH 89°19'31" E:AST, 3.81 FEET; THENCE SOUTH 00°40'29" EAST, 29.00 FEET;
THENCE SOUTH 89°19'31" WEST, 71.50 FEET TO THE POINT OF BEGINNING.

PARCEL 2

SITUATE IN THE CITY OF NORTH LAS VEGAS, CLARK COUNTY NEVADA LYING WITHIN THE
NORTHWEST ONE-QUARTER OF THE NORTHWEST ONEQUARTER OF THE SOUTHWEST ONE-QUARTER
OF SECTION 36, TOWNSHIP 19 SOUTH, RANGE 61 EAST, M.D.M., BEING A PORTION OF LOT
1 AS SHOWN ON THE OFFICIAL PLAT OF PANATTONI CREEKSIDE IN THE OFFICE OF THE
CLARK COUNTY, NEVADA RECORDER IN BOOK 128 OF PLATS ON PAGE 50, MORE PARTICULARLY
DESCRIBED AS FOLLOWS: Page 4 of 8 COMMENCING AT THE BRASS CAP IN WELL MONUMENT
STAMPED PLS 4541 WHICH MARKS THE NORTHWEST CORNER OF SAID SOUTHWEST ONEQUARTER;
THENCE ALONG THE NORTH LINE THEREOF, SAID LINE ALSO BEING THE CENTERLINE OF WASH
BURN ROAD AS SHOWN ON SAID PARCEL MAP, NORTH 89°44'24" EAST, 669.80 FEET TO THE
NORTHEAST CORNER OF THE NORTHWEST ONE-QUARTER OF THE NORTHWEST ONEQUARTER OF
SAID SOUTHWEST ONE-QUARTER; THENCE ALONG THE EAST LINE THEREOF, SOUTH 00°41'19"
EAST 663.53 FEET TO THE SOUTHEAST CORNER OF THE NORTHWEST ONE-QUARTER OF THE
NORTHWEST ONEQUARTER OF SAID SOUTHWEST ONEQUARTER; THENCE ALONG THE SOUTH LINE
THEREOF, SOUTH 89°46'17" WEST, 135.48 FEET; THENCE NORTH 00°40'29" WEST, 430.75
FEET, TO THE POINT OF BEGINNING; THENCE CONTINUING NORTH 00°40'29" WEST 50.00
FEET; THENCE NORTH 89°19'31" EAST 71.50 FEET, THENCE NORTH 00°40'29" WEST, 0.28
FEET; THENCE NORTH 89°19'31" EAST, 10.00 FEET; THENCE SOUTH 00°40'29" EAST 29.28
FEET; THENCE SOUTH 89°19'31" WEST, 3.81 FEET; THENCE SOUTH 00°40'29" EAST, 21.00
FEET; THENCE SOUTH 89°19'31" WEST, 77.69 FEET TO THE POINT OF BEGINNING.

 
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A NON EXCLUSIVE EASEMENT FOR INGRESS AND EGRESS AS CREATED BY THAT CERTAIN
DECLARATION OF COVENANTS, CONDITIONS, RESTRICTIONS, AND EASEMENTS RECORDED
FEBRUARY 16, 2006 IN BOOK 20060216 AS INSTRUMENT NO. 03658.

PARCEL 3

A NON EXCLUSIVE EASEMENT FOR INGRESS AND EGRESS AS CREATED BY THAT CERTAIN
DECLARTION OF COVENANTS, CONDITIONS, RESTRICTIONS, AND EASEMENTS RECORDED
FEBRUARY 16, 2006 IN BOOK 20060216 AS INSTRUMENT NO. 03658.

PARCEL 4

A NON EXCLUSIVE EASEMENT FOR INGRESS AND EGRESS AS CREATED BY THAT CERTAIN
DECLARATION OF COVENANTS, CONDITIONS, RESTRICTIONS, AND EASEMENTS RECORDED
FEBRUARY 21, 2006 IN BOOK 20060221 AS INSTRUMENT NO. 01190.

Cross-Collateralization:   In addition to the Guaranty, this Mortgage secures
all obligations, debts and liabilities, plus interest thereon, of the Borrower
to the Lenders.

