Document:

RECORDING REQUESTED BY:

 

Loan No.:               7000904776

 

PROMISSORY NOTE

SECURED BY DEED OF TRUST

(Adjustable Rate Note—6

MO LIBOR)

 

 

	

  $995,000.00

  	

   

  	

  BREA, CALIFORNIA

  
	

   

  	

   

  	

  FEBRUARY 22, 2002

  

 

                FOR VALUE

RECEIVED, the undersigned, PAUL-SON GAMING SUPPLIES, INC., A NEVADA CORPORATION

(hereinafter referred to as “Maker”), hereby promises to pay to the order of

JACKSON FEDERAL BANK, (hereinafter referred to as “Lender”), at 145 S. State

College Blvd., Suite 600, Brea, Ca. 92821 or at such other place Lender from

time to time designates in writing, the principal sum of NINE HUNDRED NINETY

FIVE THOUSAND AND 00/100 DOLLARS 

($995,000.00), or such lesser or greater sum as is advanced to Maker by

Lender under the terms of the Loan Documents (as defined in Paragraph 7 below),

together with all interest thereon and other sums referred to herein.

 

                1.             Interest Rate.  The advanced, unpaid principal balance

hereof shall bear interest from the date net loan proceeds are advanced by

Lender to escrow or otherwise disbursed to or on behalf of Maker as

contemplated in the Loan Documents (the “Commencement Date”) or, with respect

to all other sums, the date such sums are added to or become part of the

principal balance hereof or are otherwise imposed under the Loan Documents, all

at a rate determined in accordance with the following (the “Variable Note

Rate”):

 

                                (a)           The Variable Note Rate shall equal

the greater of (i) EIGHT AND 000/1000 percent ( 8.000%  ) per annum (the “Floor Rate”) or (ii) THREE

HUNDRED SIXTY TWO AND 5/10 ( 362.5  ) basis

points (the “Margin”) over the Index, as defined and determined below from time

to time, rounded up to the nearest one-eighth of one percent (.125%) per annum.

 

                                (b)           The “Index” is the average of the

London interbank offered rates for 6 month dollar deposits in the London market

based on quotations of major banks (“LIBOR”), as set forth in the “Money Rates”

section of the Wall Street Journal, Western Edition or, if the Money Rates

section ceases to be published or becomes unavailable for any reason, then as

set forth in a comparable publication selected by the Lender.

 

                                (c)           The initial Index applicable

hereunder is ONE AND 942/1000 percent ( 

1.942%  ), which was the Index

published as of JANUARY 10, 2002 .  Accordingly,

the Variable Note Rate, as of the date hereof, shall be EIGHT AND 000/1000

percent (  8.000%  ) per annum (the “Start Rate”).  On JUNE 01, 2002, and on the first day of

each three (3) month period thereafter through the Maturity Date (each, an

“Interest Adjustment Date”), the Variable Note Rate shall be adjusted to equal

the Index which is in effect on the date which is fifteen (15) calendar days

immediately prior to the applicable Interest Adjustment Date plus the Margin.

 

                                (d)           Notwithstanding anything in this Note

to the contrary, the Variable Note

 

1

 

 

Rate shall never be less than the Floor Rate nor more than twelve

percent 12%, nor shall the Variable Note Rate increase or decrease by more than

two (2) percentage points per annum during any twelve (12) month period or

one-half (.5) percentage point per annum during any three (3) month period

which commences on the first day of the first month following the advancement

of funds under this Note, or on any anniversary thereof.

 

                2.             Maturity Date.  The entire outstanding principal balance of

this Note, together with accrued and unpaid interest thereon and any other sums

due hereunder, shall be due and payable in full on MARCH 01, 2012 (the

“Maturity Date”).

 

                3.             Payment Schedule.

 

                                (a)           The monthly payments due under this

Note (the “Monthly Payments”) shall be payable as follows:  Interest only shall be payable in advance on

the date hereof through and including FEBRUARY 28, 2002.  Thereafter, this Note shall be payable in

arrears in equal monthly installments of principal and interest determined in

accordance with the following schedule commencing on APRIL 01, 2002 and

continuing on the first day of each month thereafter through and including the

Maturity Date, subject to adjustments in accordance with Paragraph 3(c) below.

 

                                (b)           The Monthly Payment as of the date

hereof shall be SEVEN THOUSAND THREE HUNDRED AND 96/100 DOLLARS ($ 7,300.96)

which amount is the monthly payment necessary to fully amortize the original

loan balance over the THIRTY (30) year period commencing APRIL 01, 2002 (the

“Amortization Period”) at the Variable Note Rate as of the date hereof.

 

                                (c)           The Monthly Payment shall be

recomputed on JULY 01, 2002 and on each three (3) month anniversary thereof

prior to the Maturity Date (each, a “Payment Adjustment Date”) to be the

monthly payment necessary to fully amortize the then outstanding principal

balance of this Note over the then remaining Amortization Period at the

Variable Note Rate in effect on the immediately preceding Interest Adjustment

Date.

 

                                (d)           Provided Maker makes all required

Monthly Payments from and after a Payment Adjustment Date in the amount

applicable immediately prior thereto, Maker shall not be deemed to be in

default hereunder for its failure to make any such Monthly Payment in the

amount recomputed as of such date until Lender has given Maker written notice

setting forth such recomputed amount and describing how it was calculated.  Lender’s failure to timely determine such

adjustments or to notify Maker of the same shall not relieve Maker of its

obligation to make Monthly Payments in such recomputed amounts.  Within fifteen (15) days after Lender has

notified Maker of any such adjustment, Maker shall pay to Lender the excess of

(i) the aggregate Monthly Payments due hereunder from and after such date in

the amount recomputed as of such Payment Adjustment Date over (ii) the actual

Monthly Payments previously made by Maker for the period from and after such

Payment Adjustment Date. On the other hand, if the amount of the actual Monthly

Payments previously made by Maker for the period from and after the Payment

Adjustment Date is greater than the amount of Monthly Payments which was due

and payable to Lender as a result of a decrease in the interest rate hereunder,

then Lender shall refund any such overpayment to Maker.

 

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                4.             Allocation of Payments.  All interest under this Note shall accrue

from the Commencement Date based on a three hundred sixty (360) day year.  When calculated for any partial month during

which this Note bears interest, interest shall be charged to the actual number

of days elapsed over a three hundred sixty (360) day year.  Except to the extent otherwise required by

law, Lender shall apply and credit funds received by Lender pursuant to this

Note or any other Loan Document in such manner and order of priority as Lender

shall determine at Lender’s sole discretion, provided, however, that in the

absence of any contrary determination by Lender, such funds shall be first

applied to the payment of costs and expenses for which Maker is liable

hereunder, next to the payment of accrued interest and lastly to the reduction

of principal.  Accrued interest in

excess of the required Monthly Payment and all interest not paid when due

hereunder shall be compounded monthly and shall bear interest at the applicable

Variable Note Rate.  All amounts due

under this Note shall continue to bear interest at the applicable Variable Note

Rate (or at the Default Rate, as hereinafter defined, if applicable) until and

including the date of collection.

 

                5.             Late Charges: Default Rate.

 

                                (a)           In the event any Monthly Payment is

not received by Lender on or before the fifteenth (15th) day of the calendar

month in which it is required to be paid, Maker shall pay a late charge in an

amount equal to six percent (6%) of such late payment (the “Late Charge”) and

Lender shall not be required to accept the late installment unless the same is

accompanied by the Late Charge.  Maker

hereby acknowledges that the actual damage Lender shall sustain as a result of

Maker’s failure to make Monthly Payments on time is extremely difficult to

estimate and that the Late Charge represents a reasonable approximation of the

same.  The Late Charge shall be assessed

for and due and payable with each such Monthly Payment to which it applies

without demand and shall be fully secured by the Deed of Trust and all other

Loan Documents.  The imposition or

collection of a Late Charge shall in no event be in lieu of any other remedy of

Lender and a failure to collect the same shall not constitute a waiver of

Lender’s right to require a Late Charge with respect to any prior or subsequent

Monthly Payment.

 

                                (b)           If and so long as any default exists

under this Note or any of the other Loan Documents, the interest rate on this

Note, and on any judgment obtained for the collection of this Note, shall be

increased from the date of such default to a rate (the “Default Rate”) equal to

five (5) percentage points per annum higher than and varying periodically with

the Variable Note Rate hereunder as then applicable.

 

                                (c)           In the event the payment due on (i)

the Maturity Date under Paragraph 2 of this Note, or (ii) the date on which

Lender accelerates the amount due hereunder under Paragraph 8 of this Note (the

“Acceleration Date”) remains unpaid at the end of the tenth (10th) day

following the Maturity Date or Acceleration Date, as applicable, Maker shall

pay to Lender an amount equal to one percent (1%) of the amount so delinquent

(the “Maturity Late Charge”).  Maker

hereby acknowledges that the actual damage Lender shall sustain as a result of

Maker’s failure to timely repay all sums due under this Note is extremely

difficult to estimate and that the Maturity Late Charge represents a reasonable

approximation of the same and bears a reasonable relationship to the customary

costs charged by institutional lenders in connection with short-term extensions

of mature obligations.  The Maturity

Late Charge shall be fully secured by the Deed of Trust and all

 

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other Loan Documents.

 

                6.             Costs of Collection. Maker agrees

to pay all costs, expenses and attorneys’ fees incurred by Lender in the

exercise of any remedy (with or without litigation), in any collection action,

in any trustee’s sale or foreclosure under the Deed of Trust or realization

upon any other security for repayment of this Note, in protecting or sustaining

the lien or priority of the Deed of Trust or rights to such other security or

in any proceeding or controversy arising from or related to this Note or any

other Loan Document.  Proceedings shall

include, without limitation, any probate, bankruptcy, receivership, injunction,

arbitration, mediation or other proceeding, and any appeal therefrom or

petition for review thereof, in which Lender appears to enforce any provision

of, collect any amount due under or protect its security for this Note or any

other Loan Document.  Maker further

agrees to pay all of Lender’s costs, expenses and attorneys’ fees incurred in

connection with any demand, workout, settlement, compromise or other activity

in which Lender engages to collect any amount not paid when due or as a result

of any other default of Maker under any Loan Document.  In the event a judgment is obtained with

respect to any of the foregoing which includes an award of attorneys’ fees,

such attorneys’ fees, costs and expenses shall be in such amount as the court

shall deem reasonable and such judgment shall bear interest at the Default Rate

from the date rendered until its payment to Lender.

 

                7.             Collateral.  This Note is secured by that certain Deed of

Trust, Security Agreement, Assignment of Rents and Fixture Filing (“Deed of

Trust”) of even date herewith encumbering certain real property located in the

City of LAS VEGAS , County of CLARK, State of Nevada, more particularly

described therein (the “Property”) located at 

1700 SOUTH INDUSTRIAL ROAD, LAS VEGAS, NEVADA 89102.  This Note, the Deed of Trust and all other

documents or instruments now or hereafter securing repayment of or otherwise

evidencing or relating to the loan evidenced hereby, unless such document or

instrument expressly provides to the contrary, are sometimes referred to

collectively herein as the “Loan Documents”. 

Reference is hereby made to all other Loan Documents for a description

of the nature and extent of the security, the rights of Lender in respect

thereof and the terms and conditions upon which this Note is issued.

 

                8.             Defaults; Acceleration.  Maker shall be in default under this Note in

any of the following circumstances and Maker agrees that:

 

                                (a)           if default shall be made (i) in the

payment of any installment of principal or interest precisely when due

hereunder; (ii) in the repayment in full of principal on or before the Maturity

Date, (iii) in the payment when due of taxes, assessments, insurance premiums

or any lien or charge upon the Property; (iv) in the payment of any other

charge or sum when due under the terms of this Note or any of the Loan

Documents; or (v) under any of the Loan Documents;

 

                                (b)           if any building on the Property shall

be removed or demolished or threatened with demolition;

 

                                (c)           if Maker shall fail to perform any

covenant or observe any condition contained in this Note, the Deed of Trust, or

any other Loan Document, or Maker breaches any representation, warranty,

covenant, term or condition of this Note, the Deed of Trust or any other 

 

4

 

Loan Document;

 

                                (d)           if Maker fails to deposit with Lender

any funds as and when required under the Loan Documents;

 

                                (e)           if there is a breach of any warranty

or any material inaccuracy of any representation of Maker contained in this

Note, the Deed of Trust or any other Loan Document; or should any representation,

document, exhibit, statement, certificate, or schedule furnished to Lender by

Maker contain any untrue or misleading statement of a material fact or fail to

state any material fact necessary to make the statement of facts contained

therein not misleading, or should the same thereafter become untrue or

misleading in any material respect;

 

                                (f)            if there is any failure to perform

any obligation which is secured by any lien against or interest in the

Property, rights or interests encumbered by the Deed of Trust, regardless of

whether such lien or interest is prior or subordinate to the Deed of Trust, and

which default or failure to perform is not cured within any applicable grace

period or which in any manner threatens the lien of the Deed of Trust;

 

                                (g)           if any of the following shall occur

with respect to the Property, Maker, any general partner or shareholder of

Maker, any guarantor of this Note or any owner of the Property:

 

                                                (i)            the appointment of a receiver,

liquidator, or trustee;

 

                                                (ii)           the filing of any voluntary or

involuntary petition for bankruptcy or reorganization;

 

                                                (iii)          if any such person be unable, or admit

in writing an inability, to pay its debts when due;

 

                                                (iv)          the dissolution, termination of

existence, insolvency or business failure of any such person;

 

                                                (v)           any assignment for the benefit of

creditors;

 

                                                (vi)          the making or suffering of a

fraudulent transfer under applicable federal or state law;

 

                                                (vii)         the concealment of any of its property

in fraud of creditors;

 

                                                (viii)        the making or suffering of a preference

within the meaning of the federal bankruptcy law; or

 

                                                (ix)           the imposition of a lien through

legal proceedings upon any of the Property which is not contested in the manner

permitted by the Deed of Trust;

 

                                (h)           if there is any material default by

Maker under any lease affecting the

 

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Property, or any material modification, surrender, cancellation or

termination of any lease with a term of more than one (1) year (inclusive of

any extension options) without Lender’s prior written consent;

 

                                (i)            if there is any material adverse

change, including, without limitation, actual or threatened removal,

demolition, or other impairment, of the Property or any improvements thereon;

 

                                (j)            if there exists any impending: (i)

condemnation; (ii) rezoning; or (iii) modification or enactment of any

ordinances or regulations, any of which could materially affect any existing or

contemplated improvements on the Property or the use thereof; or

 

                                (k)           if there is any Transfer (as defined

in Paragraph 24 of the Deed of Trust) or further encumbrance of all or any

portion of or interest in the Property in prohibition of the provisions of

Paragraphs 24 and 25 of the Deed of Trust;

 

then, in any such event, and subject to any applicable right

expressly granted in Paragraph 9 to Maker to cure such  default, the entire principal sum, with

accrued interest thereon due under this Note, shall, at the option of Lender,

become immediately due and payable, and Lender shall be entitled to collect all

such amounts and to enforce any and all remedies provided in the Loan Documents

or any other instrument or document executed in connection with or to secure

this Note.

 

                9.             Maker’s Right to Cure.  In the event of any default of Maker (except

as otherwise stated below), Lender shall not accelerate this debt, make any

payments for which Maker is primarily liable or foreclose upon or attach any

assets of Maker until:

 

                                (a)           expiration of a fifteen (15) day grace

period following Maker’s failure to make a monetary payment under this Note or

any other Loan Document when due, but without the necessity for notice from

Lender of the due date or amount of such payment;

 

                                (b)           thirty (30) days after notice is

given by Lender in the event of nonmonetary defaults not subject to other

provisions of this paragraph, provided (i) within twenty (20) days after the

delivery or mailing of the notice of default Maker commences its cure and

submits to Lender in writing its plan to cure, and (ii) said cure is

continuously pursued by Maker with due diligence to completion.  If said default is not reasonably capable of

being cured within thirty (30) days, Maker shall have such additional time as

is reasonably necessary to complete the cure, but in no event more than sixty

(60) days after the delivery or mailing of the notice of default,

provided:  (i) said default is in

Lender’s reasonable judgment curable within said period; (ii) Maker provides

Lender with written, detailed progress reports at least every ten (10) days

until cure is complete; and (iii) Maker continuously and diligently pursues

said cure to completion; or

 

                                (c)           forty-five (45) days after the filing

of any involuntary petition in bankruptcy against or for the appointment of a

receiver for Maker, Owner or any guarantor of this Note (except for petitions

for receivership filed by Lender), with the dismissal of such petitions by the

court within such period being deemed to cure such default.

 

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Notwithstanding the above provisions, the cure period provided for

in this Paragraph 9 shall not apply in the following circumstances:

 

                                                (i)            there is a Transfer or further

encumbrance of all or any portion of or interest in the Property in prohibition

of the provisions of Paragraphs 24 and 25 of the Deed of Trust; or

 

                                                (ii)           in any circumstance when a delay in

effecting a cure is, in the reasonable judgment of Lender, likely to result in

any security being damaged, becoming uninsured or rendered unavailable to

Lender or the value thereof being materially and adversely affected; or

 

                                                (iii)          any default of the same type or nature

which is repeated more than twice in any one (1) calendar year; or

 

                                                (iv)          any failure to proceed with the

construction or repair of improvements to the Property as required by the Loan

Documents; or

 

                                                (v)           any filing of a voluntary petition in

bankruptcy by, or for the appointment of a receiver or trustee of all or a

portion of the property of Maker, any general partner of Maker, any Owner or

any guarantor of this Note; or

 

                                                (vi)          any assignment for the benefit of

creditors, fraudulent conveyance or other plan or action instituted by Maker,

any general partner of Maker, any Owner or any guarantor of this Note in an

attempt to avoid the satisfaction of any lawful indebtedness; or

 

                                                (vii)         any waste committed to the Property or

any demolition or removal of any improvements on the Property without Lender’s

prior written consent (other than the exercise by any proper authority of the

right of eminent domain); or

 

                                                (viii)        any nonmonetary default which Lender

reasonably determines is not capable of being cured within the requisite

period.

 

The provisions of this Paragraph 9 shall apply to defaults

hereunder and under any other Loan Document and, unless expressly stated to the

contrary in such documents, any cure period referred to therein shall be deemed

to incorporate said provisions.  If the

provisions of any of the Loan Documents are inconsistent with this Paragraph 9,

this Paragraph 9 shall be controlling. 

Where additional notice or cure periods are provided in this Note or any

other Loan Documents, or are required by any other contract or by law, said

periods and those contained in this Paragraph 9 shall run concurrently.  Nothing in this Paragraph 9 shall be

construed as extending the term of this Note or the date upon which a default

occurs, and no decision to forego any remedy for any given default shall be

deemed a waiver on the part of the holder hereof of any right relating to any

other default.  This Paragraph 9 shall

be strictly construed and shall not impair the exercise of any remedy not

referred to above immediately upon default, including, without limitation, the

seeking of any mandatory or prohibitive injunction or restraining order.

 

                10.           Prohibition on Transfers, Assignments

and Further Encumbrances.  Maker

 

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acknowledges and agrees that it has read and understands the

prohibition on transfers, assignments and further encumbrances set forth with

particularity in Paragraphs 24 and 25 of the Deed of Trust.

 

                11.           Assumption.  Notwithstanding Paragraphs 8(k) and 10 above, and provided Maker

is not in default under this Note or under any other Loan Document, Lender

agrees not to declare this Note immediately due and payable upon a Transfer of

all of Maker’s interest in the Property which meets all of the following

requirements.  In all events, Maker

agrees to reimburse Lender for its reasonable attorneys’ fees, the cost of any

title insurance policy endorsements required by Lender, and all other actual

out-of-pocket expenses paid in connection with the review and approval or

disapproval of any such requested Transfer:

 

                                (a)           Lender approves the terms and

conditions of such Transfer and the credit worthiness, financial strength and

real estate management abilities of the proposed transferee;

 

                                (b)           Lender receives, concurrently with

such transfer, an assumption fee in an amount equal to one percent (1%) of the

then outstanding principal balance of this Note; and

 

                                (c)           Maker and the proposed transferee

execute Lender’s form of assumption agreement, which, among other things, shall

provide that such proposed transferee assumes all obligations set forth in this

Note and all other Loan Documents.

 

                                (d)           Maker and the proposed transferee

comply with such other requirements as Lender may establish to protect its

security, including, without limitation, a reduction of the outstanding

principal balance of this Note to not more than seventy-five percent (75%) of

the total price for the Property received by Maker in such conveyance

(including cash paid at closing and the present value of all deferred payments,

but excluding customary buyer’s closing costs).

 

                12.           Usury.  It is the specific intent of the Maker and Lender that this Note

bear a lawful rate of interest, and if any court of competent jurisdiction

should determine that the interest rates (and any other charges or costs set

forth herein which may be deemed to be an interest charge) herein provided for

exceed that which is statutorily permitted for the type of transaction

evidenced hereby, the interest rates (and other applicable charges or costs)

shall be reduced to the highest rate permitted by applicable law, with any

excess interest previously collected being applied against principal or, if

such principal has been fully repaid, returned to Maker on demand.  In addition to the foregoing, Maker

acknowledges that Lender is a federal savings bank organized under the laws of

the United States of America and the loan evidenced hereby is intended to be

exempt from the provisions of applicable usury law.

 

                13.           Renewals.  Maker, any guarantor of this Note and all others who may become

liable for all or any part of the obligation evidenced hereby, consent to any

number of renewals or extensions of the time of payment hereof, to the release

of all or any part of the security for the payment hereof and to the release of

any party liable for repayment of the obligations hereunder.  Any such renewals, extensions or releases

may be made without notice to any of said parties and without affecting their

liability.

 

                14.           Multiple Parties.  If Maker is comprised of more than one

person, each of such

 

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persons shall be jointly and severally liable for the indebtedness

evidenced hereby.  A default on the part

of any one person comprising Maker or any guarantor of this Note shall be

deemed a default on the part of Maker hereunder.  Unless and to the extent otherwise limited by the express terms

hereof, this Note is executed with recourse against the separate property and

marital community property of all persons comprising Maker who are executing

this Note in their individual capacities (or as a general partner or in some

other capacity causing such person to be personally liable) and the marital

communities of such persons’ spouses.

 

                15.           Successors and Assigns;

Participation.  Subject to the

prohibitions against Maker’s assignments herein and in any other Loan Document,

this Note shall inure to the benefit of Lender and bind Maker and all of their

respective successors, estates, heirs, personal representatives and

assigns.  Without limiting the

generality of the foregoing, Lender may assign or grant participation in any of

its rights under this Note or any other Loan Document in whole or in part to

any person, without notice and without affecting Maker’s liability hereunder.

 

                16.           Waivers.  Except with respect to Maker’s right to cure defaults as provided

in this Note, Maker hereby waives presentment, demand of payment, notice of

dishonor, protest, notice of nonpayment and any and all other notices and

demands whatsoever.  No covenant, condition,

right or remedy in this Note may be waived or modified orally, by course of

conduct or previous acceptance or otherwise unless such waiver or modification

is specifically agreed to in writing executed by Lender.  Without limiting the foregoing, no previous

waiver and no failure or delay by Lender in acting with respect to terms of

this Note or any of the Loan Documents shall constitute a waiver of any breach,

default or failure of a condition under this Note any of the Loan Documents or

any obligations contained therein or secured thereby.  Maker further waives exhaustion of legal remedies and the right

to plead any and all statutes of limitation as a defense to any demand on this

Note, or to any agreement to pay the same, or to any demands secured by the

Deed of Trust securing this Note, or any other security for this Note.

 

                17.           Governing Law and

Interpretation.  This Note shall be

governed by and construed in accordance with the laws of the State of Nevada,

except to the extent that applicable federal law preempts the laws of the State

of Nevada.  All sums referred to herein

shall be calculated by reference to and payable in the lawful currency of the

United States of America.  This Note and

all Loan Documents and guaranties executed in connection with this Note have

been reviewed and negotiated by Maker, Lender and any guarantors at arms’

length with the benefit of or opportunity to seek the assistance of legal

counsel and shall not be construed against either party.  The titles and captions in this Note are

inserted for convenience only and in no way define, limit, extend or modify the

scope or intent of this Note.  Any

reference to Lender in this Note shall include any successor to or assignee of

Lender.  Time is of the essence of this

Note and of each and every provision hereof.

