Document:

ex10-12.htm

    
Exhibit
10.12

       

       

      LOAN
AGREEMENT

       

       

      THIS
LOAN AGREEMENT (the “Loan
Agreement”) is made as of November 21, 2007 by and between CONSOLIDATED
MORTGAGE, LLC, a Nevada limited liability company (“Borrower”),
whose address is 1291 Galleria Drive, Henderson, Nevada 89014 and DESERT
CAPITAL TRS, INC., a Delaware corporation (“Lender”),
whose address is 1291 Galleria Drive, Henderson, Nevada
89014.

       

      RECITALS:

       

      WHEREAS,
concurrently herewith, pursuant to that certain Purchase Agreement dated as of
November 21, 2007 among Desert Capital REIT, Inc., a Maryland corporation
(“Parent”),
Lender and Sandstone Equity Investors, LLC, a Delaware limited liability company
(“Buyer”)
(such Purchase Agreement as the same may be amended or otherwise modified from
time to time is hereinafter referred to as the “Purchase
Agreement”), Buyer acquired all of the issued and outstanding membership
units of Borrower from Lender;

       

      WHEREAS,
pursuant to the Purchase Agreement, Lender agreed to finance Fifteen Million
Five Hundred Thousand Dollars ($15,500,000) of the purchase price to be paid by
Buyer to Lender in connection with such acquisition (the “Loan”);
and

       

      WHEREAS,
Lender is willing to finance a portion of the purchase price through the Loan to
Borrower upon the terms and conditions of this Loan Agreement and the other Loan
Documents (hereinafter defined).

       

      NOW,
THEREFORE, in consideration of the premises and mutual covenants hereinafter
contained, the parties hereto hereby agree as follows:

       

      AGREEMENTS:

       

      1. Loan.  Lender
hereby agrees to finance a portion of the purchase price through the Loan to
Borrower in the original principal amount of Fifteen Million Five Hundred
Thousand Dollars ($15,500,000), subject to the terms and conditions set forth in
this Loan Agreement and the other agreements, instruments and documents
evidencing, securing, governing, guaranteeing and/or pertaining to the Loan
(collectively, together with the Loan Agreement, referred to hereinafter as the
“Loan
Documents”).

       

      2. Promissory
Note.  The Loan shall be evidenced by a promissory note (as the
same may be amended, modified, substituted, renewed, extended and increased, the
“Note”)
duly executed by Borrower and payable to the order of Lender, in form and
substance reasonably acceptable to Lender.  Interest on the Note shall
accrue at the rate set forth therein.  The principal of and interest
on the Note shall be due and payable in accordance with the terms and conditions
set forth in the Note and in this Loan Agreement.

       

      3. Collateral.  As
collateral and security for the indebtedness evidenced by the Note and any and
all other indebtedness or obligations from time to time owing by Borrower to
Lender, Buyer shall pledge and grant to Lender, its successors and assigns, a
first and prior lien on and security interest in and to the property described
below, together with any and all PRODUCTS AND PROCEEDS thereof (the “Collateral”):

       

      All
membership units of Borrower, now or hereafter issued and outstanding, together
with any and all books of account and other records relating in any way to the
foregoing.

       

      The term
“Collateral”
shall also include all records and data relating to the foregoing (including,
without limitation, any computer software on which such records and data may be
located).  Buyer shall execute such pledge agreements, security
agreements, assignments and other agreements and documents as Lender shall deem
appropriate and otherwise require from time to time to more fully create and
perfect Lender’s lien and security interests in the Collateral.

       

      4. Representations
and Warranties.  Borrower hereby represents and warrants to
Lender as follows:

       

      (a) Existence.  Borrower
is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Nevada and all other states where it is
doing business, and has all requisite power and authority to execute and deliver
the Loan Documents to which it is a party.

       

      (b) Binding
Obligations.  The execution, delivery, and performance of this
Loan Agreement and all of the other Loan Documents by Borrower have been duly
authorized by all necessary action by Borrower, and constitute legal, valid and
binding obligations of Borrower, enforceable in accordance with their respective
terms, except as limited by bankruptcy, insolvency or similar laws of general
application relating to the enforcement of creditors’ rights and except to the
extent specific remedies may generally be limited by equitable
principles.

       

      (c) No Consent.  The
execution, delivery and performance of this Loan Agreement and the other Loan
Documents, and the consummation of the transactions contemplated hereby and
thereby, do not (i) conflict with, result in a violation of, or constitute a
default under (A) any provision of its operating agreement or any agreement or
other instrument binding upon Borrower, or (B) any law, governmental regulation,
court decree or order applicable to Borrower, or (ii) require the consent,
approval or authorization of any third party.

