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Exhibit 10.60    
    

 
  SECURITY AGREEMENT    
    

        This SECURITY AGREEMENT ("Agreement") dated as of June 10, 2004, is made by the Persons listed on the signature pages hereto together with each of the
Persons who may become a party hereto pursuant to Section 14 hereof, and each of them, jointly and severally, as Grantors (each a "Grantor" and collectively "Grantors") in favor of Bank of
America, N.A., as the Administrative Agent ("Administrative Agent") under the Credit Agreement referred to below for the ratable benefit of each of the lenders which are parties to the Credit
Agreement from time to time (collectively, the "Lenders" and individually, a "Lender"), as Secured Party, with reference to the following facts: 

RECITALS  

        A.    Pursuant
to the Credit Agreement of even date herewith, by and among Herbst Gaming, Inc., a Nevada corporation ("Borrower"), the Lenders, and the Administrative
Agent, (as such agreement may from time to time be amended, extended, renewed, supplemented or otherwise modified, the "Credit Agreement"), the Lenders have agreed to extend certain credit facilities
to Borrower. 

        B.    The
Credit Agreement provides, as a condition of the availability of such credit facilities, that Grantors shall enter into this Agreement and shall grant security
interests to Secured Party as herein provided. 

        C.    Each
Grantor expects to realize direct and indirect benefits as a result of the availability of the aforementioned credit facilities. 

AGREEMENT  

        NOW, THEREFORE, in order to induce the Lenders to extend the aforementioned credit facilities, and for other good and valuable consideration, the receipt and
adequacy of which hereby are acknowledged, Grantors hereby jointly and severally represent, warrant, covenant, agree, assign and grant as follows: 

        1.     Definitions. This Agreement is the Security Agreement referred to in the Credit Agreement. Terms defined in the Credit
Agreement and not otherwise defined in this Agreement shall have the meanings defined for those terms in the Credit Agreement. Terms defined in the Nevada Uniform Commercial Code and not otherwise
defined in this Agreement or in the Credit Agreement shall have the meanings defined for those terms in the Nevada Uniform Commercial Code. As used in this Agreement, the following terms shall have
the meanings respectively set forth after each: 

        "Agreement" means this Security Agreement, and any extensions, modifications, renewals, restatements, supplements or amendments hereof,  including, without limitation,
any documents or agreements by which additional Grantors become party hereto. 

        "Collateral" means and includes all present and future right, title and interest of Grantors, or any one or more of them, in or to any
property or assets whatsoever, and all rights and powers of Grantors, or any one or more of them, to transfer any interest in or to any property or assets whatsoever,  including, without limitation, any
and all of the following property: 

        (a)   All
present and future accounts, accounts receivable, agreements, contracts, leases, contract rights, payment intangibles, rights to payment, instruments, documents,
chattel paper (whether tangible or electronic), security agreements, guaranties, letters of credit, letter-of-credit rights, undertakings, surety bonds, insurance policies
(whether or not required by the terms of the Loan Documents), commercial tort claims, notes and drafts, and all forms of obligations owing to any Grantor or in which any Grantor may have any interest,
however created or arising and whether or not earned by performance; 

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        (b)   All
present and future general intangibles, all tax refunds of every kind and nature to which any Grantor now or hereafter may become entitled, however arising, all
other refunds, and all deposits, reserves, loans, royalties, cost savings, deferred payments, goodwill, choses in action, liquidated damages, rights to indemnification, trade secrets, computer
programs, software, customer lists, trademarks (including any applications therefor), trade names, patents (including any applications
therefor), licenses, copyrights (including any applications therefor), technology, processes, proprietary information and insurance proceeds of which any Grantor is a beneficiary; 

        (c)   Whether
characterized as accounts, general intangibles or otherwise, all rents (including, without limitation, prepaid
rents, fixed, additional and contingent rents), issues, profits, receipts, earnings, revenue, income, security deposits, occupancy charges, hotel room charges, cabana charges, casino revenues, show
ticket revenues, food and beverage revenues, room service revenues, merchandise sales revenues, parking, maintenance, common area, tax, insurance, utility and service charges and contributions,
instruction fees, membership charges, restaurant and snack bar revenues; 

        (d)   All
present and future deposit accounts of any Grantor, including, without limitation, any demand, time, savings,
passbook or like account maintained by any Grantor with any bank, savings and loan association, credit union or like organization, and all money, cash and cash equivalents of any Grantor, whether or
not deposited in any such deposit account; 

        (e)   All
present and future books and records, including, without limitation, books of account and ledgers of every kind and
nature, all electronically recorded data relating to any Grantor or the business thereof, all receptacles and containers for such records, and all files and correspondence; 

        (f)    All
present and future goods, including, without limitation, all consumer goods, farm products, inventory, equipment,
video lottery terminals, slot machines and other gaming devices and associated equipment (including, without limitation, gaming devices and associated equipment as defined in Nevada Revised Statutes
Chapter 463 or by similar provisions under other applicable Laws), catalogs, machinery, tools, molds, dies, furniture, furnishings, fixtures, trade fixtures, motor vehicles, aircraft, documented and
undocumented vessels, ships and other watercraft, and all other goods used in connection with or in the conduct of any Grantor's business including all goods as defined in Section 9102(a)(44)
of the Uniform Commercial Code; 

        (g)   All
present and future inventory and merchandise, including, without limitation, all present and future goods held for
sale or lease or to be furnished under a contract of service, all raw materials, work in process and finished goods, all packing materials, supplies and containers relating to or used in connection
with any of the foregoing, and all bills of lading, warehouse receipts or documents of title relating to any of the foregoing; 

        (h)   All
present and future stocks, investment property, bonds, debentures, securities (whether certificated or uncertificated), security entitlements, securities accounts,
commodity contracts, commodity accounts, subscription rights, options, warrants, puts, calls, certificates, partnership interests, limited liability company membership or other interests, joint
venture interests, certificates of deposit, Investments and/or brokerage accounts and all rights, preferences, privileges, dividends, distributions, redemption payments, or liquidation payments with
respect thereto; 

        (i)    All
present and future accessions, appurtenances, components, repairs, repair parts, spare parts, replacements, substitutions, additions, issue and/or improvements to or
of or with respect to any of the foregoing; 

        (j)    All
other tangible and intangible property of any Grantor; 

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        (k)   All
rights, remedies, powers and/or privileges of any Grantor with respect to any of the foregoing; and 

        (l)    Any
and all proceeds and products of any of the foregoing, including, without limitation, all money, accounts, payment
intangibles, general intangibles, deposit accounts, promissory notes, documents, instruments, certificates of deposit, chattel paper, investment property,
letter-of-credit-rights, goods, insurance proceeds, and any other tangible or intangible property received upon the sale or disposition of any of the foregoing; 

provided that the term "Collateral", as used in this Agreement, shall  not include (i) any interests pledged
pursuant to the Pledge Agreement, (ii) Real Property or (iii) any Property the purchase of
which was financed by a purchase money security interest, including any capital lease obligation permitted under Article 7 of the Credit Agreement to the extent that the documents creating such
purchase money security interest or capital lease prohibit the granting thereon, but only for so long as the related Indebtedness remains outstanding. 

        "Distribution" means all interest, premiums, dividends, distributions, redemption payments, liquidation payments, other collections and
payments, other investment property and other products and proceeds of any kind, with respect to any Investment Collateral or other investment property. 

        "Grantors" means Borrower and those Subsidiaries of Borrower, if any, that are parties hereto as indicated on the signature pages hereof,
or that become parties hereto as provided in Section 14 hereof, and each of them, and any one or more of them, jointly and severally. At such times, if any, as no Subsidiaries of Borrower are
parties hereto, the term "Grantors" shall refer solely to Borrower. 

        "Investment Collateral" shall have the meaning set forth therefor in Section 9. 

        "Secured Obligations" means (a) with respect to Borrower, all of the Secured Obligations of Borrower at any time or from time to
time owed to Secured Party under the Loan Agreement, (b) with respect to Flamingo Paradise Gaming, L.L.C., a Nevada limited liability company ("Flamingo"), all of the Secured Obligations of
Flamingo at any time or from time to time owed to Secured Party under the Guaranty dated as of even date herewith, by Flamingo in favor of Secured Party, (c) with respect to Market
Gaming, Inc., a Nevada corporation ("Market Gaming"), all of the Secured Obligations of Market Gaming at any time or from time to time owed to Secured Party under the Guaranty dated as of even
date herewith, by Market Gaming in favor of Secured Party, (d) with respect to E-T-T, Inc., a Nevada corporation ("ETT"), all of the Obligations of ETT at any
time or from time to time owed to Secured Party under the Guaranty of even date herewith, by ETT in favor of Secured Party and (e) with respect to all other Subsidiaries, all of the Secured
Obligations of such Subsidiaries at any time or from time to time owed to Secured Party under the Guaranty dated as of even date herewith, by such Subsidiaries in favor of Secured Party, all whether
due or to become due, matured or unmatured, liquidated or unliquidated, or contingent or noncontingent. 

        "Secured Party" means the Administrative Agent (acting as the Administrative Agent and/or on behalf of the Lenders, the L/C Issuer, and
any party to a Secured Swap Contract that is an Affiliate of a Lender) and the Lenders which are parties to the Credit Agreement from time to time. Subject to the terms and conditions of the Credit
Agreement, any right, remedy, privilege or power of Secured Party shall be exercised by the Administrative Agent. 

        2.     Further Assurances. At any time and from time to time at the request of Secured Party, each Grantor, as applicable shall
execute and deliver to Secured Party all such financing statements and other instruments and documents in form and substance satisfactory to Secured Party as shall be necessary or desirable to fully
perfect, when filed and/or recorded, Secured Party's security interests granted pursuant to Section 3 of this Agreement for the benefit of the Secured Party and for the ratable benefit of the
Lenders. At any time and from time to time, Secured Party shall be entitled to file and/or record any or all such financing statements, instruments and documents held by it, and any 

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or
all such further financing statements, documents and instruments, and to take all such other actions, as Secured Party may deem appropriate to perfect and to maintain perfected the security
interests granted in Section 3 of this Agreement. Before and after the occurrence of any Event of Default, at Secured Party's request, each Grantor shall execute all such further financing
statements, instruments and documents, and shall do all such further acts and things, as may be deemed necessary or desirable by Secured Party to create and perfect, and to continue and preserve, an
indefeasible security interest in the Collateral in favor of Secured Party, or the priority thereof. With respect to any Collateral consisting of certificated securities, instruments, documents,
certificates of title or the like, as to which Secured Party's security interest need be perfected by, or the priority thereof need be assured by, possession of such Collateral, Grantors will upon
demand of Secured Party deliver possession of same in pledge to Secured Party. With respect to any Collateral consisting of securities, instruments, partnership or joint venture interests, other
Investments or the like, Grantors hereby consent and agree (a) to notify any securities intermediary, depositary institution or other bailee therefor, and any issuer thereof, obligor thereon or
registrar, transfer agent or trustee thereof, of the security interest of Secured Party therein, (b) to require any such party to execute and deliver to Secured Party such acknowledgments,
instruments, control agreements or other agreements as may be necessary for Secured Party to maintain the perfection of such security interest; and (c) that any such party shall be entitled to
accept the provisions of this Agreement as conclusive evidence of the right of Secured Party to effect any transfer or exercise any right hereunder or with respect to any such Collateral,
notwithstanding any other notice or direction to the contrary heretofore or hereafter given by any Grantor or any other Person to such issuers or such obligors or to any such registrar or transfer
agent or trustee. 

        3.     Security Agreement. For valuable consideration, Grantors and each of them hereby assign and pledge to Secured Party, and
grant to Secured Party a security interest in, all presently existing and hereafter acquired Collateral, as security for the timely payment and performance of the Secured Obligations, and each of
them. This Agreement is a continuing and irrevocable agreement and all the rights, powers, privileges and remedies hereunder shall apply to any and all Secured Obligations,  including those arising under
successive transactions which shall either continue the Secured Obligations, increase or decrease them, or from time to
time create new Secured Obligations after all or any prior Secured Obligations have been satisfied, and notwithstanding the bankruptcy of any Grantor or any other Person or any other event or
proceeding affecting any Person. 

        4.     Grantors' Representations, Warranties and Agreements. Grantors represent, warrant and agree that: (a) each Grantor
will pay, prior to delinquency, all taxes, charges, Liens and assessments against the portion of the Collateral owned by it, except such as are timely
contested in good faith or those that are immaterial so long as no material property of such Grantor is in jeopardy of being seized, levied upon or forfeited, and upon its failure to pay or so contest
such taxes, charges, Liens and assessments, Secured Party at its option may pay any of them, and Secured Party shall be the sole judge of the legality or validity thereof and the amount necessary to
discharge the same; (b) the Collateral will not be used for any unlawful purpose or in violation of any Law, regulation or ordinance, nor used in any way that will void or impair any insurance
required to be carried in connection therewith; (c) each Grantor will, to the extent consistent with good business practice, keep the portion of the Collateral owned by it in reasonably good
repair, working order and condition, and from time to time make all needful and proper repairs, renewals, replacements, additions and improvements thereto and, as appropriate and applicable, will
otherwise deal with such portion of the Collateral in all such ways as are considered good practice by owners of like property; (d) each Grantor will take all reasonable steps to preserve and
protect the Collateral; (e) each Grantor will maintain, with responsible insurance companies, insurance covering the Collateral against such insurable losses as is required by the Credit
Agreement and will cause Secured Party to be designated as an additional insured and loss payee with respect to all insurance (whether or not required by the Credit Agreement), will obtain the written
agreement of the insurers that such insurance shall not be cancelled, terminated or materially modified 

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to
the detriment of Secured Party without at least thirty (30) days prior written notice to Secured Party, and will furnish copies of such insurance policies or certificates to Secured Party
promptly upon request therefor; (f) Grantors will promptly notify Secured Party in writing in the event of any substantial or material damage to the Collateral from any source whatsoever, and,  except for the disposition of collections and other proceeds of the Collateral permitted by Section 6 hereof or of the Credit Agreement, Grantors
will not remove or permit to be removed any part of the Collateral from their places of business without the prior written consent of Secured Party,  except for such items of the Collateral as are
removed in the ordinary course of business or in connection with any transaction or disposition otherwise
permitted by the Loan Documents; (g) in the event any Grantor changes its name or its address as either are set forth herein or in the Credit Agreement, such Grantor will notify Secured Party
of such name and/or address change promptly, but in any event, within five (5) Business Days; and (h) all acknowledgments, instruments, control agreements or other agreements with any
securities intermediary, depositary institution or other bailee for the Collateral, and any issuer thereof, obligor thereon or registrar, transfer agent or trustee thereof, that are necessary for
Secured Party to maintain the perfection of its security interest in the Collateral as of the Closing Date, are listed in Schedule I hereto, and all of such agreements have been delivered to
Secured Party. 

        5.     Secured Party's Rights Regarding Collateral. At any time (whether or not an Event of Default has occurred), at the expense
of each Grantor with regard to the portion of the Collateral owned by it, Secured Party may, subject to Gaming Laws, to the extent it may be necessary or desirable to protect the security hereunder,
but Secured Party shall not be obligated to: (a) at all reasonable times on reasonable prior notice, enter upon any premises on which Collateral is situated and examine the same or
(b) on reasonable prior notice, perform any obligation of any Grantor under this Agreement or any obligation of any other Person under the Loan Documents. At any time and from time to time,
subject to compliance with Gaming Laws, at the expense of each Grantor with regard to the portion of the Collateral owned by it, Secured Party may, to the extent it may be necessary or desirable to
protect the security hereunder, but Secured Party shall not be obligated to, request from obligors on the Collateral, in the name of any Grantor or in the name of Secured Party, information concerning
the Collateral and the amounts owing thereon. Each Grantor shall maintain books and records pertaining to the Collateral in such detail, form and scope as Secured Party shall reasonably require
consistent with Secured Party's interests hereunder. Each Grantor shall at any time at Secured Party's request mark the Collateral and/or such Grantor's ledger cards, books of account and other
records relating to the Collateral with appropriate notations satisfactory to Secured Party disclosing that they are subject to Secured Party's security interests. Secured Party shall at all
reasonable times on reasonable prior notice have full access to and the right to audit any and all of Grantors' books and records pertaining to the Collateral, and to confirm and verify the value of
the Collateral and to do whatever else Secured Party reasonably may deem necessary or desirable to protect its interests; provided,  however, that any such
action which involves communicating with customers of Grantors shall be carried out by Secured Party through Grantors'
independent auditors unless Secured Party shall then have the right directly to notify obligors on the Collateral as provided in Section 8. Secured Party shall be under no duty or obligation
whatsoever to take any action to preserve any rights of or against any prior or other parties in connection with the Collateral, to exercise any voting rights or managerial rights with respect to any
Collateral, whether or not an Event of Default shall have occurred, or to make or give any presentments, demands for performance, notices of non-performance, protests, notices of protests,
notices of dishonor or notices of any other nature whatsoever in connection with the Collateral or the Secured Obligations. Secured Party shall be under no duty or obligation whatsoever to take any
action to protect or preserve the Collateral or any rights of any Grantor therein, or to make collections or enforce payment thereon, or to participate in any foreclosure or other proceeding in
connection therewith. 