 

                18.           Partial Invalidity.  If any section or provision of this Note is

declared invalid or unenforceable by any court of competent jurisdiction, said

determination shall not affect the validity or enforceability of the remaining

terms hereof.  No such determination in

one jurisdiction shall affect any provision of this Note to the extent it is

otherwise enforceable under the laws of any other applicable jurisdiction.

 

9

 

                19.           Notices.  Any notice required or permitted to be given under this Note

shall be in writing and shall be served personally, or delivered or sent by a

national overnight delivery company or by United States mail, registered or

certified mail, postage prepaid, return receipt requested, and addressed as

follows:

 

 

	

  If to Maker:

  	

   

  	

  PAUL-SON GAMING SUPPLIES, INC.,

  
	

   

  	

   

  	

  A NEVADA CORPORATION

  
	

   

  	

   

  	

  1700 SOUTH INDUSTRIAL ROAD

  
	

   

  	

   

  	

  LAS VEGAS, NEVADA  89102

  
	

   

  	

   

  	

  Fax No.

  
	

   

  	

   

  	

   

  
	

  If to Lender:

  	

   

  	

  Jackson Federal Bank

  
	

   

  	

   

  	

  145 S. State College Blvd., Suite 600

  
	

   

  	

   

  	

  Brea, California 92821

  
	

   

  	

   

  	

  Attention:   LOAN

  SERVICING

  
	

   

  	

   

  	

  Fax No.    (714) 990-7319

  

 

 

Any such notices shall be deemed delivered upon delivery or

refusal to accept delivery as indicated in writing by the person attempting to

make personal service, on the U.S. Postal Service return receipt or by similar

written advice from the overnight 

delivery company; provided, however, that if any such notice shall also

be sent by electronic transmission device, such as telex, telecopy, fax machine

or computer, such notice shall be deemed given at the time and on the date of

machine transmittal if the sending party receives a written send verification

on its machine and promptly sends a duplicate notice by personal service, mail

or overnight delivery in the manner described above.  Any party to whom notices are to be sent pursuant to this Note

may from time to time change its address for future communication hereunder by

giving notice in the manner prescribed herein to all other parties hereto,

provided that the address change shall not be effective until five (5) business

days after giving of notice of the address change.

 

                20.           Venue.  At the option of Lender, the venue of any action brought to

interpret or enforce the provisions of this Note shall be in the county where

the Property is situated or Clark County, Nevada.

 

                21.           Full Power and Authority.  Maker and each individual executing this

Note as a corporate officer, constituent partner, trustee or otherwise on

behalf of Maker hereby represents and warrants to Lender that such individual has

full power and authority to execute and deliver this Note on behalf of Maker,

that Maker has full power and authority to execute and deliver this Note and

that this Note constitutes the valid and binding obligation of Maker and is

enforceable in accordance with its terms.

 

This Agreement may be executed in counterparts, all of which shall

be deemed one and the same instrument and all of the signature pages of which

may be attached to a single counterpart hereof

 

10

 

for recording and any other purposes; however, the failure of

refusal of any one or more persons to execute this Agreement shall not render

any provision hereof invalid or unenforceable against any person who does

execute the same.

 

 

MAKER:

 

 

PAUL-SON GAMING SUPPLIES, INC., A NEVADA CORPORATION

 

 

 

	

  BY:

  	

  /s/ Eric P. Endy

  
	

  ERIC P. ENDY, PRESIDENT

  

 

11

 

OPTIONAL PREPAYMENT PROVISION FOR PROMISSORY NOTE

 

                Prepayment.  This Note may be prepaid in part or in whole

on the first day of any month, upon the giving of written notice to Lender at

least ten (10) business days prior to prepayment, and upon the payment of a

prepayment premium on any prepayment equal to (i) three percent (3%) of the

amount prepaid from and after the date hereof through and including the date

which is twelve (12) months following the Commencement Date (the “First

Anniversary Date”), the period of time commencing on the date hereof and ending

on the First Anniversary Date is hereinafter referred to as the “Prepayment

Period”).  Thereafter, this Note may be

prepaid in part or in whole at any time without premium provided Lender is

given written notice at least ten (10) business days prior to prepayment and

prepayment is actually made.

 

                Maker

acknowledges and agrees that the prepayment premium described above shall be

payable if any of the indebtedness evidenced by this Note is paid during the

Prepayment Period, including, without limitation, by reason of Maker having

defaulted in payment hereof, or performance of any agreement under this Note or

the Deed of Trust (including without limitation the right to accelerate upon

any Transfer or further encumbrance of the Property as set forth in Paragraphs

24 and 25 of the Deed of Trust), or any other agreement securing this Note, and

Lender, by reason thereof, having declared all sums secured by the Deed of

Trust immediately due and payable.  The

prepayment premiums described above represent the reasonable estimate of Lender

and Maker of a fair average compensation for the loss that may be sustained by

Lender hereof due to the payment of the indebtedness evidenced by this Note

during the Prepayment Period.  Any

applicable prepayment premium shall be paid without prejudice to the right of

Lender to collect any other amounts provided to be paid under this Note or the

Deed of Trust.

 

                Maker

acknowledges and agrees to all the limitations on prepayment, voluntarily or

involuntarily, and the payment of any applicable fee thereon, and that the

making of the loan evidenced hereby is adequate consideration for the foregoing

provisions and confirms its agreement with the foregoing provisions by

initialing in the following space(s):

 

 

 

                                                INITIALS:

E.P.E.

 

12

 

 

 

13

 

RECORDING REQUESTED BY

162-04-704-001, 162-04-609-009

 

	

  AND WHEN RECORDED MAIL TO:

  	

   

  	

  MAIL TAX STAEMENTS TO:

  
	

   

  	

   

  	

   

  
	

  JACKSON FEDERAL BANK

  	

   

  	

  PAULSON GAMING INC.

  
	

  145 S. STATE COLLEGE BLVD. #600

  	

   

  	

   

  
	

  BREA, CA., 92821

  	

   

  	

  1700 S. INDUSTRIAL RD.

  
	

   

  	

   

  	

  LAS VEGAS, NEVADA 89102

  

 

	

  Attention:

  	

   

  	

  CATALINA SERRANO

  
	

  Loan No.:

  	

   

  	

  7000904776

  
	

  Order No:

  	

   

  	

  01125894

  
	

   

  	

   

  	

   

  
	

   

  

 

DEED OF TRUST, SECURITY

AGREEMENT,

ASSIGNMENT OF RENTS AND

FIXTURE FILING

 

                THIS DEED OF

TRUST, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND FIXTURE FILING (“Deed of

Trust”) is made as of FEBRUARY 22, 2002

by PAUL-SON GAMING SUPPLIES, INC. A NEVADA

CORPORATION (“Trustor”), whose address is 1700 SOUTH INDUSTRIAL ROAD, LAS VEGAS NEVADA 89102 to UNITED TITLE OF NEVADA (“Trustee”), whose

address is 3980 HOWARD HUGHES PARKWAY #100,

LAS VEGAS, NEVADA 89109 for the benefit of JACKSON FEDERAL BANK, A CALIFORNIA CORPORATION

whose address is 145 S. STATE COLLEGE BLVD.,

SUITE 600, BREA, CALIFORNIA  92822

(“Beneficiary”).

 

W  I  T  N  E  S  S

E  T  H:

 

                That Trustor

grants, bargains, sells, conveys and warrants to Trustee, in trust with power

of sale, all of its current and hereafter acquired right, title and interest in

and to that certain property located in or about the City of LAS VEGAS, County of CLARK, State of NEVADA, more particularly described in Exhibit “A”

attached hereto and made a part hereof, together with the following described

estate, property and rights of Trustor (herein collectively called the

“Property”) as security for the performance of each covenant and agreement of

Trustor contained herein and in all other instruments executed in connection

herewith, and for the payment of all sums of money secured hereby:

 

                A.            All fee and leasehold estates and

rights of Trustor now held and hereafter acquired in and to the Property and in

and to all land lying in streets and roads adjoining the Property and all

access rights and easements appertaining thereto;

 

                B.            All buildings, structures,

improvements, furnishings, fixtures and equipment (real, personal and mixed)

now or hereafter attached to or used or adapted for use in the operation of the

Property (but specifically excluding any “mobilehome” as defined in Section

489.120 of the Nevada Revised Statutes, in which Trustor has no interest) and

all replacements and additions thereto, all heating and incinerating apparatus

and equipment, boilers, engines, motors, dynamos, generating equipment, pumps,

piping and plumbing fixtures, cooling, ventilating, sprinkling and

fire-extinguishing apparatus, gas and electric fixtures, elevators, escalators,

partitions, shrubbery and plants; and including also all interest of Trustor in

any of such items hereafter at any time acquired under a conditional sales

 

14

 

contract, chattel mortgage or other title-retaining or security

instrument, all of which property described in this paragraph shall be deemed

part of the realty and not severable wholly or in part without material injury

to the freehold; and

 

                C.            All and singular the lands,

tenements, privileges, water, water rights, water stock, mineral, oil and gas

rights, hereditaments and appurtenances belonging or in anywise appertaining to

the Property, all reversions, remainders, rents, royalties, issues and profits

thereof and all estate, rights, title, claim, interest and demand whatsoever of

Trustor either at law or in equity of, in and to the Property, whether now held

or hereafter acquired;

 

                TO HAVE AND

TO HOLD forever as security for the faithful performance of the Note secured

hereby (described below) and as security for the faithful performance of each

and all of the covenants, agreements, terms and conditions of this Deed of

Trust, the Loan Documents (as defined below) and in all other instruments

executed in connection herewith.  This

Deed of Trust also constitutes a security agreement with respect to, and for

such purposes Trustor hereby grants to Beneficiary a security interest in, all

items of the Property in which such an interest may be created under the  Uniform Commercial Code as adopted in

Nevada, Chapter 104 of the Nevada Revised Statutes.

 

                NOW,

THEREFORE, Trustor hereby covenants and agrees as follows:

 

                1.             Obligations Secured.  This Deed of Trust is made for the purpose

of securing the performance of each agreement of Trustor herein, in that

certain Promissory Note Secured by Deed of Trust (the “Note”) of even date

herewith executed by Trustor and payable to Beneficiary or order in the

original principal sum of NINE HUNDRED NINETY

FIVE THOUSAND AND 00/100  ($995,000.00)

and in all other instruments and agreements executed in connection with or to

secure the Note, the debts evidenced by all renewals, extensions,

modifications, substitutions and conditions of the Note and all other obligations

of Trustor to Beneficiary, its successors and assigns now existing or hereafter

arising which are at any time specifically declared by Beneficiary in writing

to be secured by these presents or which specifically indicate in the

instruments which evidence the same that they are intended to be so secured

(individually, a “Loan Document” and collectively, the “Loan Documents”);

excluding, however, any hazardous waste indemnifications and completion and

payment guarantees separate from the Note and all other documents and

instruments which expressly provide to the contrary.  Trustor’s agreements and obligations secured by this Deed of

Trust shall include, without limitation, Trustor’s covenants to pay all

indebtedness evidenced by the Note and all interest thereon and other amounts

evidenced thereby (including increases in the original principal sum as a

result of the inadequacy of the monthly installments to pay the then current

interest and all other forms of negative amortization) and all future advances

made to Trustor by Beneficiary, its successors and assigns, under or pursuant

to the terms of the Note or any other Loan Document.  Without limiting the generality of the foregoing, Trustor

acknowledges that that certain Environmental Indemnity Agreement of even date

herewith in favor of Beneficiary pursuant to which Trustor has agreed, among

other things, to indemnify Beneficiary from any and all losses arising out of

or relating to certain Environmental Matters (as those terms are defined

therein) shall in no event be deemed to be a Loan Document and that

notwithstanding any other provision hereof, this Deed of Trust does not secure

the payment or performance of any obligation or indebtedness of Trustor

described therein with respect to any liability, expense, loss or damage

arising out of the existence or the removal of, or the failure to remove any

hazardous or toxic material, chemical, substance or waste on or in the Property

now or hereafter located thereon.

 

                2.             Trustor’s Covenant of Payment.  Trustor shall pay all debts and monies

secured

 

15

 

hereby when due without setoff or deduction of any kind

whatsoever.

 

                3.             Trustor’s

Warranties of Title. 

Trustor warrants to Beneficiary that it is the sole holder of fee simple

absolute title to all of the Property, including, without limitation, all

improvements comprising the Property, and that said title is marketable and

free from any lien or encumbrance other than matters shown on Beneficiary’s

policy of title insurance issued by Trustee as of the date hereof in connection

with the lien of this Deed of Trust (the “Title Policy”).  Trustor further covenants and agrees (a) to

keep the Property free from all liens of any kind, including, without

limitation, statutory and governmental; (b) that no lien superior or junior to

this Deed of Trust will be created or suffered by Trustor during the life of

this Deed of Trust without Beneficiary’s prior written consent; (c) that it has

the right to make this Deed of Trust and the person executing this Deed of

Trust on behalf of Trustor has the authority to do so; and (d) that it will

forever warrant and defend Beneficiary’s interest in the Property against all

parties.

 

                4.             Trustor’s

Right to Contest Statutory Liens.  The filing of a mechanic’s or materialman’s lien against the

Property shall not constitute a default hereunder if and so long as (a) no

defaults exist under any Loan Document; (b) within ten (10) days after filing

of such lien, Trustor obtains and maintains in effect a bond issued by a surety

acceptable to Beneficiary in an amount not less than the entire sum alleged to

be owed to the lien claimant or such other amount as is required by the surety

or by the court to obtain a court order to release said lien of record; (c)

Trustor provides to Beneficiary and pays for an endorsement to Beneficiary’s

title insurance policy which insures the priority of this Deed of Trust over

the lien being contested; (d) Trustor immediately commences its contest of such

lien and continuously pursues the same in good faith and with due diligence;

(e) such bond or contest stays the foreclosure of the lien; and (f) Trustor

pays any judgment rendered for the lien claimant within ten (10) days

thereafter.

 

                5.             Maintenance

and Inspection.

 

                                (a)           Trustor shall maintain the buildings

and other improvements now or hereafter comprising the Property in a first

class, rentable condition and state of repair. 

Respecting the Property or the use thereof, Trustor shall (i) not commit

or suffer any waste; (ii) promptly comply with all requirements of the Federal,

State and Municipal authorities and all other laws, ordinances, regulations,

covenants, conditions and restrictions; and (iii) pay all fees or charges of

any kind in connection therewith.

 

                                (b)           Trustor shall permit Beneficiary or

its agents the opportunity to inspect the Property, including the interior of

any structures comprising the Property, at all reasonable times.  In addition, Trustor shall at its sole cost

and expense provide to Beneficiary all inspection reports, studies and tests

related to the Property as Beneficiary may reasonably request from time to time

(including, without limitation, if requested by Beneficiary, a Phase I

Environmental Report with respect to the Property and all adjacent areas and

periodic updates of any inspection or test performed in connection therewith),

all in form and scope reasonably satisfactory to Beneficiary.

 

                6.             Construction

and Repairs.  Trustor

shall complete or restore promptly and in good workmanlike manner any building

or improvement comprising the Property which may be constructed, damaged or

destroyed and pay when due all costs incurred therefor.

 

                7.             Alterations.  No building or other improvement now or

hereafter comprising the Property shall be structurally altered, removed or

demolished without the Beneficiary’s prior written

 

16

 

consent, nor shall any fixture or chattel covered by this Deed of

Trust and adapted to the proper use and enjoyment of the Property be removed at

any time without Beneficiary’s prior written consent unless actually replaced

by an article of equal suitability and value, owned by the Trustor, free and

clear of any lien or security interest except such as may be approved in

writing by the Beneficiary.

 

                8.             Compliance

With Laws and CC&R’s.

 

                                (a)           Trustor shall comply with all

statutes, laws, ordinances and regulations which now or hereafter pertain to

the construction, repair, condition, use and occupancy of the Property, including,

without limitation, all environmental, subdivision, zoning, building code,

fire, occupational, health, safety, occupancy, and other similar or dissimilar

statutes, and shall not permit any tenant, subtenant or other occupant or user

with respect to the Property (collectively, herein, “Tenants”) to violate the

same.  In the event any statute requires

any correction, alteration or retrofitting of any improvements, Trustor shall

promptly undertake the required repairs and restoration and complete the same

with due diligence at its sole cost and expense.

 

                                (b)           Trustor shall comply with all

covenants, conditions and restrictions now or hereafter of record against the

Property (“CC&R’s”) regardless of whether or not such CC&R’s are prior

to or subordinate to the lien of this Deed of Trust.  In the event any CC&R’s require any action, correction,

alteration or retrofitting respecting the Property or any improvements, Trustor

shall promptly undertake the same with due diligence at its sole cost and

expense.

 

                9.             Insurance

 

                                (a)           Trustor shall continuously maintain

the insurance described below on the Property and all improvements and

additions thereto with all premiums prepaid and provide Beneficiary original

policies or originally signed evidence of such policies which list all

coverages and endorsements to the 

policies exactly as stated in the policies and to which the originally

signed Lender’s loss payee endorsement is attached.  All such existing and future policies are hereby assigned to

Beneficiary.  Unless otherwise specified

in the Loan Documents or unless expressly and in each instance waived by the

Beneficiary in writing, said insurance shall be placed with companies licensed

to do business in Nevada with a Best’s rating of “B” or better and indicated to

be of sufficient size to qualify for Best’s designation V, or for companies

which are not licensed in Nevada, a Best’s rating of “A” or better and Best’s

designation V.

 

                                (b)           All casualty and builder’s risk

policies shall (i) be written on “all risk” casualty and completed value

builder’s risk forms, include, to the extent Beneficiary so requires from time

to time, fire and extended coverage, vandalism and malicious mischief, all

perils, “soft costs,” earthquake and other endorsements and coverages, and

include flood protection if the Property is located within a special flood

hazard area, as determined by a Zone A designation on a Flood Hazard Boundary

Map or a Zone A or V designation on a Flood Insurance Rate Map, (ii) cover one

hundred percent (100%) of the replacement value of the improvements comprising

the Property, with agreed value and inflation protection endorsements approved

by Beneficiary in writing, and (iii) name Beneficiary as a loss payee under a

standard 438 BFU endorsement or a complete equivalent thereof acceptable to

Beneficiary.

 

                                (c)           Trustor shall carry (i) said casualty

and builder’s risk policies, (ii) such policies as are otherwise required from

time to time by any applicable law, (iii) coverage against loss of rents for

not less than one (1) year, based upon Beneficiary’s approved pro forma rent

schedule for the total gross annual rents on one hundred percent (100%) of the

then net rentable area of the Property, plus real

 

17

 

estate taxes, special assessments, utility charges and premiums

for all other insurance required herein (whether paid by the Trustor or

Tenants), (iv) public liability insurance applicable to the Property, buildings

and improvements thereon, covering losses from damage to property and injury or

death to persons in amounts set forth in the Loan Documents, or which

Beneficiary otherwise requires from time to time, and including an extended

liability endorsement if applicable to the Property and required by Beneficiary,

and (v) such policies, or increased coverage or limits under existing policies,

as are otherwise required by Beneficiary from time to time.  Upon Beneficiary’s request, Trustor shall

cause Beneficiary to be an additional insured on such liability policies and

named as a loss payee under a standard 438 BFU endorsement on such rent loss

policies.

 

                                (d)           All insurance policies shall be

evaluated and adjusted as required by Beneficiary on an annual basis.  Trustor assumes all risk of insufficient

coverage of risks or amounts and acknowledges that Beneficiary’s requirements

are not intended to indicate what Trustor should, in its exercise of its

prudent and reasonable judgment, obtain. 

The evidence of insurance shall confirm that no insurance policy shall

be canceled or modified without ten (10) days’ prior written notice to

Beneficiary for nonpayment of premiums and thirty (30) days’ prior written

notice to Beneficiary for any other cancellation.  Beneficiary may, at its option, require Trustor to maintain said

policies in Trustor’s possession or deliver said policies to Beneficiary.  If retained by Trustor, said policies shall

be kept available by Trustor at all times for delivery to Beneficiary or for

inspection by Beneficiary, its agents or insurers.  In event of foreclosure of this Deed of Trust or other transfer of

title to the Property in extinguishment of some or all of the indebtedness

secured hereby, all interest of the Trustor in any insurance policies in force

shall pass to the purchaser.  Trustor

shall provide Beneficiary with proof of premiums paid for each policy term so

long as this Deed of Trust remains in effect. 

Trustor shall reimburse Beneficiary for any premiums paid for such

insurance by the Beneficiary upon the Trustor’s default in so insuring the

improvements or default in assigning and delivering such policies to

Beneficiary.

 

                10.          Assignment of Insurance and

Condemnation Proceeds. 

Should the Property or any part or appurtenance thereof or right or

interest therein be taken or damaged by reason of any public or private

improvement, condemnation proceeding (including change of grade), fire,

earthquake or other casualty, or in any other manner, Beneficiary or Trustee

may, at its option, commence, appear in and prosecute, in its own name, any

action or  proceeding, or make any

reasonable compromise or settlement in connection with such taking or damage,

and obtain all compensation, awards or other relief therefor.  All compensation, awards, damages, rights of

action and proceeds, including the policies and the proceeds of any policies of

insurance affecting the Property, are hereby assigned to Beneficiary, but no

such assignments shall be effective to invalidate or impair any insurance

policy.  Trustor further assigns to

Beneficiary any return premiums or other repayments upon any insurance at any

time provided for the benefit of the Beneficiary and all refunds or rebates

made of taxes or assessments on said Property, and Beneficiary may at any time

collect said return premiums, repayments, refunds, and rebates in the event of

any default by Trustor under the Note or this Deed of Trust.  No insurance proceeds or condemnation awards

at any time assigned to or held by Beneficiary shall be deemed to be held in

trust, and Beneficiary may commingle such proceeds with its general assets and

shall not be liable for the payment of any interest thereon.  Trustor also agrees to execute such further

assignments of any such policies, compensation, award, damages, rebates, return

of premiums, repayments, rights of action and proceeds as Beneficiary or

Trustee may require.

 

                11.          Use

of Insurance Proceeds. 

After any damage by casualty to the Property, whether or not required to

be insured against under the policies to be provided by Trustor, Trustor shall

give prompt written notice thereof to Beneficiary generally describing the

nature and cause of such casualty

 

18

 

and the extent of the damage to or destruction of the Property

resulting therefrom.  In all events

Trustor shall have the obligation to promptly repair all such damage or

destruction, regardless of whether and to the extent the casualty was covered

by an insurance policy or insurance proceeds are available hereunder.  Beneficiary shall make available to Trustor

the proceeds of any insurance policy covering the casualty and maintained by

Trustor, but only in strict accordance with each of the following terms and

conditions; provided, however, that in the event Beneficiary reasonably

determines that the total estimated cost of fully restoring and repairing the

Property to the condition existing immediately prior to the casualty does not

exceed Fifty Thousand Dollars ($50,000) and such casualty occurs more than one

(1) year prior to the end of the Note term (excluding unexercised extension

options), Beneficiary shall waive the imposition of the fee referred to in

subparagraph (a) below:

 

                                (a)           Trustor shall pay to Beneficiary,

within ten (10) days after the issuance to Trustor of a statement therefor, a

fee equal to one-half percent (.5%) of the total estimated repair costs, said

fee being agreed to as a reasonable approximation of the increase in

Beneficiary’s administrative expenses which are anticipated as a result of the

use of insurance proceeds as provided in this paragraph;

 

                                (b)           Insurance proceeds which are directly

attributable to the damage (herein the “Proceeds”), less any portion thereof

which is necessary to discharge any unpaid portion of the administrative fee

referred to in subparagraph (a) above, shall be released to Trustor upon and

subject to satisfaction of each of the following conditions:

 

                                                (i)            There exists no default under the

Note or this Deed of Trust at any time prior to or during the course of

reconstruction;

 

                                                (ii)           Receipt by Beneficiary of written

confirmation from all Tenants, in form and content acceptable to Beneficiary,

that all existing leases and subleases of the Property will continue in full

force and effect without modification (reasonable rent abatements provided

therein resulting from such damage excepted) and that Trustor’s proposed

restorations will satisfy all of Trustor’s obligations thereunder with respect

to such damage;

 

                                                (iii)          Receipt by Beneficiary of satisfactory

written evidence to the effect that proposed restorations will comply with all

statutes, ordinances, regulations, restrictive 

covenants, reciprocal easements, leases and contracts; that its proposed

plans and specifications have been approved by all required governmental

agencies; and that Trustor has obtained all necessary building and other

permits and approvals for such reconstruction;

 

                                                (iv)          Receipt by Beneficiary of proof

reasonably satisfactory to Beneficiary that there exists and will continue to

exist until the Property is reasonably expected to be restored and fully

occupied a source of funds sufficient to pay all amounts under the Note as and

when due.  Such computation shall

include Beneficiary’s estimate of the amount necessary to pay all of Trustor’s

operating expenses and the sums due under the Note over the projected period of

reconstruction plus a one (1) year period for releasing any vacant portion of

the Property, offset by net income from Tenants remaining in occupancy during

such periods, and Beneficiary may require Trustor to establish and fund a

holdback account up to the amount of the difference between the anticipated

debt service and operating expenses of Trustor and such net income.  Said fund shall be held by Beneficiary and disbursed

as and when additional leases of such vacant space which are approved by

Beneficiary in writing are entered into. 