       

      (d) Financial
Condition.  Each financial statement of Borrower supplied to
the Lender truly discloses and fairly presents Borrower’s financial condition as
of the date of each such statement.  There has been no material
adverse change in such financial condition or results of operations of Borrower
subsequent to the date of the most recent financial statement supplied to
Lender.

       

      (e) Litigation.  Except
as disclosed on Schedule
4(e) attached hereto, there are no actions, suits or proceedings, pending
or, to the knowledge of Borrower, threatened against or affecting Borrower or
the properties of Borrower, before any court or governmental department,
commission or board, which, if determined adversely to Borrower, would have a
Material Adverse Effect (hereinafter defined).  For the purposes
hereof, “Material Adverse Effect” means a material adverse effect on (i) the
business, operations, property, condition (financial or otherwise) or prospects
of Borrower, (ii) the ability of Borrower to perform its obligations under this
Loan Agreement, any of the other Loan Documents or Purchase Agreement, or (iii)
the validity or enforceability of this Loan Agreement, any of the other Loan
Documents, the Purchase Agreement or the rights or remedies of Lender hereunder
or thereunder.

       

      (f) Taxes; Governmental Charges.  Borrower
has filed all federal, state and local tax reports and returns required by any
law or regulation to be filed by it and has either duly paid all taxes, duties
and charges indicated due on the basis of such returns and reports, or made
adequate provision for the payment thereof, and the assessment of any material
amount of additional taxes in excess of those paid and reported is not
reasonably expected.  Borrower knows of no pending investigation of
Borrower by any taxing authority or of any pending but unassessed tax liability
of Borrower other than taxes that are not yet due or that are being contested in
good faith and for which adequate reserves have been established in accordance
with generally accepted accounting principles consistently
applied.

       

      (g)           Disclosure.                                No
statement, information, report, representation or warranty made by Borrower in
this Loan Agreement or in any other Loan Document or furnished to Lender in
connection with this Agreement or any transaction contemplated hereby contains
any untrue statement of a material fact or omits to state any material fact
necessary to make the statements herein or therein not
misleading.  There is no fact known to Borrower (other than general
economic conditions) that has a Material Adverse Effect or that could reasonably
be expected to have a Material Adverse Effect.

       

      (h)           Compliance
with
Laws.                                                      The
Borrower is not in violation in any material respect of any law, rule,
regulation, order or decree of any governmental authority or
arbitrator.

       

      (i)           Agreements.                                Borrower
is not in default in any respect in the performance, observance or fulfillment
or any of the obligations, covenants or conditions contained in any agreement or
instrument, except where such default or violation could not individually, or in
the aggregate, reasonably be expected to have a Material Adverse
Effect.

       

      5. Conditions
Precedent to Lender’s Obligation.  Lender’s obligation to enter
into this Loan Agreement and the other Loan Documents shall be subject to the
conditions precedent that, as of the date hereof and after giving effect thereto
(i) all representations and warranties made to Lender in this Loan Agreement and
the other Loan Documents shall be true and correct, as of the date hereof, (ii)
no material adverse change in the financial condition of Borrower since the
effective date of the most recent financial statements furnished to Lender by
Borrower shall have occurred and be continuing, (iii) no event has occurred and
is continuing, or would result from the Loan, which with notice or lapse of
time, or both, would constitute an Event of Default (as hereinafter defined),
and (iv) Lender’s receipt of all Loan Documents appropriately executed by
Borrower and all other proper parties.

       

      6. Affirmative
Covenants.  Until the Note and all other obligations and
liabilities of Borrower under this Loan Agreement, the other Loan Documents and
the Purchase Agreement are indefeasibly paid and finally satisfied in full,
Borrower agrees and covenants that it will, unless Lender shall otherwise
consent in writing:

       

      (a) Accounts
and Records.  Maintain its books and records in accordance with
generally accepted accounting principles consistently
applied.

       

      (b) Right
of Inspection.  Permit Lender to visit its properties and
installations and to examine, audit and make and take away copies or
reproductions of Borrower’s books and records, at all reasonable
times.

       

      (c) Right
to Additional Information.  Furnish Lender with such additional
information and statements, lists of assets and liabilities, tax returns, and
other reports with respect to Borrower’s financial condition and business
operations as Lender may request from time to time.

       

      (d) Compliance
with Laws.  Conduct its business in an orderly and efficient
manner consistent with good business practices, and perform and comply with all
statutes, rules, regulations and/or ordinances imposed by any federal, state or
local governmental unit or agency upon Borrower and its businesses, operations
and properties (including without limitation, all applicable environmental
statutes, rules, regulations and ordinances).