        6.     Collections on the Collateral. Except as otherwise provided in any Loan
Document, Grantors shall have the right to use and to continue to make collections on and receive other proceeds of all of 

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the
Collateral in the ordinary course of business so long as no Event of Default shall have occurred and be continuing. Upon the occurrence and during the continuance of an Event of Default, at the
option of Secured Party, Grantors' rights to make collections on and receive other proceeds of the Collateral and to use or dispose of such collections and proceeds shall terminate, and any and all
proceeds and collections, including all partial or total prepayments, then held or thereafter received on or on account of the Collateral will be held
or received by Grantors in trust for Secured Party and immediately delivered in kind to Secured Party. Any remittance received by any Grantor from any Person shall be presumed to relate to the
Collateral and to be subject to Secured Party's security interests. Upon the occurrence and during the continuance of an Event of Default, Secured Party shall have the sole right at all times to
receive, receipt for, endorse, assign, deposit and deliver, in the name of Secured Party or in the name of the appropriate Grantor, any and all checks, notes, drafts and other instruments for the
payment of money constituting proceeds of or otherwise relating to the Collateral; and each Grantor hereby authorizes Secured Party to affix, by facsimile signature or otherwise, the general or
special endorsement of it, in such manner as Secured Party shall deem advisable, to any such instrument in the event the same has been delivered to or obtained by Secured Party without appropriate
endorsement, and Secured Party and any collecting bank are hereby authorized to consider such endorsement to be a sufficient, valid and effective endorsement by the appropriate Grantor, to the same
extent as though it were manually executed by the duly authorized officer of the appropriate Grantor, regardless of by whom or under what circumstances or by what authority such facsimile signature or
other endorsement actually is affixed, without duty of inquiry or responsibility as to such matters, and each Grantor hereby expressly waives demand, presentment, protest and notice of protest or
dishonor and all other notices of every kind and nature with respect to any such instrument. 

        7.     Possession of Collateral by Secured Party. All the Collateral now, heretofore or hereafter delivered to Secured Party
shall be held by Secured Party in its possession, custody and control. Any or all of the Collateral delivered to Secured Party may be held in an interest-bearing or non-interest-bearing
account, in Secured Party's sole and absolute discretion, and Secured Party may, in its discretion, apply any such interest to payment of the Secured Obligations. Nothing herein shall obligate Secured
Party to invest any Collateral or obtain any particular return thereon. Subject to Gaming Laws, upon the occurrence and during the continuance of an Event of Default, whenever any of the Collateral is
in Secured Party's possession, custody or control, Secured Party may use, operate and consume the Collateral, whether for the purpose of preserving and/or protecting the Collateral, or for the purpose
of performing any of Grantors' obligations with respect thereto, or otherwise. Secured Party may at any time deliver or redeliver the Collateral or any part thereof to Grantors, and the receipt of any
of the same by any Grantor shall be complete and full acquittance for the Collateral so delivered, and Secured Party thereafter shall be discharged from any liability or responsibility therefor. So
long as Secured Party exercises reasonable care with respect to any Collateral in its possession, custody or control, Secured Party shall have no liability for any loss of or damage to such
Collateral, and in no event shall Secured Party have liability for any diminution in value of Collateral occasioned by economic or market conditions or events. Secured Party shall be deemed to have
exercised reasonable care within the meaning of the preceding sentence if the Collateral in the possession, custody or control of Secured Party is accorded treatment substantially equal to that which
Secured Party accords its own property, it being understood that Secured Party shall not have any responsibility for (a) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relating to any Collateral, whether or not Secured Party has or is deemed to have knowledge of such matters, or (b) taking any necessary steps to
preserve rights against any Person with respect to any Collateral. 

        8.     Rights Upon Event of Default. Subject to Gaming Laws, upon the occurrence and during the continuance of an Event of
Default under the Credit Agreement, Secured Party shall have, in any jurisdiction where enforcement hereof is sought, in addition to all other rights and remedies that Secured Party may have under
applicable Law or in equity or under this Agreement (including, without 

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limitation,
all rights set forth in Section 6 hereof) or under any other Loan Document, all rights and remedies of a secured party under the Uniform Commercial Code as enacted in the applicable
jurisdiction, and, in addition, the following rights and remedies, all of which may be exercised with or without notice to Grantors and without affecting the obligations of Grantors hereunder or under
any other Loan Document, or the enforceability of the Liens and security interests created hereby: (a) to foreclose the Liens and security interests created hereunder or under any other
agreement relating to any Collateral by any available judicial procedure or without judicial process; (b) to enter any premises where any Collateral may be located for the purpose of securing,
protecting, inventorying, appraising, inspecting, repairing, preserving, storing, preparing, processing, taking possession of or removing the same; (c) to sell, assign, lease or otherwise
dispose of any Collateral or any part thereof, either at public or private sale or at any broker's board, in lot or in bulk, for cash, on credit or otherwise, with or without representations or
warranties and upon such terms as shall be acceptable to Secured Party; (d) to notify obligors on the Collateral that the Collateral has been assigned to Secured Party and that all payments
thereon are to be made directly and exclusively to Secured Party; (e) to collect by legal proceedings or otherwise all interest, principal or other sums now or hereafter payable upon or on
account of the Collateral; (f) to cause the Collateral to be registered in the name of Secured Party, as legal owner; (g) to enter into any extension, reorganization, deposit, merger or
consolidation agreement, or any other agreement relating to or affecting the Collateral, and in connection therewith Secured Party may deposit or surrender control of the Collateral and/or accept
other property in exchange for the Collateral; (h) to settle, compromise or release, on terms acceptable to Secured Party, in whole or in part, any amounts owing on the Collateral and/or any
disputes with respect thereto; (i) to extend the time of payment, make allowances and adjustments and issue credits in connection with the Collateral in the name of Secured Party or in the name
of any Grantor; (j) to enforce payment and prosecute any action or proceeding with respect to any or all of the Collateral and take or bring, in the name of Secured Party or in the name of any
Grantor, any and all steps, actions, suits or proceedings deemed by Secured Party necessary or desirable to effect collection of or to realize upon the Collateral,  including any judicial or nonjudicial
foreclosure thereof or thereon, and each Grantor specifically consents to any nonjudicial foreclosure of any or
all of the Collateral or any other action taken by Secured Party which may release any obligor from personal liability on any of the Collateral, and each Grantor waives any right not expressly
provided for in this Agreement to receive notice of any public or private judicial or nonjudicial sale or foreclosure of any security or any of the Collateral; and any money or other property received
by Secured Party in exchange for or on account of the Collateral, whether representing collections or proceeds of Collateral, and whether resulting from voluntary payments or foreclosure proceedings
or other legal action taken by Secured Party or Grantors may be applied by Secured Party without notice to Grantors to the Secured Obligations in such order and manner as Secured Party in its sole
discretion shall determine; (k) to insure, process and preserve the Collateral; (l) to exercise all rights, remedies, powers or privileges provided under any of the Loan Documents;
(m) to remove, from any premises where the same may be located, the Collateral and any and all documents, instruments, files and records, and any receptacles and cabinets containing the same,
relating to the Collateral, and Secured Party may, at the cost and expense of each Grantor, use such of its supplies, equipment, facilities and space at its places of business as may be necessary or
appropriate to properly administer, process, store, control, prepare for sale or disposition and/or sell or dispose of the portion of the Collateral owned by such Grantor or to properly administer and
control the handling of collections and realizations thereon, and Secured Party shall be deemed to have a
rent-free tenancy of any premises of any Grantor for such purposes and for such periods of time as reasonably required by Secured Party; (n) to receive, open and dispose of all mail
addressed to any Grantor and notify postal authorities to change the address for delivery thereof to such address as Secured Party may designate;  provided that Secured Party agrees that it will promptly
deliver over to the appropriate Grantor such opened mail as does not relate to the Collateral;
and (o) to exercise all other rights, powers, privileges and remedies of an owner of the Collateral; all at Secured Party's sole option and as Secured Party in its sole discretion may deem
advisable. Grantors will, at Secured Party's 

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request,
assemble the Collateral (or any part thereof, as requested) and make it available to Secured Party at places which Secured Party may reasonably designate, whether at the premises of Grantors
or elsewhere (provided, however, that Grantors shall not be required to deliver Collateral consisting of gaming devices to a location in a jurisdiction where possession of such items is unlawful), and
will make available to Secured Party, free of cost, all premises, equipment and facilities of Grantors for the purpose of Secured Party's taking possession of such Collateral or storing the same or
removing or putting such Collateral in salable form or selling or disposing of same. 

        Upon
the occurrence and during the continuance of an Event of Default, Secured Party also shall have the right, without notice or demand, either in person, by agent or by a receiver to
be appointed by a court (and Grantors hereby expressly consent upon the occurrence and during the continuance of an Event of Default to the appointment of such a receiver), and without regard to the
adequacy of any security for the Secured Obligations, to take possession of the Collateral or any part thereof and to collect and receive the rents, issues, profits, income and proceeds thereof.
Taking possession of the Collateral shall not cure or waive any Event of Default or notice thereof or invalidate any act done pursuant to such notice. The rights, remedies and powers of any receiver
appointed by a court shall be as ordered by said court. 

        Any
public or private sale or other disposition of the Collateral may be held at any office of Secured Party, or at Grantors' places of business, or at any other place permitted by
applicable Law, and without the necessity of the Collateral being within the view of prospective purchasers. With respect to any Collateral located within or subject to the jurisdiction of a Gaming
Board, Secured Party may also request, in connection therewith, such Gaming Board to petition such local judicial or administrative tribunal or other authority as may be deemed appropriate by Secured
Party for the appointment of a supervisor or similar official to conduct the normal gaming activities on the premises following the appointment of a receiver or similar remedy. Secured Party may
direct the order and manner of sale of the Collateral, or portions thereof, as it in its sole and absolute discretion may determine, and Grantors expressly waive any right to direct the order and
manner of sale of any Collateral. Subject to applicable laws, Secured Party or any Person on Secured Party's behalf may bid and purchase at any such sale or other disposition. The net cash proceeds
resulting from the collection, liquidation, sale, lease or other disposition of the Collateral shall be applied, first, to the expenses
(including reasonable attorney costs) of retaking, holding, storing, processing and preparing for sale or lease, selling, leasing, collecting,
liquidating the Collateral and the like, and then to the satisfaction of the Secured Obligations with application as to any particular Secured
Obligations to be in the order set forth in the Credit Agreement or other Loan Documents. Grantors and any other Person then obligated therefor shall pay to Secured Party on demand any deficiency with
regard thereto which may remain after such sale, disposition, collection or liquidation of the Collateral. After all the Secured Obligations have been
indefeasibly paid, the balance after such sale, disposition, collection or liquidation of the collateral shall immediately be reassigned and redelivered to the applicable Grantor or to the Person or
Persons otherwise legally entitled thereto. 

        Unless
the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Secured Party will send or otherwise make available
to the Grantor thereof, such notice as may be required by the applicable Uniform Commercial Code of the time and place of any public sale thereof or of the time on or after which any private sale
thereof is to be made. Each Grantor hereby irrevocably appoints Borrower as its agent for the purpose of receiving notices hereunder and agrees that such Grantor shall be deemed to have conclusively
received any such notice when received by Borrower. Each Grantor expressly waives any right to receive notice of any public or private sale of any Collateral or other security for the Secured
Obligations except as expressly provided for in this paragraph. 

        Upon
consummation of any sale of Collateral hereunder, Secured Party shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold.
Each such 

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purchaser
at any such sale shall hold the Collateral so sold absolutely free from any claim or right upon the part of any Grantor or any other Person, and each Grantor hereby waives (to the extent
permitted by applicable Laws) all rights of redemption, stay and appraisal which it now has or may at any time in the future have under any rule of Law or statute now existing or hereafter enacted. If
the sale of all or any part of the Collateral is made on credit or for future delivery, Secured Party shall not be required to apply any portion of the sale price to the Secured Obligations until such
amount actually is received by Secured Party, and any Collateral so sold may be retained by Secured Party until the sale price is paid in full by the purchaser or purchasers thereof. Secured Party
shall not incur any liability in case any such purchaser or purchasers shall fail to pay for the Collateral so sold, and, in case of any such failure, the Collateral may be sold again. 

        9.     Attorney-in-Fact. Each Grantor hereby irrevocably nominates and appoints Secured Party as its
attorney-in-fact for the following purposes: (a) to do all acts and things which Secured Party may deem necessary or advisable to perfect and continue perfected the
security interests created by this Agreement and, upon the occurrence and during the continuance of an Event of Default, to preserve, process, develop, maintain and protect the Collateral;
(b) upon the occurrence and during the continuance of an Event of Default, to do any and every act which any Grantor is obligated to do under this Agreement, at the expense of the Grantor so
obligated and without any obligation to do so; (c) to prepare, sign, file and/or record, for any Grantor, in the name of the appropriate Grantor, any financing statement, application for
registration, or like paper, and to take any other action deemed by Secured Party necessary or desirable in order to perfect or maintain perfected the security interests granted hereby; and
(d) upon the occurrence and during the continuance of an Event of Default, to execute any and all papers and instruments and do all other things necessary or desirable to preserve and protect
the Collateral and to protect Secured Party's security interests therein; provided, however, that
Secured Party shall be under no obligation whatsoever to take any of the foregoing actions, and, absent bad faith or actual malice, Secured Party shall have no liability or responsibility for any act
taken or omission with respect thereto. 

        10.   Costs and Expenses. Each Grantor agrees to pay to Secured Party all costs and expenses
(including, without limitation, reasonable attorney costs) incurred by Secured Party in the enforcement or attempted enforcement of this Agreement,
whether or not an action is filed in connection therewith, and in connection with any waiver or amendment of any term or provision hereof. All advances, charges, costs and expenses,  including reasonable
attorney costs, incurred or paid by Secured Party in exercising any right, privilege, power or remedy conferred by this Agreement
(including, without limitation, the right to perform any Secured Obligation of any Grantor under the Loan Documents), or in the enforcement or attempted
enforcement thereof, shall be secured hereby and shall become a part of the Secured Obligations and shall be paid to Secured Party by each Grantor, immediately upon demand, together with interest
thereon at the rate then applicable to Obligations under the Credit Agreement. 

        11.   Statute of Limitations and Other Laws. Until the Secured Obligations shall have been paid and performed in full, the
power of sale and all other rights, privileges, powers and remedies granted to Secured Party hereunder shall continue to exist and may be exercised by Secured Party at any time and from time to time
irrespective of the fact that any of the Secured Obligations may have become barred by any statute of limitations. Each Grantor expressly waives the benefit of any and all statutes of limitation, and
any and all Laws providing for exemption of property from execution or for valuation and appraisal upon foreclosure, to the maximum extent permitted by applicable Law. 

        12.   Other Agreements. Nothing herein shall in any way modify or limit the effect of terms or conditions set forth in any
other security or other agreement executed by any Grantor or in connection with the Secured Obligations, but each and every term and condition hereof shall be in addition thereto. All provisions
contained in the Credit Agreement or any other Loan Document that apply to 

9

 

Loan
Documents generally are fully applicable to this Agreement and are incorporated herein by this reference. 

        13.   Continuing Effect. This Agreement shall remain in full force and effect and continue to be effective should any petition
be filed by or against any Grantor for liquidation or reorganization, should any Grantor become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of any Grantor's assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Secured
Obligations, or any part thereof, is, pursuant to applicable Law, rescinded or reduced in amount, or must otherwise be restored or returned by Administrative Agent or any Lender, whether as a
"voidable preference," "fraudulent conveyance," or otherwise, all as though such payment or performance had not been made. In the event that any payment or any part thereof is rescinded, reduced,
restored or returned, the Secured Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned. 

        14.   Additional Grantors. From time to time following the Closing Date, additional Persons may become parties hereto, as
additional Grantors, by executing and delivering to Secured Party an Instrument of Joinder substantially in the form of Exhibit A, accompanied by such documentation as the Secured Party may
require in connection therewith, wherein such additional Grantors agree to become a party hereto and to be bound hereby. Upon delivery of such Instrument of Joinder to and acceptance thereof by
Secured Party, notice of which acceptance is hereby waived by Grantors, each such additional Grantor shall be as fully a party hereto as if such Grantor were an original signatory hereof. Each Grantor
expressly agrees that its Secured Obligations and the Liens upon its property granted herein shall not be affected or diminished by the addition or release of additional Grantors hereunder, nor by any
election of Secured Party not to cause any Subsidiary of Borrower to become an additional Grantor hereunder. This Agreement shall be fully effective as to any Grantor who is or becomes a party hereto
regardless of whether any other Person becomes or fails to become or ceases to be a Grantor hereunder. 

        15.   Release of Grantors. This Agreement and all obligations of Grantors hereunder shall be released when (i) all
Secured Obligations have been paid in full in cash or otherwise performed in full and when no portion of the Commitments remains outstanding. Upon such release of Grantors' obligations hereunder,
Secured Party shall return any pledged Collateral to Grantors, or to the Person or Persons legally entitled thereto, and shall endorse, execute, deliver, record and file all instruments and documents,
and do all other acts and things, reasonably required for the return of the Collateral to Grantors, or to the Person or Persons legally entitled thereto, and to evidence or document the release of
Secured Party's interests arising under this Agreement, all as reasonably requested by, and at the sole expense of, Grantors. 

        16.   Additional Powers and Authorization. Secured Party shall be entitled to the benefits accruing to it as Administrative
Agent under the Credit Agreement and the other Loan Documents. Notwithstanding anything contained herein to the contrary, Secured Party may employ agents, trustees, or
attorneys-in-fact and may vest any of them with any property (including, without limitation, any Collateral pledged hereunder),
title, right or power deemed necessary for the purposes of such appointment. 