In the event of any default under the Note, this Deed of Trust or any

reconstruction requirements, Beneficiary may, at its option, apply any portion

or all of such amounts

 

19

 

against accrued interest and the outstanding principal balance of

the Note;

 

                                                (v)           Receipt by Beneficiary from Trustor

of sufficient cash funds to cover one hundred percent (100%) of any difference

between the estimated costs of completion, as certified by an architect or

engineer approved by Beneficiary in writing, and the Proceeds, the amount of

which difference shall be placed in a money market account with Beneficiary

with said amount and any interest earned thereon to be released to Beneficiary

as necessary following the exhaustion of available insurance proceeds, or at

such earlier time deemed appropriate by Beneficiary.  In the event of any default under the Note, this Deed of Trust or

any reconstruction requirements, Beneficiary may, at its option, apply any

portion or all of such amounts and interest against the accrued interest and

principal sums outstanding under the Note;

 

 

 

                                                (vi)          Receipt by Beneficiary of a

certificate executed by Trustor describing the work to be performed in

connection with such restoration and a certificate by an independent architect

or engineer selected or approved by Beneficiary in writing stating that the

work described in the Trustor’s certificate is adequate to restore the Property

to substantially the same size, design, quality and condition as existed prior

to the damage.  The architect’s or

engineer’s certificate shall include its estimate of all costs and expenses

which will be required to complete such restorations; and

 

                                                (vii)         Such additional conditions as may

reasonably be imposed by Beneficiary to provide assurance that the Proceeds

will be used to restore the Property to substantially the same condition, to

the extent possible, as existed prior to the damage or taking, including,

without limitation, Beneficiary’s prior written approval of all permits, plans,

specifications and construction contracts for such restoration.

 

                                (c)           Beneficiary shall disburse the

Proceeds in increments corresponding to the percentage of completion costs then

incurred for labor performed and materials furnished (which may, at

Beneficiary’s discretion, be subject to reasonable holdbacks required by

Beneficiary, which holdbacks will not exceed ten percent (10%) of the total

estimated cost of completion and which will be released upon lien-free

completion of the restorations in accordance with the requirements of this Deed

of Trust and the expiration of the periods within which any mechanic’s or

materialman’s lien may be filed). 

Disbursements shall be conditioned upon Beneficiary’s written

confirmation that all of its requirements therefor have been satisfied,

including its receipt of periodic inspection and completion percentage

certificates executed by the project architect approved by Beneficiary in

writing, payment acknowledgments and lien waivers, and such other conditions to

periodic disbursements as are customarily imposed by Beneficiary in connection

with its construction loans, including that there be  no existing defaults or misrepresentations of Trustor and

Trustor’s obtaining of all title insurance endorsements, payment and

performance bonds, and builder’s risk policies required by Beneficiary.  Trustor shall, during the progress of the

work, also submit to the Beneficiary, at periodic intervals not less frequently

than monthly, a certificate satisfactory to Beneficiary furnished by an

architect or engineer approved by Beneficiary in writing showing the cost of

labor and materials incorporated into the work during the period specified in

the certificate, which period shall not include any part of the period covered

by any other such certificate;

 

                                (d)           After completion of the restoration

and subject to the conditions herein stated, and if Trustor is not then in

default under the Note or this Deed of Trust, Beneficiary shall pay to Trustor

(or such other persons or entities that may have an interest therein) the

undisbursed Proceeds

 

20

 

and Trustor’s deposit for any estimated restoration expense held

by Beneficiary upon delivery to Beneficiary of (i) a certificate executed by

Trustor showing that the work has been completed and that all bills for labor

performed and materials furnished in connection therewith have been paid, (ii) lien

waivers and other appropriate written acknowledgments of payment in full

executed by all contractors and subcontractors performing labor on or furnished

materials to the Property; (iii) a certificate executed by an architect or

engineer approved by Beneficiary confirming that the Property has been restored

to substantially the same size, design, quality and condition as existed

immediately prior to the damage and in accordance with all applicable federal,

state, local and other governmental laws and regulations; and (iv) a

certificate of occupancy and other permits issued by the appropriate

governmental authorities which authorize the occupancy of the Property for its

intended purposes and use;

 

                                (e)           If any of the conditions in

subparagraph (b) above are not fulfilled within sixty (60) days after the date

of the casualty, or if Trustor fails to exercise diligence in promptly

commencing or continuously prosecuting the work, or if Trustor is otherwise in

default under the Note, this Deed of Trust or any reconstruction requirements,

Beneficiary may, at its option, apply the Proceeds and any deposits made by

Trustor hereunder to the indebtedness secured hereby or complete the necessary

repairs and use the Proceeds for the payment thereof.  If the Proceeds are so applied to the indebtedness and, together

with any other payments due to Beneficiary under the Note and all other debts

of Trustor to Beneficiary are discharged, Beneficiary shall not have the right

to require the Property to be repaired under the terms of this Deed of Trust,

but Beneficiary’s rights under this Deed of Trust and the Loan Documents

(including, without limitation Beneficiary’s right to accelerate the Loan as a

result of such casualty) shall not be thereby impaired or affected;

 

                                (f)            Trustor shall not commence any

repairs or reconstruction of any casualty until Beneficiary consents in writing

thereto, which consent may be withheld by Beneficiary in its sole discretion

until all of the conditions contained in this paragraph have been satisfied.  All work of repairing or restoring damage

shall be done in a good and workmanlike manner with materials of good quality

and in conformity with all applicable laws, ordinances and regulations.  Nothing herein contained shall be construed

as authorizing the Trustor to subject the Property to any mechanic’s,

materialman’s or other lien for the payment of bills for material furnished or

labor performed in connection with any work contemplated by this paragraph;

 

                                (g)           In any event in which the Beneficiary

is not otherwise obligated to permit the insurance proceeds to be applied to

the restoration of the Property as hereinabove described and, at the option of

Beneficiary, the Proceeds of a loss under any policy, whether or not endorsed

payable to Beneficiary, may be applied in payment of the principal, interest or

any other sums secured by this Deed of Trust, whether or not then due, or to

the restoration or replacement of any building on the Property, without in any

way affecting the enforceability or priority of the lien of this Deed of Trust

or the obligation of the Trustor or any other person for payment of the

indebtedness hereby secured or the reconstruction of the damaged

improvements,  whether such Trustor be

the then owner of said premises or not.

 

                12.          Use

of Condemnation Awards. 

Should any portion of the Property be taken or damaged by reason of any

public improvement or condemnation proceeding, or in any other manner,

Beneficiary shall be entitled to all compensation, awards and other payments or

relief therefor, and may at its option commence, appear in or prosecute in its

own name any action or proceeding or make any reasonable compromise or

settlement in connection with such taking or damage, and Trustor agrees to pay

Beneficiary’s costs and reasonable attorneys’ fees incurred in connection

therewith.  All such

 

21

 

compensation, awards, damages, rights of actions and proceeds may

be applied by Beneficiary toward the repair to any damage to the improvements

on any portion of the Property not subject to the taking as and subject to the

same conditions herein provided with respect to the disposition of insurance

proceeds; provided, however, that if the taking results in a loss of the

Property to an extent which, in the reasonable opinion of Beneficiary, renders

or will render the Property not economically viable or which substantially

impairs Beneficiary’s security or lessens to any extent the value,

marketability or intended use of the Property, Beneficiary may apply the

condemnation proceeds to reduce the unpaid indebtedness secured hereby in such

order as Beneficiary may determine, and without any adjustment in the amount of

the installments due under the Note. 

Trustor agrees to execute such further assignments of condemnation

proceeds as Beneficiary or Trustee may from time to time require.  If so applied, any proceeds in excess of the

unpaid balance of the Note and other sums due to Beneficiary shall be paid to

Trustor or Trustor’s assignee.

 

                13.          Property

Taxes and Assessments. 

Trustor shall pay in full on or before the due date thereof all rents,

taxes, assessments and encumbrances, with interest, that may now or hereafter

be levied, assessed or claimed upon the Property that is the subject of this

Deed of Trust or any part thereof, and upon request, exhibit to Beneficiary

official receipts therefor, and shall pay all taxes imposed upon, and

reasonable costs, fees and expenses of this Deed of Trust.

 

                14.          Assessment

Districts.  Trustor

agrees not to consent to inclusion of the Property in any local improvement or

special assessment district or to the imposition of any special or local

improvement assessment against the Property without Beneficiary’s prior written

consent.

 

                15.          Mortgage

Taxes.  In the event of

the passage after the date of this Deed of Trust of any Federal, State or

Municipal law relating to the taxation of mortgages, deeds of trust, or debts

secured thereby so as to tax or assess any interest of Beneficiary or any

payments secured hereby (excluding Beneficiary’s income or franchise taxes)

Trustor shall bear and pay the full amount of such taxes, provided that, if for

any reason payment by Trustor of any such new or additional taxes would be

unlawful or if the payment thereof would constitute usury or render the loan or

indebtedness secured hereby wholly or partially usurious under any of the terms

or provisions of this Note, or the within Deed of Trust or otherwise,

Beneficiary may, at its option, without demand or notice, declare the whole sum

secured by this Deed of Trust, with interest thereon, to be immediately due and

payable, or Beneficiary may, at its option, pay that amount or portion of such

taxes as renders the loan or indebtedness secured hereby unlawful or usurious,

in which event Trustor shall concurrently therewith pay the remaining lawful

and nonusurious portion or balance of said taxes.

 

                16.          Tax

and Insurance Reserves. 

Trustor shall at the request of the Beneficiary, pay to Beneficiary at

the time of and in addition to the regular payments of principal and interest

due under the terms of the Note equal monthly installments of the taxes,

assessments, and insurance premiums estimated by the Beneficiary next to become

due so that thirty (30) days before the due date thereof, or of the first

installment thereof, Beneficiary will have on hand an amount sufficient to pay

the next maturing taxes, assessments and insurance premiums.  The amount of the additional payment to be

made on account of taxes, assessments and insurance premiums shall be adjusted

annually or more frequently as Beneficiary deems necessary and any deficit

shall be immediately paid by Trustor upon request and any surplus shall be

credited on the mortgage account.  Subsequent  payments on account of taxes, assessments

and insurance premiums shall be made in accordance with the next estimate by

the Beneficiary of annual requirements. 

To the extent permitted by applicable law, all monies paid to

Beneficiary on account of taxes, assessments or insurance premiums may be

commingled and invested with Beneficiary’s own funds and, unless and to the

extent required by law, shall not bear interest for

 

22

 

Trustor.  In the event of

default of the Trustor under the Note, this Deed of Trust or other Loan

Documents, Beneficiary, at its option, may apply any monies in this account to

any part of the debt secured hereby. 

Beneficiary shall not exercise the rights granted in this paragraph so

long as all of the following conditions have been met:

 

                                (a)           There have been no more than four (4)

total late monthly installment payments through the loan term;

 

                                (b)           There are no other defaults under the

terms of any Loan Document;

 

                                (c)           Trustor remains in title on the

Property; and

 

                                (d)           Trustor pays all taxes, assessments

and insurance premiums prior to delinquency.

 

Upon Trustor’s failure to comply with any one or more of the

conditions (a) through (d) above, Beneficiary may, at its option then or

thereafter exercised, require Trustor to pay the additional sums described in

this paragraph.

 

                17.          Trustor’s

Right to Contest Taxes. 

Trustor shall have the right to contest any real property tax or special

assessment so long as (a) no defaults exist under the Note or this Deed of

Trust; (b) Trustor makes any payment or deposit or posts any bond as and when

required as a condition to pursuing such contest; (c) Trustor commences such

contest prior to such tax or assessment becoming delinquent and continuously

pursues the same in good faith and with due diligence; (d) such contest or any

bond furnished by Trustor stays the foreclosure of any lien securing the

payment of any such tax or assessment; and (e) Trustor pays any tax or

assessment within ten (10) days following the date of resolution of such

contest.

 

                18.          Report

of Real Estate Transaction. 

Trustor has made or provided for making, or will make or provide for

making, on a timely basis, any reports or returns required under Section 6045

of the Internal Revenue Code of 1986 (and any similar reports or returns

required by state or local law) relating to the Property, notwithstanding the

fact that the primary reporting responsibility may fall on the Beneficiary,

counsel for the Beneficiary, or other party. 

Trustor’s obligations under this paragraph will be deemed to be

satisfied if proper and timely reports and returns required under this

paragraph are filed by a title company or real estate broker involved in the

real estate transaction relating to the Property, but nothing contained herein shall

be construed to require such returns or reports to be filed by Beneficiary or

counsel for Beneficiary.

 

                19.          Leases.  With respect to all leases currently or

hereafter relating to any part of the Property, Trustor agrees that:

 

                                (a)           Trustor shall fully comply with all

of its obligations under all existing and future leases on the Property,

whether Trustor is the lessor or lessee therein, so that the same shall not

become in default and shall do all that is necessary to preserve the same in

force;

 

                                (b)           Trustor shall not permit an

assignment of any leases, or any subletting thereunder unless the right to

assign or sublet is expressly reserved by the lessee under such lease;

 

                                (c)           Trustor shall not create or suffer or

permit to be created, subsequent to the date

 

23

 

of the execution and delivery of this Deed of Trust, any lien or

encumbrance which may be or become superior to any lease or renewal affecting

said Property;

 

                                (d)           Trustor shall provide parking

facilities in kind, size and location sufficient to comply with all

governmental zoning and regulations, and Trustor will furnish to Beneficiary

satisfactory assurance of such completion thereof, and that the same were so

completed in compliance with said regulations and free of liens; and

 

                                (e)           Beneficiary and its successors and

assigns (including any purchaser at a foreclosure or trustee’s sale) shall have

the right, at its option, to recognize and continue in effect any leasehold

interest which is junior or subordinated to this Deed of Trust following any

foreclosure or trustee’s sale.

 

                20.          Assignment

of Leases.  Trustor does

hereby unconditionally and absolutely assign, transfer and set over unto

Beneficiary, as further security for the indebtedness and covenants secured

hereby, all rentals and deposits which may be received or contracted for under

any existing or future leases of the Property encumbered hereby or any portion

thereof, including if applicable and without limitation, rental agreements for

mobilehome and trailer sites, all of the Trustor’s present and future interests

in said existing and future leases, and all of its right, title and interest in

and to the plans, drawings, specifications, permits, engineering reports and

land planning maps, which it now has or may hereafter acquire with regard to

any improvements now on or to be constructed upon the Property and, in the

event of any default hereunder or under the Note, Trustor shall deliver

possession of same to the Beneficiary forthwith upon demand.  In the event the Beneficiary exercises or is

entitled to exercise any of its rights or remedies under this Deed of Trust as

a result of any default of Trustor under the Note or any Loan Document, and if

any lessee, sublessee or assignee under any lease assigned under this paragraph

files or has filed against it any petition in bankruptcy or for reorganization

or undertakes or is subject to similar action, the Beneficiary shall have, and

is hereby assigned by the Trustor, all of the rights which would otherwise

inure to the benefit of the Trustor in such 

proceedings, including, without limitation, the right to seek “adequate

protection” of its interests, to compel rejection of any such lease, and to seek

such claims and awards as may be sought or granted in connection with the

rejection of any such lease.  Unless

otherwise agreed to by Beneficiary in writing, Beneficiary’s exercise of any of

the rights provided in this paragraph shall preclude Trustor from the pursuit

and benefit thereof without any further action or proceeding of any

nature.  The rights granted in this

paragraph shall be in addition to and not in derogation of any similar or

related rights granted Beneficiary in any separate assignment of leases and

rents.

 

                21.          Security

Agreement.

 

                                (a)           Creation of Security Interest.  Trustor hereby grants to Beneficiary,

pursuant to the  Uniform Commercial Code

as adopted in Nevada, a security interest in all articles of personal property

and any additions to, substitutions for, changes in or replacements of the

whole or any part thereof (the “Personal Property”) exception for merchandise

crewed for sale to 3rd parties, attached to, erected upon, situated in or upon,

forming a part of, appurtenant to, used in the construction or operation of or

in connection with, or arising from the use or enjoyment of all or any portion

of, or from any lease or agreement pertaining to the Property or any business

conducted by Trustor at the Property (but excluding the merchandise held for

sale to third parties in the ordinary course of Trustor’s business, personal

property of tenants held for storage on the Property, unless Trustor or any

guarantor of the Note has or has acquired any ownership, leasehold, security or

other interest therein) including, without limitation, the personal property

described on Exhibit “B” attached hereto.

 

24

 

                                (b)           Warranties and Representations of

Trustor.  Trustor warrants and

represents that:

 

                                                (i)            At the time of granting the security

interest described herein, Trustor has, or upon acquisition will have, good and

marketable title to all of the Personal Property, and, no other person, entity

or government has or purports to have or upon acquisition will have any right,

title, encumbrance or adverse claim or lien in or to any of the Personal

Property.

 

                                                (ii)           Except for the financing statement

executed by Trustor to perfect the security interest in the Personal Property

in favor of Beneficiary, at the time of granting the security interest

described herein, no financing statement covering the Personal Property or any

portion thereof will be on file in any public office and Trustor agrees not to

execute or authorize the filing of any such additional financing statement in

favor of any person or entity other than Lender as long as any portion of the

indebtedness evidenced by the Note remains unpaid.

 

                                                (iii)          Trustor will not sell, assign,

transfer or otherwise hypothecate or grant a security interest in and to any

portion of the Personal Property.

 

                                                (iv)          Trustor will, at its own expense,

appear in and defend any and all actions and proceedings which purport to

affect title to the Personal Property or any part thereof or affect the

security interest of Beneficiary therein.

 

                                (c)           Covenants and Agreements of

Trustor.  Trustor agrees that:

 

                                                (i)            Any replacements, renewals or

additional personal property hereafter acquired by Trustor or placed on the

Property, including the interest of Trustor in property purchased on

conditional sale or subject to a purchase money security interest or lien shall

immediately become additional Personal Property subject to this Deed of

Trust.  Upon demand of Beneficiary,

Trustor, in order to further confirm the same, will execute a new or amended

security agreement and additional or supplemental financing statements.  Whenever necessary, Trustor will use its

best efforts to procure from any conditional vendor or holder of a purchase

money lien its consent to the security interest hereby created or a waiver of

any provision of any conditional sale or purchase money lien prohibiting a

subsequent security interest.

 

                                                (ii)           The Personal Property or any part

thereof (including renewals, replacements and other after acquired property)

will not be removed from the Property without the prior written consent of

Beneficiary, which consent shall not be unreasonably withheld, provided that

obsolete and worn out articles may be removed concurrently with the

installation of a replacement therefor of at least equal economic value and of

equal usefulness in the operation of the Property and provided that Beneficiary

continues to have a first lien security interest in such replacement article.

 

                                                (iii)          Trustor will keep the Personal

Property in good condition and repair and permit no waste thereof and will

permit Beneficiary from time to time to inspect the same and will replace any

worn out or obsolete property with property satisfactory to Beneficiary.

 

                                                (iv)          Trustor will insure the Personal

Property, with Beneficiary as Loss Payee, against such hazards and in such form

and in such amounts with such companies as Beneficiary may reasonably require,

and will deliver the policies or appropriate certificates to Beneficiary.

25

 

                                                (v)           Trustor agrees to pay when due all

taxes, assessments, charges, liens or encumbrances now or hereafter affecting

the Personal Property or affecting the Property.

 

                                                (vi)          Should Trustor fail to make any

payment or perform any act herein agreed to be made or performed, Beneficiary

may pay or perform the same, and in that event Trustor agrees to reimburse

Beneficiary in full for all payments, expenses and costs thereby incurred, with

interest thereon at the Default Rate set forth in the Note.  Beneficiary shall be the sole judge of the

validity of any adverse claims, taxes, assessments, charges or encumbrances,

and the amount to be paid in satisfaction thereof, and of the necessity for,

and of the time and manner of doing everything herein authorized to be done,

provided Beneficiary shall be under no obligation to so do any such acts or to

make any of such payments.

 

                                                (vii)         The Personal Property will not be used

for any unlawful purpose or in any way which will void any insurance required

by this Deed of Trust.

 

                                                (viii)        No Hazardous Material (as hereinafter

defined) shall be installed, used, generated, manufactured, treated, handled,

refined, produced, processed, stored or disposed of in, on or under the

Property.  As used herein, the term

“Hazardous Material” shall mean all hazardous or toxic materials, pollutants,

effluents, contaminants, radioactive materials, flammable explosives, chemicals

known to cause cancer or reproductive toxicity, emissions, wastes and all other

chemicals, materials and substances, the handling, storage, release,

transportation, or disposal of which is or becomes prohibited, limited or

regulated by any federal, state, county, regional or local authority or which,

even if not so regulated, is or becomes known to pose a hazard to the health

and safety of the occupants of the Property, including, without limitation, (a)

asbestos, (b) petroleum and petroleum by-products, (c) urea formaldehyde foam

insulation, (d) polychlorinated biphenyls, (e) all substances now or hereafter

designated as “hazardous substances,” “hazardous materials” or “toxic

substances” pursuant to the Comprehensive Environmental Response, Compensation

and Liability Act of 1980 (“CERCLA”), 42 U.S.C. Section 9601, et seq., as

amended by the Superfund Amendments and Reauthorization Act of 1986 (“SARA”),

the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq., the

Clean Air Act, 42 U.S.C. Section 7401 et seq., the Hazardous Materials

Transportation Act, 49 U.S.C. Section 1801 et seq., or the Resource,

Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.; (f) all

substances now or hereafter designated as “hazardous wastes” as defined in

Section 459.430 of the Nevada Revised Statutes or as “hazardous substances” in

Section 459.3816 of the Nevada Revised Statutes, and (g) all substances now or

hereafter designated as “hazardous substances,” “hazardous materials” or “toxic

substances” under any other federal, state or local law or in any regulation or

publication adopted or promulgated pursuant thereto (collectively, “Hazardous

Materials Law”).

 

                                                (ix)           No activity shall be undertaken on

the Property which would cause (a) the Property to become a hazardous waste

treatment, storage or disposal facility as such terminology is defined and

classified under any Hazardous Materials Law, (b) a release or threatened

release of any Hazardous Material from the Property in violation of any

Hazardous Materials Law, or (c) the discharge of any Hazardous Material into

any watercourse, body of surface or subsurface water or wetland or the

discharge into the atmosphere of any Hazardous Material which would require a

permit under any Hazardous Materials Law and for which no such permit has been

issued.

 

                                                (x)            No activity shall be undertaken or

permitted to be undertaken on the Property which would result in a violation

under any Hazardous Materials Law.