       

      (e) Taxes.  Pay
and discharge when due all of its indebtedness and obligations, including
without limitation, all assessments, taxes, governmental charges, levies and
liens, of every kind and nature, imposed upon Borrower or its properties,
income, or profits, prior to the date on which penalties would attach, and all
lawful claims that, if unpaid, might become a lien or charge upon any of
Borrower’s properties, income, or profits; provided, however, Borrower will not
be required to pay and discharge any such assessment, tax, charge, levy, lien or
claim so long as (i) the legality of the same shall be contested in good faith
by appropriate judicial, administrative or other legal proceedings, and (ii)
Borrower shall have established on its books adequate reserves
with  respect to such contested assessment, tax, charge, levy, lien or
claim in accordance with generally accepted accounting principles, consistently
applied.

       

      (f) Insurance.  Maintain
customary insurance, including but not limited to, fire insurance, comprehensive
property damage, public liability, worker’s compensation, business interruption
and other insurance deemed necessary or otherwise reasonably required by
Lender.

       

      (g) Notice of Indebtedness.  Promptly
inform Lender of the creation, incurrence or assumption by Borrower of any
actual or contingent liabilities not permitted under this Loan
Agreement.

       

      (h) Notice
of Litigation.  Promptly after the commencement thereof, notify
Lender of all actions, suits and proceedings before any court or any
governmental department, commission or board affecting Borrower or any of its
properties.

       

      (i) Notice
of Material Adverse Change.  Promptly inform Lender of (i) any
and all material adverse changes in Borrower’s financial condition, and (ii) all
claims made against Borrower which could materially affect the financial
condition of Borrower.

       

      (j) Additional
Documentation.  Execute and deliver, or cause to be executed
and delivered, any and all other agreements, instruments or documents which
Lender may reasonably request in order to give effect to the transactions
contemplated under this Loan Agreement, the other Loan Documents and the
Purchase Agreement.

       

      (k)           Notice
of Default.                                           As
soon as possible and in any event within five (5) days after the occurrence of
each Event of Default (hereinafter defined), provide Lender with written notice
thereof setting forth the details of such Event of Default and the action that
Borrower has taken and proposes to take with respect
thereto.

       

      (l)           Notice
of Material Adverse Effect.                                                                           As
soon as possible and in any event within five (5) days after the occurrence
thereof, provide Lender with written notice of any matter that, individually or
when aggregated, could reasonably be expected to have a Material Adverse
Effect.

       

      (m)           Maintenance
of Existence; Conduct of
Business.                                                                                                           Borrower
will preserve and maintain its existence and all of its leases, privileges,
licenses, permits, franchises, qualifications and rights that are necessary or
desirable to the ordinary conduct of Borrower’s business.  Borrower
will conduct its business in accordance with good business
practices.

       

      (n)           Compliance
with
Agreements.                                                                Borrower
will comply in all material respects with all agreements, contracts and
instruments binding on it or affecting its properties or business.

       

      7. Negative
Covenants.  Until the Note and all other obligations and
liabilities of Borrower under this Loan Agreement, the other Loan Documents and
the Purchase Agreement are indefeasibly paid and finally satisfied in full,
Borrower will not, without the prior written consent of
Lender:

       

      (a) Nature
of Business.  Make any material change in the nature of its
business as carried on as of the date hereof or engage in any business
materially different than the business in which it is engaged on the date hereof
or which is related directly to such business.

       

      (b) Liquidations,
Mergers, Consolidations. Liquidate, dissolve, merge or consolidate with
or into any other entity.

       

      (c) Sale
of Assets.  Sell, transfer or otherwise dispose of any of its
assets or properties, whether now owned or hereafter acquired, other than in the
ordinary course of business or obsolete or worn out property or property no
longer useful in the conduct of Borrower’s business.

       

      (d) Liens.  Create,
incur, assume or permit to exist, any lien, security interest or encumbrance on
any of its property, assets or revenues, other than (i) liens and security
interests securing indebtedness owing to Lender, (ii) liens and security
interests securing indebtedness permitted by Section 7(e) hereof, (iii) liens
for taxes, assessments or similar charges that are (1) not yet due or (2) being
contested in good faith by appropriate proceedings and for which Borrower has
established adequate reserves, (iv) liens and security interests existing as of
the date hereof and described on Schedule
7(d) attached hereto, and (v) liens placed upon equipment or machinery
used in the ordinary course of business of the Borrower at the time of
acquisition thereof by the Borrower to secure indebtedness incurred to pay all
or a portion of the purchase price thereof, provided that (x) the aggregate
principal amount of all indebtedness secured by liens permitted by this clause
(v) incurred in any fiscal year of Borrower, does not exceed that aggregate
amount permitted by Section 7(e) hereof, and (y) in all events, the liens
encumbering the equipment and machinery so acquired does not encumber any other
asset of Borrower.