        17.   Amendment, Waiver, Etc. This Agreement shall not be amended, modified, supplemented, extended, terminated or waived
(explicitly or by implication) except in the manner permitted by the terms of the Credit Agreement. 

        18.   Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and
all of which, taken together, shall constitute one and the same agreement. 

10

 

        19.   Financing Statement Property Description. To perfect the security interests granted under this Agreement, Grantor
expressly authorizes Secured Party to file financing statements naming Grantor as debtor with the Collateral description "all assets of the debtor", "all personal property of the debtor" or other
words to that effect, except that such financing statements shall not include or grant or purport to grant any security interest in any items of property otherwise excluded as Collateral pursuant to
provisions hereof. 

        20.   Incorporation of Suretyship Provisions and Waivers. The attached  Exhibit B, "Suretyship Provisions and Waivers," is hereby incorporated by this reference as though
set forth herein in full. 

        21.   GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEVADA.

        22.   WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH GRANTOR (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. 

11

 

        IN
WITNESS WHEREOF, each Grantor has executed this Agreement by its duly authorized officer as of the date first written above. 

	 	"Grantors"
	

 	

HERBST GAMING, INC.,

a Nevada corporation
	

 	

By:	

/s/  EDWARD H. HERBST      
	
 	

 
	 	Name:	Edward J. Herbst
	 	 
	 	Title:	President
	 	 
	

 	

 	

 	
 	

 
	

 	

FLAMINGO PARADISE GAMING, LLC,

a Nevada limited liability company
	

 	

By:	

/s/  EDWARD H. HERBST      
	
 	

 
	 	Name:	Edward J. Herbst
	 	 
	 	Title:	Manager
	 	 
	

 	

 	

 	
 	

 
	

 	

MARKET GAMING, INC.,

a Nevada corporation
	

 	

By:	

/s/  EDWARD H. HERBST      
	
 	

 
	 	Name:	Edward J. Herbst
	 	 
	 	Title:	President
	 	 
	

 	

 	

 	
 	

 
	

 	

CARDIVAN COMPANY,

a Nevada corporation
	

 	

By:	

/s/  EDWARD H. HERBST      
	
 	

 
	 	Name:	Edward J. Herbst
	 	 
	 	Title:	President
	 	 
	

 	

 	

 	
 	

 
	 	 	 	 	 

12

 

	

 	

CORAL COIN, INC.,

a Nevada corporation
	

 	

By:	

/s/  EDWARD H. HERBST      
	
 	

 
	 	Name:	Edward J. Herbst
	 	 
	 	Title:	President
	 	 
	

 	

 	

 	
 	

 
	

 	

CORRAL COUNTRY COIN, INC.,

a Nevada corporation
	

 	

By:	

/s/  EDWARD H. HERBST      
	
 	

 
	 	Name:	Edward J. Herbst
	 	 
	 	Title:	President
	 	 
	

 	

 	

 	
 	

 
	

 	

E-T-T ENTERPRISES L.L.C.,

a Nevada limited liability company
	

 	

By:	

/s/  EDWARD H. HERBST      
	
 	

 
	 	Name:	Edward J. Herbst
	 	 
	 	Title:	Manager
	 	 
	

 	

 	

 	
 	

 
	

 	

E-T-T, INC.,

a Nevada corporation
	

 	

By:	

/s/  EDWARD H. HERBST      
	
 	

 
	 	Name:	Edward J. Herbst
	 	 
	 	Title:	President
	 	 
	 	 	 	 	 

	ACCEPTED AND AGREED

AS OF THE DATE FIRST

ABOVE WRITTEN:	 	 
	

"Secured Party"
	

BANK OF AMERICA, N.A.

as Administrative Agent
	

By:	

/s/  PETER J. VITALE      
	
 	

 
	Name:	Peter J. Vitale
	 	 
	Title:	Senior Vice President
	 	 
	 	 	 	 

13

   SCHEDULE I  

       

[BORROWER TO PROVIDE]  

      

1

   EXHIBIT A

TO

SECURITY AGREEMENT

INSTRUMENT OF JOINDER  

        THIS INSTRUMENT OF JOINDER ("Joinder") is executed as of
                        ,             , by
                        , a
                         ("Joining Party"), and delivered to Bank of America,
 N.A.,
as Administrative Agent ("Administrative Agent"), pursuant to the Security Agreement dated as of June 10, 2004 made by Herbst Gaming, Inc., a Nevada corporation, Flamingo Paradise
Gaming, LLC, a Nevada limited liability company, Market Gaming, Inc., a Nevada corporation, Cardivan Company, a Nevada corporation, Corral Coin, Inc., a Nevada corporation, Corral
Country Coin, Inc., a Nevada corporation, E-T-T Enterprises L.L.C., a Nevada limited liability company, and E-T-T, Inc., a Nevada
corporation, as initial Grantors, in favor of the Administrative Agent and the Lenders referred to below (as amended, extended, renewed, supplemented or otherwise modified, the "Security Agreement").
Terms used but not defined in this Joinder shall have the meanings defined for those terms in the Security Agreement. 

RECITALS  

        (a)   The
Security Agreement was made by the Grantors in favor of the Administrative Agent for the ratable benefit of the Lenders that are parties to that certain Credit
Agreement dated as of June 10, 2004, by and among Herbst Gaming, Inc., a Nevada corporation ("Borrower"), the Lenders which are parties thereto and the Administrative Agent (the "Credit
Agreement"). 

        (b)   Joining
Party has become a Significant Subsidiary of Borrower, and as such is required pursuant to Section 5.11 of the Credit Agreement to become a Grantor. 

        (c)   Joining
Party expects to realize direct and indirect benefits as a result of the availability to Borrower of the credit facilities under the Credit Agreement. 

        NOW
THEREFORE, Joining Party agrees as follows: 

AGREEMENT  

        (1)   By
this Joinder, Joining Party becomes a "Grantor" under and pursuant to Section 16 of the Security Agreement. Joining Party agrees that, upon its execution
hereof, it will become a Grantor under the Security Agreement and will be bound by all terms, conditions, and duties applicable to a Grantor under the Security Agreement. 

[Remainder
of Page Intentionally Left Blank] 

1

 

        (2)   The
effective date of this Joinder is                         ,
            . 

	 	 	"Joining Party"
	

 	
 	

    
	
 	

 
	 	 	a	    
	 	 
	 	 	 	 	 	 
	

 	
 	

By:	

    
	
 	

 
	 	 	Name:	    
	 	 
	 	 	Title:	    
	 	 
	 	 	 	 	 	 

	ACKNOWLEDGED:
	

BANK OF AMERICA, N.A.,

as Administrative Agent
	

By:	

    
	
 	

 
	Name:	    
	 	 
	Title:	    
	 	 
	 	 	 	 

2

 
EXHIBIT B

TO

SECURITY AGREEMENT

SURETYSHIP PROVISIONS AND WAIVERS  

        1.     Waivers and Consents. Each Grantor acknowledges that the Liens created or granted herein will or may secure obligations of
Persons other than such Grantor and, in full recognition of that fact, each Grantor consents and agrees that Secured Party may, at any time and from time to time, without notice or demand, and without
affecting the enforceability or security hereof: 

        (a)   supplement,
modify, amend, extend, renew, accelerate, or otherwise change the time for payment or the terms of the Secured Obligations or any part thereof, including any
increase or decrease of the rate(s) of interest thereon; 

        (b)   supplement,
modify, amend or waive, or enter into or give any agreement, approval or consent with respect to, the Secured Obligations or any part thereof or any of the
Loan Documents or any additional security or guaranties, or any condition, covenant, default, remedy, right, representation or term thereof or thereunder; 

        (c)   accept
new or additional instruments, documents or agreements in exchange for or relative to any of the Loan Documents or the Secured Obligations or any part thereof; 

        (d)   accept
partial payments on the Secured Obligations; 

        (e)   receive
and hold additional security or guaranties for the Secured Obligations or any part thereof; 

        (f)    release,
reconvey, terminate, waive, abandon, subordinate, exchange, substitute, transfer and enforce any security or guaranties, and apply any security and direct the
order or manner of sale thereof as Secured Party in its sole and absolute discretion may determine; 

        (g)   release
any Person or any guarantor from any personal liability with respect to the Secured Obligations or any part thereof; 

        (h)   settle,
release on terms satisfactory to Secured Party or by operation of applicable laws or otherwise liquidate or enforce any Secured Obligations and any security or
guaranty therefor in any manner, consent to the transfer of any security and bid and purchase at any sale; and 

        (i)    consent
to the merger, change or any other restructuring or termination of the corporate or other existence of Borrower or any other Person, and correspondingly
restructure the Secured Obligations, and any such merger, change, restructuring or termination shall not affect the liability of any Grantor or the continuing existence of any Lien hereunder, under
any other Loan Document to which any Grantor is a party or the enforceability hereof or thereof with respect to all or any part of the Secured Obligations. 

        Upon
the occurrence of and during the continuance of any Event of Default, Secured Party may enforce this Agreement independently as to each Grantor and independently of any other remedy
or security Secured Party at any time may have or hold in connection with the Secured Obligations, and it shall not be necessary for Secured Party to marshal assets in favor of any Grantor or any
other Person or to proceed upon or against and/or exhaust any other security or remedy before proceeding to enforce this Agreement. Each Grantor expressly waives any right to require Secured Party to
marshal assets in favor of any Grantor, or any other Person or to proceed against any other Person or any collateral provided by any other Person, and agrees that Secured Party may proceed against any
Person and/or collateral in such order as it shall determine in its sole and absolute discretion. Secured Party may file a separate action or actions against any Grantor, whether or not action
is brought or prosecuted with respect to any other security or against any other Grantor, Borrower or any other 

3

 

Person,
or whether or not any other Person is joined in any such action or actions. Each Grantor agrees that Secured Party and Borrower and any Person may deal with each other in connection with the
Secured Obligations or otherwise, or alter any contracts or agreements now or hereafter existing between any of them, in any manner whatsoever, all without in any way altering or affecting the
validity of, or the pledge or security interest granted or created by, this Agreement. Secured Party's rights hereunder shall be reinstated and revived, and the enforceability of this Agreement shall
continue, with respect to any amount at any time paid on account of the Secured Obligations which thereafter shall be required to be restored or returned by Secured Party upon the bankruptcy,
insolvency or reorganization of any Grantor or any other Person or otherwise (and whether by litigation, settlement, demand or otherwise), all as though such amount had not been paid. Each Grantor
agrees that the Liens created or granted herein and the enforceability of this Agreement at all times shall remain effective to secure the full amount of all the Secured Obligations including, without
limitation, the amount of all loans and interest thereon at the rates provided for in the Credit Agreement and the note(s) thereunder, even though the Secured Obligations,  including any part thereof or
any other security or guaranty therefor, may be or hereafter may become invalid or otherwise unenforceable as against
Borrower or any other Person and whether or not Borrower or any other Person shall have any personal liability with respect thereto. Each Grantor expressly waives any and all defenses now or hereafter
arising or asserted by reason of (a) any disability or other defense of Borrower or any other Person with respect to the Secured Obligations, (b) the unenforceability or invalidity of
any security or guaranty for the Secured Obligations or the lack of perfection or continuing perfection or failure or subordination of priority of any security for the Secured Obligations,
(c) the cessation for any cause whatsoever of the liability of Borrower or any other Obligor (other than by reason of the full payment and performance of all Secured Obligations),
(d) any failure of Secured Party to marshal assets in favor of such Grantor or any other Person, (e) except as otherwise provided in this Agreement, any failure of Secured Party to give
notice of sale or other disposition of collateral to such Grantor or any other Person or any defect in any notice that may be given in connection with any sale or disposition of collateral,
(f) except as otherwise provided in this Agreement, any failure of Secured Party to comply with applicable Laws in connection with the sale or other disposition of any Pledged Collateral or
other security for any Secured Obligation, including, without limitation, any failure of Secured Party to conduct a commercially reasonable sale or
other disposition of any Pledged Collateral or other security for any Secured Obligation, (g) any act or omission of Secured Party or others that directly or indirectly results in or aids the
discharge or release of Borrower or any other Person or the Secured Obligations or any other security or guaranty therefor by operation of Law or otherwise, (h) any Law which provides that the
obligation of a surety or guarantor must neither be larger in amount nor in other respects more burdensome than that of the principal or which reduces a surety's or guarantor's obligation in
proportion to the principal obligation, (i) any failure of Secured Party to file or enforce a claim in any bankruptcy or other proceeding with respect to any Person, (j) the election by
Secured Party, in any bankruptcy proceeding of any Person, of the application or non-application of
Section 1111(b)(2) of the United States Bankruptcy Code, (k) any extension of credit or the grant of any Lien under Section 364 of the United States Bankruptcy Code,
(l) any use of cash collateral under Section 363 of the United States Bankruptcy Code, (m) any agreement or stipulation with respect to the provision of adequate protection in any
bankruptcy proceeding of any Person, (n) the avoidance of any Lien in favor of Secured Party for any reason, (o) any bankruptcy, insolvency, reorganization, arrangement, readjustment of
debt, liquidation or dissolution proceeding commenced by or against any Person, including any discharge of, or bar or stay against collecting, all or
any of the Secured Obligations (or any interest thereon) in or as a result of any such proceeding, (p) to the extent permitted, the benefits of any form of one-action rule under any
applicable Law, or (q) any action taken by Secured Party that is authorized by this Section 1 or any other provision of any Loan Document. Until no part of any commitment to lend remains
outstanding and all of the Secured Obligations have been paid and performed in full, Grantors shall have no right of subrogation, contribution, reimbursement or indemnity, and each Grantor expressly
waives any right to enforce any remedy that Secured Party now 

4

 

has
or hereafter may have against any other Person and waives the benefit of, or any right to participate in, any other security now or hereafter held by Secured Party. Each Grantor waives all rights
and defenses arising out of an election of remedies by Secured Party, even though that election of remedies, such as a non-judicial foreclosure with respect to security for the Secured
Obligations has destroyed such Grantor's rights of subrogation and reimbursement against the principal. Each Grantor expressly waives all setoffs and counterclaims and all presentments, demands for
payment or performance, notices of nonpayment or nonperformance, protests, notices of protest, notices of dishonor and all other notices or demands of any kind or nature whatsoever with respect to the
Secured Obligations, and all notices of acceptance of this Agreement or of the existence, creation or incurring of new or additional Secured Obligations. 

        2.     Condition of Borrower and its Subsidiaries. Each Grantor represents and warrants to Secured Party that such Grantor has
established adequate means of obtaining from Borrower and its Subsidiaries on a continuing basis, financial and other information pertaining to the businesses, operations and condition (financial and
otherwise) of Borrower and its Subsidiaries, and their Properties, and such Grantor now is and hereafter will be completely familiar with the businesses, operations and condition (financial and
otherwise) of Borrower and its Subsidiaries and their Properties. To the maximum extent permitted by law, each Grantor hereby expressly waives and relinquishes any duty on the part of Secured Party
(should any such duty exist) to disclose to such Grantor any matter, fact or thing related to the businesses, operations or condition (financial or otherwise) of Borrower or its Subsidiaries, or their
Properties, whether now known or hereafter known by Secured Party during the life of this Agreement. With respect to any of the Obligations, Secured Party need not inquire into the powers of any
Borrower or any of its Subsidiaries thereof, or the officers or employees acting or purporting to act on their behalf, and all Secured Obligations made or created in good faith reliance upon the
professed exercise of such powers shall be secured hereby. 

        3.     Liens on Real Property. In the event that all or any part of the Secured Obligations at any time are secured by any one or
more deeds of trust or mortgages or other instruments creating or granting Liens on any interests in real property, each Grantor authorizes Secured Party, upon the occurrence of and during the
continuance of any Event of Default, at its sole option, without notice or demand and without affecting any obligations of any Grantor, the enforceability of this Agreement, or the validity or
enforceability of any Liens of Secured Party on any collateral, to foreclose any or all of such deeds of trust or mortgages or other instruments by judicial or nonjudicial sale. To the maximum extent
permitted by law, each Grantor expressly waives any defenses to the enforcement of this Agreement or any Liens created or granted hereby or to the recovery by Secured Party against Borrower, any other
Obligor or any guarantor or any other Person liable therefor of any deficiency after a judicial or nonjudicial foreclosure or sale, even though such a foreclosure or sale may impair the subrogation
rights of such Grantor and may preclude such Grantor from obtaining reimbursement or contribution from any other Person. Each Grantor expressly waives any defenses or benefits that may be derived
Nevada Revised Statutes Sections 40.430 (and judicial decisions relating thereto), 40.451, 40.455, 40.457 and 40.459, or comparable provisions of the Laws of any other jurisdiction, and all other
suretyship defenses it otherwise might or would have under any other applicable Law. Each Grantor expressly waives any right to receive notice of any judicial or nonjudicial foreclosure or sale of any
real property or interest therein subject to any such deeds of trust or mortgages or other instruments and any Grantor's failure to receive any such notice shall not impair or affect such Grantor's
obligations hereunder and under the other Loan Documents or the enforceability of this Agreement or any Liens created or granted hereby. 