Mortgage Void On Full Payment:   When the Borrower pays all amounts due under
the Note, the Lenders’s rights under the Note and this Mortgage shall end. At
the request and expense of the Borrower, the Lenders shall cancel this Mortgage
of Record.
 
 
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Covenants of Grantor:

Compliance:   The Grantor shall comply with, or cause the Borrower to comply
with, the terms of the Note, this Mortgage and the Related Documents;

Payments:   The Grantor shall cause the Borrower to make all payments due under
the Note and this Mortgage;

Ownership:   The Grantor owns and has the right to mortgage the Property to the
Lenders. The Grantor shall defend this ownership against all claims;

Payment of Taxes:   The Grantor shall pay when due all real estate taxes,
assessments, water and sewer charges and other charges against the Property.

No Credit for Taxes Paid:   The Grantor and/or Borrower shall not claim or be
entitled to any credit against the principal or interest under the Note or this
Mortgage for taxes paid on the Property. The Grantor shall not claim any
deduction from the taxable value of the Property because of this Mortgage.

Hazard Insurance:   The Grantor shall maintain hazard insurance on the Property.
This insurance must cover loss or damage caused by fire and other hazards
normally included under “extended coverage” insurance. It must also include such
other hazard coverage as the Lenders may reasonably require. If the Property is
in a Federal or State flood hazard zone, the Grantor shall maintain flood
insurance. The insurance company, agent or broker, amounts of coverage, and
forms of all policies must be acceptable to the Lenders. The Lenders may require
that the amount of the coverage be the greater of (1) the principal of the Note
or (2) the current replacement value of the buildings and other improvements to
the extent available. The coverage must be furnished by one insurance company.
There can be no co-insurance or sharing of the risk by more than one company.
The Grantor shall pay all premiums when due. The Grantor shall deliver the
original policies and all renewals to the Lenders if so required.

All policies shall state that the insurance company cannot cancel or refuse to
renew without at least 10 days notice to the Lenders. They shall include
“standard mortgage clauses” naming the Lenders. All insurance proceeds shall be
paid to the Lenders. In case of loss or damage the Grantor shall promptly notify
the insurance company and the Lenders. The Grantor shall promptly (1) file a
proof of loss with the insurance company, and (2) settle the claim. If not, the
Lenders may use the insurance proceed received to (1) repair and restore the
Property or (2) reduce the principal due under the Note. The Lenders shall use
any money left after the repair and restoration to reduce the principal due
under the Note. The Lenders shall pay to the Grantor any money left after paying
the entire principal and interest due under the Note.

Repairs:   The Grantor shall keep the Property in good repair. The Grantor shall
not damage, destroy or abandon the Property. The Lenders may inspect the
Property upon reasonable notice to the Grantor. The Grantor shall make repairs
as may reasonably be required by the Lenders.

 
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Changes in Property:   The Grantor shall not do any of the following to the
Property without the written consent of the Lenders: (i) remove, demolish or
materially alter any buildings or other improvements, (ii) remove any fixtures,
and (iii) give a security interest in any fixtures. If any fixture is destroyed
or removed, the Grantor shall replace it with another of at least equal quality
and condition.

Eminent Domain:   Eminent domain is the right of the government to lawfully
condemn and take private property for public purpose. Fair value must be paid
for the taking. The taking may occur either by court order or by deed to the
condemning party. If all or any part of the Property is taken by eminent domain,
the entire payment shall be given to the Lenders. The Lenders may use the
payment to (1) repair and restore the Property or (2) reduce the principal due
under the Note. The Lenders shall use any money left after the repair and
restoration to reduce the principal. This shall not change the amounts or due
dates of the payments under the Note. The Lenders shall pay to the Grantor any
money left after paying the entire principal and interest.