       

      (e) Indebtedness.  Create,
incur, assume or permit to exist, any indebtedness for borrowed money or issue
or assume any other note, debenture, bond or other evidences of indebtedness, or
guarantee any such indebtedness or such evidences of indebtedness of others,
other than (i) borrowings from Lender, (ii) borrowings outstanding on the date
hereof and described on Schedule
7(e) attached hereto, and (iii) borrowings to the extent that both before
and after giving effect thereto, Borrower shall be in compliance with Section 8
hereof.

       

      (f) Transfer
of Ownership.  Permit the sale, pledge, or other transfer of
any of the ownership interests in Borrower or the issuance of any additional
ownership interests in Borrower.

       

      (g) Change
in Management.  Permit a change in the Chief Executive Officer
of Borrower.

       

      (h) Loans.  Make
any advances, loans, extensions of credit or capital contribution to or
investment in, or purchase or own, any stock, bonds, notes, debentures or other
securities of any person or entity except in the ordinary course of its
business.

       

      (i) Transactions
with Affiliates.  Enter into any transaction, including,
without limitation, the purchase, sale or exchange of property or the rendering
of any service, with any Affiliate (as hereinafter defined) of Borrower, except
in the ordinary course of and pursuant to the reasonable requirements of
Borrower’s business and upon fair and reasonable terms no less favorable to
Borrower than would be obtained in a comparable arm’s-length transaction with a
person or entity not an Affiliate of Borrower.  As used herein, the
term “Affiliate”
means any individual or entity directly or indirectly controlling, controlled
by, or under common control with, another individual or
entity.

       

      (j) Distributions.  Borrower
agrees not to declare or pay any Distributions (hereinafter defined), make any
other distributions with respect to any payment on account of the purchase,
redemption, or other acquisition or retirement of any membership units of
Borrower, or make any other distribution, sale, transfer or lease of any of
Borrower’s assets other than in the ordinary course of business, except (i) any
such amounts that are directly utilized for the payment of principal or interest
on indebtedness or other obligations owing from time to time by Borrower or
Buyer to Lender, and (ii) Distributions to Buyer to pay taxes of Buyer
(including the members of Buyer to the extent attributable to the dividends
received from Buyer) and Borrower as part of a consolidated group. As used
herein, “Distributions”
shall mean all dividends and other distributions made by Borrower to its
members, other than salary, bonuses and other compensation for
services.  Unless otherwise specified, all accounting and financial
terms and covenants contained herein are to be determined according to generally
accepted accounting principles, consistently applied.

       

      8. Financial
Covenants.  Until the Note and all other obligations and
liabilities of Borrower and Buyer under this Loan Agreement, the other Loan
Documents and the Purchase Agreement are indefeasibly paid and finally satisfied
in full, Borrower will maintain the following financial
covenants:

       

      (a) Net
Worth.  Borrower will maintain, at all times, its total assets
less
its total liabilities at not less than $2,800,000.

       

      (b) Fixed
Charge Coverage Ratio.  Borrower will maintain as of the end of
each fiscal year, a ratio of (a) net income after taxes plus depreciation,
amortization, other non-cash expenses, interest expense, lease expense and
installment payments made pursuant to Section 2.2(b) of the Purchase Agreement
for the 12 month period ending with such fiscal year, less any Distributions
during such 12 month period, to (b) interest expense, lease expense, installment
payments made pursuant to Section 2.2(b) of the Purchase Agreement, current
maturities of long-term debt and current maturities of long-term leases for such
12 month period, of not less than 1.0 to 1.0.

       

      (c)           Working
Capital.  Borrower will maintain, at all times, its current
assets(excluding prepaid expenses), less its current liabilities at an amount
not less than $250,000.

       

      9. Reporting
Requirements.  Until the Note and all other obligations and
liabilities of Borrower and Buyer under this Loan Agreement, the other Loan
Documents and the Purchase Agreement are indefeasibly paid and finally satisfied
in full, Borrower will, unless Lender shall otherwise consent in writing,
furnish to Lender:

       

      (a) Interim Financial Statements.  As
soon as available, and in any event within forty-five (45) days after the end of
each of the first three quarters of each fiscal year of Borrower, a balance
sheet and income statement of Borrower as of the end of such fiscal quarter, all
in form and substance and in reasonable detail satisfactory to Lender and duly
certified (subject to year-end review adjustments) by the President and/or Chief
Financial Officer of Borrower (i) as being true and correct in all material
aspects to the best of his or her knowledge and (ii) as having been prepared in
accordance with generally accepted accounting principles, consistently
applied.

       

      (b) Annual Financial Statements.  As
soon as available and in any event within ninety (90) days after the end of each
fiscal year of Borrower, a balance sheet and income statement of Borrower as of
the end of such fiscal year, in each case audited by independent public
accountants of recognized standing acceptable to Lender.

