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EXHIBIT 10.20
DEED OF TRUST
(Due on Transfer - Strict)
THIS DEED OF TRUST is made on this 14th of June, 1996, between National
Gaming Companies, Inc., a Minnesota corporation (Borrower), whose address is
0000 Xxxx 00xx Xxxxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxxxx 00000; and the Public
Trustee of the County in which the Property (see paragraph 1) is situated
(Trustee); for the benefit of E. Wayne and Xxxxx X. Xxxxx (Lender), whose
address is 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxx 00000.
Borrower and Lender covenant and agree as follows:
1. Property in Trust. Borrower, in consideration of the indebtedness
herein recited and the trust herein created, hereby grants and conveys to
Trustee in trust, with power of sale, the following described property located
in the County of Teller, State of Colorado:
Lots 1 through 15, Block 26, Fremont, (now Cripple Creek), Colorado,
together with all improvements and appurtenances (Property).
2. Note; Other Obligations Secured. This Deed of Trust is given to
secure to Lender:
a. the repayment of the indebtedness evidenced by Borrower's note (Note)
dated June 14th, 1996, in the principal sum of Seven Hundred Thousand and
no/100 U.S. Dollars ($700,000.00), with interest on the unpaid principal
balance from the date thereof, until paid, at the rate of nine percent (9%) per
annum, with principal and interest payable at 000 Xxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxx 00000, or such other place as the Lender may designate, as follows:
1) During the first year of the Note and until June 1, 1997. Borrower
shall pay to the Lender on at least a quarterly basis commencing July 1, 1996,
all net income received by Borrower from the parking business conducted on the
Property. Net income shall be defined as gross receipts derived from the
parking business less all ordinary and necessary expenses for operating the
business, including employee salaries, real property taxes, liability insurance,
utilities and general maintenance. Expenses for capital improvements to the
parking lot such as paving, installation of lights and excavation to expand the
parking lot, shall not be treated as operating expenses. Net income from all
parking shall be applied to interest due under the Note. In the event that the
net income paid to Lender is less than the accrued interest under the Note for
the first year, the unpaid interest shall be added to the principal balance of
the Note, as of June 1, 1997. In the event the net income from parking is
greater than the accrued interest for the first year, the excess shall be
applied as a partial prepayment of the principal balance of the Note. Borrower
agrees that it will conduct a parking lot business on the Property during at
least the first year of the Note and will use its best reasonable efforts to
maximize revenues from such business. Borrower agrees that it will charge a fee
for parking on such lot comparable to such fees charged by other parking lots in
Cripple Creek, Colorado, but not less than $5.00 per car per day. Borrower will
provide Lender with a full accounting of revenues and expenses of the parking
lot on a quarterly basis. Lender and their authorized agents shall have the
right to review the books and records of Borrower relating to the parking lot
upon request.
2) The remaining balance of principal and accrued interest as of June
1, 1997, shall be paid in 108 equal consecutive monthly installments amortized
over 9 years, commencing on June 1, 1997 and continuing on the first day of each
succeeding month through May 1, 2006.
3) The entire remaining balance of principal and accrued interest
shall be due and payable on May 1, 2006; and
4) Borrower is to pay to Lender a late charge of ten percent (10%) of
any payment not received by the Lender within ten (10) days after payment is
due; and Borrower has the right to prepay the principal amount outstanding under
said Note, in whole or in part, at any time without penalty; and Borrower is to
pay interest on the outstanding principal balance of the Note at a rate of
twelve percent (12%) per annum during any default under this Deed of Trust and
under the Note.
b. the payment of all other sums, with interest thereon at twelve percent
(12%) per annum, disbursed by Lender in accordance with this Deed of Trust to
protect the security of this Deed of Trust; and
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c. the prompt performance of the covenants and agreements of Borrower
contained in the Note, this Deed of Trust, any other instrument securing the
debt, and that certain Contract to Buy and Sell Commercial Real Estate dated
May 16th, 1996 (the "Contract").
3. Title. Borrower covenants that Borrower owns and has the right to
grant and convey the Property, and warrants title to the same, subject to
general real estate taxes for the current year, easements of record or in
existence, and recorded declarations, restrictions, reservations and covenants,
if any, as of this date.
4. Payment of Principal and Interest. Borrower shall promptly pay when
due the principal of and interest on the indebtedness evidenced by the Note,
and late charges as provided in the Note and shall perform all of Borrower's
other covenants contained in the Note.
5. Application of Payments. All payments received by Lender under the
terms hereof shall be applied by Lender first in payment of amounts due
pursuant to paragraph 23, then to amounts disbursed by Lender pursuant to
paragraph 9 (Protection of Lender's Security), and the balance in accordance
with the terms and conditions of the Note.
6. [Reserved]
7. Property Insurance. Borrower shall keep the improvements now
existing or hereafter erected on the Property insured against loss by fire or
hazards included within the term "extended coverage" in an amount at least equal
to the lessor of, (1) the full replacement value of the Property and any
improvements thereon, or (2) an amount sufficient to pay the sums secured by
this Deed of Trust as well as any prior encumbrances on the Property. All of
the foregoing shall be known as "Property Insurance."