        4.     Waiver of Rights of Subrogation. Notwithstanding anything to the contrary elsewhere contained herein or in any other Loan
Document to which any Grantor is a Party, each Grantor hereby waives with respect to Borrower and its successors and assigns (including any surety) and any other Person any and all rights at Law or in
equity, to subrogation, to reimbursement, to exoneration, to indemnity, to 

5

 

contribution,
to setoff or to any other rights that could accrue to a surety against a principal, to a guarantor against a maker or obligor, to an accommodation party against the party accommodated,
or to a holder or transferee against a maker and which such Grantor may have or hereafter acquire against Borrower or any other Person in connection with or as a result of such Grantor's execution,
delivery and/or performance of this Agreement or any other Loan Document to which such Grantor is a Party. Each Grantor agrees that it shall not have or assert any such rights against Borrower or its
successors and assigns or any other Person (including any surety) which is directly or indirectly a creditor of any other Person or any surety for any
other Person, either directly or as an attempted setoff to any action commenced against such Grantor by Borrower (as borrower or in any other capacity) or any other Person. Each Grantor hereby
acknowledges and agrees that this waiver is intended to benefit Secured Party and shall not limit or otherwise affect such Grantor's liability hereunder, under any other Loan Document to which such
Grantor is a Party, or the enforceability hereof or thereof. 

        5.     Waiver of Discharge. Without limiting the generality of the foregoing, each Grantor hereby waives discharge by waiving all
defenses based on suretyship or impairment of collateral. 

        6.     Understandings with Respect to Waivers and Consents. Each Grantor warrants and agrees that each of the waivers and
consents set forth herein is made after consultation with legal counsel and with full knowledge of its significance and consequences, with the understanding that events giving rise to any defense or
right waived may diminish, destroy or otherwise adversely affect rights which such Grantor otherwise may have against Borrower, Secured Party or others, or against collateral, and that, under the
circumstances, the waivers and consents herein given are reasonable and not contrary to public policy or Law. If any of the waivers or consents herein are determined to be contrary to any applicable
Law or public policy, such waivers and consents shall be effective to the maximum extent permitted by Law. 

6

QuickLinks

Exhibit 10.60

SECURITY AGREEMENTExhibit 10.61

 

	
  RECORDING
  REQUESTED BY

  AND WHEN RECORDED MAIL TO:

  
	
  Sheppard,
  Mullin, Richter & Hampton LLP

  333 South Hope Street, 48th Floor

  Los Angeles, CA  90071-1448

  Attn:  William M. Scott IV, Esq.

  APN:  162-22-104-01

  
	
   

  
	
  Mail Property Tax Statements to:

  
	
  c/o Herbst Gaming, Inc.

  5195 Las Vegas Blvd.

  Las Vegas, NV  89119

  Attn:  M. Higgins

  
	
   

  
	
   

  
	
  THIS
  SPACE ABOVE FOR RECORDER’S USE

  

 

 

DEED OF TRUST

with Assignment of Rents, Security Agreement and

Fixture Filing

 

NOTICE:  THE OBLIGATIONS SECURED HEREBY PROVIDE FOR
THE PERIODIC INCREASES AND/OR DECREASES IN THE APPLICABLE INTEREST RATE.

 

NOTICE:  THE OBLIGATIONS SECURED HEREBY INCLUDE
REVOLVING CREDIT OBLIGATIONS WHICH PERMIT BORROWING, REPAYMENT AND REBORROWING.

 

NOTICE:  THIS DEED OF TRUST SECURES FUTURE ADVANCES.  THE MAXIMUM AMOUNT OF PRINCIPAL SECURED IS
$190 MILLION.

 

The parties to
this Deed of Trust with Assignment of Rents, Security Agreement and Fixture
Filing (“Deed of Trust”), dated as of June 10, 2004, are FLAMINGO PARADISE
GAMING, LLC, a Nevada limited liability company (“Trustor”), as trustor, PRLAP,
INC., as trustee (“Trustee”), and BANK OF AMERICA, N.A., a national banking
association, as “Administrative Agent” for the “Lenders” including, without
limitation, “the Swing Line Lender” (as each of those three terms is defined in
the Credit Agreement), as beneficiary and secured party (“Beneficiary”).  Capitalized terms used and not otherwise
defined herein shall have the meanings given to them in that certain Credit
Agreement, dated as of June 10, 2004 (“Credit Agreement”) by and among
Herbst Gaming, Inc., a Nevada corporation (“Borrower”), each lender whose name
is set forth on the signature pages therein and each lender that may hereafter
become a party to the Credit Agreement pursuant to Section 10.6 therein
(each a “Lender” and collectively, the “Lenders”), Bank of America, N.A., as
Administrative Agent, Swing Line Lender and L/C Issuer, Banc of America
Securities LLC, as a Co-Lead Arranger and Sole Book Manager, U.S. Bank,
National Association, as a Co-Lead Arranger, Wells Fargo Bank, National
Association, as Syndication Agent and Lehman Brothers Holdings, Inc., as
Documentation Agent.

 

1

 

1.                                       Grant in Trust and Secured Obligations.

 

1.1                                 Grant in Trust. 
For the purpose of securing payment and performance of the Secured
Obligations defined and described in Section 1.2, Trustor hereby
irrevocably and unconditionally grants, bargains, conveys, sells, transfers and
assigns to Trustee, in trust for the benefit of Beneficiary, with power of sale
and right of entry and possession, all estate, right, title and interest which
Trustor now has or may later acquire in and to the following property (all or
any part of such property, or any interest in all or any part of it, as the
context may require, the “Property”):

 

(a)                                  The real property located in the County
of Clark (the “County”), State of Nevada, as described in Exhibit A,
together with all existing and future easements and rights affording access to
it (the “Land”); together with

 

(b)                                 All buildings, structures and
improvements now located or later to be constructed on the Land, including,
without limitation, all parking areas, roads, driveways, walks, fences, walls,
docks, berms, landscaping, recreation facilities, drainage facilities, lighting
facilities and other site improvements (the “Improvements”); together with

 

(c)                                  All existing and future appurtenances,
privileges, easements, franchises, hereditaments and tenements of the Land,
including all minerals, oil, gas, other hydrocarbons and associated substances,
sulphur, nitrogen, carbon dioxide, helium and other commercially valuable
substances which may be in, under or produced from any part of the Land, all
development rights and credits, air rights, water, water courses, water rights
(whether riparian, appropriative or otherwise, and whether or not appurtenant),
water stock and water permits (together with the statutory right to file
applications to change, and any and all applications to change the same),
including any water permits, easements, rights of way, rights of ingress and
egress, drainage rights, gores or strips of land, any land lying in the
streets, highways, ways, sidewalks, alleys, passages, roads or avenues, open or
proposed, in front of or adjoining the Land and Improvements, any land in the
bed of any body of water adjacent to the Land, any land adjoining the Land
created by artificial means or by accretion, all air space and rights to use
such air space, and all development and similar rights; together with

 

(d)                                 Subject to Article 2, below,
all existing and future leases, subleases, subtenancies, licenses (except for
gaming licenses and liquor licenses that are not transferable), occupancy
agreements, concessions and any other agreement devising any portion of the
Property or relating to the use and enjoyment of all or any part of the Land
and Improvements, and any and all guaranties and other agreements relating to
or made in connection with any of the foregoing, whether written or oral and
whether in existence at or upon the recordation of this Deed of Trust or
entered into after the recordation of this Deed of Trust (some or all
collectively, as the context may require, “Leases”, which shall not include the
Operating Lease), and all rents, security deposits, royalties, issues, profits,
receipts, earnings, revenue, income, products and proceeds and other benefits
of the Land and Improvements, whether now due, past due or to become due,
including, without limitation, all prepaid rents, security deposits, fixed,
additional

 

2

 

and contingent rents, deficiency rents and liquidated
damages, license fees, occupancy charges, hotel room charges, cabana charges,
casino revenues, show ticket revenues, food and beverage revenues, room service
revenues, merchandise sales revenues, parking, maintenance, common area, tax,
insurance, utility and service charges and contributions, proceeds of sale of
electricity, gas, heating, air-conditioning, cable and other utilities and
services, green fees, cart rental fees, instruction fees, membership charges,
restaurant, snack bar and pro shop revenues, liquidated damages, and all other
rights to payments, together with and any and all guaranties and other
agreements relating to or made in connection with any of such leases (some or
all collectively, as the context may require, “Rents”); together with

 

(e)                                  All goods, materials, supplies, chattels,
furniture, fixtures, equipment, machinery and other property now or later to be
attached to, placed in or on, or used in connection with the use, enjoyment,
occupancy or operation of all or any part of the Land and Improvements, whether
stored on the Land or elsewhere, including all pumping plants, engines, pipes,
ditches and flumes, and also all gas, electric, cooking, heating, cooling, air
conditioning, lighting, refrigeration and plumbing fixtures and equipment, all
water, sanitary and storm sewer, drainage, electricity, steam, gas, telephone,
cable and other utility equipment and facilities, all plumbing, lighting,
heating, ventilating, air conditioning, refrigerating, incinerating,
compacting, fire protection and sprinkler, surveillance and security, vacuum
cleaning, public address and communications equipment and systems, all kitchen
and laundry appliances, screens, awnings, floor coverings, partitions,
elevators, escalators, motors, machinery, pipes, fittings and other items of
equipment and property of every kind and description, all of which shall be
considered to the fullest extent of the law to be real property for purposes of
this Deed of Trust; together with

 

(f)                                    All building materials, equipment, work
in process or other personal property of any kind, whether stored on the Land
or elsewhere, which have been or later will be acquired for the purpose of
being delivered to, incorporated into or installed in or about the Land or
Improvements; together with

 

(g)                                 All rights to the payment of money,
accounts, accounts receivable, reserves, deferred payments, refunds, cost savings,
payments and deposits, room revenues, food revenues, beverage revenues and
casino revenues, whether now or later to be received from third parties
(including all earnest money sales deposits) or deposited by Trustor with third
parties (including all utility deposits), contract rights, development and use
rights, governmental permits and licenses (except for gaming licenses and
liquor licenses that are not transferable), authorizations, certificates,
variances, consents and approvals, applications, architectural and engineering
plans, specifications and drawings, as-built drawings, guaranties, warranties,
management agreements, operating and/or licensing agreements, supply and
service contracts for water, sanitary and storm sewer, drainage, electricity,
steam, gas, telephone, cable, satellite, and other utilities, property and
title insurance policies and proceeds thereof (including without limitation the
right to assert, prosecute and settle claims under such policies), chattel
paper, instruments, documents, notes, certificates of deposit, securities,
other investments, drafts and letters of credit (other than letters of credit
in favor of Beneficiary), which arise from or relate to

 

3

 

construction on the Land or to any business now or
later to be conducted on it, or to the Land and Improvements generally;
together with

 

(h)                                 All proceeds, including all rights and
claims to, dividends of and demands for them, of the voluntary or involuntary
conversion of any of the Land, Improvements or the other property described
above into cash or liquidated claims, including proceeds of all present and
future fire, hazard or casualty insurance policies (whether or not any such
insurance policy is required by this Deed of Trust or any other Loan Document)
and all condemnation awards or payments now or later to be made by any public
body or decree by any court of competent jurisdiction for any taking or in
connection with any condemnation or eminent domain proceeding, and all causes
of action and their proceeds for any damage or injury to the Land, Improvements
or the other property described above or any part of them, or breach of
warranty in connection with the construction of the Improvements, including
causes of action arising in tort, contract, fraud or concealment of a material
fact; together with

 

(i)                                     All books and records pertaining to any
and all of the property described above, including computer readable memory and
any computer hardware or software necessary to access and process such memory
(“Books and Records”); together with

 

(j)                                     All proceeds of, additions and accretions
to, substitutions and replacements for, changes in, and greater right, title
and interest in, to and under or derived from, any of the property described
above and all extensions, improvements, betterments, renewals, substitutions
and replacements thereof and additions and appurtenances thereto, including all
proceeds of any voluntary or involuntary disposition or claim, right and remedy
respecting any such property (arising out of any judgment, condemnation or
award, or otherwise arising) and all goods, documents, general intangibles,
chattel paper and accounts, wherever located, acquired with cash proceeds of
any of the foregoing or its proceeds.

 

Notwithstanding
the foregoing, the term “Property,” as used in this Deed of Trust, shall not
include (i) any personal property or fixtures, the purchase of which was
financed by a purchase money security interest, including any capital lease
obligation, permitted under the Credit Agreement to the extent that the
documents creating such purchase money security interest or capital lease
prohibit the granting thereon, but only for so long as the related indebtedness
remains outstanding, (ii) any capital stock or other equity interests in any
gaming licenses, and (iii) any gaming licenses and liquor licenses which are
not transferable.

 

Trustor shall and
will warrant and forever defend the Property in the quiet and peaceable
possession of the Trustee, its successors and assigns against all and every
person or persons lawfully claiming or to claim the whole or any part
thereof.  Trustor agrees that any greater
title to the Property hereafter acquired by Trustor during the term hereof
shall be subject hereto.

 

4

 

1.2                                 Secured Obligations.

 

1.2.1                        Trustor makes the grant, bargain,
conveyance, sale, transfer and assignment set forth in Section 1.1 and
grants the security interest set forth in Article 3 for the purpose of
securing the following obligations (collectively, the “Secured Obligations”) in
any order of priority that Beneficiary may choose:

 

(a)                                  Except as specified in Section 1.2.2
below, the payment and performance of each obligation of Trustor pursuant to
that certain Guaranty (the “Guaranty”), dated concurrently herewith, executed
by Trustor in favor of Beneficiary.  The
Guaranty has been entered into by Trustor to, among other things, guaranty the
payment and performance of all obligations of Borrower and any other “Obligor”
(as defined in the Guaranty) to Beneficiary under the Credit Agreement and all
related Loan Documents, pursuant to which the Lenders have extended or have
agreed to extend to the Borrower certain secured revolving and term credit
facilities, presently in the aggregate amount of $150,000,000, but subject to
increase to $190,000,000 under certain circumstances (the “Commitment”),
including, but not limited to the payment of all amounts owing under the Swing
Line Loan Note, the payment of all amounts owing with respect to the Letters of
Credit, including without limitation unreimbursed drawings and obligations to
furnish cash collateral as provided in the Credit Agreement, and the payment of
all amounts owing under any and all Secured Swap Contracts entered into by the
Borrower with any Lender or Affiliate thereof;

 

(b)                                 The payment and performance of all future
advances and other obligations that Trustor or any other person or entity may
owe to Beneficiary and/or any Lender (whether as principal, surety or
guarantor), when a writing evidences Trustor’s and Beneficiary’s agreement that
such advances or obligations be secured by this Deed of Trust;

 

(c)                                  The payment and performance of all
obligations of Trustor under this Deed of Trust;

 

(d)                                 The payment and performance of all
modifications, amendments, extensions and renewals, however evidenced, of any
of the Secured Obligations described in clause (a), (b) or (c) above.

 

1.2.2                        Notwithstanding any provision of this
Deed of Trust or any other Loan Document, the obligations and liability of
Trustor, any Borrower or any other person arising under Sections 5.09
and/or 10.04 of the Credit Agreement (and/or under any separate
agreement relating to Hazardous Materials which states that it is not secured
by real property) are not and shall not be Secured Obligations under this Deed
of Trust.

 

1.2.3                        All persons who may have or acquire an
interest in all or any part of the Property will be considered to have notice
of, and will be bound by, the terms of the Secured Obligations and each other
agreement or instrument made or entered into in connection with each of the
Secured Obligations.  Such terms include
any provisions in the Credit Agreement or the other Loan Documents which permit
borrowing, repayment and reborrowing,

 

5

 

or which provide that the interest rate on one or more
of the Secured Obligations may vary from time to time.

 

1.3                                 Future Advances (NRS 106.300, et seq). 
It is the intention of Trustor, Beneficiary and the Lenders that this
Deed of Trust is an “instrument” (as defined in NRS 106.330, as amended or
recodified from time to time) which secures “future advances” (as defined in
NRS 106.320, as amended or recodified from time to time) and which is governed
pursuant to NRS 106.300 through 106.400, as amended or recodified from
time to time (“NRS” means Nevada Revised Statutes).  It is the intention of the parties that the
Secured Obligations include the obligation of Trustor to repay “future
advances” of “principal” (as defined in NRS 106.345, as amended or recodified
from time to time) in an amount up to the Commitment (as further described
above), and that the lien of this Deed of Trust secures the obligation of
Trustor to repay all such “future advances” with the priority set forth in
NRS 106.370(1), as amended or recodified from time to time.

 

2.                                       Assignment of Rents and Leases.

 

2.1                                 Assignment.  Trustor
hereby irrevocably, absolutely, presently and unconditionally assigns,
transfers and sets over to Beneficiary all of the right, title and interest
which Trustor now has or may later acquire in and to the Rents and the Leases,
and confers upon Beneficiary the right to collect such Rents and enforce the
provisions of the Leases with or without taking possession of the
Property.  This is an absolute
assignment, not an assignment for security only.

 

2.2                                 Grant of License. 
Beneficiary hereby confers upon Trustor a license (“License”) to collect
and retain the Rents as they become due and payable, so long as no Event of
Default, as defined in Section 6.2, shall exist and be
continuing.  If an Event of Default has
occurred and is continuing, Beneficiary shall have the right, which it may
choose to exercise in its absolute discretion, to terminate this License without
notice to or demand upon Trustor, and without regard to the adequacy of
Beneficiary’s security under this Deed of Trust.