       

      (c) Compliance Certificate.  A
certificate signed by the Chief Financial Officer of Borrower, within forty-five
(45)
days  after  the  end  of  each
quarter of each fiscal year, stating that Borrower is in full compliance with
all of its obligations under this Loan Agreement and all other Loan Documents
and is not in default of any term or provisions hereof or thereof, and
demonstrating compliance with all financial ratios and covenants set forth in
this Loan Agreement.

       

      (d) Tax
Returns.  Copies of Borrower’s income tax returns (federal and
state, if any) within thirty (30) days after filing.

       

      10. Events
of Default.  Each of the following shall constitute an “Event
of Default” under this Loan Agreement:

       

      (a) The
failure, refusal or neglect of Borrower to pay when due any part of the
principal of, or interest on, the Note or any other indebtedness or obligations
owing to Lender by Borrower from time to time and such failure shall continue
for five (5) days.

       

      (b) Any
representation or warranty made or deemed made by Borrower or any Obligated
Party (hereinafter defined) (or any of their respective officers) in any Loan
Document, Purchase Agreement or in any certificate, report, notice or financial
statement furnished at any time in connection with this Loan Agreement or the
Purchase Agreement shall be false, misleading or erroneous in any material
respect when made or deemed to have been made.

       

      (c) The
failure of Borrower or any Obligated Party to timely and properly observe, keep
or perform any covenant, agreement, warranty or condition required herein or in
any of the other Loan Documents and such failure shall continue for ten (10)
days after written notice thereof has been given to Borrower or such Obligated
Party.

       

      (d) The
failure of Borrower or any Obligated Party to timely and properly observe, keep
or perform any covenant, agreement, warranty or condition required in the
Purchase Agreement or in any of the documents or agreements delivered in
connection therewith.

       

      (e) The
occurrence of any event which permits the acceleration of the maturity of any
indebtedness owing by Borrower or any Obligated Party to any third party under
any agreement or understanding.

       

      (f) If
Borrower or any Obligated Party: (i) becomes insolvent, or makes a transfer in
fraud of creditors, or makes an assignment for the benefit of creditors, or
admits in writing its inability to pay its debts as they become due; (ii)
generally is not paying its debts as such debts become due; (iii) has a
receiver, trustee or custodian appointed for, or take possession of, all or
substantially all of the assets of such party, either in a proceeding brought by
such party or in a proceeding brought against such party and such appointment is
not discharged or such possession is not terminated within sixty (60) days after
the effective date thereof or such party consents to or acquiesces in such
appointment or possession; (iv) files a petition for relief under the United
States Bankruptcy Code or any other present or future federal or state
insolvency, bankruptcy or similar laws (all of the foregoing hereinafter
collectively called “Applicable
Bankruptcy Law”) or an involuntary petition for relief is filed against
such party under any Applicable Bankruptcy Law and such involuntary petition is
not dismissed within sixty (60) days after the filing thereof, or an order for
relief naming such party is entered under any Applicable Bankruptcy Law, or any
composition, rearrangement, extension, reorganization or other relief of debtors
now or hereafter existing is requested or consented to by such party; (v) fails
to have discharged within a period of thirty (30) days any attachment,
sequestration or similar writ levied upon any property of such party; or (vi)
fails to pay within thirty (30) days any final money judgment against such
party.

       

      (g) If
Borrower or any Obligated Party is an entity, the liquidation, dissolution,
merger or consolidation of any such entity.

       

      (h) The entry
of any judgment against Borrower or any Obligated Party or the issuance or entry
of any attachment or other lien against any of the property of Borrower or any
Obligated Party the scheduled payments for which exceed, individually or in the
aggregate, $500,000 per year, if undischarged, unbonded or undismissed within
thirty (30) days after such entry.

       

      Nothing
contained in this Loan Agreement shall be construed to limit the events of
default enumerated in any of the other Loan Documents and all such events of
default shall be cumulative.  The term “Obligated
Party”, as used herein, shall mean any party other than Borrower who
secures, guarantees and/or is otherwise obligated to pay all or any portion of
the indebtedness evidenced by the Note or the obligations under the Purchase
Agreement.

       

      11. Remedies.

       

      (a) General.                      Upon
the occurrence of any one or more of the foregoing Events of Default, the entire
unpaid principal balance of the Note, together with all accrued but unpaid
interest thereon, and all other indebtedness owing to Lender by Borrower at such
time shall, at the option of Lender, become immediately due and payable without
notice, demand, presentation, notice of dishonor, notice of intent to
accelerate, notice of acceleration, protest or notice of protest of any kind,
all of which are expressly waived by Borrower.  All rights and
remedies of Lender set forth in this Loan Agreement, in any of the other Loan
Documents and afforded by applicable law, by equity or otherwise may also be
exercised by Lender, at its option to be exercised in its sole discretion, upon
the occurrence of an Event of Default.  Upon the occurrence of an
Event of Default under Section
10(f), the outstanding principal balance of and accrued and unpaid
interest on the Note and all other obligations of the Borrower under the Loan
Documents shall thereupon become immediately due and payable without notice,
demand, presentment, notice of dishonor, notice of acceleration, notice of
intent to accelerate, protest, or other formalities of any kind, all of which
are hereby expressly waived by Borrower.