 

26

 

                                                (xi)           Trustor shall obtain and deliver to

Beneficiary, within a reasonable time following completion of any action which

may have been required to be taken by any appropriate governmental agency,

certifications of engineers or other professionals reasonably acceptable to

Beneficiary, in form and substance reasonably satisfactory to Beneficiary

certifying that all necessary and required actions to clean up, remove,

contain, prevent and eliminate all releases or threats of release of any

Hazardous Material on or about the Property to the levels required by the

appropriate governmental agencies have been taken, and that upon completion of

such actions, the property is, to the knowledge of such professional, then in

compliance with applicable Hazardous Materials Law as then in effect and

applicable to such actions.

 

                22.          Impairment

of Security.  Trustor

shall not, without first obtaining the Beneficiary’s written consent, assign

any of the rents or profits of the Property or change the general nature of the

use of the Property or initiate or acquiesce in any zoning reclassification, or

do, or suffer to be done, any act or thing which would impair the security for

said debt or the Beneficiary’s lien upon the Property or the rents

thereof.  Trustor shall not, without the

written consent of Beneficiary, (a) initiate or support any zoning

reclassification of the Property, seek any variance under existing zoning

ordinances applicable to the Property or use or permit the use of the Property

in a manner which would result in such use becoming a non-conforming use under

applicable zoning ordinances; (b) modify, amend or supplement any easement,

reservation, restriction, covenant, condition or encumbrance pertaining to the

Property; (c) impose or consent to any restrictive covenant or encumbrance upon

the Property, execute or file any subdivision or parcel map affecting the Property

or consent to the annexation of the Property to any municipality; or (d) permit

or suffer the Property to be used by the public or any person in such manner as

might make possible a claim of adverse usage or possession or of any implied

dedication or easement.

 

                23.          Defense

of Suits.  Trustor shall

appear in and defend any suit, action or proceeding that might affect the

value, priority or enforceability of this security instrument or the security

itself or the rights and powers of Beneficiary or Trustee, including any suits

relating to damage to property or death or personal injuries, whether or not

Trustor is ultimately found liable for any negligence or other wrongful conduct

or inaction.  Trustor, following mutual

negotiations with Beneficiary, has waived and does hereby waive any immunity to

such liability to Beneficiary under any industrial insurance or similar statute

to the extent such immunity would impair Beneficiary’s rights against

Trustor.  Should Beneficiary elect also

to appear in or defend any such action or proceeding or be made a party to such

by reason of this Deed of Trust, or elect to prosecute such action as appears

necessary to preserve said value, the Trustor will at all times indemnify from

and, on demand reimburse Beneficiary and Trustee for, any and all loss, damage,

expense or cost, including cost of evidence of title and attorneys’ fees,

arising out of or incurred in connection with any such suit, action or

proceeding, and any appeal or petition for review thereof, and the sum of such

expenditures shall be secured by this Deed of Trust with interest as provided

in the Note secured hereby and shall be due and payable on demand.  Trustor shall pay costs of suit, cost of

evidence of title and a reasonable attorneys’ fee in any proceeding or suit

brought by Beneficiary to foreclose this Deed of Trust and in any appeal

therefrom or petition for review thereof. 

The indemnity contained herein shall survive execution and delivery of

this Deed of Trust, repayment of the Note and performance of Trustor’s

obligations under the Note and this Deed of Trust.

 

                24.          Assignments

and Transfers.  Trustor

acknowledges that Beneficiary has relied upon the financial statements, credit

history, business and real property managerial expertise and other factors

personal to Trustor and its constituent partners, shareholders and trustees, as

the case may be, in making the loan secured hereby.  Therefore, as a principal inducement to Beneficiary to make this

loan,

 

27

 

and with the knowledge that Beneficiary will materially rely upon

this paragraph in so doing, Trustor acknowledges that it shall be a material

default hereunder and under the Note if, whether voluntarily or involuntarily,

Trustor conveys, transfers, trades, sells, assigns or leases for more than one

(1) year(s) (inclusive of any extension options) (i) any interest in the

Property or any portion thereof including a transfer as a result of Trustor’s

dissolution or death or (ii) any constituent interest in Trustor including,

without limitation, (A) a transfer as a result of the dissolution or death of

the holder of such constituent interest, (B) the transfer by way of

distribution, dissolution or otherwise of any interest in or any portion of the

Property to the partners of Trustor, if Trustor is a partnership, or to the

shareholders of Trustor if Trustor is a corporation, or (C) a transfer of any

ownership interest in Trustor by the holder of such ownership interest to any

other person or entity (all of which events are individually and collectively

referred to as a “Transfer”).  Upon such

a default, the outstanding balance of the Note and all other sums then due to

Beneficiary by Trustor hereunder or under any other Loan Document may, at

Beneficiary’s sole option and absolute discretion, then be declared immediately

due and payable.  Any conveyance by real

estate purchase contract or transfer by foreclosure or other forced sale or

forfeiture shall all be deemed Transfers for the purposes of this Paragraph

24.  Any sums which are accelerated as a

result of this Paragraph 24 shall bear the same prepayment premium, if any, as

provided in the Note for amounts which are voluntarily paid to Beneficiary in

advance of their originally scheduled due dates.

 

                25.          Further

Encumbrances.  Trustor

acknowledges that Beneficiary has relied upon the Property not being subject to

additional liens or encumbrances for reasons which include, but are not limited

to, the possibility of competing claims or the promotion of plans disadvantageous

to Beneficiary in bankruptcy; the risks to Beneficiary in a junior lienholder’s

bankruptcy; questions which involve the priority of future advances, the

priority of futures leases of the Property, the marshaling of Trustor’s assets

and the Beneficiary’s rights to determine the application of condemnation

awards and insurance proceeds; the impairment of the Beneficiary’s option to

accept a deed in lieu of foreclosure; the increased difficulty of reaching

agreements for loan workouts or to the actions to be taken by trustees,

receivers, liquidators and fiduciaries; and Beneficiary’s requirements of

Trustor’s preservation of its equity in the Property and the absence of debt

which could increase the likelihood of Trustor’s inability to perform its

obligations when due.  Therefore, as a

principal inducement to Beneficiary to make this loan and with the knowledge

that Beneficiary will materially rely upon this paragraph in so doing, Trustor

acknowledges that it shall be a material default hereunder and under the Note

if Trustor encumbers the Property with any lien other than the lien of this

Deed of Trust.  Upon such a default, the

outstanding balance of the Note and all other sums then due to Beneficiary under

any documents executed in connection therewith may, at Beneficiary’s sole

option and absolute discretion, be declared immediately due and payable if any

interest in the Property or the improvements thereto, or any part thereof, are

voluntarily or involuntarily encumbered. 

Without limiting the generality of the foregoing, no mortgages, deeds of

trust or other forms of security interests prior or subordinate to the security

interests of Beneficiary shall encumber any real or personal property which is

the subject of any lien or security interest granted to Beneficiary.  An encumbrance or hypothecation of stock or

partnership or other constituent interest in Trustor, a sale with leaseback, a

transfer by lease with a purchase option or other preferential right to

purchase the Property and a conveyance by real estate purchase contract shall

all be deemed encumbrances for the purposes of this Paragraph 25.  Any sums which are accelerated as a result

of this Paragraph 25 shall bear the same prepayment premium as provided in the

Note for amounts which are voluntarily paid to Beneficiary in advance of their

originally scheduled due dates.

 

                26.          Conditions

to Further Encumbrances. 

If Beneficiary elects, at its sole and absolute discretion, or is

required by any contract or law to consent to any further encumbrance, it may

condition such consent upon all of the following:

 

28

 

                                (a)           There be no then existing defaults

under any Loan Document when such subordinate financing is to be approved by

Beneficiary or is recorded;

 

                                (b)           The continuing maintenance of

Beneficiary’s required debt service ratio, when adding the payment amounts of

the further encumbrance to the payment amounts of the Note;

 

                                (c)           The written approval of any existing

or proposed participant or assignee of the Note;

 

                                (d)           Beneficiary’s receipt of an

endorsement to Beneficiary title policy which insures the priority of

Beneficiary’s future advances over the subordinate loan security, the premium

for which shall be paid by Trustor; and

 

                                (e)           The written agreement executed by the

subordinate lender in favor of Beneficiary to the effect that:

 

                                                (i)            The subordinate lien is junior to

all security for the Note, including any extensions or modifications thereof

and future advances pursuant to the Loan Documents or such security;

 

                                                (ii)           Any default under any of the

subordinate loan documents shall constitute a default under the Note;

 

                                                (iii)          The secondary financing shall not

permit a deferral or accrual of interest;

 

                                                (iv)          It has not been granted any option or

right of first refusal or other preferential right to purchase the Property;

 

                                                (v)           It shall give Beneficiary copies of

all notices of default relating to any remedy of the subordinate loan

documents, and shall permit Beneficiary a reasonable opportunity, without

obligation, to cure such defaults, and that any sum so expended by Beneficiary

shall be added to the principal of the Note, be repayable upon demand, bear

interest at the Default Rate specified in the Note from the date of advance to

and including the date of collection, and be secured by this Deed of Trust and

Beneficiary’s other security with priority over the subordinate financing;

 

                                                (vi)          No foreclosure, trustee’s sale, or

deed in lieu of either shall be effective to terminate any occupancy or tenancy

of the Property without the prior written consent of Beneficiary, and that

nondisturbance and attornment agreements have been executed with the lessees

which so provide;

 

 

                                                (vii)         The provisions in Beneficiary’s loan

security regarding the application of loan proceeds, insurance proceeds,

condemnation awards, and all income, rents, and profits shall be controlling

over the provisions of the subordinate loan documents;

 

                                                (viii)        It waives all rights, legal and

equitable, that it may have to require the marshaling of assets or to require

the sale of assets in a particular order; and

 

29

 

                                                (ix)           It shall cause any successor or

assignee of the subordinate loan documents to be bound by the same conditions

and restrictions.

 

                27.          Default.  Subject to any grace periods or cure rights

provided in the Note, Trustor shall be in default under this Deed of Trust in

any of the following circumstances:

 

                                (a)           if default shall be made (i) in the

payment of any installment of principal or interest precisely when due

hereunder; (ii) in the repayment in full of principal under the Note on or

before the Maturity Date thereunder, (iii) in the payment when due of taxes,

assessments, insurance premiums or any lien or charge upon the Property; (iv)

in the payment of any other charge or sum when due under the terms of the Note

or any of the Loan Documents; or (v) under any of the Loan Documents;

 

                                (b)           if any building or structure on the

Property shall be removed or demolished or threatened with demolition, unless

such building or structure is replaced in compliance with law by a building or

structure of substantially similar suitability and value, and free and clear of

any lien or security interest except such as may be approved in writing by

Beneficiary;

 

                                (c)           if Trustor shall fail to perform any

covenant or observe any condition contained in the Note, this Deed of Trust, or

any other Loan Document, or Trustor breaches any representation, warranty,

covenant, term or condition of the Note, this Deed of Trust or any other Loan

Document;

 

                                (d)           if Trustor fails to deposit with

Beneficiary any funds as and when required under the Loan Documents;

 

                                (e)           if there is a breach of any warranty

or any material inaccuracy of any representation of Trustor contained in the

Note, this Deed of Trust or any other Loan Document; or should any

representation, document, exhibit, statement, certificate, or schedule

furnished to Beneficiary by Trustor contain any untrue or misleading statement

of a material fact or fail to state any material fact necessary to make the

statement of facts contained therein not misleading, or should the same

thereafter become untrue or misleading in any material respect;

 

                                (f)            if there is any failure to perform

any obligation which is secured by any lien against or interest in the

Property, rights or interests encumbered by this Deed of Trust, regardless of

whether such lien or interest is prior or subordinate to this Deed of Trust,

and which default or failure to perform is not cured within any applicable

grace period or which in any manner threatens the lien of this Deed of Trust;

 

                                (g)           if any of the following shall occur

with respect to the Property, Trustor, any general partner or shareholder of Trustor,

any guarantor of the Note or any owner of the Property:

 

                                                (i)            the appointment of a receiver,

liquidator, or trustee;

 

                                                (ii)           the filing of any voluntary or

involuntary petition for bankruptcy or reorganization;

 

                                                (iii)          if any such person be unable, or admit

in writing an inability, to pay its

 

30

 

debts when due;

 

                                                (iv)          the dissolution, termination of

existence, insolvency or business failure of any such person;

 

                                                (v)           any assignment for the benefit of

creditors;

 

                                                (vi)          the making or suffering of a

fraudulent transfer under applicable federal or state law;

 

                                                (vii)         the concealment of any of its property

in fraud of creditors;

 

                                                (viii)        the making or suffering of a preference

within the meaning of the federal bankruptcy law; or

 

                                                (ix)           the imposition of a lien through

legal proceedings upon any of the Property which is not contested in the manner

permitted by this Deed of Trust;

 

                                (h)           if there is any material default by

Trustor under any lease affecting the Property, or any modification, surrender,

cancellation or termination of any lease with a term of more than one (1) year

(inclusive of any extension options) without Beneficiary’s prior written

consent;

 

                                (i)            if there is any material adverse

change, including, without limitation, actual or threatened removal,

demolition, or other impairment, of the Property or any improvements thereon;

 

                                (j)            if there exists any impending: (i)

condemnation; (ii) rezoning; or (iii) modification or enactment of any

ordinances or regulations, any of which could materially affect any existing or

contemplated improvements on the Property or the use thereof; or

 

                                (k)           if there is any Transfer (as defined

in Paragraph 24 of this Deed of Trust) or further encumbrance of all or any

portion of or interest in the Property in prohibition of the provisions of

Paragraphs 24 and 25 of this Deed of Trust;

 

                28.          Rights

and Remedies on Default. 

Upon the occurrence of any default under this Deed of Trust and at any

time thereafter, and subject to Paragraph 9 of the Note with respect to

applicable cure periods, Trustee or Beneficiary may exercise any one or more of

the following rights and remedies:

 

                                (a)           Loan Document Remedies.  Beneficiary may exercise any right or remedy

provided for in the Note or any other Loan Document.

 

                                (b)           Acceleration.  Beneficiary may declare the Note and all

other sums secured by this Deed of Trust immediately due and payable.

 

                                (c)           Foreclosure Rights.  In the event of any default  hereunder, then and in each such event,

Beneficiary may declare all sums secured hereby immediately due and payable

either by commencing an action to foreclose this Deed of Trust as a mortgage,

or by the delivery to Trustee of a written declaration of default and demand for

sale and of written notice of default and of election to cause the Property to

be sold, which notice Trustee shall cause to be duly filed for record in case

of

 

31

 

foreclosure by exercise of the power of sale herein.  Should Beneficiary elect to foreclose by

exercise of the power of sale herein, Beneficiary shall also deposit with

Trustee this Deed of Trust and the Note and such receipts and evidence of

expenditures made and secured hereby as Trustee may require, and notice of sale

having been given as then required by law and after lapse of such time as may

then be required by law after recordation of such notice of default, Trustee,

without demand on Trustor, shall sell the Property at the time and place of

sale fixed by it in said notice of sale, either as a whole or in separate

parcels, and in such order as it may determine, at public auction to the

highest bidder upon any terms and conditions specified by Beneficiary and

permitted by applicable law.  Trustee

may postpone sale of all or any portion of the Property by public announcement

at such time and place of sale, and from time to time thereafter may postpone

such sale by public announcement at the time fixed by the preceding

postponement.  Trustee shall deliver to

such purchaser its deed or deeds conveying the Property, or any portion

thereof, so sold, but without any covenant or warranty, express or

implied.  The recitals in such deed or

deeds of any matters or facts shall be conclusive proof of the truthfulness

thereof.  Any person, including Trustor,

Trustee or Beneficiary, may purchase at such sale.  The power of sale under this Deed of Trust shall not be exhausted

by any one or more sales (or attempts to sell) as to all or any portion of the

Property remaining unsold, but shall continue unimpaired until all of the

Property has been sold by exercise of the power of sale herein contained and

all indebtedness of Trustor to Beneficiary under this Deed of Trust, the Note

or any other Loan Document has been paid in full.

 

                                (d)           Right to Rescind.  Beneficiary, from time to time before

Trustee’s sale, may rescind any such notice of breach of default and of

election to cause the Property to be sold by executing and delivering to

Trustee a written notice of such rescission, which notice, when recorded, shall

also constitute a cancellation of any prior declaration of default and demand

for sale.  The exercise by Beneficiary

of such right of rescission shall not constitute a waiver of any breach or

default then existing or subsequently occurring, or impair the right of

Beneficiary to execute and deliver to Trustee, as above provided, other

declarations of default and demand for sale, and notices of breach or default,

and of election to cause the Property to be sold to satisfy the obligations

hereof, nor otherwise affect any provision, agreement, covenant or condition of

the Note and for of this Deed of Trust or any of the rights, obligations or

remedies of the parties hereunder.

 

                                (e)           UCC Remedies.  With respect to all or any part of the

Property that is personal or intangible, Beneficiary shall have all the rights

and remedies of a secured party under the Uniform Commercial Code as adopted in

Nevada.  Upon request, Trustor shall

assemble and make such collateral available to Beneficiary at a place to be

designated by Beneficiary which is reasonably convenient to both parties.  Upon repossession, Beneficiary may propose

to retain the collateral in partial satisfaction of the Note or sell the

collateral at public or private sale in accordance with the Uniform Commercial

Code as adopted in the state where the Property is situated or any other

applicable statute.  Such sale may be

held as a part of, distinctive from or without a trustee’s sale or foreclosure

of the real property secured by this Deed of Trust.  If any notification of disposition of all or any portion of the

collateral is required by law, such notification shall be deemed reasonably and

properly given if mailed at least ten (10) days prior to such disposition.  If Beneficiary disposes of all or any part

of the collateral after default, the proceeds of disposition shall be applied

in the following order:

 

                                                (i)            To the reasonable expenses of

retaking, holding, preparing for sale, selling the collateral, and the like;

 

 

                                                (ii)           To the reasonable attorneys’ fees and

legal expenses incurred by Beneficiary; and

 

32

 

                                                (iii)          To the satisfaction of the

indebtedness secured by this Deed of Trust.

 

                                (f)            Remedial Advances.  Should Trustor fail to make any  payment or to do any act as herein provided,

then Beneficiary or Trustee, without obligation so to do and without demand

upon Trustor and without releasing Trustor from any obligation hereof, may (i)

make or do the same in such manner and to such extent as either may deem

necessary to protect the security hereof, Beneficiary or Trustee being

authorized to enter upon the 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 or Trustee, (iii) pay, purchase,

contest, or compromise any encumbrance, charge, lien, tax or assessment, or the

premium for any policy of insurance required herein; and in exercising any such

power, incur any liability, expend whatever amounts in its absolute discretion

it may deem necessary therefor, including cost of evidence of title, employ

counsel and pay such counsel’s fees. 

Beneficiary shall be subrogated to the rights and lien interests of any

person who is paid by Beneficiary pursuant to the terms of this paragraph.  Trustor shall repay immediately on written

notice to Trustor all sums expended or advanced hereunder by or on behalf of Beneficiary,

with interest from the date of such advance or expenditure at the Default Rate

provided for in the Note, and the repayment thereof shall be secured hereby.

 

                                (g)           Summary Possession.  Beneficiary may, at its option, and in

person or by agent, employee or court-appointed receiver, enter upon and take

possession of the Property and continue any improvement, repair or renovation

thereof at Trustor’s expense and to lease the same or any part thereof, making

such alterations as it determines necessary, and may terminate in any lawful

manner any lease of the Property, exercising with respect thereto any right or

option available to the Trustor.  The

entering upon and taking possession of the Property, the collection of rents,

issues and profits, or the proceeds of fire and other insurance policies or

compensation or awards for any taking or damage of the Property, and the

application or release thereof shall not cure or waive any default or notice of

default hereunder or invalidate any act done pursuant to such notice.

 

                                (h)           Collection of Rents.  Beneficiary may require any Tenant to make

payments of its rent or fees directly to Beneficiary regardless of whether

Beneficiary has taken possession of the Property.  If any rents are collected by Beneficiary, then Trustor

irrevocably designates Beneficiary as Trustor’s attorney-in-fact to endorse

instruments received in payment thereof in the name of Trustor and to negotiate

the same and collect the proceeds. 

Payments by Tenants to Beneficiary in response to Beneficiary’s demand

shall satisfy the obligation for which the payments are made, whether or not

any proper grounds for the demand existed. 

Beneficiary may exercise its rights under this paragraph either in

person, by agent or through a receiver.

 

                                (i)            Beneficiary’s Enforcement of

Leases.  Beneficiary is hereby

vested with full power to use all measures, legal and equitable, deemed by it

necessary or proper to collect the rents assigned in this Deed of Trust,

including the right, in person or by agent, employee and court-appointed

receiver, to enter upon the Property, or any part thereof, and take possession

thereof forthwith to the extent necessary to effect the cure of any default on

the part of Trustor as lessor in any leases or upon Trustor’s default under the

Note.  Trustor hereby grants to

Beneficiary full power and authority to exercise all rights, privileges and

powers herein granted at any and all times hereafter, without notice to

Trustor, including the right to operate and manage the Property, make and amend

leases and perform any other acts which are reasonably necessary to protect the

value, priority or enforceability of any security for the Note and use and

apply all of the rents and other income herein assigned to the payment of the

costs of exercising such remedies, of managing and operating the Property, and

of any

 

33

 

indebtedness or liability of Trustor to Beneficiary, including,

but not limited to, the payment of taxes, special assessments, insurance

premiums, damage claims, the costs of maintaining, repairing, rebuilding and

restoring the improvements on the Property or of making the same rentable,

attorneys’ fees incurred in connection with the enforcement of this Deed of

Trust, and any principal and interest payments due from Trustor to Beneficiary

on said Note and this Deed of Trust, all in such order as Beneficiary may

determine.  Beneficiary shall be under

no  obligation to enforce any of the rights

or claims assigned to it hereunder or to perform or carry out any of the obligations

of the lessor under any leases and does not assume any of the liabilities in

connection with or arising or in any way related to the covenants and

agreements of Trustor in any leases.  It

is further understood that this Deed of Trust shall not operate to place

responsibility for the control, care, management or repair of the Property, or

parts thereof, upon Beneficiary nor shall it operate to make Beneficiary liable

for the carrying out of any of the terms and conditions of any leases, or for

any waste of the Property by the lessee under any leases or by any other party,

or for any dangerous or defective condition of the Property or for any

negligence in the management, upkeep, repair or control of the Property

resulting in loss or injury or death to any lessee, invitee, licensee, employee

or stranger, except as may result from the gross negligence or willful

misconduct of Beneficiary after taking possession of the Property hereunder.

 

                                (j)            Beneficiary’s Enforcement of

Contracts.  Beneficiary shall have

the right to enforce Trustor’s rights under all architect contracts and

construction contracts and to bring an action for the breach thereof in the

name of Beneficiary or, at Beneficiary’s option, in the name of Trustor, in the

event any architect or contractor breaches their respective contracts,

regardless of whether Beneficiary has acquired or retained any interest in the

Property.  Trustor hereby irrevocably

appoints Beneficiary as its attorney-in-fact for the purposes of the foregoing,

which power shall be durable and coupled with an interest.  Beneficiary does not assume and shall not be

obligated to perform any of Trustor’s obligations under said contracts nor

shall Beneficiary be required to enforce such contracts or bring action for the

breach thereof; provided, however, any performance of the respective contracts

specifically required in writing by the Beneficiary, following any default by

Trustor under the Note or the contracts, and which is properly and timely

undertaken by the contractor or architect, shall be paid for by the Beneficiary

in accordance with the terms and conditions of the contracts.  Such payments shall be deemed additions to

the Note principal and shall bear interest at the rate provided in the Note

from the date of advance to and including the date of full payment, and shall

be secured as a part of said Note principal and interest by any deed of trust,

collateral assignment of leases and rents, security agreement, guaranty and

other documents granted to secure the Note.