 

2.3                                 Collection and Application of Rents. 
Subject to the License granted to Trustor under Section 2.2,
Beneficiary has the right, power and authority to collect any and all Rents and
exercise Trustor’s right, title and interest under the Leases.  Trustor hereby appoints Beneficiary its
attorney-in-fact to perform any and all of the following acts, if and at the
times when Beneficiary in its absolute discretion may so choose:

 

(a)                                  Demand, receive and enforce payment of
any and all Rents and any other right, title and interest of Trustor under the
Leases; or

 

(b)                                 Give receipts, releases and satisfactions
for any and all Rents and any other obligations and duties under the Leases; or

 

(c)                                  Sue either in the name of Trustor or in
the name of Beneficiary for any and all Rents and to enforce any other
obligations and duties under the Leases.

 

Beneficiary’s
right to the Rents and the Leases does not depend on whether or not Beneficiary
takes possession of the Property as permitted under Section 6.3.3.  In Beneficiary’s absolute

 

6

 

discretion,
Beneficiary may choose to collect Rents and exercise the right, title and
interest of Trustor under the Leases either with or without taking possession
of the Property.  Beneficiary shall apply
all Rents collected by it in the manner provided under Section 6.6.  If an Event of Default shall have occurred and
Beneficiary is in possession of all or part of the Property and is collecting
and applying Rents and exercising any right, title and interest of Trustor
under the Leases as permitted under this Deed of Trust, then Beneficiary,
Trustee and any receiver shall nevertheless be entitled to exercise and invoke
every right and remedy afforded any of them under this Deed of Trust and at law
and in equity, including the right to exercise the power of sale granted under
Section 1.1 and Section 6.3.7.

 

2.4                                 Beneficiary Not Responsible. 
Under no circumstances shall Beneficiary have any duty to produce Rents
from the Property or maintain the Leases. 
Regardless of whether or not Beneficiary, in person or by agent, takes
actual possession of the Land and Improvements, Beneficiary is not and shall
not be deemed to be:

 

(a)                                  a “mortgagee in possession” for any
purpose; or

 

(b)                                 responsible for performing any of the
obligations under any Lease; or

 

(c)                                  responsible for any waste committed by
lessees or any other parties, any dangerous or defective condition of the
Property, or any negligence in the management, upkeep, repair or control of the
Property; or

 

(d)                                 liable in any manner for the Property or
the use, occupancy, enjoyment or operation of all or any part of it.

 

Notwithstanding
the foregoing, this Section 2.4 shall not be construed as a waiver
of any liability of Beneficiary to Trustor that would otherwise exist as a
result of Beneficiary’s gross negligence or willful misconduct.

 

2.5                                 Leasing.  Without
Beneficiary’s prior written consent, Trustor shall not accept any deposit or
prepayment of Rents for any period exceeding one (1) month, and Trustor shall
not lease the Property or any part of it except strictly in accordance with the
Loan Documents.  Trustor shall not apply
any Rents in any manner prohibited by the Loan Documents.

 

3.                                       Grant of Security Interest.

 

3.1                                 Security Agreement. 
The parties intend for this Deed of Trust to create a lien on and
security interest in the Property, and an absolute assignment of the Rents and
the Leases, all in favor of Beneficiary. 
The parties acknowledge that some of the Property and some of the Rents
and Leases may be determined under applicable law to be personal property or
fixtures.  To the extent such Property,
Rents or Leases constitute personal property, Trustor, as debtor, hereby grants
to Beneficiary, as secured party, a security interest in all such Property,
Rents and Leases, to secure payment and performance of the Secured Obligations,
and Trustor, as debtor, also has granted a security interest in such Property,
Rents and Leases pursuant to that certain Security Agreement dated concurrently
herewith, executed by the Borrower and each of

 

7

 

its Subsidiaries, as debtor, in favor of Beneficiary,
as secured party, as modified from time to time.  This Deed of Trust constitutes a security
agreement under the Nevada Uniform Commercial Code, as amended or recodified
from time to time, covering all such Property, Rents and Leases.  To the extent any revenues generated in
connection with the operation of the Property from time to time are not real
property encumbered by the lien created by Section 1.1, above, and
are not absolutely assigned by the assignment set forth in Section 2.1,
above, it is the intention of the parties that such revenues shall constitute
“proceeds, products, offspring, rents or profits” (as defined in and for the
purposes of Section 552(b) of the United States Bankruptcy Code, as such
section may be modified or supplemented) of the Land and Improvements,
and/or “fees, charges, accounts, or other payments for the use or occupancy of
rooms and other public facilities in hotels, motels or other lodging
properties,” as applicable (as such terms are defined in and for the purpose of
Section 552(b) of the United States Bankruptcy Code, as such
Section may be modified or supplemented).

 

3.2                                 Financing Statements. 
Trustor consents to one or more financing statements and such other
documents as Beneficiary may from time to time require to perfect or continue
the perfection of Beneficiary’s security interest in any Property, Rents or
Leases.  As provided in Section 5.11,
Trustor shall pay all fees and costs that Beneficiary may incur in filing such
documents in public offices and in obtaining such record searches as
Beneficiary may reasonably require.  If
Trustor fails to execute any financing statements or other documents for the
perfection or continuation of any security interest, Trustor hereby appoints
Beneficiary as its true and lawful attorney-in-fact (which appointment is
irrevocable and coupled with an interest) to execute any such documents on its
behalf.  If any financing statement or
other document is filed in the records normally pertaining to personal
property, that filing shall never be construed as in any way derogating from or
impairing this Deed of Trust or the rights or obligations of the parties under
it.

 

4.                                       Fixture Filing. 
This Deed of Trust constitutes a financing statement filed as a fixture
filing under NRS 104.9502(2) of the Nevada Uniform Commercial Code, as
amended or recodified from time to time, covering any Property which now is or
later may become fixtures attached to the Land or Improvements.  In connection therewith, the addresses of
Trustor, as debtor, and Beneficiary, as secured party, are as set forth in
Section 8.11, below.  The
foregoing address of Beneficiary, as secured party, is also the address from
which information concerning the security interest may be obtained by any
interested party.  The property subject
to this fixture filing is described in Section 1.1, above.  Portions of the property subject to this
fixture filing as identified in this Section are or are to become fixtures
related to the real estate described in Exhibit A attached hereto.

 

5.                                       Rights and Duties of the Parties.

 

5.1                                 Representations and Warranties. 
Trustor represents and warrants that, except as previously disclosed to
Beneficiary in a writing making reference to this Section 5.1:

 

(a)                                  Trustor has or will have good title to
all Property (other than personal property utilized by Trustor under such
equipment leases and similar financing arrangements as were disclosed to
Beneficiary in writing prior to the execution of this

 

8

 

Deed of Trust or as are hereafter entered into by
Trustor in accordance with the Credit Agreement);

 

(b)                                 Subject to applicable gaming laws and
regulations of the State of Nevada, Trustor has the full and unlimited power,
right and authority to encumber the Property and assign the Rents and the
Leases;

 

(c)                                  This Deed of Trust creates a first and
prior lien on and security interest in the Property;

 

(d)                                 The Property includes all property and
rights which may be reasonably necessary to promote the present beneficial use
and enjoyment of the Land and Improvements;

 

(e)                                  Trustor owns any Property which is
personal property free and clear of any security agreements, reservations of
title or conditional sales contracts, and there is no financing statement affecting
such personal property on file in any public office (other than personal
property utilized by Trustor under such equipment leases and similar financing
arrangements as were disclosed to Beneficiary in writing prior to the execution
of this Deed of Trust or as are hereafter entered into by Trustor in accordance
with the Credit Agreement);

 

(f)                                    Trustor’s place of business, or its chief
executive office if it has more than one place of business, is located at the
address specified below; and

 

(g)                                 None of the Property is located in an
area having or identified as having special flood hazards or any similar
designation under the National Flood Insurance Act of 1968, as amended or
recodified from time to time, or the Flood Disaster Protection Act of 1973, as
amended or recodified from time to time.

 

5.2                                 Taxes and Assessments. 
Trustor shall pay prior to delinquency all taxes, levies, charges and
assessments, including assessments on appurtenant water stock, imposed by any
public or quasi-public authority or utility company which are (or if not paid,
may become) a lien on or security interest in all or part of the Property or
any interest in it, or which may cause any decrease in the value of the
Property or any part of it.  If any such
taxes, levies, charges or assessments become delinquent, Beneficiary may
require Trustor to present evidence that they have been paid in full, on ten
(10) days’ written notice by Beneficiary to Trustor.  This Section 5.2 is subject to
the right granted in Section 5.11 of the Credit Agreement to
contest in good faith certain taxes, assessments, charges and levies.

 

5.3                                 Performance of Secured Obligations. 
Trustor shall promptly pay and perform each Secured Obligation in
accordance with its terms.

 

5.4                                 Liens, Charges and Encumbrances. 
Trustor shall immediately discharge any lien on or security interest in
the Property to which Beneficiary has not consented in writing.  Subject to any applicable rights to contest
set forth in the Credit Agreement, Trustor shall pay, prior to delinquency,
each obligation secured by or reducible to a lien, security interest, charge or
encumbrance which now does or later may encumber or appear to encumber all or
part of the

 

9

 

Property or any interest in it, whether the lien,
security interest, charge or encumbrance is or would be senior or subordinate
to this Deed of Trust.

 

5.5                                 Damages and Insurance and Condemnation
Proceeds.

 

5.5.1                        Trustor hereby absolutely and irrevocably
assigns to Beneficiary, and authorizes the payor to pay to Beneficiary, the
following claims, causes of action, awards, payments and rights to payment:

 

(a)                                  All awards of damages and all other
compensation payable directly or indirectly because of a condemnation, proposed
condemnation or taking for public or private use which affects all or part of
the Property or any interest in it; and

 

(b)                                 All other awards, claims and causes of
action, arising out of any warranty affecting all or any part of the Property,
or for damage or injury to or decrease in value of all or part of the Property
or any interest in it; and

 

(c)                                  All proceeds of any insurance policies
payable because of loss sustained to all or part of the Property; and

 

(d)                                 All interest which may accrue on any of
the foregoing.

 

5.5.2                        Trustor shall immediately notify
Beneficiary in writing if:

 

(a)                                  Any damage occurs or any injury or loss
is sustained in the amount of $250,000 or more to all or part of the Property,
or any action or proceeding relating to any such damage, injury or loss is
commenced; or

 

(b)                                 Any offer is made, or any action or
proceeding is commenced, which relates to any actual or proposed condemnation
or taking of all or part of the Property.

 

5.5.3                        If Beneficiary chooses to do so,
Beneficiary may in its own name appear in or prosecute any action or proceeding
to enforce any cause of action based on warranty, or for damage, injury or loss
to all or part of the Property and, while any Event of Default remains uncured,
Beneficiary may make any compromise or settlement of the action or
proceeding.  Beneficiary, if it so
chooses, may participate in any action or proceeding relating to condemnation
or taking of all or part of the Property, and may join Trustor in adjusting any
loss covered by insurance.  Trustor
hereby irrevocably appoints Beneficiary its true and lawful attorney-in-fact
for all such purposes.  The power of
attorney granted hereunder is coupled with an interest and is irrevocable.  Trustor shall not settle, adjust or
compromise any such action or proceeding without the prior written approval of
Beneficiary, which shall not be unreasonably withheld or delayed.

 

5.5.4                        All proceeds of these assigned claims,
other property and rights which Trustor may receive or be entitled to
(collectively, “Proceeds”) shall be paid to Beneficiary.  In each instance, Beneficiary shall apply
such Proceeds first toward reimbursement of all of Beneficiary’s costs and
expenses of recovering the Proceeds, including attorneys’ fees.

 

10

 

If, in any instance, each and all of the following
conditions (the “Restoration Conditions”) are satisfied in Beneficiary’s
reasonable judgment, Beneficiary shall permit Trustor to use the balance of
such Proceeds (“Net Claims Proceeds”) to pay costs of repairing or
reconstructing the Property in the manner described below:

 

(a)                                  The plans and specifications, cost
breakdown, construction contract, construction schedule, contractor and payment
and performance bond for the work of repair or reconstruction must all be
reasonably acceptable to Beneficiary; and

 

(b)                                 Beneficiary must receive evidence
reasonably satisfactory to it that, after repair or reconstruction, the
Property will be at least as valuable as it was immediately before the damage
or condemnation occurred; and

 

(c)                                  The Net Claims Proceeds must be
sufficient in Beneficiary’s reasonable determination to pay for the total cost
of repair or reconstruction, including all associated development costs and
interest projected to be payable on the Secured Obligations until the repair or
reconstruction is complete; or Trustor must provide its own funds in an amount
equal to the difference between the Net Claims Proceeds and a reasonable
estimate, made by Trustor and found acceptable by Beneficiary, of the total
cost of repair or reconstruction; and

 

(d)                                 No Event of Default shall have occurred
and be continuing.

 

If Beneficiary
finds that such conditions have been met, Beneficiary shall hold the Net Claims
Proceeds and any funds which Trustor is required to provide in an
interest-bearing passbook savings account and shall disburse them to Trustor on
a monthly basis in accordance with Beneficiary’s customary construction lending
procedures.  However, if an Event of
Default has occurred and is continuing, Beneficiary may apply the Net Claims
Proceeds to pay or prepay (without premium) some or all of the Secured
Obligations in such order and proportions as Beneficiary in its absolute
discretion may choose (subject to the provisions for priority of application of
payments set forth in the Credit Agreement). 
Any and all Proceeds (including, without limitation, any Net Claims
Proceeds) held by Beneficiary from time to time shall be collateral for the
Secured Obligations, and Trustor hereby grants to Beneficiary a security
interest in and lien on such Proceeds and all rights and remedies available
under applicable laws with respect to such Proceeds, including, without
limitation, all rights and remedies under the Nevada Uniform Commercial Code.  Trustor shall execute and deliver to
Beneficiary and the Lenders any and all documents reasonably requested by
Beneficiary in order to confirm, create and perfect such security interest in
and lien on such Proceeds.  In the event
that any Proceeds are applied to pay any Secured Obligations, then Beneficiary
shall have no obligation to disburse or release such applied Proceeds to
Trustor under this Section 5.5. 
If no Event of Default shall have occurred and be continuing, any funds
remaining upon completion of the repair or reconstruction shall be returned to
Trustor.

 

5.5.5                        Trustor hereby specifically,
unconditionally and irrevocably waives all rights of a property owner granted
under applicable law, including NRS 37.115, as amended or recodified from time
to time, which provide for allocation of condemnation proceeds between a
property owner and a lienholder, and any other law or successor statute of
similar

 

11

 

import.  Trustor
hereby specifically, unconditionally and irrevocably waives all right to
recover against Beneficiary or any Lender (or any officer, employee, agent or
representative of Beneficiary or any Lender) for any loss incurred by Trustor
from any cause insured against or required by any Loan Document to be insured against;
provided, however, that this waiver of subrogation shall not be effective with
respect to any insurance policy if the coverage thereunder would be materially
reduced or impaired as a result.

 

5.5.6                        Notwithstanding anything to the contrary
set forth in this Section 5.5, so long as no Event of Default
remains uncured, the proceeds of any casualty or condemnation for which the
gross value of the applicable damage and/or taking is less than $250,000 shall
be paid to Trustor rather than to Beneficiary (and shall be delivered to
Trustor if received by Beneficiary), and Trustor shall not be required to
obtain Beneficiary’s consent to settle, adjust or compromise any action or
proceeding relating to any such casualty or condemnation (nor shall Beneficiary
be entitled to participate in such action or proceeding).

 

5.6                                 Maintenance and Preservation of Property.

 

5.6.1                        Except as permitted in the Credit
Agreement, Trustor shall not remove or demolish the Property or any part of it,
or alter, restore or add to the Property, or initiate or allow any change in
any zoning or other land use classification which affects the Property or any
part of it, except as permitted or required by the Credit Agreement or with
Beneficiary’s express prior written consent in each instance; provided that,
without Beneficiary’s consent, Trustor shall be entitled to remove personal
property in the ordinary course of Trustor’s business so long as any such
personal property is replaced with property of comparable value.

 

5.6.2                        If all or part of the Property becomes
damaged or destroyed, Trustor shall promptly and completely repair and/or
restore the Property in a good and workmanlike manner in accordance with sound
building practices, regardless of whether or not Beneficiary agrees to disburse
insurance proceeds or other sums to pay costs of the work of repair or
reconstruction under Section 5.5.

 

5.6.3                        Trustor shall not commit or allow any act
upon or use of the Property which would violate:  (i) any applicable law or order of any
Governmental Agency, whether now existing or later to be enacted and whether
foreseen or unforeseen (except to the extent that noncompliance would not cause
a Material Adverse Effect or a License Revocation); or (ii) any public or
private covenant, condition, restriction or equitable servitude affecting the
Property.  Trustor shall not bring or
keep any article on the Property or cause or allow any condition to exist
on it, that could invalidate or would be prohibited by any insurance coverage
required to be maintained by Trustor on the Property or any part of it under
this Deed of Trust.

 

5.6.4                        Trustor shall not commit or allow waste
of the Property.

 

5.6.5                        Trustor shall perform all other acts
which from the character or use of the Property may be reasonably necessary to
maintain and preserve its value. Without limiting the generality of the
forgoing, Trustor shall protect and preserve all easements, rights-of-way and
other appurtenances to the Land and/or Improvements.  Trustor shall not cause or allow any such
easement, right-of-way and other appurtenance to be cancelled, rejected or
otherwise terminated,

 

12

 

or modified (except for such terminations that occur
pursuant to the terms of such easement, right of way and other appurtenance).