       

      (b)           Setoff.                      If
an Event of Default shall have occurred and then be continuing, Lender is hereby
authorized at any time and from time to time, without notice to Borrower (any
such notice being hereby expressly waived by Borrower), to set off and apply any
and all amounts at any time held and other indebtedness or amounts at any time
owing by Lender to or for the credit or account of Borrower against any and all
of the obligations of Borrower now or hereafter existing under this Loan
Agreement, the Note or any other Loan Document, irrespective of whether or not
Lender shall have made any demand under this Loan Agreement, the Note or any
other Loan Document.  Lender agrees promptly to notify Borrower after
any such setoff and application, provided that the failure to give such notice
shall not affect the validity of such setoff and application.  The
rights and remedies of Lender under this Section
11(b) are in addition to other rights and remedies (including, without
limitation, rights of setoff) that Lender may have.

       

      12. Rights
Cumulative.  All rights of Lender under the terms of this Loan
Agreement shall be cumulative of, and in addition to, the rights of Lender under
any and all other agreements between Borrower and Lender (including, but not
limited to, the other Loan Documents), and not in substitution or diminution of
any rights now or hereafter held by Lender under the terms of any other
agreement.

       

      13. Waiver
and Agreement.  Neither the failure nor any delay on the part
of Lender to exercise any right, power or privilege herein or under any of the
other Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege.  No waiver of any provision in this Loan Agreement or in
any of the other Loan Documents and no departure by Borrower therefrom shall be
effective unless the same shall be in writing and signed by Lender, and then
shall be effective only in the specific instance and for the purpose for which
given and to the extent specified in such writing.  No modification or
amendment to this Loan Agreement or to any of the other Loan Documents shall be
valid or effective unless the same is signed by the party against whom it is
sought to be enforced.

       

      14. Benefits.  This
Loan Agreement shall be binding upon and inure to the benefit of Lender and
Borrower, and their respective successors and assigns, provided, however, that
Borrower may not, without the prior written consent of Lender, assign any
rights, powers, duties or obligations under this Loan Agreement or any of the
other Loan Documents.

       

      15. Notices.  All
notices, requests, demands or other communications required or permitted to be
given pursuant to this Agreement shall be in writing and given by
(i) personal delivery, (ii) expedited delivery service with proof of
delivery, or (iii) United States mail, postage prepaid, registered or
certified mail, return receipt requested, sent to the intended addressee at the
address set forth on the first page hereof and shall be deemed to have been
received either, in the case of personal delivery, as of the time of personal
delivery, in the case of expedited delivery service, as of the date of first
attempted delivery at the address and in the manner provided herein, or in the
case of mail, upon deposit in a depository receptacle under the care and custody
of the United States Postal Service.  Either party shall have the
right to change its address for notice hereunder to any other location within
the continental United States by notice to the other party of such new address
at least thirty (30) days prior to the effective date of such new
address.

       

      16. Construction.  This
Loan Agreement and the other Loan Documents have been executed and delivered in
the State of Nevada, shall be governed by and construed in accordance with the
laws of the State of Nevada, and shall be performable by the parties hereto in
the county in Nevada where the Lender’s address set forth on the first page
hereof is located.

       

      17. Invalid
Provisions.  If any provision of this Loan Agreement or any of
the other Loan Documents is held to be illegal, invalid or unenforceable under
present or future laws, such provision shall be fully severable and the
remaining provisions of this Loan Agreement or any of the other Loan Documents
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance.

       

      18. Expenses.  Borrower
shall pay all costs and expenses (including, without limitation, reasonable
attorneys’ fees) in connection with (i) any action required in the course of
administration of the indebtedness and obligations evidenced by the Loan
Documents, and (ii) any action in the enforcement of Lender’s rights upon the
occurrence of Event of Default.

       

      19. Assignment
of the Loan.  Borrower agrees that Lender may, at its option,
sell or assign its interest in the Loan and its rights under this Loan Agreement
to a third party and, in connection with such sale, Lender may disclose any and
all financial and other information available to Lender concerning Borrower to
each prospective purchaser.

       

      20. Conflicts.  In
the event any term or provision hereof is inconsistent with or conflicts with
any provision of the other Loan Documents, the terms and provisions contained in
this Loan Agreement shall be controlling.

       

      21. Counterparts.  This
Loan Agreement may be separately executed in any number of counterparts, each of
which shall be an original, but all of which, taken together, shall be deemed to
constitute one and the same instrument.