 

                                (k)           Appointment of Receiver.  Beneficiary shall have the right to have a

receiver appointed to take possession of any or all of the Property, with the

power to protect and preserve the Property, to operate the Property preceding

foreclosure or sale, to collect the income from the Property and apply the

proceeds, over and above cost of the receivership, against the accrued interest

and principal under the Note.  The

receiver may serve without bond if permitted by law.  Beneficiary’s right to the appointment of a receiver shall exist

whether or not apparent value of the Property exceeds the indebtedness secured

hereby by a substantial amount. 

Employment by Beneficiary shall not disqualify a person from serving as

a receiver.  Upon taking possession of

all or any part of the Property, the receiver or Beneficiary may: (i) use,

operate, manage, control and conduct business on the Property and make

expenditures for all maintenance and improvements as in its judgment are

necessary and proper; (ii) collect the income from the Property and apply such

sums to the expenses of use, operation and management; and (iii) at

Beneficiary’s option, complete any construction in progress on the Property,

and in connection therewith, pay bills, borrow funds, employ contractors and make

any changes in plans or specifications as Beneficiary deems necessary or

appropriate.  If the revenues produced

by the Property are insufficient to pay expenses, the receiver may borrow, from

Beneficiary or otherwise, such

 

34

 

sums as the receiver or Beneficiary may deem reasonably necessary

for the purposes stated in this paragraph. 

The amounts borrowed or advanced shall be payable by Trustor on demand

and bear interest from the date of expenditure until repaid at the interest

rate then applicable under the Note. 

Such sums shall become a part of the debt secured by this Deed of Trust.

 

                                (l)            Specific Enforcement.  Beneficiary may specifically enforce any

covenant in this Deed of Trust or the Trustor’s compliance with its warranties

herein and may restrain and  enjoin the

breach or prospective breach of any such covenant or the noncompliance with any

condition, and Trustor waives any requirement of the posting of any bond in

connection therewith.

 

                                (m)          General Creditors’ Remedies.  Beneficiary shall have such other rights and

remedies as are available under any statute or at law or in equity generally,

and the delineation of certain remedies in this Deed of Trust shall not be

deemed in limitation thereof.

 

                                (n)           Guaranties.  If Beneficiary at any time holds additional

security for any obligations secured hereby, it may enforce the terms thereof

or otherwise realize upon the sale, at its option, either before or

concurrently herewith or after a sale is made hereunder, and may apply the

proceeds upon the indebtedness secured hereby without affecting the status of

or waiving any right to exhaust all or any other security, including the

security hereunder or thereunder, and without waiving any breach or default or

any right or power whether exercised hereunder or contained herein or in any

such other security.

 

                29.          Application

of Sale Proceeds.  After

deducting all costs and expenses of Trustee and of this Trust, including cost

of evidence of title and reasonably attorneys’ fees in connection with sale, as

above set forth, Trustee shall apply the proceeds of sale to payment of all

sums expended under the terms hereof, not then repaid, with accrued interest at

the Default Rate provided for in the Note; all other sums then secured hereby;

and the remainder, if any, to the person or persons legally entitled thereto.

 

                30.          Remedies

Cumulative.  No remedy

herein conferred upon or reserved to Trustee or Beneficiary is intended to be

exclusive of any other remedy herein or in any other Loan Document or by law

provided or permitted, and each such remedy shall be cumulative and in addition

to every other such remedy.  Every power

or remedy given by this instrument to Trustee or Beneficiary or to which either

of them may be otherwise entitled, may be exercised concurrently or

independently, from time to time and as often as may be deemed expedient by

Trustee or Beneficiary and either of them may pursue inconsistent remedies.

 

                31.          No

Waiver.  No waiver of any

default or failure or delay to exercise any right or remedy by Beneficiary

shall operate as a waiver of any other default or of the same default in the

future or a preclusion of any right or remedy with respect to the same or any

other occurrence.

 

                32.          Marshaling.  In case of a sale under this Deed of Trust,

the said Property, real, personal and mixed, may be sold in one or more

parcels.  Neither Trustee nor

Beneficiary shall be required to marshal Trustor’s assets.

 

                33.          Jury Trial Waiver.  TRUSTOR HEREBY WAIVES ALL RIGHTS TRUSTOR MAY

HAVE TO A JURY TRIAL IN ANY ACTION RELATED TO THIS DEED OF TRUST.  TRUSTOR HAS READ AND UNDERSTANDS THE

FOREGOING AND ACKNOWLEDGES THAT IT IS GIVING UP ITS RIGHT TO A JURY TRIAL.

 

35

 

 

	

  /s/ EPE

  	

   

  	

  /s/ EPE

  
	

  Initial

  	

   

  	

  Initial

  

 

                34.          Trustor’s

Indemnification.  Trustor

agrees to indemnify and hold harmless Trustee and Beneficiary from and against

any and all losses, penalties, claims, charges, costs and expenses (including

attorneys’ fees and disbursements) which may be imposed on, incurred or paid by

or asserted against Trustee and or Beneficiary by reason or on account of, or

in connection with: (a) any default by Trustor hereunder or under any other

Loan Document; (b) Trustee’s and Beneficiary’s good faith and commercially

reasonable exercise of any of their rights and remedies or the performance of

any of their duties hereunder or under the other documents to which Trustor is

a party; (c) the construction, reconstruction or alteration of the Property;

(d) any negligence, willful misconduct or failure to act of Trustor, or any

negligence, willful misconduct or failure to act of any lessee of the Property,

or any of their respective agents, contractors, subcontractors, servants,

employees, licensees or invitees; (e) any accident, injury, death or damage to

any person or property occurring in, on or about the Property or any street,

drive, sidewalk, curb or passageway adjacent thereto; or (f) any failure of

Trustor to file any tax reports or returns referred to in this Deed of

Trust.  The indemnity provided under

subsection (f) of this section shall also extend to counsel for  the Beneficiary.  Any amount payable to Trustee, Beneficiary or counsel for

Beneficiary under this paragraph shall be due and payable within ten (10) days

after demand therefor and receipt by Trustor of a statement from Trustee,

Beneficiary and/or counsel for Beneficiary setting forth in reasonable detail

the amount claimed and the basis therefor, and such amounts shall bear interest

at the Default Rate (as defined in the Note) from and after the date such

amounts are paid by Beneficiary, Trustee or counsel for Beneficiary until paid

in full by Trustor.  Trustor’s

obligations under this paragraph shall not be affected by the absence or

unavailability of insurance covering the same or by the failure or refusal by

any insurance carrier to perform any obligation on its part under any such

policy of insurance.  If any claim,

action or proceeding is made or brought against Trustor or Beneficiary which is

subject to the indemnity set forth in this paragraph, Trustor shall resist or

defend against the same, if necessary in the name of Trustee and Beneficiary,

by attorneys for Trustor’s insurance carrier (if the same is covered by

insurance) or otherwise by attorneys approved by Beneficiary.  Notwithstanding the foregoing, Trustee and

Beneficiary, in their reasonable discretion, may engage their own attorneys to

resist or defend, or assist therein, and Trustor shall pay or, on demand, shall

reimburse Trustee and Beneficiary for the payment of the reasonable fees and

disbursements of said attorneys.  The

indemnity provided for herein shall survive execution and delivery of this Deed

of Trust, repayment of the loan secured by this Deed of Trust and foreclosure,

whether by power of sale pursuant to this Deed of Trust or by deed of trust in

lieu of foreclosure.

 

                35.          Attorneys’

Fees; Costs.  Trustor

agrees to reimburse Beneficiary for all costs, expenses and reasonable

attorneys’ fees that Beneficiary incurs in connection with the realization or

enforcement of any obligation or remedy contained in the Note or any other Loan

Document, with or without litigation, including without limitation any costs,

expenses and fees incurred:  (a) on

appeal; (b) in any arbitration or mediation; (c) in any action contesting or

seeking to restrain, enjoin, stay, or postpone the exercise of any remedy in

which Beneficiary prevails; (d) in any bankruptcy, probate, receivership or

other proceeding involving Trustor; and (e) in connection with all

negotiations, documentation, and other actions relating to any work-out,

compromise, settlement or satisfaction of the debt secured hereby or settlement

of any debt secured by this Deed of Trust or any other Loan Document.  All such costs, expenses and fees shall be

due and payable upon demand, shall bear interest from the date incurred through

the date of collection at the highest rate stated in the Note (including the

Default Rate), and shall be secured by this Deed of Trust.

 

36

 

                36.          Acceptance

by Trustee.  Trustee

accepts this Trust when this Deed, duly executed and acknowledged, is made a

public record as provided by law.

 

                37.          Successor

Trustee.  Trustee may

resign by an instrument in writing addressed to Beneficiary, or Trustee may be

removed at any time with or without cause by an instrument in writing executed

by Beneficiary and duly recorded.  In

case of the death, resignation, removal or disqualification of Trustee or if for

any reason Beneficiary shall deem it desirable to appoint a substitute or

successor trustee to act instead of Trustee herein named or any substitute or

successor trustee, then Beneficiary shall have the right and is hereby

authorized and empowered to appoint a successor trustee, or a substitute

trustee, without other formality than appointment and designation in writing

executed and acknowledged by Beneficiary and the recordation of such writing in

the office where this Deed of Trust is recorded, and the authority hereby

conferred shall extend to the appointment of other successor and substitute

trustees successively.  Such appointment

and designation by Beneficiary shall be full evidence of the right and authority

to make the same and of all facts herein recited.  If such appointment is executed on behalf of Beneficiary by an

officer of Beneficiary, such appointments shall be conclusively presumed to be

executed with authority and shall be valid and sufficient without proof of any

action by the Trustee or any officer of Beneficiary.  Upon the making of such appointment and designation, all of the

estate and title of Trustee in the Property shall vest in the named successor

or substitute trustee and it shall thereupon succeed to and shall hold, possess

and execute all the rights,  powers,

privileges, immunities and duties herein conferred upon Trustee; but,

nevertheless, upon the written request of Beneficiary or of the successor

substitute trustee, the Trustee shall execute and deliver an instrument transferring

to such successor or substitute trustee all of the estate and title in the

Property of the trustee so ceasing to act, together with all the rights,

powers, privileges, immunities and duties herein conferred upon Trustee, and

shall duly assign, transfer and deliver any of the properties and moneys held

by the Trustee hereunder to said successor or substitute trustee.  All references herein to Trustee shall be

deemed to refer to any trustee (including any successor or substitute,

appointed and designated, as herein provided) from time to time acting

hereunder.  Trustor hereby ratifies and

confirms any and all acts which Trustee herein named or its successor or

successors, substitute or substitutes, in this Deed of Trust, shall do lawfully

by virtue hereof.

 

                38.          Reconveyances.  Upon Trustee’s receipt of a written request

from Beneficiary stating that all sums secured hereby have been paid, together

with the original counterparts of this Deed of Trust and the Note for

cancellation and delivery to the Trustor and the Trustee’s fees, Trustee shall

reconvey, without warranty, the Property then held hereunder.  The recitals in any reconveyance executed

under this Deed of Trust 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.”

 

                39.          Releases.  No Property shall be released from the lien

of this Deed of Trust and no person shall be released from liability under the

Note or any other obligation secured hereby except in the manner herein

specified.  Without affecting the

liability of any other person for the payment of any obligation herein

mentioned (including Trustor should it convey said 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, grant other indulgences,

make future or other advances to Trustor or any one or more parties comprising

Trustor, assign or in any manner transfer this Deed of Trust, release or

reconvey or cause to be released or reconveyed at any time all or part of the

said Property described herein, take or release any other security or make

compositions or other arrangements with debtors.  Beneficiary may also accept

 

37

 

additional security, either concurrently herewith or thereafter,

and sell the same or otherwise realize thereon, either before, concurrently

with, or after sale hereunder.

 

                40.          Beneficiary’s

Consents.  At any time,

upon written request of Trustor, payment of Beneficiary’s fees and presentation

of this Deed of Trust and said Note or endorsement (in case of full

reconveyance, for cancellation and retention), without affecting the liability

of any person for the payment of the indebtedness, Beneficiary may:  (a) consent to the making of any map or plat

of said Property; (c) join in granting any easement or creating any restriction

thereon; (c) join in any subordination or other agreement affecting this Deed

of Trust or the lien or charge thereof; and (d) reconvey, without warranty, all

or any part of the Property.

 

                41.          Usury

Disclaimer.  It is the

specific intent of Trustor and Beneficiary that the Note bear a lawful rate of

interest.  If any court of competent

jurisdiction should determine that the interest rates (and any other charges or

costs set forth in the Note which may be deemed to be an interest charge)

therein provided for exceed that which is statutorily permitted for the type of

transaction evidenced thereby, the interest rates (and other applicable charges

or costs) shall be reduced to the highest rate permitted by applicable law,

with any excess interest theretofore collected being applied against the Note

principal or, if such principal has been fully repaid, returned to Trustor on

demand.  In addition to the foregoing,

Trustor acknowledges that Beneficiary is a federal savings bank organized under

the laws of the United States of America and that the loan secured hereby is

intended to be exempt from the provisions of all applicable usury laws.

 

                42.          Further

Assurances.  Trustor,

from time to time, within fifteen (15) days after request by Beneficiary, shall

execute, acknowledge and deliver to Beneficiary, such chattel mortgages,

security agreements or other similar security instruments, in  form and substance reasonably satisfactory

to Beneficiary, covering all property of any kind whatsoever owned by Trustor

or in which Trustor has any interest which, in the reasonable opinion of

Beneficiary, is essential to the operation of the Property covered by this Deed

of Trust.  Trustor shall further, from

time to time, within fifteen (15) days after request by Beneficiary, execute,

acknowledge and deliver any financing statement, renewal, affidavit,

certificate, continuation statement or other document as Beneficiary may

reasonably request in order to perfect, preserve, continue, extend or maintain

the security interest under, and the priority of, this Deed of Trust and the

priority of such chattel mortgage or other security instrument.  Trustor further agrees to pay to Beneficiary

on demand all reasonable costs and expenses incurred by Beneficiary in

connection with the preparation, execution, recording, filing and refiling of

any such instrument or document, including the charges for examining title and

any required title endorsements. 

However, neither a request so made by Beneficiary nor the failure of

Beneficiary to make such request shall be construed as a release of such

Property, or any part thereof, from the conveyance of title by this Deed of

Trust, it being understood and agreed that this covenant and any such chattel

mortgage, security agreement or other similar security instrument delivered to

Beneficiary are cumulative and given as additional security.

 

                43.          Time

of Performance.  Time is

of the essence hereof in connection with all obligations of Trustor herein and

in all Loan Documents.

 

                44.          Notices.  Any notice required or permitted to be given

under this Deed of Trust shall be in writing and shall be served personally, or

delivered or sent by a national overnight delivery company or by United States

mail, registered or certified mail, postage prepaid, return receipt requested,

and addressed as follows:

 

38

 

	

  If to Trustor:

  	

   

  	

  PAUL-SON GAMING SUPPLIES, INC.

  
	

   

  	

   

  	

  A NEVADA CORPORATION

  
	

   

  	

   

  	

  1700 SOUTH INDUSTRIAL ROAD

  
	

   

  	

   

  	

  LAS VEGAS, NEVADA 89102

  
	

   

  	

   

  	

  Fax No. 702-384-3863

  
	

   

  	

   

  	

   

  
	

  If to Beneficiary:

  	

   

  	

   

  
	

   

  	

   

  	

  JACKSON FEDERAL BANK

  
	

   

  	

   

  	

  145 S. STATE COLLEGE BOULEVARD, SUITE 600

  
	

   

  	

   

  	

  BREA, CALIFORNIA 92821

  
	

   

  	

   

  	

  Attention:    LOAN

  SERVICING DEPT.

  
	

   

  	

   

  	

  Fax No.    714-990-7319

  

 

 

Any such notices shall be deemed delivered upon delivery or

refusal to accept delivery as indicated in writing by the person attempting to

make personal service, on the U.S. Postal Service return receipt or by similar

written advice from the overnight 

delivery company; provided, however, that if any such notice shall also

be sent by electronic transmission device, such as telex, telecopy, fax machine

or computer, such notice shall be deemed given at the time and on the date of

machine transmittal if the sending party receives a written send verification

on its machine and promptly sends a duplicate notice by personal service, mail

or overnight delivery in the manner described above.  Any party to whom notices are to be sent pursuant to this Deed of

Trust may from time to time change its address for future communication

hereunder by giving notice in the manner prescribed herein to all other parties

hereto, provided that the address change shall not be effective until five (5)

business days after giving of notice of the address change.

 

                45.          Beneficiary’s

Right to Inspect. 

Beneficiary and its agents and representatives may enter upon the

Property at all reasonable times to attend to Beneficiary’s interest and to

inspect the Property.

 

                46.          Reports

and Statements.  Trustor

shall deliver to Beneficiary, within ninety (90) days after the end of each of

Trustor’s fiscal years, and within twenty (20) days after Beneficiary’s request

in the event of any default by Trustor, reasonably detailed operating

statements and occupancy reports in form satisfactory to Beneficiary covering

the Property, both certified as correct by Trustor.  At Beneficiary’s option, such operating statements shall be

prepared by an independent certified public accountant at Trustor’s

expense.  If Beneficiary so requests,

such statements shall specify, in addition to other information requested by

Beneficiary, the rents and profits received from the Property, the

disbursements made for such period and the name of each Tenant and a summary of

the terms of its lease or rental arrangement. 

Trustor shall permit Beneficiary or its representative to examine all

books and records pertaining to the Property and shall deliver to Beneficiary

all financial statements, credit reports and other documents pertaining to the

financial condition and obligations of Trustor or any Tenant and all rental,

income and expense statements, audits and tax returns relating to the Property.

 

                47.          Assignment

by Beneficiary; Participation. 

Beneficiary may assign this Deed of Trust in whole or in part to any

person and may grant participation in any of its rights under this Deed of

Trust, without notice and without affecting Trustor’s liability under this Deed

of Trust.  In connection with any

proposed assignment, participation or similar arrangement, Beneficiary may make

available to any person all credit and financial data furnished or to be

furnished to Beneficiary by Trustor or any

 

39

 

guarantor of the Note. 

Trustor agrees to provide to the person designated by Beneficiary any

information as such person may reasonably require to form a decision regarding

the proposed assignment, participation or other arrangement.  Trustor may not assign this Deed of Trust to

any person at any time, except in connection with a transaction approved in

writing by Beneficiary under the terms of this Deed of Trust.

 

                48.          Multiple

Trustors.  If Trustor is

comprised of more than one (1) person or entity, then the term “Trustor” shall

refer to all such persons or entities collectively and to each such person or

entity individually, such that all obligations, covenants, warranties,

requirements, restrictions and other provisions of this Deed of Trust shall

apply both collectively and individually. 

If Trustor is comprised of more than one (1) person or entity, then each

of such persons or entities shall be jointly and severally liable for the

indebtedness secured by this Deed of Trust, for the performance of Trustor’s

obligations under the Loan Documents and for any default on the part of any one

or more of the persons or entities comprising Trustor.  This Deed of Trust shall be so construed

that, wherever applicable, the use of the singular number shall include the

plural number, the use of the plural number shall include the singular number,

the use of any gender shall be applicable to all genders, and shall likewise be

so construed as applicable to and including a corporation.  Any act, event or omission which is hereby

defined as a default on the part of Trustor shall likewise be a default on the

part of Trustor should the same exist with respect to any one or more parties

comprising Trustor.

 

                49.          Legal

Relationships.  The

relationship between Beneficiary and Trustor is that of lender and borrower,

and no partnership, joint venture or other similar relationship shall be

inferred from this Deed of Trust. 

Trustor shall not have the right or authority to make representations,

act or incur debts or liabilities on behalf of Beneficiary.  Trustor is not executing this Deed of Trust

as an agent or nominee for an undisclosed principal, and no third party

beneficiaries are or shall be created by the execution of this Deed of Trust,

other than by the assignment by Beneficiary of this Deed of Trust.

 

                50.          Community

Property.  If Trustor

includes any married person, then that married person’s separate and community

property interests in the Property and the community property interests of his

or her spouse in the Property are encumbered by this Deed of Trust.

 

                51.          Modification.  This Deed of Trust may be amended, modified,

changed or varied only by a written agreement signed by the parties

hereto.  No requirement of this Deed of

Trust may be waived at any time except in a writing signed by Beneficiary and

any such waiver shall be effective only as to its terms and on a single

occasion.  Neither Beneficiary’s delay

or omission in exercising any right, power or remedy under this Deed of Trust

upon default of Trustor nor Beneficiary’s failure to insist upon strict

performance of any of the covenants or agreements contained in this Deed of

Trust shall be construed as a waiver of any such right, power, remedy, covenant

or agreement or as an acquiescence in Trustor’s breach or default.  By accepting payment of any sum secured by

this Deed of Trust after its due date, Beneficiary does not waive its right to

require prompt payment of any other sums when due or to declare default for

failure to pay.

 

                52.          Successors.  Subject to the prohibitions against

Trustor’s assignments herein, this Deed of Trust shall inure to the benefit of

and bind all of the parties, their successors, estates, heirs, personal

representatives and assigns.

 

                53.          Partial

Invalidity.  If a court

of competent jurisdiction finally determines that any provision of this Deed of

Trust is invalid or unenforceable, the court’s determination shall not affect

the validity or enforceability of the remaining provisions of this Deed of

Trust.  In such event, this Deed of

 

40

 

Trust shall be construed as if it did not contain the particular

provision that was determined to be invalid or unenforceable.  No such determination shall affect any

provision of this Deed of Trust to the extent that it is otherwise enforceable

under the laws of any other applicable jurisdiction.

 

                54.          Mutual

Negotiation.  Beneficiary

and Trustor confirm that they have mutually negotiated this Deed of Trust and

that none of the terms or provisions of this Deed of Trust shall be construed

against either party.

 

                55.          Paragraph

Headings.  The paragraph

headings are for convenience only and in no way define, limit, extend or

describe the scope or intent of this Deed of Trust or any of its  provisions.

 

                56.          Applicable

Law.  This Deed of Trust

and the rights of the parties hereunder shall be governed by, construed and

enforced in accordance with the laws of the state where the Property is

located.

 

                57.          Entire

Agreement.  This Deed of

Trust and the other Loan Documents, including any exhibits or addenda, contain

the entire agreement of the parties with respect to the subject matter hereof.

 

                58.          Fixture

Filing.  This Deed of

Trust constitutes a fixture filing as defined in Sections 104.9313 and

104.9-402(6) of the Nevada Uniform Commercial Code as adopted in Nevada, as

amended or recodified from time to time. 

This Deed of Trust is to be recorded in the real estate records of the

County in which the Property is located and covers goods which are, or are to

become, fixtures.

 

                59.          Survival

of Representations and Warranties.  All of the representations and warranties contained in this Deed

of Trust shall be true and correct at all times during the term of the Loan

secured hereby until full repayment of such loan and performance of all

obligations of Trustor under the Note and all other Loan Documents.

 

                IN WITNESS

WHEREOF, Trustor has executed this Deed of Trust on the date first written

above.

 

This Agreement may be executed in counterparts, all of which shall

be deemed one and the same instrument and all of the signature pages of which

may be attached to a single counterpart hereof for recording and any other

purposes; however, the failure of refusal of any one or more persons to execute

this Agreement shall not render any provision hereof invalid or unenforceable

against any person who does execute the same.

 

TRUSTOR:

 

PAUL-SON GAMING SUPPLIES, INC., A NEVADA

CORPORATION

 

 

 

	

  BY:

  	

  /s/ Eric P. Endy

  
	

   

  	

  ERIC P. ENDY, PRESIDENT

  

 

 

41

 

State of Nevada

County of Clark

 

 

On February 28, 2002, before me, Tina D. Taylor personally

appeared

Eric P. Endy

personally known to me (or proved to me on the basis of

satisfactory evidence)to be the person(s) whose name(s) is/are subscribed to

the within instrument and acknowledged to me that he/she/they executed the same

in his/her/their authorized capacity(ies), and that by his/her/their

signature(s) on the instrument the person(s), or the entity upon behalf of

which the person(s) acted, executed the instrument.

 

WITNESS my hand and official seal.