Lenders’s Right of Acceleration:   The Lenders has the right, called
acceleration, to declare the entire unpaid principal and interest under the Note
and this Mortgage due immediately for any of the following reasons: (i) the
occurrence of an Event of Default, (ii) the failure if the Borrower to make any
payment of principal or interest under the Note by its due date; (iii) the
failure of the Grantor to keep any other promise in this Mortgage within 5 days
after written notice from the Lenders; (iv) any change in ownership of the all
or part of the Property; (v) a change in management of the Borrower; (vi) the
commencement of foreclosure or execution proceedings by the holder of any other
mortgage or lien on the Property; (vi) the commencement of bankruptcy,
receivership or insolvency proceedings by or against the Borrower or the
Grantor. The Lenders’s failure to declare acceleration for any cause shall not
prevent the Lenders from declaring acceleration for any cause occurring later in
time.

Lenders’s Rights on Acceleration:   If the Lenders declares acceleration, the
Borrower shall immediately pay to the Lenders the entire unpaid principal and
interest due under the Note and this Mortgage. If the Borrower does not do so,
the Lenders shall have all rights given to mortgage lenders by law and under
this Mortgage, for example: (i) to enter and take possession of the Property in
a lawful way to manage the Property; (ii) to ask a court to appoint a receiver
of rents of the Property. The Grantor consents to the appointment of a receiver,
(iii) to start a court action known as foreclosure to take away all of the
Grantor’s rights in the Property and to have the Property sold. A foreclosure
sale is a court-ordered sale of the Property. The proceeds of the sale are used
to pay the entire unpaid principal and interest due under the Note and this
Mortgage, plus all costs allowed by law, (iv) the court-ordered sale of the
Property in the foreclosure may not bring in enough money to pay the entire
amount due under the Note and this Mortgage plus costs. The Lenders may then sue
the Borrower under the Note for the difference. The Lenders reserves any rights
given by law to sue under the Note before beginning a foreclosure action under
this Mortgage.

 
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Notices:   All notices under this Mortgage must be in writing. They may be given
by (a) personal delivery, or (b) certified mail, return receipt requested. Each
party must accept and claim the notices given by the other. Notices shall be
addressed to the other party at the address written at the beginning of this
Mortgage. Either party may notify the other of a change of address.

Non-Liability of Lenders:   The relationship between Borrower and Grantor and
Lenders created by this Mortgage is strictly a debtor and creditor relationship
and not fiduciary in nature, nor is the relationship to be construed as creating
any partnership or joint venture between Lenders and Borrower and Grantor.

Merger:   There shall be no merger of the interest or estate created by this
Mortgage with any other interest or estate in the Property at any time held by
or for the benefit of Lenders in any capacity, without the written consent of
the Lenders.

Successors and Assigns:   Subject to any limitations stated in this Mortgage on
transfer of Grantor’s interest, this Mortgage shall be binding upon and inure to
the benefit of the parties, their successors and assigns.

Time is of the Essence:   Time is of the essence in the performance of this
Mortgage.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] 

 
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JURY WAIVER:   All parties to this Mortgage hereby waive the right to any jury
trial in any action, proceeding or counterclaim brought by any party against the
other.

EACH GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS MORTGAGE, AND
EACH GRANTOR AGREES TO ITS TERMS. EACH GRANTOR ACKNOWLEDGES RECEIPT, WITHOUT
CHARGE, OF A TRUE AND CORRECT COPY OF THIS MORTGAGE.

THIS MORTGAGE IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS MORTGAGE IS AND
SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW.
 
GRANTOR:
GATEWAY VENTURE HOLDINGS, INC.

 
By:
/s/ Rick Bailey(Seal)
 
Name:
Rick Bailey
 
Title:
President
             
Signed, acknowledged and delivered in the presence of:
     
x
/s/ illegible
   
Witness
       
x
/s/ illegible
   
Witness
 

INDIVIDUAL ACKNOWLEDGEMENT

STATE OF
NEVADA
)
     
) ss:
 
COUNTY OF
CLARK
)
 

I am an officer authorized to take acknowledgments and proofs in the State of
NEVADA. I sign this acknowledgement below to certify that it was made before me.

On October 31, 2007 appeared before me in person Richard A. Bailey. I am
satisfied that this person is the individual named in and who signed this
Document. This person acknowledged signing, sealing and delivering this Document
on behalf of Gateway Venture Holdings, Inc. for the uses and purposes expressed
in this Document.

[seal.jpg]
     
/s/ Penelope A. Stowe
Notary Public

 
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