       

      22. Electronic
and Facsimile Documents and Signatures.  For purposes of
negotiating and finalizing this Loan Agreement, if this document or any document
executed in connection with it is transmitted electronically or by facsimile
machine (“fax”),
it shall be treated for all purposes as an original
document.  Additionally, the signature of any party on this document
transmitted electronically or by way of a facsimile machine shall be considered
for all purposes as an original signature.  Any such electronically
transmitted or faxed document shall be considered to have the same binding legal
effect as an original document.  At the request of any party, any
electronically transmitted or faxed document shall be re-executed by each
signatory party in an original form.

       

      NOTICE
OF NO ORAL AGREEMENTS

       

      For the
purpose of this Notice, the term “WRITTEN AGREEMENT” shall include the document
set forth above, together with each and every other document relating to and/or
securing the same loan transaction, regardless of the date of
execution.

       

      THIS
WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.

       

      THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO.

       

      [Signature
Page Follows.]

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      BORROWER                                                                           LENDER:

       

      
        	
                CONSOLIDATED
      MORTGAGE, LLC

              	
                DESERT
      CAPITAL TRS, INC.

              

      

       

       

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

             Todd B.
Parriott                                                                                                  
Todd B. Parriott

             President                                                                                                              
Presidentex10-13.htm

    
Exhibit
10.13

       

       

      PROMISSORY
NOTE

       

      

       

      $15,500,000                                                                Henderson,
Nevada                                                                November
21, 2007

       

      For value
received, CONSOLIDATED
MORTGAGE, LLC, a Nevada limited liability company (“Borrower”) does
hereby promise to pay to the order of DESERT CAPITAL TRS, INC., a Delaware
corporation (“Lender”), at 1291
Galleria Drive, Henderson, Nevada 89014, or at such other address as Lender
shall from time to time specify in writing, in lawful money of the United States
of America, the sum of FIFTEEN MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($15,500,000), or so much thereof as may be advanced and outstanding hereunder,
together with interest from date hereof on the principal balance outstanding
from time to time as hereinafter provided.  Interest shall be computed
on a per annum basis of a year of 360 days and for the actual number of days
elapsed, unless such calculation would result in a rate greater than the highest
rate permitted by applicable law, in which case interest shall be computed on a
per annum basis of a year of 365 days or 366 days in a leap year, as the case
may be.  All capitalized terms used and not otherwise defined herein
shall have the same meanings as set forth in that certain Loan Agreement dated
of even date herewith between Borrower and Lender (as the same may be amended or
otherwise modified from time to time, the “Loan
Agreement”).

       

      1. Payment
Terms.

       

      
        	
                (a)  

              	
                Thirty-nine
      (39) quarterly installments in the principal amount of Three Hundred
      Eighty-Seven Thousand Five Hundred and No/100 Dollars ($387,500) each,
      plus accrued and unpaid interest, shall be due and payable, the first such
      installment to be due and payable on March 31, 2008, with like successive
      installments of principal plus accrued and unpaid interest to be due and
      payable on the last day of each succeeding calendar quarter thereafter
      until and including September 30, 2017; and
  thereafter

              

      

       

      
        	
                (b)  

              	
                A
      final installment in the amount of all outstanding principal, plus accrued
      and unpaid interest, shall be due and payable on December 31,
      2017.

              

      

       

      Interest
shall be calculated on the unpaid principal balance of this Note each day
principal is outstanding and all payments made credited to any collection costs,
to the discharge of the interest accrued and to the reduction of the principal,
in such order as Lender shall determine.  All payments and prepayments
of principal or interest on this Note shall be made in lawful money of the
United States of America in immediately available funds, at the address of
Lender indicated above, or such other place as the holder of this Note shall
designate in writing to Borrower.  If any payment of principal or
interest on this Note shall become due on a day which is not a Business Day (as
hereinafter defined), such payment shall be made on the next succeeding Business
Day and any such extension of time shall be included in computing interest in
connection with such payment.  As used herein, the term “Business Day” shall
mean any day other than a Saturday, Sunday or any other day on which national
banking associations are authorized to be closed.  The books and
records of Lender shall be prima facie evidence of all
outstanding principal of and accrued and unpaid interest on this
Note.

       

      2. Interest
Rate.                                Interest
on the outstanding and unpaid principal balance hereof shall be computed at a
per annum rate equal to nine percent (9%), but in no event shall interest
contracted for, charged or received hereunder plus any other charges in
connection herewith which constitute interest exceed the maximum interest
permitted by applicable law, said rate to be effective prior to maturity
(however such maturity is brought about).

       

      3. Default
Rate.  Matured unpaid principal and interest shall bear
interest from date of maturity until paid at the highest rate permitted by
applicable law, or if no such maximum rate is established by applicable law, at
the rate stated above plus five percent (5%) per annum.