 

5.7                                 Insurance.

 

5.7.1                        Trustor shall maintain the following
insurance with respect to the Property:

 

(a)                                  Trustor shall provide, maintain and keep
in force at all times during any period of construction with respect to the
portion of the Property affected by such construction a policy or policies of
builder’s “all risk” insurance in nonreporting form in an amount not less than
the full insurable completed value of such portion of the Property on a
replacement cost basis.  The policy or
policies shall insure against loss or damage by hazards customarily included
within such “all risk” policies and any other risks or hazards which
Beneficiary may reasonably specify (and shall include boiler and machinery
insurance from and after the date on which any such equipment is installed on
the Property), and each shall contain a Lender’s Loss Payable Endorsement (Form
438 BFU or equivalent) in favor of Beneficiary; provided that Beneficiary shall
not be entitled to require Trustor to insure the Property against earthquake
risks during any period in which earthquake insurance is not available with
respect to the Property at commercially reasonable rates.

 

(b)                                 Trustor shall provide, maintain and keep
in force at all times for all portions of the Property not covered by a policy
or policies described in Section 5.7.1(a), above, a policy or policies of
fire and hazards “all risk” insurance providing extended coverage, in an amount
not less than the full insurable value of such portions of the Property on a replacement
cost basis.  The policy or policies shall
insure against loss or damage by hazards customarily included within “all risk”
and “extended coverage” policies and any other risks or hazards which
Beneficiary may reasonably specify (and shall include boiler and machinery
insurance), and each shall contain a Lender’s Loss Payable Endorsement (Form
438 BFU or equivalent) in favor of Beneficiary.

 

(c)                                  Trustor shall provide, maintain and keep
in force at all times for all portions of the Property any policy or policies
of business interruption insurance that Beneficiary reasonably requires
(including insurance against income loss during a period of at least six (6)
months), and each such policy shall contain a Lender’s Loss Payable Endorsement
(Form 438 BFU or equivalent) in favor of Beneficiary.

 

(d)                                 Trustor shall provide, maintain and keep
in force at all times a policy or policies of comprehensive liability insurance
naming Beneficiary and the Lenders as additional insureds, on an “occurrence”
basis, against claims for “personal injury” liability, including bodily injury,
death or property damage liability, with a limit of not less than Fifty Million
Dollars ($50,000,000).  Such insurance
shall be primary and noncontributory with any other insurance carried by
Beneficiary and/or any Lender(s).

 

(e)                                  Trustor shall provide, maintain and keep
in force at all times such policies of worker’s compensation insurance as may
be required by applicable laws

 

13

 

(including employer’s liability insurance, if required
by Beneficiary), covering all employees of Trustor.

 

(f)                                    Trustor shall provide, maintain and keep
in force at all times any and all additional insurance that Beneficiary (as
instructed by the Requisite Lenders) may from time to time require, so long as
such insurance is available in the commercial market at reasonable rates.

 

5.7.2                        All such policies of insurance shall be
issued by companies approved by Beneficiary having a minimum A.M. Best’s rating
of A-:IX.  The limits, coverage, forms,
deductibles, inception and expiration dates and cancellation provisions of all
such policies shall be reasonably acceptable to Beneficiary.  Each property insurance policy maintained in
connection with any of the Property shall contain a Lender’s Loss Payable
Endorsement (Form 438 BFU or equivalent) in favor of Beneficiary, and shall
provide that all proceeds be payable to Beneficiary to the extent of its
interest.  Each liability insurance
policy maintained in connection with any of the Property shall name Beneficiary
and the Lenders as additional insureds. 
An approval by Beneficiary is not, and shall not be deemed to be, a
representation of the solvency of any insurer or the sufficiency of any amount
of insurance.  Each policy of insurance
required hereunder shall provide that it may not be modified or cancelled
without at least thirty (30) days’ prior written notice to Beneficiary (or ten
(10) days’ prior written notice in the event of a premium nonpayment), and
shall permit a waiver of subrogation by Trustor in favor of Beneficiary and the
Lenders.

 

5.7.3                        Trustor shall supply Beneficiary with
certificates of each policy required hereunder and any other policy of
insurance maintained in connection with any of the Property, together with an
original (which may be a duplicate original) or underlyer of each such policy
and all endorsements thereto.  When any
insurance policy required hereunder expires, Trustor shall furnish Beneficiary
with proof acceptable to Beneficiary that the policy has been reinstated or a
new policy issued, continuing in force the insurance covered by the policy
which expired.  If Trustor fails to pay
any such premium, Beneficiary shall have the right, but not the obligation, to
obtain current coverage and advance funds to pay the premiums for it.  Trustor shall repay Beneficiary immediately
on demand for any advance for such premiums, which shall be considered to be an
additional loan to Trustor bearing interest at the Default Rate, and secured by
this Deed of Trust and any other collateral held by Beneficiary in connection
with the Secured Obligations.

 

5.8                                 Trustee’s Acceptance of Trust. 
Trustee accepts this trust when this Deed of Trust is recorded.

 

5.9                                 Releases, Extensions, Modifications and
Additional Security.

 

5.9.1                        From time to time, Beneficiary and/or any
Lender may perform any of the following acts without incurring any liability or
giving notice to any person, and without affecting the personal liability of
any person for the payment of the Secured Obligations (except as provided
below), and without affecting the security hereof for the full amount of the
Secured Obligations on all Property remaining subject hereto, and without the
necessity that any

 

14

 

sum representing the value of any portion of the
Property affected by Beneficiary’s and/or such Lender’s action(s) be credited
on the Secured Obligations:

 

(a)                                  Release any person liable for payment of
any Secured Obligation;

 

(b)                                 Extend the time for payment, or otherwise
alter the terms of payment, of any Secured Obligation;

 

(c)                                  Accept additional real or personal
property of any kind as security for any Secured Obligation, whether evidenced
by deeds of trust, mortgages, security agreements or any other instruments of
security; or

 

(d)                                 Alter, substitute or release any property
securing the Secured Obligations.

 

5.9.2                        From time to time when requested to do so
by Beneficiary in writing, Trustee may perform any of the following acts
without incurring any liability or giving notice to any person:

 

(a)                                  Consent to the making of any plat or map
of the Property or any part of it;

 

(b)                                 Join in granting any easement or creating
any restriction affecting the Property;

 

(c)                                  Join in any subordination or other
agreement affecting this Deed of Trust or the lien or security interest of it;
or

 

(d)                                 Reconvey the Property or any part of it
without any warranty.

 

5.10                           Reconveyance. 
Upon (a) the expiration or termination of the Commitment,
(b) the full and final payment in cash of the Loans and all interest and
fees with respect thereto, (c) the payment of all other amounts then
demanded by Beneficiary or any Lender or indemnitee and then owed under the
Credit Agreement, and (d) the payment of all other amounts then due under the
Guaranty and the other Loan Documents and the full payment and performance of
all other Secured Obligations (other than indemnity obligations, if any, that
are not then due), Beneficiary shall request Trustee in writing to reconvey the
Property, and shall surrender this Deed of Trust.  When Trustee receives Beneficiary’s written
request for reconveyance and all fees and other sums owing to Trustee by
Trustor under Section 5.11, Trustee shall reconvey the Property, or
so much of it as is then held under this Deed of Trust, without warranty, to
the person or persons legally entitled to it. 
Such person or persons shall pay any costs of recordation.  In the reconveyance, the grantee may be
described as “the person or persons legally entitled thereto,” and the recitals
of any matters or facts shall be conclusive proof of their truthfulness.  Neither Beneficiary nor Trustee shall have
any duty to determine the rights of persons claiming to be rightful grantees of
any reconveyance.

 

15

 

5.11                           Compensation, Exculpation,
Indemnification.

 

5.11.1                  Trustor agrees to pay reasonable fees as may be
charged by Beneficiary and Trustee, subject to the maximum amounts legally
permitted, for any services that Beneficiary or Trustee may render in
connection with this Deed of Trust, including Beneficiary’s providing a
statement of the Secured Obligations or Trustee’s rendering of services in
connection with a reconveyance.  Trustor
shall also pay or reimburse all of Beneficiary’s and Trustee’s costs and
expenses which may be incurred in rendering any such services.  Trustor further agrees to pay or reimburse
Beneficiary for all costs, expenses and other advances which may be incurred or
made by Beneficiary or Trustee in any efforts to enforce any terms of this Deed
of Trust, including any rights or remedies afforded to Beneficiary or Trustee
or both of them under Section 6.3, whether any lawsuit is filed or
not, or in defending any action or proceeding arising under or relating to this
Deed of Trust, including reasonable attorneys’ fees and other legal costs,
costs of any Foreclosure Sale (as defined in Section 6.3.8) and any
cost of evidence of title.  If
Beneficiary chooses to dispose of the Property through more than one Foreclosure
Sale, Trustor shall pay all costs, expenses or other advances that may be
incurred or made by Trustee or Beneficiary in each of such Foreclosure Sales.

 

5.11.2                  Beneficiary shall not be directly or indirectly liable
to Trustor or any other person as a consequence of any of the following:

 

(a)                                  Beneficiary’s exercise of, or failure to
exercise, any rights, remedies or powers granted to Beneficiary in this Deed of
Trust;

 

(b)                                 Beneficiary’s failure or refusal to
perform or discharge any obligation or liability of Trustor under any agreement
related to the Property or under this Deed of Trust; or

 

(c)                                  Any loss sustained by Trustor or any
third party resulting from Beneficiary’s failure to lease or operate the
Property, or from any other act or omission of Beneficiary in managing the
Property, after an Event of Default, unless the loss is caused by the willful
misconduct and bad faith of Beneficiary.

 

Trustor hereby
expressly waives and releases all liability of the types described above, and
agrees that no such liability shall be asserted against or imposed upon
Beneficiary.

 

5.11.3                  Trustor agrees to indemnify Trustee, Beneficiary and
the Lenders (collectively, the “Indemnitees”) against and hold them harmless
from all losses, damages, liabilities, claims, causes of action, judgments,
court costs, reasonable attorneys’ fees and other reasonable legal expenses,
cost of evidence of title, cost of evidence of value, and other costs and
expenses which any of them may suffer or incur (except to the extent that any
of the foregoing are the result of the gross negligence or willful misconduct
of any such Indemnitee):

 

(a)                                  In performing any act required or
permitted by this Deed of Trust or any of the other Loan Documents or by law;

 

(b)                                 Because of any failure of Trustor to
perform any of Trustor’s obligations; or

 

16

 

(c)                                  Because of any alleged obligation of or
undertaking by Beneficiary to perform or discharge any of the representations,
warranties, conditions, covenants or other obligations in any document relating
to the Property other than the Loan Documents.

 

Each obligation or
liability of Trustor to any Indemnitee under this Section 5.11.3
shall survive the release and cancellation of any or all of the Secured
Obligations and the full or partial release and/or reconveyance of this Deed of
Trust.

 

5.11.4                  Trustor shall pay all obligations to pay money arising
under this Section 5.11 within five (5) business days demand by
Beneficiary (or the applicable Indemnitee). 
Each such obligation shall bear interest from the date the obligation
arises at the Default Rate set forth in the Credit Agreement, and any such
obligation to a Lender shall be added to, and considered to be part of, the
principal of the Note in favor of such Lender (and, in the event that such
Lender holds more than one Note, the allocation of such obligation among such
Notes shall be made by such Lender in its absolute discretion).

 

5.12                           Defense and Notice of Claims and Actions. 
At Trustor’s sole expense, Trustor shall protect, preserve and defend
the Property and title to and right of possession of the Property, and the
security of this Deed of Trust and the rights and powers of Beneficiary and
Trustee created under it, against all adverse claims.  Trustor shall give Beneficiary and Trustee
prompt notice in writing if any claim is asserted which does or could affect
any of such matters, or if any action or proceeding is commenced which alleges
or relates to any such claim.

 

5.13                           Substitution of Trustee. 
From time to time, Beneficiary may substitute a successor to any Trustee
named in or acting under this Deed of Trust in any manner now or later to be
provided at law, or by a written instrument executed and acknowledged by
Beneficiary and recorded in the office(s) of the recorder(s) of the
County.  Any such instrument shall be
conclusive proof of the proper substitution of the successor Trustee, who shall
automatically upon recordation of the instrument succeed to all estate, title,
rights, powers and duties of the predecessor Trustee, without conveyance from
it.

 

5.14                           Subrogation. 
Subject to Gaming Laws, Beneficiary shall be subrogated to the liens and
security interests of all encumbrances, whether released of record or not,
which are discharged in whole or in part by Beneficiary in accordance with this
Deed of Trust or with the proceeds of any loan secured by this Deed of Trust.

 

5.15                           Site Visits, Observation and Testing. 
Beneficiary and its agents and representatives shall have the right at
any reasonable time to enter and visit the Property for the purpose of
performing appraisals.  In addition, each
person indemnified by the Borrower under Section 10.04 of the
Credit Agreement (collectively, “Indemnified Parties”) and their agents and
representatives shall have the right at any reasonable time to enter and visit
the Property for the purposes of observing the Property, taking and removing
soil or groundwater samples, and conducting tests on any part of the Property;
provided that, so long as no Event of Default remains uncured, the Indemnified
Parties shall not be entitled to conduct any tests that would significantly
interfere with the operation of the Property. 
The Indemnified Parties have no duty, however, to visit or observe the
Property or to conduct tests, and no site visit, observation or

 

17

 

testing by any Indemnified Party shall impose any
liability on any Indemnified Party.  In
no event shall any site visit, observation or testing by any Indemnified Party
be a representation that Hazardous Materials are or are not present in, on, or
under the Property, or that there has been or shall be compliance with any
Hazardous Materials Law, or any other applicable Law.  Neither Trustor nor any other party is entitled
to rely on any site visit, observation or testing by any Indemnified
Party.  The Indemnified Parties owe no
duty of care to protect Trustor or any other party against, or to inform
Trustor or any other party of, any Hazardous Material or any other adverse
condition affecting the Property.  Any
Indemnified Party shall give Trustor reasonable notice before entering the
Property.  The Indemnified Party shall
make reasonable efforts to avoid interfering with Trustor’s use of the Property
in exercising any rights provided in this Section.

 

5.16                           Notice of Change. 
Trustor shall give Beneficiary prior written notice of (a) any
change in the location of Trustor’s place of business or its chief executive
office if it has more than one place of business, (b) any change in the
location of any of the Property, including the Books and Records, and (c) any
change to Trustor’s name or business structure. 
Unless otherwise approved by Beneficiary in writing, all Property that
consists of personal property (other than the Books and Records) will be
located on the Land and all Books and Records for the portion of the Property
owned by Trustor will be located at such Trustor’s place of business or chief
executive office if such Trustor has more than one place of business.

 

5.17                           Title Insurance. 
At any time and from time to time at the reasonable request of
Beneficiary, Trustor, at its sole cost and expense, shall deliver to
Beneficiary such additional title insurance indorsements and reinsurance issued
by title insurance companies, in form and substance and reasonably satisfactory
to Beneficiary, with respect to this Deed of Trust, including, without
limitation, CLTA 122 endorsements insuring that each advance is secured by this
Deed of Trust (without any exception not set forth in the policy of title
insurance insuring this Deed of Trust other than (i) liens for taxes and
assessments not yet due and payable and (ii) other encumbrances, approved
by the Beneficiary, insured to be subordinate to this Deed of Trust), and CLTA
101.4 endorsements insuring the priority of the Deed of Trust over any
mechanic’s lien; provided that Trustor shall not be obligated under this
Section 5.17 to increase the stated amount of the policy of title
insurance insuring this Deed of Trust.

 

6.                                       Accelerating Transfers, Defaults and
Remedies.

 

6.1                                 Accelerating Transfers.

 

6.1.1                        “Accelerating Transfer” means any sale,
contract to sell, conveyance, encumbrance, lease, alienation or further
encumbrance of all or any material portion of the Property (or any interest in
it) which is not expressly permitted under the Credit Agreement, or any other
transfer of all or any material portion of the Property (or any interest in
it), whether voluntary, involuntary, by operation of law or otherwise, unless
Beneficiary has given its prior written consent to such “Accelerating
Transfer,” which consent may be given or not given in the absolute discretion
of Beneficiary.  If Trustor is a
corporation or limited liability company, “Accelerating Transfer” also means
any transfer of any share or shares in Trustor. 
If Trustor is a partnership or limited liability company, “Accelerating
Transfer” also means withdrawal or removal of any general partner or manager,
as the case may be, dissolution of the

 

18

 

partnership or limited liability company under Nevada
law, or any transfer of any partnership interest or any ownership interest in
the limited liability company.

 

6.1.2                        Trustor acknowledges that Beneficiary and
the Lenders are making one or more advances under the Credit Agreement in
reliance on the expertise, skill and experience of Trustor; thus, the Secured
Obligations include material elements similar in nature to a personal service
contract.  In consideration of
Beneficiary’s reliance, Trustor agrees that Trustor shall not make any
Accelerating Transfer, unless the transfer is preceded by Beneficiary’s written
consent to the particular transaction and transferee.  Beneficiary may withhold such consent in its
absolute discretion.  If any Accelerating
Transfer occurs, Beneficiary may, in its absolute discretion (provided that it
has received any consents or approvals of any other Lenders required under the
Credit Agreement), declare all of the Secured Obligations to be immediately due
and payable, and Beneficiary and Trustee may invoke any rights and remedies
provided by Section 6.3 of this Deed of Trust.