 

 

	

  Signature

  	

  /s/ Tina D. Taylor

  

 

NOTARY PUBLIC

STATE OF NEVADA

County of Clark

TINA D. TAYLOR

Appt. No. 92-4008-1

My Appt. Expires July 5, 2004

 

State of

County of

 

 

On                                                                           ,

before me,                                                                            personally

appeared personally known to me (or proved to me on the basis of satisfactory

evidence)to be the person(s) whose name(s) is/are subscribed to the within

instrument and acknowledged to me that he/she/they executed the same in

his/her/their authorized capacity(ies), and that by his/her/their signature(s)

on the instrument the person(s), or the entity upon behalf of which the

person(s) acted, executed the instrument.

 

WITNESS my hand and official seal.

 

 

	

  Signature

  	

   

  

 

 

42

 

LEGAL DESCRIPTION

Exhibit “A”

 

That portion of the South Half (S 1⁄2) of the Northeast Quarter (NE

1⁄4) and a portion of the North Half (N 1⁄2) of the Southeast Quarter (SE 1⁄4) of

Section 4, Township 21, Range 61 East, M.D.M., described as follows:

 

Parcel Two (2) as shown by map thereof in File 44 of Parcel Maps,

Page 15, in the Office of the County Recorder of Clark County, Nevada, recorded

August 06, 1984 in Book 1968 as Document No. 1927769, Official Records.

 

ESCROW NUMBER:                         01125894-029-TDS

 

PROPERTY ADDRESS:                    1700 S.

Industrial

                                                                Las

Vegas, NV

A.P.N.:                                                   162-04-704-001      162-04-609-009

 

 

43

 

DESCRIPTION OF PERSONAL

PROPERTY

 

                All

equipment, machinery, fixtures, goods, inventory, accounts, deposit accounts,

money, general intangibles, contract rights, documents, documents of title,

instruments and chattel paper, as those terms are defined in the Nevada Uniform

Commercial Code as adopted in Nevada, and all other personal property of every

kind and description, whether now existing or hereafter acquired, now or at any

time hereafter attached to, erected upon, situated in or upon, forming a part

of, appurtenant to, used in the construction or operation of or in connection

with, or arising from the use or enjoyment of all or any portion of, or from

any lease or agreement pertaining to the Property owned by Trustor (but

excluding the personal property of any tenants of the Property, unless Trustor

has acquired an interest therein) including, without limitation:

 

                All income,

rents, royalties, revenue, issues, profits, proceeds and other benefits from

any and all of the Property;

 

                All deposits

made with or other security given to governmental entities or utility companies

by Trustor with respect to the Property and the improvements thereon, and all

advance payments of insurance premiums made by Trustor with respect thereto and

all claims or demands relating to such deposits, other security and/or such

insurance;

 

                All fixtures

now or hereafter affixed to the Property, including all buildings, structures

and improvements of every kind and description now or hereafter erected or

placed thereon and any and all machinery, motors, elevators, boilers, equipment

(including, without limitation, all equipment for the generation or

distribution of air, water, heat, electricity, light, fuel or refrigeration or

for ventilating or air conditioning purposes or for sanitary or drainage

purposes or for the removal of dust, refuse or garbage), partitions,

appliances, furniture, furnishings, building service equipment, building

materials, supplies, ranges, refrigerators, cabinets, laundry equipment, hotel,

kitchen and restaurant equipment, computers and software, radios, televisions,

awnings, window shades, venetian blinds, drapes and drapery rods and brackets,

screens, carpeting and other floor coverings, lobby furnishings, games and

recreational and swimming pool equipment, elevators, cleaning and sprinkler

systems, fire extinguishing apparatus and equipment, incinerators and other

property of every kind and description now or hereafter placed, attached,

affixed or installed in such buildings, structures, or improvements (all of

such fixtures being referred to hereinafter as the “Improvements”);

 

                All damages,

royalties and revenue of every kind, nature and description whatsoever that

Trustor may be entitled to receive, either before or after any default

hereunder, from any person or entity owning or having or hereafter acquiring a

right to the oil, gas or mineral rights and reservations of the Property;

 

                All proceeds

and claims arising on account of any damages to or taking of the Property or

the Improvements thereon or any part thereof, and all causes of action and

recoveries for any loss or diminution in the value of the Property or the

Improvements;

 

                All licenses

(including, but not limited to, any operating licenses or similar licenses),

contracts, management contracts or agreements, franchise agreements, permits,

authorities or certificates required or used in connection with the ownership

of, or the operation of maintenance of the Improvements or any Business;

 

Exhibit “B”

 

 

44

 

 

                All present

and future accounts, general intangibles, chattel paper, contract rights,

deposit accounts, instruments and documents as those terms are defined in the

Uniform Commercial Code, now or hereafter relating or arising with respect to

the Property and for the use thereof or any improvements thereto, including,

without limitation: (i) all rights to the payment of money, including escrow

proceeds arising out of the sale or other disposition of all or any portion of

the Property; (ii) all plans, specifications and drawings relating to the

development of the Property and/or any construction thereon; (iii) all use

permits, occupancy permits, development agreements, construction and building

permits and all other permits and approvals required by any governmental or

quasi-governmental authority in connection with the development, construction,

use, occupancy or operation of the Property; (iv) any and all agreements

relating to the development, construction, use, occupancy and for operation of

the Property between Trustor and any contractor, subcontractor, project manager

or supervisor, architect, engineer, laborer or supplier of materials; (v) all

lease or rental agreements; (vi) all names under which the Property is now or

hereafter known and all rights to carry on business under any such names or any

variant thereof; (vii) all goodwill relating to the Property and for the

development, construction, use, occupancy or operation thereof; (viii) all

insurance proceeds and condemnation awards arising out of or incidental to the

ownership, development, construction, use, occupancy or operation of the

Property; (ix) all reserves, deferred payments, deposits, refunds, cost

savings, bonds, insurance policies and payments of any kind relating to the

Property; (x) all loan commitments issued to debtor in connection with any sale

or financing of the Property; and (xi) all supplements, modifications and

amendments to the foregoing.

 

                All water

rights appurtenant to the Property together with all pumping plants, pipes,

flumes and ditches, all rights to the use of water as well as the rights in

ditches for irrigation of the Property, all water stock relating to the

Property, shares of stock or other evidence of ownership of any part of the

Property that is owned by Trustor in common with others, and all documents of

membership in any owners’ or members’ association or similar group having

responsibility for managing or operating any part of the Property;

 

                All plans and

specifications prepared for entitlement or development of the Property or

construction of the Improvements and all studies, data and drawings relating

thereto; and also all contracts and agreements of Trustor relating to the

aforesaid plans and specifications or to the aforesaid studies, data and

drawings, or to the entitlement or development of the Property or construction

of the Improvements; and

 

                All sales

agreements, deposit receipts, escrow agreements and other ancillary documents

and agreements entered into with respect to the sale to any purchasers of any

part of the Property or of any buildings or structures on the Property,

together with all deposits and other proceeds of the sale thereof.

 

                All

landscaping, trees and other plants and crops growing on the Property, all

crops harvested and all net sale proceeds from crops harvested, packed and

sold, all maintenance buildings and agricultural equipment located on the

Property, and any and all other property now or hereafter located on or at the

Property and used in connection with any farming operations conducted upon the

Property.

 

                To the extent

not already included within the foregoing categories, all inventory, accounts

receivable, furniture, fixtures, equipment and other personal property of or

related to or used in the operation of any Business.

 

                All

replacements, repairs and substitutions of, and accessions and additions to,

any of the

 

45

 

foregoing.

 

                All proceeds

of any of the foregoing, including, without limitation, proceeds of any

voluntary or involuntary disposition or claim respecting any thereof (pursuant

to judgment, condemnation award or otherwise) and all goods, documents,

instruments, general intangibles, chattel paper and accounts, wherever located,

acquired with cash proceeds of any of the foregoing or proceeds thereof.

 

46

 

RIDER TO DEED OF TRUST,

SECURITY AGREEMENT,

ASSIGNMENT OF RENTS AND

FIXTURE FILING

 

OPERATING AND FINANCIAL STATEMENTS

COVENANTS

 

        THIS

OPERATING AND FINANCIAL STATEMENTS COVENANTS (“Rider”) is attached to and made

a part of that certain Deed of Trust, Security Agreement, Assignment of Rents

and Fixture Filing dated FEBRUARY 22, 2002

(the “Deed of Trust”) executed as “Trustor” by PAUL-SON GAMING SUPPLIES, INC., A NEVADA CORPORATION in favor

and for the benefit of JACKSON FEDERAL BANK, a Federal Savings Bank, as

“Beneficiary” encumbering, among other things, that certain property more

particularly described therein commonly known as 1700 SOUTH INDUSTRIAL ROAD, LAS VEGAS, NEVADA, 89102, with

reference to the following facts:

 

R E C I T A L S

 

        A.        Borrower proposes to borrow from

Beneficiary a loan to be evidenced by the Note defined in Section 1 of the Deed

of Trust (the “Loan”).  The Loan is

secured by the Deed of Trust and all other Loan Documents (as defined in

Section 7 of the Note).  The Deed of

Trust encumbers the “Property” as more fully described in therein.

 

        B.        Beneficiary has determined that the

continuing financial strength of Borrower, the Property and the following

persons, whether guarantors of all or part of the Loan, direct or indirect

constituent owners of Borrower, or other persons, namely PAUL-SON GAMING SUPPLIES, INC., A NEVADA CORPORATION

AND PAUL-SON GAMING CORPORATION, A NEVADA CORPORATION (collectively,

the “Borrower Parties”), is a material concern in its continuing administration

of the Loan.

 

        C.        As a condition precedent to its making

the Loan, Beneficiary has required that this Rider, as separately initialed by

Borrower, be attached to and be a part of the Deed of Trust.

 

        NOW,

THEREFORE, in order to induce Beneficiary to make the Loan, and for good and

valuable consideration, the receipt and sufficiency of which are hereby

acknowledged, Borrower agrees as follows:

 

        1.         Delivery of Operating and Financial

Statements and Rent Rolls.  Borrower

shall deliver or cause to be delivered to Beneficiary, within one hundred

twenty (120) days after the end of 2002 and within one hundred twenty (120)

days after the end of each subsequent fiscal year that ends before the Loan is

repaid in full, the following items, each in form and substance satisfactory to

Beneficiary:

 

                    (a)       A detailed, itemized, cash-basis

operating statement setting forth each item of operating income and operating

expense for the Property during such portion of the immediately preceding

fiscal year that the Property was owned by Borrower and any additional

information concerning the Property that Beneficiary may request.

 

                    (b)       A detailed current, certified rent roll

indicating each tenant’s name, unit number, expiration date, monthly rental and

other payment obligations and any outstanding delinquencies, and any other

information requested by Beneficiary.

 

RIDER — Page 1 of 2

 

47

 

                    (c)       True and complete financial statements of

Borrower and of each Borrower Party for the immediately preceding fiscal year,

including a balance sheet and income statement, all in reasonable detail and

certified by the applicable person as accurately reflecting its financial

condition as of the date of such financial statements.

 

                    (d)       A true and complete copy of the Federal

Income Tax Returns (including all Schedules and Attachments) of Borrower and of

each Borrower Party for the immediately preceding fiscal year; provided,

however, that such copies of any return shall not be required earlier than

concurrently with the filing thereof.

 

        2.         Financial Statement Charge.  In the event any item described in Section 1

above is not duly and timely received by Beneficiary, Borrower shall pay to

Beneficiary immediately upon demand a late charge (collectively, the “Financial

Statement Charge”) in an amount equal to the sum of (i) one-quarter of one

percent (0.25%) of the maximum permitted principal balance of the Loan; plus

(ii) the product of twenty percent (20%) of the amount of (i) above, multiplied

by the number of months after the date Beneficiary notifies Borrower that such

item was not timely received in full compliance with Section 1 above until the

date such item is actually received by Beneficiary in full compliance

therewith.  Borrower hereby acknowledges

that the actual damage Beneficiary shall sustain as a result of Borrower’s

failure to duly and timely submit such items is extremely difficult to estimate

and that the Financial Statement Charge represents a reasonable approximation

of the same.  The Financial Statement

Charge shall be assessed for and due and payable with each such item to which

it applies without demand.  The

imposition or collection of a Financial Statement Charge shall in no event be

in lieu of any other remedy of Beneficiary and a failure to collect the same

shall not constitute a waiver of Beneficiary’s right to require a Financial

Statement Charge with respect to any prior or subsequent required item.

 

 

        IN

WITNESS WHEREOF, this Rider has been duly initialed by the Borrower as part of

the Deed of Trust.

 

	

  /s/ E.P.E.

  
	

  E.P.E.

  

 

 

RIDER — Page 2 of 2

 

	

  CLARK COUNTY, NEVADA

  
	

  JUDITH A. BANDEVER, RECORDER

  
	

  RECORDED AT REQUEST OF:

  
	

  UNITED TITLE OF NEVADA

  
	

  03-6-2002   08:01

  	

   

  	

  JBR   32

  
	

  BOOK: 20020306

  	

   

  	

  INST:  00301

  
	

  FEE:   45.00 

  	

   

  	

  RPTT:   .00

  
	

  TRUST DEED

  	

   

  	

   

  
				

 

 

48

 

Loan No: 7000904776

 

REPAYMENT GUARANTY

 

                THIS

REPAYMENT GUARANTY (“Guaranty”) is made and entered as of FEBRUARY 22, 2002 by

PAUL-SON GAMING CORPORATION, A NEVADA CORPORATION, jointly and severally

(hereinafter collectively, “Guarantor”) in favor and for the benefit of JACKSON

FEDERAL BANK (hereinafter referred to as “Lender”).

 

R E C I T A L S

 

A.            Lender has

agreed to make a loan (the “Loan”) in the amount of up to NINE HUNDRED NINETY

FIVE THOUSAND AND 00/100THS DOLLARS ($995,000.00) to PAUL-SON GAMING SUPPLIES,

INC., A NEVADA CORPORATION (“Borrower”), to be secured by that certain real

property (the “Property”) located in the City of LAS VEGAS, County of CLARK,

State of Nevada and more particularly described in Exhibit “A” hereto.  The Loan is evidenced by a Promissory Note

Secured by Deed of Trust (the “Note”) of even date herewith, executed by

Borrower in favor of Lender and is secured by that certain Deed of Trust,

Assignment of Rents, Security Agreement, and Fixture Filing of even date

herewith, executed by Borrower in favor of Lender (“Deed of Trust”) and other

Loan Documents (as defined in the Note), Borrower has also executed an

Environmental Indemnity Agreement of even date herewith in favor of Lender

(“Environmental Indemnity”).

 

B.            The undersigned

desire and specifically intend to induce Lender to make the Loan and recognize

and intend that Lender will materially rely upon these presents in so doing.

 

A G R E E M E N T

 

                NOW,

THEREFORE, for good and valuable consideration, the receipt and sufficiency of

which are hereby acknowledged by the undersigned, Guarantor agrees with and for

the specific benefit of Lender, its successors, participants, endorsees and

assigns, as follows:

 

1. 

Agreement of Guaranty.  Guarantor

hereby unconditionally and irrevocably guarantees to Lender, and Lender’s

successors, participants, endorsees and assigns, the due performance and full

and prompt payment, whether at maturity or by acceleration or otherwise, of any

and all obligations and indebtedness of Borrower to Lender including, without

limitation, that pertaining to the Loan (or evidenced in the documents now or

hereafter evidencing or securing the Loan), including, without limitation, all

principal, interest, late charges, remedial advance reimbursements, future

advances, costs of collection and attorneys’ fees, and any and all other

amounts due under the Note and any and all instruments securing the Note or

related thereto.  This Guaranty also

includes and Guarantor shall be liable for all liabilities of Lender as a

result of Lender’s ownership of the Property following a foreclosure, sale

under the Deed of Trust, either pursuant to judicial decree or by power of sale

or by deed in lieu of foreclosure (a “Foreclosure”) to the extent incurred as a

result of failure of Borrower to perform any of its obligations under the Loan

Documents and/or the Environmental Indemnity, such as, but not limited to the

payment of debts to any third parties, the maintenance of insurance on the

Property, the payment of taxes and assessments, and compliance

 

 

49

 

 

with all laws and regulations, including

all laws and regulations pertaining to the use, storage or disposal of asbestos

and hazardous or toxic materials or waste. 

Guarantor also unconditionally and irrevocably guarantees that the Deed

of Trust constitutes a lien against the Property of the first and highest

priority and also agrees to hold Lender harmless from any and all losses,

damages and liabilities which are caused by the existence or imposition of any

lien against the Property which is not subordinate to the Deed of Trust.  All of the obligations referred to in this

paragraph are hereinafter collectively referred to as the “Indebtedness.”

 

2. 

Description of Indebtedness.  The

word “Indebtedness” is used herein in its most comprehensive sense, and

includes any and all advances (including those made by Lender to protect,

enlarge or preserve the priority, propriety or amount of its lien(s) against

mechanics’ liens, equitable liens, statutory claims or otherwise), debts,

obligations and liabilities of Borrower heretofore, now, or hereafter made,

incurred or created, whether voluntary or involuntary and however arising,

whether due or not, absolute or contingent, liquidated or nonliquidated,

determined or undetermined, and whether Borrower may be liable individually or

jointly with others, or whether recovery upon the Indebtedness may be or

hereafter becomes barred by any statute of limitations, or whether the

Indebtedness may be or hereafter becomes otherwise unenforceable.  This is a continuing guaranty relating to

the Indebtedness, including that arising under subsequent or successive

transactions which shall either continue or increase the Indebtedness, or from

time to time renew it after it has been satisfied.  Guarantor’s liability hereunder shall continue until the full and

complete satisfaction of the Indebtedness.

 

3. 

Assignment of Accounts.  In

addition to all liens upon, and rights of setoff against, the moneys,

securities or other property of Guarantor given to Lender by law, Lender shall

have a lien upon and a right of setoff against all moneys, securities and other

property of Guarantor now or hereafter in the possession of or on deposit with

Lender, whether held in a general or special account or deposit, or for

safekeeping or otherwise; and every such lien and right of setoff may be

exercised without demand upon or notice to Guarantor.  No lien or right of setoff shall be deemed to have been waived by

any act or conduct on the part of Lender, or by any neglect to exercise such

right of setoff or to enforce such lien, or by any delay in so doing; and every

right of setoff and lien shall continue in full force and effect until such

right of setoff or lien is specifically waived or released by an instrument in

writing executed by Lender.

 

4. 

Performance by Guarantor. 

Guarantor covenants to cause Borrower to maintain and preserve the

enforceability of any instruments now or hereafter executed in favor of Lender,

and to take no action of any kind which might be the basis for a claim that

Guarantor has any defense hereunder other than payment in full of all the

Indebtedness.  Guarantor hereby

indemnifies Lender against loss, cost or expense, by reason of the assertion by

Borrower of any defense to its obligations under any of the Loan Documents, or

resulting from the attempted assertion by Guarantor of any defense hereunder

based upon any such action or inaction of Borrower.  Guarantor assumes all responsibility for being and keeping itself

informed of the Borrower’s financial condition and assets, and of all other circumstances

bearing upon the risk of nonpayment of the Indebtedness, and the nature, scope

and extent of the risks which the Guarantor assumes and incurs hereunder, and

agrees that Lender shall have no duty to advise the Guarantor of information

known to it regarding such circumstances or risks.  Guarantor agrees to pay a reasonable attorneys’ fee and all other

costs and expenses which may be incurred by Lender in the enforcement of

Borrower’s obligations with respect to the Indebtedness, including such costs

and fees which are incurred in any arbitration, litigation or appeal.

 

 

50

 

 

5. 

Loan Modification.  Guarantor

authorizes Lender, without notice or demand and without affecting its liability

hereunder, from time to time to (a) renew, amend, compromise, extend,

accelerate or otherwise change the time for payment of, or otherwise change the

terms of the Indebtedness or any part thereof, including increase or decrease

of the rate of interest thereon; (b) take and hold security for the payment of

this Guaranty or the Indebtedness guaranteed; (c) exchange, enforce, waive and

release any such security; (d) apply such security and direct the order or

manner of sale thereof as Lender in its discretion may determine; and (e)

release or substitute any one or more of the endorsers or any other

guarantor.  Lender may, without notice,

assign this Guaranty in whole or in part. 

Lender may, at its election, foreclose on any security by one or more

judicial or nonjudicial sales, whether or not every aspect of any such sale is

commercially reasonable, or exercise any other right or remedy, without

affecting or impairing in any way the liability of the Guarantor hereunder

except to the extent the Indebtedness has been paid.

 

6. 

Bankruptcy of Borrower.  In any

bankruptcy or other proceeding in which the filing of claims is required by

law, each Guarantor shall file all claims which such Guarantor may have against

Borrower relating to any indebtedness of Borrower to Guarantor and shall assign

to Lender all rights of Guarantor thereunder. 

If Guarantor does not file any such claim, Lender, as attorney-in-fact

for Guarantor, is hereby authorized to do so in the name of Guarantor or, in

Lender’s discretion, to assign the claim to a nominee and to cause proof of

claim to be filed in the name of Lender’s nominee.  The foregoing power of attorney is coupled with an interest and

cannot be revoked.  Lender or its

nominee shall have the right, in its reasonable discretion, to accept or reject

any plan proposed in such proceeding and to take any other action which a party

filing a claim is entitled to do.  In

all such cases, whether in administration, bankruptcy or otherwise, the person

or persons authorized to pay such claim shall pay to Lender the amount payable

on such claim and, to the full extent necessary for that purpose, each

Guarantor hereby assigns to Lender all of such Guarantor’s rights to any such

payments or distributions; providing, however, Guarantor’s obligations

hereunder shall not be satisfied except to the extent that Lender receives cash

by reason of any such payment or distribution. 

If Lender receives anything hereunder other than cash, the same shall be

held as collateral for amounts due under this Guaranty.

 

7. 

Guarantor’s Waiver.  Guarantor

hereby waives to the extent permitted by law, any right to require Lender to

(a) record, perfect, maintain, or enforce any other security for the

Indebtedness; (b) proceed against Borrower or any other party; (c) proceed

against or exhaust any security received from Borrower; including, but not

limited to any rights under the Nevada one action rule contained in Section

40.430 of the Nevada Revised Statutes (d) proceed against any particular person

comprising Guarantor or to file any claims in any such person’s bankruptcy,

probate, or other proceeding; (e) pursue any other remedy in Lender’s power

whatsoever; or (f) dispose of any repossessed collateral in a “commercially

reasonable” or other manner as required by the Uniform Commercial Code or other

applicable statute.  Guarantor also

waives any defense based on or arising out of (i) any defense of the Borrower

other than payment in full, including, without limitation, any defense based on

or arising out of the disability of the Borrower, or the enforceability of the

Indebtedness or any part thereof from any cause; or (ii) the cessation of the

liability of the Borrower from any cause other than payment in full of the

Indebtedness; or (iii) any 

 

 

51

 

 

election regarding foreclosure or other remedy as herein provided,

even though such election operates to impair or extinguish any right of

reimbursement or subrogation or other right or remedy of the Guarantor against

the Borrower or any security; or (iv) any failure of Lender to make or file any

claim in any bankruptcy, reorganization, guardianship, probate or other

proceeding within any time period or in any form otherwise required unless

Lender has been given written notice of the necessity for and form of such

notice at least thirty (30) days prior to the expiration of the applicable

filing period; (v) any defense based upon lack of authority of the officers,

partners or other agents of Borrower or any defect in the formation of Borrower

or of any principal of Borrower; (vi) any defense based upon Borrower’s use of

the Loan proceeds for purposes other than the purposes represented by Borrower;

(vii) any defense based on Lender’s failure to disclose to Guarantor any

information concerning Borrower’s financial condition or any other circumstance

bearing on Borrower’s ability to pay all sums due under the Loan; (viii) any

defense arising because of an election made by Lender under Section 1112(b) of

the Federal Bankruptcy Code; and (ix) any defense based upon any borrowing or

grant of security interest under Section 364 of the Federal Bankruptcy Code.