       

      4. Prepayment.  Borrower
reserves the right to prepay, prior to maturity, all or any part of the
principal of this Note without penalty; provided that any such prepayment must
be in a principal amount in excess of $1,000,000 over the amount of any
scheduled quarterly principal payment.  Any prepayments shall be
applied first to accrued interest and then to principal.  Borrower
will provide at least thirty (30) day’s prior written notice to the holder of
this Note of any such prepayment of all or any part of the principal
hereof.  All payments and prepayments of principal or interest on this
Note shall be made in lawful money of the United States of America in
immediately available funds, at the address of Lender indicated above, or such
other place as the holder of this Note shall designate in writing to
Borrower.  All partial prepayments of principal shall be applied to
the last installments payable in their inverse order of maturity.

       

      5. Default.  It
is expressly provided that upon default in the punctual payment of this Note or
any part hereof, principal or interest, as the same shall become due and
payable, or upon the occurrence of an Event of Default, the holder of this Note
may, at its option, without further notice or demand, (i) declare the
outstanding principal balance of and accrued but unpaid interest on this Note at
once due and payable, (ii) foreclose any and all liens securing payment hereof,
(iii) pursue any and all other rights, remedies and recourses available to the
holder hereof, including but not limited to any such rights, remedies or
recourses under the Loan Documents, at law or in equity, or (v) pursue any
combination of the foregoing; and in the event default is made in the prompt
payment of this Note when due or declared due, and the same is placed in the
hands of an attorney for collection, or suit is brought on same, or the same is
collected through probate, bankruptcy or other judicial proceedings, then the
Borrower agrees and promises to pay all costs of collection, including
reasonable attorney’s fees.

       

      6. No Usury
Intended; Usury Savings Clause.  In no event shall interest
contracted for, charged or received hereunder, plus any other charges in
connection herewith which constitute interest, exceed the maximum interest
permitted by applicable law.  The amounts of such interest or other
charges previously paid to the holder of the Note in excess of the amounts
permitted by applicable law shall be applied by the holder of the Note to reduce
the principal of the indebtedness evidenced by the Note, or, at the option of
the holder of the Note, be refunded.  To the extent permitted by
applicable law, determination of the legal maximum amount of interest shall at
all times be made by amortizing, prorating, allocating and spreading in equal
parts during the period of the full stated term of the loan and indebtedness,
all interest at any time contracted for, charged or received from the Borrower
hereof in connection with the loan and indebtedness evidenced hereby, so that
the actual rate of interest on account of such indebtedness is uniform
throughout the term hereof.

       

      7. Joint
and Several Liability; Waiver.  Each maker, signer, surety and
endorser hereof, as well as all heirs, successors and legal representatives of
said parties, shall be directly and primarily, jointly and severally, liable for
the payment of all indebtedness hereunder.  Lender may release or
modify the obligations of any of the foregoing persons or entities, or
guarantors hereof, in connection with this loan without affecting the
obligations of the others.  All such persons or entities expressly
waive presentment and demand for payment, notice of default, notice of intent to
accelerate maturity, notice of acceleration of maturity, protest, notice of
protest, notice of dishonor, and all other notices and demands for which waiver
is not prohibited by law, and diligence in the collection hereof; and agree to
all renewals, extensions, indulgences, partial payments, releases or exchanges
of collateral, or taking of additional collateral, with or without notice,
before or after maturity.  No delay or omission of Lender in
exercising any right hereunder shall be a waiver of such right or any other
right under this Note.

       

      8. Governing
Law, Venue. This Note is being executed and delivered, and is intended to
be performed in the State of Nevada.  Except to the extent that the
laws of the United States may apply to the terms hereof, the substantive laws of
the State of Nevada shall govern the validity, construction, enforcement and
interpretation of this Note.  In the event of a dispute involving this
Note or any other instruments executed in connection herewith, the undersigned
irrevocably agrees that venue for such dispute shall lie in any court of
competent jurisdiction in Clark County, Nevada.

       

      9. Captions.  The
captions in this Note are inserted for convenience only and are not to be used
to limit the terms herein.

       

      10. Financial
Information.  Borrower agrees to promptly furnish such
financial information and statements, including financial statements in a format
acceptable to Lender, lists of assets and liabilities, agings of receivables and
payables, inventory schedules, budgets, forecasts, tax returns, and other
reports with respect to Borrower’s financial condition and business operations
as Lender may request from time to time.  This provision shall not
alter the obligation of Borrower to deliver to Lender any other financial
statements or reports pursuant to the terms of the Loan Agreement.

       

      [Signature Page
Follows]

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      

       

      BORROWER:

      

      CONSOLIDATED
MORTGAGE, LLC

      

      

      By: 
/s/ Todd B.
Parriott        

                Todd B.
Parriott

              President

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