 

6.2                                 Events of Default. 
Trustor will be in default under this Deed of Trust upon the occurrence
of any one or more of the following events (“Events of Default”):

 

(a)                                  Trustor fails to perform any obligation
to pay money which arises under this Deed of Trust within two (2) Business
Days after written demand therefor; or

 

(b)                                 Trustor fails to perform any other
obligation arising under this Deed of Trust within ten (10) Business Days
after the giving of written notice by Beneficiary of such failure; or

 

(c)                                  Trustor, any other Borrower, any other
Party, or any other “borrower” (as that term is defined in NRS 106.310, as
amended or recodified from time to time) who may send a notice pursuant to NRS
106.380(1), as amended or recodified from time to time, with respect to this
Deed of Trust, (i) delivers, sends by mail or otherwise gives, or purports
to deliver, send by mail or otherwise give, to Beneficiary or any Lender,
(A) any notice of an election to terminate the operation of this Deed of
Trust as security for any Secured Obligation, including, without limitation,
any obligation to repay any “future advance” (as defined in NRS 106.320, as
amended or recodified from time to time) of “principal” (as defined in NRS
106.345, as amended or recodified from time to time), or (B) any other
notice pursuant to NRS 106.380(1), as amended or recodified from time to time,
(ii) records a statement pursuant to NRS 106.380(3), as amended or
recodified from time to time, or (iii) causes this Deed of Trust, any
Secured Obligation, Beneficiary or any Lender to be subject to NRS 106.380(2),
106.380(3) or 106.400, as amended or recodified from time to time; or

 

(d)                                 Any Event of Default (as defined in the
Credit Agreement or in any other Loan Document) occurs; or any other default
occurs under any of the Secured Obligations.

 

6.3                                 Remedies.  At any time
after and during the continuance of an Event of Default (following the
expiration of any applicable cure period) and provided that Beneficiary has
received any consents or approvals of any other Lenders required under the
Credit

 

19

 

Agreement, Beneficiary and Trustee will be entitled to
invoke any or all of the following rights and remedies (subject to any
restrictions on those rights and remedies imposed by applicable Gaming Laws),
all of which will be cumulative, and the exercise of any one or more of which shall
not constitute an election of remedies:

 

6.3.1                        Acceleration. 
Beneficiary may declare any or all of the Secured Obligations to be due
and payable immediately.

 

6.3.2                        Receiver.  Beneficiary
may apply to any court of competent jurisdiction for, and obtain appointment
of, a receiver for the Property; and Beneficiary may request, in connection
with any foreclosure proceeding hereunder, that the Nevada Gaming Commission
petition a District Court of the State of Nevada for the appointment of a
supervisor to conduct the normal gaming activities on the Property following
such foreclosure proceeding.

 

6.3.3                        Entry.  Beneficiary,
in person, by agent or by court-appointed receiver, may enter, take possession
of, manage and operate all or any part of the Property, and may also do any and
all other things in connection with those actions that Beneficiary may in its
absolute discretion consider necessary and appropriate to protect the security
of this Deed of Trust.  Such other things
may include, without limitation:  taking
and possessing all of Trustor’s or the then owner’s Books and Records; entering
into, enforcing, modifying, or cancelling Leases on such terms and conditions
as Beneficiary may consider proper; obtaining and evicting tenants; collecting
and receiving any payment of money owing to Trustor; completing construction;
and/or contracting for and making repairs and alterations.  If Beneficiary so requests, Trustor shall
assemble all of the Property that has been removed from the Land and make all
of it available to Beneficiary at the site of the Land.  Trustor hereby irrevocably constitutes and
appoints Beneficiary as Trustor’s attorney-in-fact (which appointment is
coupled with an interest) to perform such acts and execute such documents as
Beneficiary in its absolute discretion may consider to be appropriate in
connection with taking these measures, including endorsement of Trustor’s name
on any instruments.  Regardless of any
provision of this Deed of Trust or the Credit Agreement, Beneficiary shall not
be considered to have accepted any property other than cash or immediately
available funds in satisfaction of any obligation of Trustor to Beneficiary
unless Beneficiary has given express written notice of Beneficiary’s election
of that remedy in accordance with NRS 104.9620, as it may be amended or
recodified from time to time.

 

6.3.4                        Cure; Protection of Security. 
Either Beneficiary or Trustee may cure any breach or default of Trustor
and, if it chooses to do so in connection with any such cure, Beneficiary or
Trustee may (subject to applicable Gaming Laws) also enter the Property and/or
do any and all other things which either may in its absolute discretion
consider necessary and appropriate to protect the security of this Deed of
Trust.  Such other things may include,
without limitation:  appearing in and/or
defending any action or proceeding which purports to affect the security of, or
the rights or powers of Beneficiary or Trustee under, this Deed of Trust;
paying, purchasing, contesting or compromising any encumbrance, charge, lien,
security interest or claim of lien or security interest which (in Beneficiary’s
or Trustee’s sole judgment) is or may be senior in priority to this Deed of
Trust, such judgment of Beneficiary or Trustee to be conclusive as among the
parties to this Deed of Trust; obtaining insurance and/or paying any premiums
or charges for insurance required to be carried under this Deed of Trust and
the other Loan Documents; otherwise caring for and protecting any and all of
the Property; and/or employing

 

20

 

counsel, accountants, contractors and other
appropriate persons to assist Beneficiary or Trustee.  Beneficiary and Trustee may take any of the
actions permitted under this Section 6.3.4 either with or without
giving notice to any person.

 

6.3.5                        Uniform Commercial Code Remedies. 
Subject to applicable Gaming Laws, Beneficiary may exercise any or all
of the remedies granted to a secured party under the Nevada Uniform Commercial
Code, as amended or recodified from time to time.

 

6.3.6                        Judicial Action. 
Beneficiary may bring an action in any court of competent jurisdiction
to foreclose this Deed of Trust or to obtain specific enforcement of any of the
covenants or other terms of this Deed of Trust.

 

6.3.7                        Power of Sale. 
Under the power of sale hereby granted, Beneficiary shall have the
discretionary right to cause some or all of the Property, including any
Property which constitutes personal property, to be sold or otherwise disposed
of in any combination and in any manner permitted by applicable law.

 

(a)                                  Sales of Personal Property.

 

(i)                                     For purposes of this power of sale,
Beneficiary may elect to treat as personal property any Property which is
intangible or which can be severed from the Land or Improvements without
causing structural damage.  If it chooses
to do so, Beneficiary may dispose of any personal property separately from the
sale of real property, in any manner permitted by Article 9 of the Nevada
Uniform Commercial Code, as amended or recodified from time to time, including
any public or private sale, or in any manner permitted by any other applicable
law.  Any proceeds of any such
disposition shall not cure any Event of Default or reinstate any Secured
Obligation.

 

(ii)                                  In connection with any sale or other
disposition of such Property, Trustor agrees that the following procedures
constitute a commercially reasonable sale: 
Beneficiary shall mail written notice of the sale to Trustor not later
than ten (10) days prior to such sale. 
Once per week during the three weeks immediately preceding such sale,
Beneficiary will publish notice of the sale in a local daily newspaper of
general circulation.  Upon receipt of any
written request, Beneficiary will make the Property available to any bona fide
prospective purchaser for inspection during reasonable business hours.  Notwithstanding any provision to the
contrary, Beneficiary shall be under no obligation to consummate a sale if, in
its judgment, none of the offers received by it equals the fair value of the
Property offered for sale.  The foregoing
procedures do not constitute the only procedures that may be commercially
reasonable.

 

(b)                                 Trustee’s Sales of Real Property or Mixed
Collateral.

 

(i)                                     Beneficiary may choose to dispose of some
or all of the Property which consists solely of real property in any manner
then permitted by applicable law.  In its
discretion, Beneficiary may also or alternatively choose to dispose of some or
all of the Property, in any combination consisting of both real

 

21

 

and personal property, together in one sale to be held
in accordance with the law and procedures applicable to real property, as
permitted by Article 9 of the Nevada Uniform Commercial Code, as amended
or recodified from time to time.  Trustor
agrees that such a sale of personal property together with real property
constitutes a commercially reasonable sale of the personal property.  For purposes of this power of sale, either a
sale of real property alone, or a sale of both real and personal property
together in accordance with Article 9 of the Nevada Uniform Commercial
Code, as amended or recodified from time to time, will sometimes be referred to
as a “Trustee’s Sale.”

 

(ii)                                  Before any Trustee’s Sale, Beneficiary or
Trustee shall give such notice of default and election to sell as may then be
required by law.  When all time periods
then legally mandated have expired, and after such notice of sale as may then
be legally required has been given, Trustee shall sell the property being sold
at a public auction to be held at the time and place specified in the notice of
sale, provided, however, that no sale or other disposition of slot machines or
other gaming devices shall occur without first receiving the approval of the
applicable Gaming Board.  Neither Trustee
nor Beneficiary shall have any obligation to make demand on Trustor before any
Trustee’s Sale.  From time to time in
accordance with then applicable law, Trustee may, and in any event at
Beneficiary’s request shall, postpone any Trustee’s Sale by public announcement
at the time and place noticed for that sale.

 

(iii)                               At any Trustee’s Sale, Trustee shall sell
the property being sold at a public auction to the highest bidder at public
auction for cash in lawful money of the United States.  Trustee shall execute and deliver to the
purchaser(s) a deed or deeds conveying the property being sold without any
covenant or warranty whatsoever, express or implied.  The recitals in any such deed of any matters
or facts, including any facts bearing upon the regularity or validity of any
Trustee’s Sale, shall be conclusive proof of their truthfulness.  Any such deed shall be conclusive against all
persons as to the facts recited in it.

 

6.3.8                        Single or Multiple Foreclosure Sales. 
If the Property consists of more than one lot, parcel or item of
property, Beneficiary may:

 

(a)                                  Designate the order in which the lots,
parcels and/or items shall be sold or disposed of or offered for sale or
disposition; and

 

(b)                                 Elect to dispose of the lots, parcels
and/or items through a single consolidated sale or disposition to be held or
made under the power of sale granted in Sections 1.1 and 6.3.7,
or in connection with judicial proceedings, or by virtue of a judgment and
decree of foreclosure and sale; or through two or more such sales or
dispositions; or in any other manner Beneficiary may deem to be in its best
interests (any such sale or disposition being referred to herein as a
“Foreclosure Sale”).

 

If Beneficiary
chooses to have more than one Foreclosure Sale, Beneficiary at its option may
cause the Foreclosure Sales to be held simultaneously or successively, on the
same day, or on

 

22

 

such different
days and at such different times and in such order as Beneficiary may deem to
be in its best interests.  No Foreclosure
Sale shall terminate or affect the liens or security interests of this Deed of
Trust on any part of the Property which has not been sold until all of the
Secured Obligations have been paid in full and the Commitment has been fully
and finally terminated.

 

6.3.9                        Other Permitted Remedies. 
Beneficiary and the Lenders may refuse to make any advance to any
Borrower or issue any Letter of Credit for the account of any Borrower.  Beneficiary and the Lenders may exercise any
and all other rights and remedies available under the Loan Documents and
applicable law, including, without limitation, the right to file applications
to change, and to exercise all other rights and remedies available under
applicable law with respect to, all water permits and rights relating to the
Property; provided however that, notwithstanding the foregoing or any other
provision contained in this Deed of Trust, the remedies provided by this Deed
of Trust shall not include the right to take any action that violates
applicable Gaming Laws.

 

6.4                                 Credit Bids. 
At any Foreclosure Sale, any person, including Trustor, Trustee or
Beneficiary, may bid for and acquire the Property or any part thereof to the
extent permitted by then applicable law. 
Instead of paying cash for such property, Beneficiary may settle for the
purchase price by crediting against the sales price of the Property or any part
thereof any or all of the outstanding Secured Obligations (including without
limitation the portion of the Secured Obligations attributable to the expenses
of sale, costs of any action and any other sums for which Trustor is obligated
to pay or reimburse Beneficiary, the Lenders or Trustee under Section 5.11)
in such order and proportions as Beneficiary in its absolute discretion may
choose.

 

6.5                                 Application of Foreclosure Sale Proceeds. 
Beneficiary and Trustee shall apply the proceeds of any Foreclosure Sale
in the manner required by applicable law; provided that all proceeds that are
to be applied against the Secured Obligations shall, except as otherwise
required by applicable law, be applied against the Secured Obligations in any
order and proportions as Beneficiary in its absolute discretion may choose
(subject to any applicable provisions for priority of application of proceeds
set forth in either Credit Agreement).

 

6.6                                 Application of Rents and Other Sums. 
Beneficiary shall apply any and all Rents collected by it, and any and
all sums other than proceeds of a Foreclosure Sale which Beneficiary may
receive or collect under Section 6.3, in the following manner:

 

(a)                                  First, to pay the portion of the Secured
Obligations attributable to the costs and expenses of operation and collection
that may be incurred by Trustee, Beneficiary or any receiver;

 

(b)                                 Second, to pay all other Secured
Obligations in any order and proportions as Beneficiary in its absolute
discretion may choose (subject to any applicable provisions for priority of
application of payments set forth in the Credit Agreement); and

 

23

 

(c)                                  Third, to remit the remainder, if any, to
the person or persons entitled to it. 
Beneficiary shall have no liability for any funds which it does not
actually receive.

 

6.7                                 Incorporation of Certain Nevada Covenants. 
Covenants Nos. 1, 2 (full replacement value), 3, 4 (at the applicable
Default Rate), 5, 6, 7 (reasonable), 8 and 9 of NRS 107.030, where not in
conflict with the provisions of the Loan Documents, are hereby adopted and made
a part of this Deed of Trust.  Upon any
Event of Default by Trustor hereunder, Beneficiary may (a) declare all sums
secured immediately due and payable without demand or notice or (b) have a
receiver appointed as a matter of right without regard to the sufficiency of
said property or any other security or guaranty and without any showing as
required by NRS §107.100.  All remedies
provided in this Deed of Trust are distinct and cumulative to any other right
or remedy under this Deed of Trust or afforded by law or equity and may be
exercised concurrently, independently or successively.  The sale of said property conducted pursuant
to Covenants Nos. 6, 7 and 8 of NRS §107.030 may be conducted either as to the
whole of said property or in separate parcels and in such order as Trustee may
determine.

 

7.                                       [Intentionally omitted.]

 

8.                                       Suretyship Provisions. 
The following provisions shall apply to the extent that all or any
portion of the Secured Obligations now or hereafter constitute obligations of
person(s) (for the purposes of this Article 8, each a “Obligated Party”
and collectively, “Obligated Parties”) other than, or in addition to, Trustor:

 

8.1                                 Conditions to Exercise of Rights. 
Trustor hereby waives any right it may now or hereafter have to require
Beneficiary, as a condition to the exercise of any remedy or other right
against Trustor hereunder or under any other document executed by Trustor in
connection with any Secured Obligation, 
to proceed against any Obligated Party or other person, or against any other
collateral assigned to Beneficiary by Trustor or any Obligated Party or other
person,  to pursue any other right or
remedy in Beneficiary’s power,  to give
notice of the time, place or terms of any public or private sale of real or
personal property collateral assigned to Beneficiary by any Obligated Party or
other person (other than Trustor), or otherwise to comply with
Section 9504 of the Nevada Uniform Commercial Code (as modified or
recodified from time to time) with respect to any such personal property
collateral, or  to make or give (except
as otherwise expressly provided in the Loan Documents) any presentment, demand,
protest, notice of dishonor, notice of protest or other demand or notice of any
kind in connection with any Secured Obligation or any collateral (other than
the Property) for any Secured Obligation.

 

8.2                                 Defenses.  Trustor
hereby waives any defense it may now or hereafter have that relates to:  any disability or other defense of either of
any Obligated Party or other person;  the
cessation, from any cause other than full performance, of the obligations of
any Obligated Party or other person;  the
application of the proceeds of any Secured Obligation, by any Obligated Party
or other person, for purposes other than the purposes represented to Trustor by
any Obligated Party or otherwise intended or understood by Trustor or any
Obligated Party;  any act or omission by
Beneficiary which directly or indirectly results in or contributes to the
release of any Obligated Party or other person or any collateral for any
Secured Obligation;  the unenforceability
or invalidity of any collateral assignment (other than this Deed of Trust) or

 

24

 

guaranty with respect to any Secured Obligation, or
the lack of perfection or continuing perfection or lack of priority of any lien
(other than the lien hereof) which secures any Secured Obligation;  any failure of Beneficiary to marshal assets
in favor of Trustor or any other person; 
any modification of any Secured Obligation, including any renewal,
extension, acceleration or increase in interest rate;  any election of remedies by Beneficiary that
impairs any subrogation or other right of Trustor to proceed against any Obligated
Party or other person, including any loss of rights resulting from
anti-deficiency laws relating to nonjudicial foreclosures of real property or
other laws limiting, qualifying or discharging obligations or remedies; any law
which provides that the obligation of a surety or guarantor must neither be
larger in amount nor in other respects more burdensome than that of the
principal or which reduces a surety’s or guarantor’s obligation in proportion
to the principal obligation;  any failure
of Beneficiary to file or enforce a claim in any bankruptcy or other proceeding
with respect to any person;  the election
by Beneficiary, in any bankruptcy proceeding of any person, of the application
or non-application of Section 1111(b)(2) of the United States Bankruptcy
Code;  any extension of credit or the
grant of any lien under Section 364 of the United States Bankruptcy
Code;  any use of cash collateral under
Section 363 of the United States Bankruptcy Code; or  any agreement or stipulation with respect to
the provision of adequate protection in any bankruptcy proceeding of any
person.