Until all of the Indebtedness has been paid in full, Guarantor shall have no

right of subrogation, and waives any right to enforce any remedy which Lender

now has or hereafter may have against the Borrower, and waives any benefit of,

and any right to participate in, any security now or hereafter held by

Lender.  Guarantor further waives all

presentments, demands for performance, protests and notices, including, without

limitation, notices of nonperformance, notices of protest, notices of dishonor,

notices of acceptance of this Guaranty, and notice of the existence, creation,

or incurring of new or additional Indebtedness.  Guarantor waives any right or claim of right to cause a

marshaling of Borrower’s assets or to require Lender to proceed against

Guarantor in any particular order. 

Guarantor represents and warrants to Lender that Guarantor is not a

principal obligor or the alter ego of a principal obligor with respect to the

Indebtedness, and Guarantor will remain liable hereunder notwithstanding

foreclosure of any lien on the real property securing the Indebtedness, whether

by judicial foreclosure, exercise of a power of sale or acceptance of a deed in

lieu of foreclosure.

 

8. 

Conveyance of Security Property; Foreclosure Under Deed of Trust.  No change of ownership or legal title to the

Property, whether made with or without Lender’s consent, shall affect or change

or discharge the obligations of Guarantor hereunder.

 

9. 

No Releases.  Guarantor agrees

that notwithstanding the death of any or all Guarantors, this Guaranty shall

continue in full force and effect and shall extend and be applicable to any

extensions or modifications of the Indebtedness and to all future advances made

by Lender after the death of any or all Guarantors.  No person executing this Guaranty shall be released from

liability as a result of any failure of Lender to file any claim against any

other persons’ estate or if Lender elects not to file any such claim.  Guarantor hereby expressly waives the

benefit of any statute of limitations affecting its liability hereunder or the

enforcement thereof.

 

10. 

Subordination.  Any indebtedness

of Borrower now or hereafter held by Guarantor is hereby subordinated to the

Indebtedness; and such indebtedness of Borrower to Guarantor, if Lender so

requests, shall be collected, enforced and received by Guarantor as trustees

for Lender and be paid over to Lender on account of the Indebtedness, but

without reducing or affecting in any manner the liability of Guarantor under

the other provisions of this Guaranty.

 

 

52

 

 

11. 

Guarantor’s Warranties. 

Guarantor hereby represents, warrants and acknowledges to Lender as

follows:  (a) the Loan is of substantial

and material benefit to Guarantor; (b) Guarantor now has and will continue to

have full and complete access to any and all information concerning the transactions

contemplated by the Loan Documents, Borrower’s financial status and its ability

to perform under the Loan Documents and Environmental Indemnity, (c) Guarantor

has reviewed and approved copies of the Loan Documents and Environmental

Indemnity and is fully informed of the remedies the holder may pursue, with or

without notice to Borrower, in the event of default under the Note or other

Loan Documents and Environmental Indemnity and (d) so long as the Indebtedness,

or any portion thereof remains unsatisfied, Guarantor shall keep fully informed

as to all aspects of Borrower’s financial condition and the performance of the

Indebtedness.

 

12. 

Defaults.  Upon any default of

Guarantor under this Guaranty or of Borrower under any of the Loan Documents,

or if Borrower or Guarantor becomes insolvent or makes an assignment for the

benefit of creditors, or if a petition in bankruptcy or for corporate

reorganization or for an arrangement be filed by or against Borrower or

Guarantor, or in the event of the appointment of a receiver for Borrower or

Guarantor or their properties, or if a judgment is obtained or warrant of

attachment issued against Borrower or Guarantor, all or any part of the

Indebtedness and any obligations or liabilities of Guarantor to Lender, whether

direct or contingent, and of every kind and description, shall, without notice

or demand, at the option of the Lender, become immediately due and payable by

Guarantor.  No delay on the part of

Lender in the exercise of any right, power or privilege under the Loan

Documents with Borrower or under this Guaranty shall operate as a waiver of any

such privilege, power or right.

 

13. 

Costs and Attorneys’ Fees. 

Guarantor agrees to reimburse Lender for all costs, expenses and

attorneys’ fees which Lender incurs in connection with the enforcement of any

remedy contained in this Guaranty or any other security for the Note, with or

without litigation, including such costs, expenses and fees as may be incurred

on appeal, and in any arbitration proceeding, in any action contesting or

seeking to restrain, enjoin, stay or postpone the exercise of such remedy in

which Lender prevails, in any bankruptcy, probate or other proceeding involving

any person comprising Guarantor and in connection with all negotiations,

documentation and other actions relating to any work-out or settlement of any

debt guaranteed hereby.  Said costs,

expenses and fees shall be due and payable upon demand and shall bear interest

from the date of such demand to and including the date of collection at the

highest rate of interest stated in the Note (including any Default Rate).

 

14. 

Financial Statements.  Within

twenty (20) days after written request from Lender, Guarantor shall deliver to

Lender a detailed financial statement in form satisfactory to Lender,

Guarantor’s tax returns, and other financial information reasonably requested

by Lender and, at the option of Lender, such financial statements shall be

prepared by an independent certified public accountant at Guarantor’s

expense.  Guarantor shall also permit

Lender to inspect and make copies of its books and records upon request.

 

15. 

Signature Authorities.  Where any

one or more of Borrower or Guarantor are corporations or partnerships, it is

not necessary for Lender to inquire into the powers of Borrower or Guarantor or

the officers, directors, partners or agents acting or purporting to act in

their behalf, and any Indebtedness or any other obligation made or created in

reliance upon the professed exercise of 

 

 

53

 

 

such powers shall be guaranteed

hereunder.  Where any one or more of

Borrower are corporations, Guarantor represents that the corporate borrower is

the bona fide borrower, that said corporate borrower has not been formed or

availed of to evade or circumvent the applicable usury laws of any state or

states concerned therewith, and Guarantor hereby indemnifies Lender and agrees

to save it harmless against any damages or expenses suffered by Lender should,

any of the aforesaid representations prove untrue.

 

16. 

Legal Relationships.  The

obligations hereunder are joint and several with, and independent of the

obligations of Borrower, and a separate action or actions may be brought and

prosecuted against Guarantor, whether action is brought against Borrower or

whether Borrower be joined in any such action or actions.  Each party executing this Guaranty binds

itself, himself, or herself as a principal and not as a surety for performance

of this independent guaranty, and each such person agrees to be liable herein

jointly and severally.  If this Guaranty

is executed by husband and wife, or by any married individual, it is so

executed with recourse against the separate property of each such person and

the marital community property of such person and his or her spouse.

 

17. 

Construction and Interpretation. 

In all cases where there is but a single Borrower or a single Guarantor,

then all words used herein in the plural shall be deemed to have been used in

the singular wherein the context and construction so require; and when there is

more than one Borrower named herein, or when this Guaranty is executed by more

than one Guarantor, the word “Borrower” and the word “Guarantor” shall

respectively mean all and any one or more of them, and all words used in the

singular shall be deemed to have been used in the plural wherein the context

and construction so require.  This

Guaranty shall be effective against all persons who execute it, even though

such persons are less than all of the persons designated as among the persons

comprising Guarantor herein.  This

Guaranty may be executed in two or more counterparts, all of which shall be

deemed one and the same instrument.  The

other provisions of this Guaranty shall not be affected if any portion of this

Guaranty is declared unenforceable by any court of competent jurisdiction.

 

18. 

Guaranty Independent of Deed of Trust. 

This Guaranty constitutes a separate and independent contract with and

obligation to the Lender, and the Guarantor recognizes and intends that this

Guaranty be a separate source of repayment of the Indebtedness.  Therefore, in consideration of the Lender

making loans to the Borrower and to induce the Lender to do so with the

knowledge and intention that the Lender is relying upon this Guaranty in so

doing, the Guarantor agrees that recourse may be obtained against the Guarantor

for the repayment of all or any outstanding portion of the Indebtedness prior

to, concurrently with or after any action, proceeding, settlement or other

means by which the Lender may from time to time elect to recover said

Indebtedness; that in no event shall the Lender be deemed to have elected any

remedy which precludes or impairs its ability to proceed against the Guarantor

hereunder; and that this Guaranty may be enforced prior to, concurrently with

or after any action against Borrower and shall survive any foreclosure,

trustee’s sale, or deed in lieu of foreclosure, or deed in lieu of trustee’s

sale of any personal or real property encumbered or to which any judgment or

other lien attaches to satisfy the Indebtedness.  In particular, this Guaranty shall survive as an independent

contractual obligation any public or trustee’s sale under a mortgage with power

of sale or deed of trust, despite any statutory provision which otherwise

prohibits any deficiency judgment, extinguishes the indebtedness, or otherwise

relieves the Borrower from further liability, the Guarantor hereby recognizing

and agreeing that its liability hereunder is not conditioned in any manner upon

the existence of such liability of the Borrower or the ability of the Guarantor

to obtain any redress against the Borrower through indemnification, subrogation

or otherwise.

 

 

54

 

 

19. 

Entire Agreement.  Guarantor

acknowledges that this Guaranty, including the terms of the immediately

preceding paragraph, has been specifically negotiated with the Lender, and that

the Guarantor has consulted with counsel of its choice in entering into these

presents.  Guarantor further

acknowledges that Lender has been induced by this Guaranty to make the loan

heretofore described to Borrower and has materially relied upon the continuing

effectiveness of this Guaranty in so doing. 

Guarantor confirms that it has not relied upon any representation

concerning the use, effect, purpose or enforceability of this Guaranty or any

other statement purportedly made on behalf of the Lender unless and to the

extent the same are evidenced in writing signed by Lender.

 

20. 

Assignment.  This Guaranty may be

assigned in whole or in part to any person by Lender and without notice to or

affecting Guarantor’s liability hereunder and Lender may, in connection with

any such assignment, participation or similar arrangement make all credit and

financial data furnished and to be furnished by Guarantor available to any such

existing or prospective assignee, participant or person.  This Guaranty shall, without further

reference or assignment, pass to, and may be relied upon and enforced by, any

successor, participant or assignee of Lender in and to the Indebtedness and any

other liabilities or obligations of Borrower to Lender.

 

21. 

Effect of Waivers.  Guarantor

warrants and agrees that each of the waivers set forth in this Guaranty are

made with Guarantor’s full knowledge of their significance and consequences,

and that under the circumstances, the waivers are reasonable and not contrary

to public policy or law.  If any of said

waivers are determined to be contrary to any applicable law or public policy,

such waivers shall be effective only to the maximum extent permitted by law.

 

22. 

Controlling Law; Venue.  This

Guaranty shall for all purposes be governed by and construed in accordance with

the laws of the State of Nevada, and in the event any action is brought to

enforce the provisions of this Guaranty, the venue of the same shall be in the

county where the Property is situated or Los Angeles County, California, at the

option of Lender.

 

23. 

Notices.  Any notice required or

permitted to be given under this Note shall be in writing and shall be served

personally, or delivered or sent by a national overnight delivery company or by

United States mail, registered or certified mail, postage prepaid, return

receipt requested, and addressed as follows:

 

                If

to Guarantor:                     PAUL-SON

GAMING SUPPLIES, INC.,
                                                                A NEVADA CORPORATION

                                                                1700

S. INDUSTRIAL WAY

                                                                LAS

VEGAS, CA  89102

                                                                Fax

No.

 

                If

to Lender:                          JACKSON

FEDERAL BANK

                                                                145

S. State College Boulevard, Suite 600

                                                                Brea,

CA  92821

 

 

55

 

 

                                                                Attention:  Loan Servicing

                                                                Fax

No.  (714) 990-7419

 

Any such notices shall be deemed delivered upon delivery or

refusal to accept delivery as indicated in writing by the person attempting to

make personal service, on the U.S. Postal Service return receipt or by similar

written advice from the overnight 

delivery company; provided, however, that if any such notice shall also

be sent by electronic transmission device, such as telex, telecopy, fax machine

or computer, such notice shall be deemed given at the time and on the date of

machine transmittal if the sending party receives a written send verification

on its machine and promptly sends a duplicate notice by personal service, mail

or overnight delivery in the manner described above.  Any party to whom notices are to be sent pursuant to this Note

may from time to time change its address for future communication hereunder by

giving notice in the manner prescribed herein to all other parties hereto,

provided that the address change shall not be effective until five (5) business

days after giving of notice of the address change.

 

 

 

                IN WITNESS

WHEREOF, this Guaranty has been duly executed by the undersigned as of the day

and year first above written.

 

This Agreement may be executed in counterparts, all of which shall

be deemed one and the same instrument and all of the signature pages of which

may be attached to a single counterpart hereof for recording and any other

purposes; however, the failure of refusal of any one or more persons to execute

this Agreement shall not render any provision hereof invalid or unenforceable

against any person who does execute the same.

 

 

GUARANTOR:

 

PAUL-SON GAMING CORPORATION, A NEVADA CORPORATION

 

 

 

	

  BY: 

  	

  /s/ Eric P. Endy

  
	

  ERIC P. ENDY, PRESIDENT

  

 

 

 

This Guaranty Must Be Acknowledged

 

 

                NOTICE:  THIS GUARANTY CONTAINS WAIVERS OF CERTAIN

DEFENSES GUARANTOR WOULD OTHERWISE BE ENTITLED TO ASSERT AGAINST LENDER UNDER

NEVADA LAW.  IT IS RECOMMENDED THAT,

PRIOR TO THE EXECUTION OF THIS GUARANTY, GUARANTOR CONSULT WITH AN ATTORNEY.

 

 

 

56

 

 

RECORDING REQUESTED BY

162-04-704-001, 162-04-609-009

 

AND WHEN RECORDED MAIL TO:

 

Jackson Federal Bank

145 South State College Blvd., Suite #600

Brea,  CA  92821

 

	

  Attention:

  	

   

  	

  LOAN SERVICING

  
	

  Loan No.

  	

   

  	

  7000904776

  
	

  Order No.

  	

   

  	

  01125894

  
	

   

  	

   

  	

   

  

 

SUBORDINATION AND

ATTORNMENT AGREEMENT

 

NOTICE:  THIS AGREEMENT

RESULTS IN YOUR LEASEHOLD ESTATE BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN

A SECURITY INTEREST IN THE PROPERTY CREATED BY SOME OTHER OR LATER INSTRUMENT.

 

                This Subordination

and Attornment Agreement (“Agreement”) dated as of FEBRURAY 22, 2002, is executed by PAUL-SON GAMING CORPORATION (collectively, “Tenant”), and PAUL-SON GAMING SUPPLIES, INC., A NEVADA CORPORATION

(“Borrower”), in favor of JACKSON FEDERAL BANK (“Bank”), and is made with

reference to the following facts:

 

                                Borrower

is the current “landlord” and Tenant is the current “tenant” under that certain

LEASE dated as of FEBRUARY 22, 2002

(the “Lease”) covering certain premises (the “Premises”) described therein

located at 1700 SOUTH INDUSTRIAL ROAD

in the City of LAS VEGAS, County

of CLARK, State of Nevada, and

more particularly described in Exhibit “A” attached hereto (the

“Property”).

 

A.                            Bank

has agreed to make a loan to Borrower in the original face amount of NINE

HUNDRED NINETY FIVE THOUSAND AND 00/1000 DOLLARS ($995,000.00) to be secured by

that certain Deed of Trust, Security Agreement, Assignment of Rents and Fixture

Filing of even date herewith executed by Borrower in favor of Bank (the “Deed

of Trust”) encumbering, among other things, the Property (the “Loan”), provided

that the Lease is subordinated to the lien of the Deed of Trust.

 

B.                            For

the purposes of completing the Loan, the parties hereto desire expressly to

subordinate the Lease to the lien of the Deed of Trust, it being a condition

precedent to Bank’s obligation to consummate the Loan that the lien of the Deed

of Trust be unconditionally and at all times prior and superior to the

leasehold interests and estate created by the Lease.

 

                C.            Tenant attorns to Bank or the

purchaser at any foreclosure or trustee’s sale of the Property.

 

 

57

 

 

                NOW

THEREFORE, in consideration of the mutual covenants contained herein and of

other good and valuable consideration, the receipt and sufficiency of which are

hereby acknowledged, the parties agree as follows:

 

1.                             Subordination.  Notwithstanding anything

to the contrary set forth in the Lease, the Lease and the leasehold estate

created thereby and all of Tenant’s rights thereunder, including, without

limitation, any purchase options, rights of first refusal or lien rights with

respect to any part of the Property, shall be and shall at all times remain

subject, subordinate and inferior to the Deed of Trust, the lien thereof and

all rights of Bank thereunder and to any and all renewals, modifications,

consolidations, replacements and extensions thereof.

 

2.                             Acknowledgment and Agreement by

Tenant.  Tenant, as the tenant under the Lease,

acknowledges and agrees for itself and its heirs, successors and assigns, as

follows:

 

(a)                           Bank

would not make the Loan without this Agreement.

 

(b)                           It

consents to and approves the Deed of Trust and the other agreements evidencing

or securing the Loan.

 

(c)                           Bank,

in making any disbursements to Borrower, is under no obligation or duty to

oversee or direct the application of the proceeds of such disbursements and

such proceeds may be used by Borrower for purposes other than improvement of

the Property.

 

(d)                           From

and after the date hereof, in the event of any act or omission by the landlord

which would give Tenant the right, either immediately or after the lapse of

time, to terminate the Lease or to claim a partial or total eviction, Tenant

will not exercise any such right until it has given written notice of such act

or omission to Bank and, further, until the same period of time as is given to

the landlord under the Lease to cure such act or omission shall have elapsed

following such notice to Bank and following the time when Bank shall have

become entitled under the Deed of Trust to cure the same.

 

(e)                           It

has notice that the Lease and the rent and all other sums due thereunder have

been assigned or are to be assigned to Bank as security for the Loan.  In the event Bank notifies Tenant of a

default under the Deed of Trust and demands that Tenant pay its rent and all

other sums due under the Lease to Bank, Tenant shall honor such demand and pay

its rent and all other sums due under the lease directly to Bank or as

otherwise required pursuant to such notice.

 

(f)                            It

shall send a copy of any notice or statement under the Lease to Bank at the

same time such notice or statement is sent to the landlord.

 

(g)                           It

has no right or option of any nature whatsoever, whether pursuant to the Lease or

otherwise, to purchase the Premises or the Property or any portion thereof or

any interest therein and, to the extent that Tenant has had, now has or

hereafter acquires any such right or option, the same is hereby waived and

released as against Bank.

 

 

58

 

3.                             Foreclosure and Sale.  In the event of

foreclosure of the Deed of Trust, upon a sale of the Property pursuant to the

trustee’s power of sale contained therein or upon a transfer of the Property by

conveyance in lieu of foreclosure, then:

 

(a)                           New

Lease.  Upon the written request of

Bank or any New Owner, Tenant shall execute a new lease of the Premises upon

the same terms and conditions as the Lease, which new lease shall cover any

unexpired term of the Lease existing prior to such foreclosure, trustee’s sale

or conveyance in lieu of foreclosure.

 

4.                             Acknowledgment and Agreement by

Borrower.  Borrower, as the landlord under the Lease

and the trustor under the Deed of Trust, acknowledges and agrees for itself and

its heirs, successors and assigns, as follows:

 

(a)                           This

Agreement shall not constitute a waiver by Bank of any of its rights under or

in any way release Borrower from its obligation to comply with the terms of the

Deed of Trust or any other agreement evidencing or securing the Loan.

 

(b)                           In

the event of a default under the Deed of Trust, Tenant may pay all rent and all

other sums due under the Lease to Bank as provided in this Agreement.

 

5.                             No Obligation of Bank.  Bank shall have no obligation

or incur any liability with respect to the erection or completion of the

Premises, the improvements in which the Premises are located or any other

improvements for Tenant’s use and occupancy, either at the commencement of the

term of the Lease, upon any renewal or extension thereof or upon any addition

of additional space.

 

6.                             Notice.  Any notice required or

permitted to be given hereunder shall be in writing and shall be served

personally, or delivered or sent by a national overnight delivery company or by

United States mail, registered or certified mail, postage prepaid, return

receipt requested, and addressed as follows:

 

	

  If to Tenant:

  	

   

  	

  PAUL-SON GAMING CORPORATION

  
	

   

  	

   

  	

  A NEVADA CORPORATION

  
	

   

  	

   

  	

  1700 SOUTH INDUSTRIAL ROAD

  
	

   

  	

   

  	

  LAS VEGAS, NEVADA 89102

  
	

   

  	

   

  	

  Fax No.

  
	

   

  	

   

  	

   

  
	

  If to Borrower:

  	

   

  	

  PAUL-SON GAMING SUPPLIES, INC.

  
	

   

  	

   

  	

  A NEVADA CORPORATION

  
	

   

  	

   

  	

  1700 SOUTH INDUSTRIAL ROAD

  
	

   

  	

   

  	

  LAS VEGAS, NEVADA 89102

  
	

   

  	

   

  	

  Fax No.

  
	

   

  	

   

  	

   

  
	

  If to Bank:

  	

   

  	

  Jackson Federal Bank

  
	

   

  	

   

  	

  145 South State College Blvd., Suite #600

  
	

   

  	

   

  	

  Brea, California  92821

  
	

   

  	

   

  	

  Attention:  Loan

  Servicing

  
	

   

  	

   

  	

  Fax No. (714) 990-7319

  

 

 

59

 

Any such notices shall be deemed delivered upon delivery or

refusal to accept delivery as indicated in writing by the person attempting to

make personal service, on the U.S. Postal Service return receipt or by similar

written advice from the overnight delivery company; provided, however, that if

any such notice shall also be sent by electronic transmission device, such as

telex, telecopy, fax machine or computer, such notice shall be deemed given at

the time and on the date of machine transmittal if the sending party receives a

written send verification on its machine and promptly sends a duplicate notice

by personal service, mail or overnight delivery in the manner described

above.  Any party to whom notices are to

be sent pursuant hereto may from time to time change its address for future

communication hereunder by giving notice in the manner prescribed herein to all

other parties hereto, provided that the address change shall not be effective

until five (5) business days after giving of notice of the address change.

 

(a)                           Miscellaneous.

 

(i)                            This

Agreement supersedes any inconsistent provision of the Lease.

 

(ii)                           Nothing

contained in this Agreement shall be construed to derogate from or in any way

impair or effect the lien and charge or modify any provision of the Deed of

Trust.

 

(iii)                          Bank

shall have no obligations nor incur any liability to Tenant or Borrower with

respect to any warranties of any nature whatsoever regarding the Property,

whether pursuant to the Lease or otherwise, including, without limitation, any

warranties respecting permitted use, compliance with zoning, Borrower’s title

or authority, habitability, fitness for purposes or possession.

 

(iv)                          In

the event Bank shall acquire title to the Premises or the Property, Bank shall

have no obligation, nor incur any liability, beyond Bank’s then equity

interest, if any, in the Premises. 

Accordingly, Tenant agrees to look exclusively to such equity interest

of Bank, if any, in the Premises for the payment and discharge of any

obligations imposed upon Bank at law, hereunder or under the Lease and hereby

releases and relieves Bank from all other or further obligations.

 

(v)                           This

Agreement shall inure to the benefit of the parties hereto, their respective

successors and permitted assigns under the Lease and the Deed of Trust;

provided, however, that from and after any assignment or transfer of Bank’s

interest in the Loan, all of its obligations and liabilities, if any, at law,

hereunder or under the Lease shall be the responsibility of such assignee or

transferee.

 

(vi)                          Each

individual executing this Agreement directly or indirectly on behalf of Tenant

(a “Constituent Party”) hereby certifies to Bank that all Constituent Parties

acting together have full power and authority to execute this Agreement on

behalf of Tenant and that such execution is binding upon it.  Each Constituent Party further certifies to

Bank that it may, without

 

 

60

 

further or independent inquiry, assume and rely at all times prior

to receipt of notice from any Constituent Party to the contrary that all

Constituent Parties acting together shall continue to have full power and

authority to bind Tenant by their acts and deeds.

 

(vii)                         This

Agreement shall be governed by and construed in accordance with the laws of the

State of Nevada.

 

 

                IN WITNESS

WHEREOF, the parties have executed this Subordination and Attornment Agreement

as of the date first set forth above.

 

 

 

NOTICE:  THIS SUBORDINATION

AND ATTORNMENT AGREEMENT CONTAINS PROVISIONS WHICH ALLOW THE PERSON OBLIGATED

ON THE LEASE TO OBTAIN A LOAN, A PORTION OF WHICH MAY BE EXPENDED FOR OTHER

PURPOSES OTHER THAN IMPROVEMENT OF THE PROPERTY.

 

IT IS RECOMMENDED THAT, PRIOR TO THE EXECUTION OF THIS

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT, THE PARTIES CONSULT

WITH THEIR ATTORNEYS WITH RESPECT THERETO.

 

 

	

  BANK:

  	

   

  	

   

  	

  JACKSON FEDERAL BANK,

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  By: 

  	

  /s/ Gary Terrazas

  
	

   

  	

   

  	

   

  	

  [Print Name]

  	

  Gary Terrazas

  
	

   

  	

   

  	

   

  	

  [Print Title]

  	

  Senior Vice President

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  TENANT:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  a

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  By: 

  	

  /s/ Eric P. Endy

  
	

   

  	

   

  	

   

  	

  [Print Name]

  	

  Eric P. Endy

  
	

   

  	

   

  	

   

  	

  [Print Title]

  	

  President, Secretary

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  BORROWER:

  	

   

  	

   

  	

  /s/ Eric P. Endy

  
	

   

  	

   

  	

   

  	

  a

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

   

  	

  [Print Name]

  	

  Eric P. Endy

  
	

   

  	

   

  	

   

  	

  [Print Title]

  	

  President, Secretary

  
							

 

 

61

 

	

  STATE OF NEVADA

  	

  }

  	

   

  
	

   

  	

  }

  	

  ss.

  
	

  COUNTY OF

  	

  Clark

  	

  }

  	

   

  
				

 

                                On

February 28, 2002, before me, the undersigned, a Notary Public in and for said

State, personally appeared                 Eric

P. Endy, President of Paulson                                                                                                            Gaming

Inc.                                                                            personally known to me (or

proved to me on the basis of satisfactory evidence) to be the person whose name

is subscribed to the within instrument and acknowledged that he/she executed

the same in his/her authorized capacity, and that by his/her signature on the

instrument the person, or the entity upon behalf of which the person acted,

executed the same.

 

	

  NOTARY PUBLIC

  	

  WITNESS my hand and official seal.

  
	

  STATE OF NEVADA

  	

   

  
	

  County of Clark

  	

  /s/ Tina D. Taylor

  
	

  TINA D. TAYLOR

  	

  Notary Public in and for said County and State

  
	

  Appt. No. 92-4008-1

  	

   

  

 

 

	

  STATE OF California

  	

  }

  	

   

  
	

   

  	

  }

  	

  ss.

  
	

  COUNTY OF

  	

  Orange

  	

  }

  	

   

  
				

 

                                On

February 28, 2002, before me, the undersigned, a Notary Public in and for said

State, personally appeared Gary Terrazas, Senior Vice President                                                                                                                                                         ,

personally known to me to be the person whose name is subscribed to the within

instrument and acknowledged that he/she executed the same in his/her authorized

capacity, and that by his/her signature on the instrument the person, or the

entity upon behalf of which the person acted, executed the same.

 

	

  CATALINA SERRANO

  	

  WITNESS my hand and official seal.

  
	

  Commission #1327870

  	

   

  
	

  Notary Public — California

  	

  /s/ Catalina Serrano

  
	

  Orange County

  	

  Notary Public in and for said County and State

  
	

  My Comm. Expires Nov 2, 2005

  	

   

  

 

 

	

  STATE OF NEVADA

  	

  }

  	

   

  
	

   

  	

  }

  	

  ss.

  
	

  COUNTY OF

  	

   

  	

  }

  	

   

  
				

 

                                On

                                          ,

20          , before me, the undersigned,

a Notary Public in and for said State, personally appeared                                                                                                                                                                                ,

personally known to

 

 

62

 

me (or proved to me on the basis of satisfactory evidence) to be

the person whose name is subscribed to the within instrument and acknowledged

that he/she executed the same in his/her authorized capacity, and that by

his/her signature on the instrument the person, or the entity upon behalf of

which the person acted, executed the same.

 

	

   

  	

   

  	

   

  	

   

  	

   

  	

  WITNESS my hand and official seal.

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

  Notary Public in and for said County and State

  

 

 

 

63

 

 

LEGAL DESCRIPTION

Exhibit “A”

 

That portion of the South Half (S 1⁄2) of the Northeast Quarter (NE

1⁄4) and a portion of the North Half (N 1⁄2) of the Southeast Quarter (SE 1⁄4) of

Section 4, Township 21, Range 61 East, M.D.M., described as follows:

 

Parcel Two (2) as shown by map thereof in File 44 of Parcel Maps,

Page 15, in the Office of the County Recorder of Clark County, Nevada, recorded

August 06, 1984 in Book 1968 as Document No. 1927769, Official Records.

 

ESCROW NUMBER:                         01125894-029-TDS

 

PROPERTY ADDRESS:                    1700 S.

Industrial

 

                                                                Las

Vegas, NV

A.P.N.:                                                   162-04-704-001      162-04-609-009

 

 

	

  CLARK COUNTY, NEVADA

  
	

  JUDITH A. BANDEVER, RECORDER

  
	

  RECORDED AT REQUEST OF:

  
	

  UNITED TITLE OF NEVADA

  
	

  03-06-2002   08:01

  	

   

  	

  JBR   7

  
	

  BOOK: 20020306

  	

   

  	

  INST:  00303

  
	

  FEE:   20.00 

  	

   

  	

  RPTT:   .00

  
	

  SD AGREEMENT

  	

   

  	

   

  
				

 

 

 

64

 

RECORDING REQUESTED BY:

 

                162-04-704-001,

162-04-609-009

 

AND WHEN RECORDED MAIL TO:

 

	

  Jackson Federal Bank

  	

   

  	

  WHEN RECORDED MAIL TO:

  
	

  145 S. State College Boulevard, Suite 200

  	

   

  	

   

  
	

  Brea, California 

  92821

  	

   

  	

  Paulson Gaming Inc.,

  
	

  Attention: 

  Catalina Serrano

  	

   

  	

  1700 S. Industrial Road

  
	

  Loan No.: 

  7000904776

  	

   

  	

  Las Vegas, Nevada 

  89102

  
	

  Order No. 0115894

  	

   

  	

   

  

 

 

 

ASSIGNMENT

OF LEASES AND RENTS

 

THIS ASSIGNMENT OF LEASES AND RENTS (“Assignment”) is

made as of February 22, 2002 by Paul-Son Gaming Supplies, Inc., a Nevada

corporation (“Assignor”) in favor of Jackson Federal Bank (“Assignee”), with

reference to the following facts:

 

RECITALS

 

A.            Assignee

has agreed to make a loan to Assignor in the amount of Nine Hundred Ninety Five

Thousand and 00/100 Dollars (995,000.00) (the “Loan”) to be evidenced by that

certain Promissory Note Secured by Deed of Trust of even date herewith executed

by Assignor in favor of Assignee (the “Note”) and secured by, among other

things, that certain Deed of Trust, Security Agreement, Assignment of Rents and

Fixture Filing of even date herewith executed by Assignor in favor of Assignee

(the “Deed of Trust”).  This Assignment,

the Note, the Deed of Trust and all other documents and instruments (including

any hazardous waste indemnifications and payment guaranties) now of hereafter

securing repayment of or otherwise evidencing or relating to the Loan are

sometimes referred to herein collectively as the “loan Documents.”

 

B.            The

Deed of Trust encumbers that certain real property in the City of Las Vegas,

County of Clark, State of Nevada, as more particularly described on Exhibit “A”

attached hereto and made a part hereof, together with the improvements now

located or hereafter constructed thereon, and the easements, rights and

appurtenances thereunto belonging, which estate, together with all property now

of hereafter encumbered by the lien of the Deed of Trust or any other Loan

Document, are referred herein collectively as the “Property”.

 

C.            Certain

portions of the Property are currently and/or may in the future from time to

time become subject to one or more unrecorded leases and other occupancy

agreements, including if applicable and without limitation, rental agreements

for mobilehome or trailer sites, and Assignor intends to enter into further

such agreements from time to time in the future, all of which agreements

together with all guaranties, amendments, extensions and renewals thereof

currently or hereafter existing shall hereinafter be referred to as the

“Leases.”

 

D.            Assignee

has required this Assignment as a condition to and as additional consideration

for making the Loan to Assignor and Assignor, in order to induce Assignee to

make the Loan, has agreed to execute and deliver this Assignment.

 

NOW THEREFORE, in consideration of Assignee’s making

the Loan and for other good and

 

 

65

 

valuable consideration, the receipt and sufficiency of which are hereby

acknowledged, Assignor hereby agrees as follows:

 

1.             Assignment of Leases and Rents.  Assignor hereby unconditionally and

absolutely bargains, sells, transfers, assigns, conveys, sets over and delivers

unto Assignee the Leases, together with all rents, profits, revenues,

reimbursements, indemnifications, damages, payments under guaranties, and all

other payments or income which are now or may hereafter become due thereunder

or otherwise on account of any use of occupancy of the Property (collectively,

“Rents”) from or on behalf of any tenant of any part of the Property, its

subtenants, assignees or guarantors or any other person (collectively,

“Tenants”).  This assignment is absolute

and unconditional, Assignor intending hereby to establish a complete and

present transfer of all Leases and all Rents unto Assignee, with the right, but

without the obligation, to collect all Rents which may become due after the

date hereof.

 

2.  Assignor’s Covenants.  Assignor hereby represents and warrants to

Assignee:

 

                (a)           That Assignor has previously

delivered to Assignee true and correct copies of all Leases in effect as of the

date hereof and that Assignor shall hereafter deliver to Assignee true and

correct copies of Leases within fifteen (15) days of entering into the same.

 

                (b)           That Assignor shall deposit with

Assignee, immediately upon demand, such of the Leases as may from time to time

be designated by Assignee.

 

                (c)           That Assignor shall perform all of

the lessor’s obligations under the Leases of accordance with their terms.

 

                (d)           That Assignor shall deliver to

Assignee, promptly on receipt thereof, copies of any and all demands, claims

and notices of default received or given by it or any other party under any

Lease.

 

3.             Approval of Leases.  Assignor agrees that all Leases entered into

after the date hereof shall be subject to Assignee’s prior written approval;

provided, however, that from and after such time as Assignee approves a

standard, preprinted from of lease submitted by Assignor, Assignor may enter

into subsequent Leases without such consent so long as each such Lease uses

such form without material or extensive modification or addition and, further

(a) the rentals provided for therein are not less than the pro forma rents

required by Assignee or are commercial reasonable in the absence of any such

requirement by Assignee; (b) the term of such Leases (including extension

options) to not exceed one (1) year; (c) the permitted uses of the leased

premises do not violate any law, restrictive covenant, requirement of any other

lease, lien or contract; and (d) the Tenant is not permitted to violate any

term of the Loan Documents.  Assignee’s

approval of any Lease or form of lease shall not be construed as a modification

(as used herein and in the other Loan Documents, the waiver of any right by

Assignor to enforce a Lease provision shall be deemed a “modification”) of any

requirement or provision of any Loan Document, all of which shall remain in all

events binding upon Assignor and any other person whose interest in the

Property is or becomes subject to the Deed of Trust.  Without limiting the generality of the foregoing, nothing herein

shall be construed to permit Assignor to, and Assignor hereby expressly agrees

not to enter any Lease which so purports to grant any option of right of first

refusal to purpose any portion of the Property, subordinate any Lease to any

encumbrance not held by Assignee or otherwise adversely affect the value or

marketability or financeability of Assignor’s interest in the Property or any

Tenant’s obligations to improve, use, maintain, insure or operate the

same.  Assignor further agrees that it

shall not release any Tenant, modify, cancel or terminate any Lease or accept a

surrender thereof or make any further transfers or assignments, or suffer the

same, which would result in, directly or indirectly, a merger of the estates

and rights of, or termination or dimunition of the obligations of, any Tenant.

 

 

66

 

4.             Assignee’s Authority to Collect Rents.  Assignor hereby appoints Assignee the true

and lawful attorney of Assignor with full power of substitution and with power

for it and in its name, place and stead, to demand, collect, receipt and give

complete acquittances for all Rents and, at its discretion, to file any claim

or take any other action or proceeding and make any settlement of any claims,

either in its own name or in the name of Assignor or otherwise, which Assignee

may reasonably deem necessary or desirable in order to collect and enforce the

payment of any Rent.  Assignor hereby

expressly authorized and directs all Tenants to pay all Rents to Assignee, or

such nominee as Assignee may designate in writing to such Tenant and expressly

relives all such Tenants of any duty, liability or obligation to Assignor in

respect of all payments so made.

 

5.             Assignee’s Enforcement of Leases.  Assignee is hereby vested with full power to

use all measures, legal and equitable, deemed by it to be necessary of property

to enforce this Assignment and all of the lessor’s rights under the Leases and

to collect the Rents, including, without limitation, the right, in person or by

agent, employee or court-appointed receiver, to enter upon and take possession

of the Property to the extent necessary to effect the cure of any default on

the part of Assignor as lessor in any of the Leases or upon Assignor’s default

under any Loan Document.  Assignor

hereby grants to Assignee full power and authority to exercise all rights,

privileges and powers herein granted or granted to the lessor under any Lease

at any and all time hereafter, without notice to Assignor, including the right

to operate and manage the Property, make any amend any Leases and perform any

other acts which are reasonably necessary to protect the value of the Property

of the Leases of the property or enforceability of any security for the Note.

 

6.             Assignee’s Liability Under the Leases.  The Assignee shall be under no obligation to

enforce any of the rights of claims assigned to it hereunder or to perform or

carry out any of the obligations of the lessor under any of the Leases and

shall not by accepting this Assignment or performing any act permitted

hereunder be deemed to assume any liability in connection with or arising or

related to the covenants and agreements of Assignor under the Leases.  Assignor covenants and agrees that it will

faithfully perform all of the obligations imposed under all Leases and hereby

agrees to indemnify Assignee and to hold it harmless from and against any

liability, loss or damage (including attorneys’ fees) incurred by it under the

Leases or by reason of this Assignment or any act Assignee may take hereunder

or by reason of this Assignment, and from any and all claims and demands

whatsoever which may be asserted against Assignee by reason of any alleged

obligations or undertakings on its part to perform or discharge any of the

terms, covenants of agreements contained in any of the Leases, except those

resulting solely from the gross negligence of willful misconduct of Assignee

after taking possession of the Property. 

Assignor acknowledges and agrees that this Assignment shall not operate

to place responsibility for the control, care, management or repair of the

Property upon Assignee nor shall it operate to make Assignee liability for the

carrying out of any of the terms and conditions of any of the Leases, or for

any waste of the Property by any Tenant or by any other person, or for any

dangerous or defective condition of the Property or for any negligence in the

management, upkeep, repaid or control thereof resulting in loss or injury or

death to any Tenant, invitee, licensee, employee or stranger, except as may

result solely from the gross negligence or willful misconduct of Assignee after

taking possession of the Property hereunder.

 

7.             Application of Rents.  Assignee may, in its sole discretion, apply

any Rents which it collects against any sums which are then due under the Note

or any other Loan Document or use such Rents to discharge any amount due from

Assignor which related to any Loan Document or the Property, including, without

limitation, Assignee’s costs (including attorneys’ fees) of exercising any

remedy under the Loan Documents, all costs of managing and operating the

Property, the payment of taxes, special assessments, insurance premiums and

damage claims with respect to the Property, all costs of repairing, rebuilding

and restoring the improvements on the Property or of making the Property

rentable and any

 

 

67

 

principal and interest payments due from Assignor to Assignee under the

Note, all in such order as Assignee may determine.  Any amounts collected hereunder by Assignee in excess of such

amounts shall be paid to Assignor without interest.

 

8.             Bankruptcy of Tenants.  This Assignment shall include all of the

rights which otherwise would inure to the benefit of Assignor in the vent any

Tenant files or has filed against it any petition in bankruptcy or for reorganization,

or undertakes or is subject to any similar action, including, without

limitation, the right to seek “adequate protection” of its interests, to compel

rejection of any such Lease, and to seek such claims and awards any may be

sought or granted in connection with the reject of any such Lease.  Unless otherwise consented to by Assignee in

writing, Assignee’s exercise of any of the rights provided in this paragraph

shall preclude Assignor from the pursuit and benefit thereof without any

further action or proceeding of any nature.

 

9.             Collection Expenses.  Assignor agrees to reimburse Assignee for

all costs, expenses and fees (including, without limitation, reasonable

attorneys’ fees) that Assignee incurs in connection with the enforcement of any

obligation contained in this Assignment or the collection of any Rents assigned

herein, with or without litigation, including without limitation any costs,

expenses and fees incurred (a) in making demands for and collecting any Rents;

(b) in any action against Assignor or any Tenant arising out of a breach by

Assignor of its obligations under this Assignment or by any Tenant under the

terms of its Lease; (c) on appeal of any judgment or other decision of a court

or administrative body in any such action; (d) in any petition for review of

any judgment or other decision of a court of administrative body in any such

action (d) in any arbitration or mediation; (f) in any action contesting or

seeking to restrain, enjoin, stay or postpone the exercise of any remedy in

which Assignee prevails; (g) in any bankruptcy, probate, receivership or other

proceeding involving Assignor; and (h) in connection with all negotiations,

documentation and other actions relating to any work-out, compromise,

settlement or satisfaction relating to this Assignment.  All such costs, expenses and fees shall be

due and payable upon demand, shall bear interest from the date incurred through

the date of collection at the Default Rate stated in the Note and shall be

secured by the Deed of Trust and other Loan Documents.

 

10.           Notices.  Any notice required or permitted to be given under this

Assignment shall be in writing and shall be given in the manner set forth in

the Deed of Trust.

 

11.           Release of Assignment.  Upon payment in full of all amounts due

under the Loan Documents, this Assignment shall become null and void;

otherwise, it shall remain in full force and effect as herein provided and,

with the covenants, warranties and power of attorney herein contained, shall

inure to the benefit of Assignee and any subsequent holder of the Note, and

shall be binding upon Assignor, its heirs, legal representatives, successors

and assigns, and any subsequent owner of the Property.  In the event any part of the Property is

released from the Deed of Trust, the same shall also be thereby release from

the provisions of this Assignment, unless otherwise stated in the releasing

document, without further action on the part of the Assignee; provided,

however, such releases shall in no way affect the terms, covenants and

conditions hereof with respect to those portions of the Property not so

release.

 

12.           Assignor’s License to Collect Rents.  This Assignment is absolute and effective

upon execution by Assignor.  Assignee

grants to Assignor a revocable license to collect Rents under the Leases to the

extent attributable to one (1) month of the unexpired Lease term unless and

until Assignor is in default under the Loan Documents beyond the expiration of

any applicable cure period specifically provided for therein.  All such Rents shall be collected and held

in trust for Assignee, but until this license is revoked, shall be used to pay

the reasonable expenses of owning, maintaining, repairing, operating and

renting the Property.  Assignee shall

also have the right to revoke such license and collect Rents under any Leases

if and so long as Assignee reasonably determines that a default is likely to

occur under any of the Loan Documents and such default will result in any

Leases of rental obligations becoming modified,

 

 

68

 

released, comprised or impaired or any rentals becoming improperly

collected, waived, attached or embezzled.

 

IN WITNESS WHEREOF, Assignor has executed this

Assignment on the date first written above.

 

This Agreement may be executed in counterparts, all of

which shall be deemed one and the same instrument and all of the signature

pages of which may be attached to a single counterpart hereof for recording and

any other purposes; however, the failure or refusal of any one or more persons

to execute this Agreement shall not render any provision hereof invalid or

unenforceable against any person who does execute the same.

 

	

  ASSIGNOR: 

  

  
	

   

  
	

  PAUL-SON GAMING SUPPLIES, INC., A NEVADA CORPORAITON

  
	

   

  
	

   

  
	

   

  
	

  BY:

  	

  /s/ Eric P. Endy

  	 

	

   

  	

  ERIC P. ENDY, PRESIDENT

  	 

 

	

  STATE OF NEVADA

  
	

  }ss.

  
	

  COUNTY OF CLARK

  

 

On February 28, 2002, before me, Tina D. Taylor,

personally appeared Eric P. Endy. President of Paul-Son Gaming personally known

to be (or proved to me on the basis of satisfactory evidence) to be the

person(s) whose name(s) is/are subscribed to the within instrument and

acknowledged to me that he/she/they executed the same in his/her/their

authorized capacity(ies), and that by his/her/their signature(s) on the

instrument the person(s), or the entity upon behalf of which the person(s)

acted, executed the instrument.

 

WITNESS my hand and official seal.

 

	

  Signature:

  	

  /s/ Tina D. Taylor

  

 

 

NOTARY PUBLIC

STATE OF NEVADA

County of Clark

TINA D. TAYLOR

Appt. No. 92-4008-1

My Appt. Expires July 5, 2004

 

 

69

 

LOAN NO.: 7000904776

EXHIBIT “A”

 

LEGAL DESCRIPTION

 

THE LAND REFERRED TO HEREIN IS SITUATED IN THE COUNTY

OF CLARK, STATE OF NEVADA, AND DESCRIBED AS FOLLOWS:

 

That portion of the South

Half (S 1/2) of the Northeast Quarter (NE 1/4) and a portion of the North Half

(N 1/2) of the Southeast Quarter (SE 1/4) of Section 4, Township 21, Range 61

East, M.D.M., described as follows:

 

Parcel Two (2) as shown by map thereof in File 44

Parcel Maps, Page 15, in the Office of the County Recorder of Clark County,

Nevada, recorded August 6, 1984 in Book 1968 as Document No. 1927769, Official

Records.

 

 

	

  COMMONLY KNOWN AS:

  	

   

  	

  1700 SOUTH INDUSTRIAL ROAD, LAS VEGAS, NEVADA 89102

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  A.P.N.: 

  162-04-704-001    162-04-609-009

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  INITIALS::  

  EPE

  	

   

  	

   

  

 

 

 

	

  CLARK COUNTY, NEVADA

  
	

  JUDITH A. VANDEVER, RECORDER

  
	

  RECORDED AT REQUEST OF:

  
	

   

  
	

  UNITED TITLE OF NEVADA

  
	

   

  
	

  03-06-2002   08:01

  	

   

  	

  JBR                      

  6

  
	

  BOOK: 20020306

  	

   

  	

  INST:  00302

  
	

  FEE:   19.00 

  	

   

  	

  RPTT:   .00

  
	

  AS LEASE

  	

   

  	

   

  
	

   

  
				

 

 

 

70EXHIBIT 10

EXHIBIT 10.3

 

SECOND AMENDMENT TO

SECOND AMENDED AND RESTATED AGREEMENT

OF LIMITED PARTNERSHIP OF

DUKE-WEEKS REALTY LIMITED PARTNERSHIP

 

The

undersigned, as the General Partner of Duke-Weeks Realty Limited Partnership

(the “Partnership”), hereby amends the Partnership’s Second Amended and

Restated Agreement of Limited Partnership, as heretofore amended (the

“Partnership Agreement”), pursuant to Sections 9.05(a)(i) and (iv) of the

Partnership Agreement, as follows:

 

1.             Section 1.01 of the Partnership Agreement is amended to

read as follows:

 

Section 1.01.          Name.     The

name of the Partnership is Duke Realty Limited Partnership.

 

2.             The definition of “General Partner” in Section 1.04 of

the Partnership Agreement is amended to read as follows:

 

“General

Partner” means Duke Realty Corporation, an Indiana corporation.

 

3.             All other references in the Partnership Agreement to

“Duke-Weeks Realty Limited Partnership” are amended to “Duke Realty Limited

Partnership,” and all other references to “Duke-Weeks Realty Corporation” are

amended to “Duke Realty Corporation.”

 

In all other respects, the

Partnership Agreement shall continue in full force and effect as amended

hereby.  Any capitalized terms used in

this Amendment and not defined herein have the meanings given to them in the

Partnership Agreement.

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