 

8.3                                 Without limiting the generality of the
foregoing:

 

8.3.1                        Trustor waives all rights and defenses
that Trustor may have (a) because any Secured Obligation is secured by any real
property other than the Property (“Other Real Property”) or (b) because any
Secured Obligation which is an obligation of a person or persons other than
Trustor is secured by the Property.  This
means, among other things:

 

8.3.2                        Beneficiary may foreclose hereunder or
exercise any other remedy or right against Trustor hereunder (or under any
other document executed by Trustor in connection with any Secured Obligation)
without first foreclosing on any Other Real Property or personal property
collateral pledged by an Obligated Party (or by any other person) with respect
to any Secured Obligation.

 

8.3.3                        If Beneficiary forecloses on the Property
or on any Other Real Property pledged by an Obligated Party (or by any other
person) with respect to any Secured Obligation:

 

(a)                                  The amount of such Secured Obligation may
be reduced only by the price for which that collateral is sold at the
foreclosure sale, even if the collateral is worth more than the sale price.

 

(b)                                 Beneficiary may foreclose hereunder or
exercise any other remedy or right against Trustor hereunder (or under any
other document executed by Trustor in connection with any Secured Obligation)
even if Beneficiary, by foreclosing on any such real property, has destroyed
any right Trustor may have to collect from Obligated Party (or from any other
person who pledged any such collateral and/or was liable for such Secured
Obligation).

 

25

 

This is an
unconditional and irrevocable waiver of any rights and defenses Trustor may
have because any obligation secured hereby is also secured by Other Real
Property and/or because any Secured Obligation which is an obligation of a
person or persons other than Trustor is secured by the Property.

 

Trustor waives all rights and defenses arising out of
an election of remedies by Beneficiary, even though that election of remedies,
such as a nonjudicial foreclosure with respect to security for a Secured
Obligation, has destroyed Trustor’s rights of subrogation and reimbursement
against the principal.

 

8.4                                 Subrogation. 
Until no part of any Commitment under the Credit Agreement remains
outstanding and all of the Secured Obligations have been indefeasibly paid and
performed in full, Trustor hereby waives 
any right of subrogation which Trustor may now or hereafter have against
any Obligated Party that relates to any Secured Obligation,  any right to enforce any remedy Trustor may
now or hereafter have (in its own right, or by reason of succession to rights
of Beneficiary) against any Obligated Party that relates to any Secured
Obligation (including without limitation any right of reimbursement, indemnity
or contribution), and  any right to
participate in any collateral now or hereafter assigned to Beneficiary with
respect to any Secured Obligation. 
Trustor further agrees that, if and to the extent that any waiver set
forth in this paragraph is ever held to be unenforceable, all such rights of
subrogation, enforcement and participation shall be junior and subordinate to
the right of Beneficiary to obtain payment and performance of the Secured
Obligations and to all rights of Beneficiary in and to any property which now
or hereafter serves as collateral security for any Secured Obligation.

 

8.5                                 Obligated Party Information. 
Trustor warrants and agrees:  that
Trustor has not relied, and will not rely, on any representations or warranties
by Beneficiary to Trustor with respect to the creditworthiness of any Obligated
Party or the prospects of repayment of any Secured Obligation from sources
other than the Property;  that Trustor has
established and/or will establish adequate means of obtaining from any
Obligated Party on a continuing basis financial and other information
pertaining to the business operations, if any, and financial condition of each
Obligated Party;  that Trustor assumes
full responsibility for keeping informed with respect to each Obligated Party’s
business operations, if any, and financial condition;  that Beneficiary shall have no duty to
disclose or report to Trustor any information now or hereafter known to Beneficiary
with respect to any Obligated Party, including without limitation information
relating to any Obligated Party’s business operations or financial condition;
and that Trustor is familiar with the terms and conditions of the Loan
Documents and consents to all provisions thereof.

 

8.6                                 Other Rights of Sureties. 
Trustor hereby waives all other rights it may now or hereafter have,
whether or not similar to any of the foregoing, by reason of laws of the State
of Nevada pertaining to sureties.

 

8.7                                 Duration and Reinstatement of Lien. 
The lien of this Deed of Trust shall continue until the expiration of
all periods within which any amount at any time paid on account of the Secured
Obligations may be required to be restored or returned by Beneficiary upon the bankruptcy,
insolvency or reorganization of any Obligated Party, any guarantor or any other
person; and Beneficiary’s rights hereunder shall be reinstated and revived, and
the enforceability

 

26

 

of this Deed of Trust shall continue, with respect to
any such amount which Beneficiary is required to restore or return in
connection with any such bankruptcy, insolvency or reorganization.

 

8.8                                 Subordination. 
Except as expressly provided in the Credit Agreement, until all of the
Secured Obligations have been fully paid and performed,  Trustor hereby agrees that all existing and
future indebtedness and other obligations of each Obligated Party to Trustor
(collectively, the “Subordinated Debt”) shall be and are hereby subordinated to
all Secured Obligations which constitute obligations of the applicable
Obligated Party, and the payment thereof is hereby deferred in right of payment
to the prior payment and performance of all such Secured Obligations;  Trustor shall not collect or receive any cash
or non-cash payments on any Subordinated Debt or transfer all or any portion of
the Subordinated Debt; and  in the event
that, notwithstanding the foregoing, any payment by, or distribution of assets
of, any Obligated Party with respect to any Subordinated Debt is received by
Trustor, such payment or distribution shall be held in trust and immediately
paid over to Beneficiary, is hereby assigned to Beneficiary as security for the
Secured Obligations, and shall be held by Beneficiary in an interest bearing
account until all Secured Obligations have been fully paid and performed.

 

8.9                                 Lawfulness and Reasonableness. 
Trustor warrants that all of the waivers in this Deed of Trust are made
with full knowledge of their significance, and of the fact that events giving
rise to any defense or other benefit waived by Trustor may destroy or impair
rights which Trustor would otherwise have against Beneficiary, Obligated
Parties and other persons, or against collateral.  Trustor agrees that all such waivers are
reasonable under the circumstances and further agrees that, if any such waiver
is determined (by a court of competent jurisdiction) to be contrary to any law
or public policy, such waiver shall be effective to the fullest extent permitted
by law.

 

9.                                       Miscellaneous Provisions.

 

9.1                                 Additional Provisions. 
The Loan Documents fully state all of the terms and conditions of the
parties’ agreement regarding the matters mentioned in or incidental to this
Deed of Trust.  The Loan Documents also grant
further rights to Beneficiary and contain further agreements and affirmative
and negative covenants by Trustor which apply to this Deed of Trust and to the
Property.

 

9.2                                 No Waiver or Cure.

 

9.2.1                        Each waiver by Beneficiary or Trustee
must be in writing, and no waiver shall be construed as a continuing
waiver.  No waiver shall be implied from
any delay or failure by Beneficiary or Trustee to take action on account of any
default of Trustor.  Consent by
Beneficiary or Trustee to any act or omission by Trustor shall not be construed
as a consent to any other or subsequent act or omission or to waive the
requirement for Beneficiary’s or Trustee’s consent to be obtained in any future
or other instance.

 

9.2.2                        If any of the events described below
occurs, that event alone shall not:  cure
or waive any breach, Event of Default or notice of default under this Deed of
Trust or invalidate any act performed pursuant to any such default or notice;
or nullify the effect of any

 

27

 

notice of default or sale (unless all Secured
Obligations then due have been paid and performed and all other defaults under
the Loan Documents have been cured); or impair the security of this Deed of
Trust; or prejudice Beneficiary, Trustee or any receiver in the exercise of any
right or remedy afforded any of them under this Deed of Trust; or be construed
as an affirmation by Beneficiary of any tenancy, lease or option, or a
subordination of the lien or security interest of this Deed of Trust.

 

(a)                                  Beneficiary, its agent or a receiver
takes possession of all or any part of the Property in the manner provided in
Section 6.3.3.

 

(b)                                 Beneficiary collects and applies Rents as
permitted under Sections 2.3 and 6.6 or exercises Trustor’s
right, title and interest under the Leases, either with or without taking
possession of all or any part of the Property.

 

(c)                                  Beneficiary receives and applies to any
Secured Obligation proceeds of any Property, including any proceeds of
insurance policies, condemnation awards, or other claims, property or rights
assigned to Beneficiary under Section 5.5.

 

(d)                                 Beneficiary makes a site visit, observes
the Property and/or conducts tests as permitted under Section 5.15.

 

(e)                                  Beneficiary receives any sums under this
Deed of Trust or any proceeds of any collateral held for any of the Secured
Obligations, and applies them to one or more Secured Obligations.

 

(f)                                    Beneficiary, Trustee or any receiver
invokes any right or remedy provided under this Deed of Trust.

 

9.3                                 Powers of Beneficiary and Trustee.

 

9.3.1                        Trustee shall have no obligation to
perform any act which it is empowered to perform under this Deed of Trust
unless it is requested to do so in writing and is reasonably indemnified
against loss, cost, liability and expense.

 

9.3.2                        If either Beneficiary or any Lender or
Trustee performs any act which it is empowered or authorized to perform under
this Deed of Trust, including any act permitted by Section 5.9 or
Section 6.3.4, that act alone shall not release or change the personal
liability of any person for the payment and performance of the Secured
Obligations then outstanding, or the lien or security interest of this Deed of
Trust on all or the remainder of the Property for full payment and performance
of all outstanding Secured Obligations. 
The liability of the original Trustor shall not be released or changed
if Beneficiary or any Lender grants any successor in interest to any Borrower
or Trustor any extension of time for payment, or modification of the terms of
payment, of any Secured Obligation. 
Neither Beneficiary nor any Lender shall be required to comply with any
demand by any original Trustor or Borrower that Beneficiary or such Lender
refuse to grant such an extension or modification to, or commence proceedings against,
any such successor in interest

 

28

 

9.3.3                        Beneficiary may take any of the actions
permitted under Sections 6.3.2 and/or 6.3.3 regardless of the
adequacy of the security for the Secured Obligations, or whether any or all of
the Secured Obligations have been declared to be immediately due and payable,
or whether notice of default and election to sell has been given under this
Deed of Trust.

 

9.3.4                        From time to time, Beneficiary or Trustee
may apply to any court of competent jurisdiction for aid and direction in
executing the trust and enforcing the rights and remedies created under this
Deed of Trust.  Beneficiary or Trustee
may from time to time obtain orders or decrees directing, confirming or
approving acts in executing this trust and enforcing these rights and remedies.

 

9.4                                 Merger.  No merger
shall occur as a result of Beneficiary’s acquiring any other estate in or any
other lien on or security interest in the Property unless Beneficiary consents
to a merger in writing.

 

9.5                                 Applicable Law. 
This Deed of Trust shall be governed by and construed in accordance with
the laws of the State of Nevada.

 

9.6                                 Successors in Interest. 
The terms, covenants and conditions of this Deed of Trust shall be
binding upon and inure to the benefit of the heirs, successors and assigns of
the parties.  However, this Section 8.6
does not waive the provisions of Section 6.1.

 

9.7                                 Interpretation.

 

9.7.1                        Whenever the context requires, all words
used in the singular will be construed to have been used in the plural, and
vice versa, and each gender will include any other gender.  The captions of the sections of this Deed of
Trust are for convenience only and do not define or limit any terms or
provisions.  The word “include(s)” means
“include(s), without limitation,” and the word “including” means “including,
but not limited to.”

 

9.7.2                        The word “obligations” is used in its
broadest and most comprehensive sense, and includes all primary, secondary,
direct, indirect, fixed and contingent obligations.  It further includes all principal, interest,
prepayment charges, late charges, loan fees and any other fees and charges
accruing or assessed at any time, as well as all obligations to perform acts or
satisfy conditions.

 

9.7.3                        No listing of specific instances, items
or matters in any way limits the scope or generality of any language of this
Deed of Trust.  All Exhibits and/or
Schedules attached to this Deed of Trust are hereby incorporated in this Deed
of Trust.

 

9.8                                 In-House Counsel Fees. 
Whenever Trustor is obligated to pay or reimburse Beneficiary or any
Lender or Trustee for any attorneys’ fees, those fees shall include the
allocated costs for services of in-house counsel.

 

9.9                                 Waiver of Marshalling. 
To the extent permitted by applicable law, Trustor waives all rights,
legal and equitable, it may now or hereafter have to require marshalling of
assets or to require foreclosure sales of assets in a particular order,
including any rights provided by NRS 100.040 and 100.050, as such Sections may
be amended or recodified from time to time.

 

29

 

Each successor and assign of Trustor, including any
holder of a lien or security interest subordinate to this Deed of Trust, by
acceptance of its interest or lien or security interest, agrees that it shall
be bound by the above waiver, as if it had given the waiver itself.

 

9.10                           Severability. 
Any provision in this Deed of Trust that is held to be inoperative,
unenforceable or invalid as to any party or in any jurisdiction shall, as to
that party or jurisdiction, be inoperative, unenforceable or invalid without
affecting the remaining provisions or the operation, enforceability or validity
of that provision as to any other party or in any other jurisdiction, and to
this end the provisions of this Deed of Trust are declared to be severable.

 

9.11                           Notices.  Trustor
hereby requests that a copy of notice of default and notice of sale be mailed
to it at the address set forth below. 
That address is also the mailing address of Trustor as debtor under the
Nevada Uniform Commercial Code, as amended or recodified from time to
time.  Beneficiary’s address given below
is the address for Beneficiary as secured party under the Nevada Uniform
Commercial Code, as amended or recodified from time to time.

 

	
  Notices to
  Trustor:

  	
   

  	
  Herbst Gaming, Inc.

  
	
   

  	
   

  	
  5195 Las Vegas Blvd.

  
	
   

  	
   

  	
  Las Vegas, NV 
  89119

  
	
   

  	
   

  	
  Attn:  M.
  Higgins

  
	
   

  	
   

  	
   

  
	
  Notices to
  Beneficiary:

  	
   

  	
  Bank of America, N.A.

  
	
   

  	
   

  	
  Gaming and Leisure Industries Group

  
	
   

  	
   

  	
  Portfolio Management – CA 9-706-17-54

  
	
   

  	
   

  	
  555 So. Flower Street, 17th Floor

  
	
   

  	
   

  	
  Los Angeles, California  90071

  
	
   

  	
   

  	
  Attention: 
  Janice Hammond

  
	
   

  	
   

  	
   

  
	
  Notices to
  Trustee:

  	
   

  	
  PRLAP, Inc.

  
	
   

  	
   

  	
  P.O. Box 2240

  
	
   

  	
   

  	
  Brea, California 
  92622

  

 

IN WITNESS
WHEREOF, this Deed of Trust has been executed as of the date first written
above.

 

“Trustor”:

 

	
  FLAMINGO
  PARADISE GAMING, LLC,

  
	
  a Nevada limited
  liability company

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Edward
  Herbst

  	
   

  
	
   

  	
  Edward Herbst

  	
   

  

 

30

 

ACKNOWLEDGEMENT

 

	
  STATE OF Nevada

  	
  )

  	
   

  
	
   

  	
  ) ss

  	
   

  
	
  COUNTY OF Clark

  	
  )

  	
   

  

 

This instrument was acknowledged before me on 6/10, 2004 by Edward
Herbst as Manager of Flamingo Paradise Gaming, LLC, a Nevada limited liability
company.

 

 

	
   

  	
  /s/ Janice R. Donelson

  	
   

  
	
   

  	
  (Signature of Notarial Officer)

  	
   

  
	
   

  	
  JANICE R. DONELSON

  	
   

  	
   

  	
   

  
	
   

  	
  Notary Public State of Nevada

  	
   

  	
   

  	
   

  
	
  (SEAL)

  	
  No. 99-39315-1

  	
   

  	
  (Title and Rank)

  	
   

  
	
   

  	
  My appt. exp. Nov. 20, 2007

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  My commission expires:

  	
        11/20/07

  	
   

  
						

 

31

 

EXHIBIT “A”

 

(Legal Description of
Land)

 

 

That portion of the Northwest Quarter (NW 1/4) of the Northwest Quarter
(NW 1/4) of Section 22, Township 21 South, Range 61 East, M.D.B.&M.,
described as follows:

 

Parcel 1, as shown by Parcel Map in File 26 of Parcel Maps, Page 26, in
the Office of the County Recorder of Clark County, Nevada.

 

Subject to a Right of Way and Easement for the benefit of the fee owner
of Parcel 2, as shown by Parcel Map in File 26, Page 26, recorded May 30, 1979
as Document No. 1022111 of Official Records, Clark County, Nevada, over and
across the following described premises:

 

A strip of land being 25.00 feet in width, 12.50 feet on each side of
the following described centerline:

 

That portion of the Northwest corner of said Section 22; thence
South 88°55’56” East along the North line thereof, a distance of 1,030.21 feet;
thence South 00°44’11” East, a distance of 92.64 feet to a point in the present
Southerly Right of Way line of Flamingo Road, being the True Point of
Beginning; thence South 00°44’11” East, a distance of 576.22 feet to the True
Point of Ending.

 

1

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