The insurance carrier providing the insurance shall be qualified to write
Property Insurance in Colorado and shall be chosen by Borrower subject to
Lender's right to reject the chosen carrier for reasonable cause. Purchaser is
required to supply Seller during all of the term of the loan with a certificate
of insurance showing liability coverage in amounts suitable to Seller. All
insurance policies and renewals thereof shall include a standard mortgage clause
in favor of Lender, and shall provide that the insurance carrier shall notify
Lender at least thirty (30) days before cancellation, termination or any
material change of coverage. Insurance policies shall be furnished to Lender at
or before closing. Lender shall have the right to hold the policies and
renewals thereof.
In the event of loss, Borrower shall give prompt notice to the insurance
carrier and Lender. Lender may make proof of loss if not made promptly by
Borrower.
Insurance proceeds shall be applied to restoration or repair of the
Property damaged, provided such restoration or repair is economically feasible
and the security of this Deed of Trust is not thereby impaired. If such
restoration or repair is not economically feasible or if the security of this
Deed of Trust would be impaired, the insurance proceeds shall be applied to the
sums secured by this Deed of Trust, with the excess, if any, paid to Borrower.
If the Property is abandoned by Borrower, or if Borrower fails to respond to
Lender within thirty (30) days from the date notice is given in accordance with
paragraph 16 (Notice) by Lender to Borrower that the insurance carrier offers to
settle a claim for insurance benefits, Lender is authorized to collect and apply
the insurance proceeds, at Lender's option, either to restoration or repair of
the Property or to the sums secured by this Deed of Trust.
Any such application of proceeds to principal shall not extend or postpone
the due date of the installments referred to in paragraphs 4 (Payment of
Principal and Interest) and 23 or change in the amount of such installments.
Notwithstanding anything herein to the contrary, if under paragraph 18
(Acceleration; Foreclosure; Other Remedies), the Property is acquired by Lender,
all right, title and interest of Borrower in and to any insurance policies and
in and to the proceeds thereof resulting from damage to the Property prior to
the sale or acquisition shall pass to Lender to the extent of the sums secured
by this Deed of Trust immediately prior to such sale or acquisition.
All of the rights of Borrower and Lender hereunder with respect to
insurance carriers, insurance policies and insurance proceeds are subject to the
rights of any holder of a prior deed of trust with respect to said insurance
carriers, policies and proceeds.
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8. Preservation and Maintenance of Property. Borrower shall keep the
Property in good repair and shall not commit waste or permit impairment or
deterioration of the Property and shall comply with the provisions of any lease
if this Deed of Trust is on a leasehold. Borrower shall perform all of
Borrower's obligations under any declarations, covenants, by-laws, rules , or
other documents governing the use, ownership or occupancy of the Property,
provided that same do not materially adversely affect the value of the Property.
9. Protection of Lender's Security. Except when Borrower has exercised
Borrower's rights under paragraph 6 above, if the Borrower fails to perform the
covenants and agreements contained in this Deed of Trust, or if a default occurs
in a prior lien, or if any action or proceeding is commenced which materially
affects Lender's interest in the Property, then Lender, at Lender's option, with
notice to Borrower if required by law, may make such appearances, disburse such
sums and take such action as is necessary to protect Lender's interest,
including, but not limited to disbursement of reasonable attorney's fees and
entry upon the Property to make repairs. Borrower hereby assigns to Lender any
right Borrower may have by reason of any prior encumbrance on the Property or by
law or otherwise to cure any default under said prior encumbrance.
Any amounts disbursed by Lender pursuant to this paragraph 9, with interest
thereon, shall become additional indebtedness of Borrower secured by this Deed
of Trust. Such amounts shall be payable upon notice from Lender to Borrower
requesting payment thereof, and Lender may bring suit to collect any amounts so
disbursed plus interest specified in paragraph 2.b. (Note; Other Obligations
Secured). Nothing contained in this paragraph 9 shall require Lender to incur
any expense or take any action hereunder.
10. Inspection. Lender may make or cause to be made reasonable entries
upon and inspection of the Property, provided that Lender shall give Borrower
notice prior to any such inspection specifying reasonable cause therefore
related to Lender's interest in the Property.
11. Condemnation. The proceeds of any award or claim for damages, direct
or consequential, in connection with any condemnation or other taking of the
Property, or part thereof, or for any conveyance in lieu of condemnations, are
hereby assigned and shall be paid to Lender as herein provided. However, all of
the rights of Borrower and Lender hereunder with respect to such proceeds are
subject to the rights of any holder of a prior deed of trust.
In the event of a total or partial taking of the Property, the proceeds
shall be applied to the sums secured by this Deed of Trust, with the excess, if
any, paid by Borrower.
If the Property is abandoned by Borrower, or if, after notice by Lender to
Borrower that the condemnor offers to make an award or settle a claim for
damages, Borrower fails to respond to Lender within thirty (30) days after the
date such notice is given, Lender is authorized to collect and apply the
proceeds, at Lender's option, either to restoration or repair of the Property or
to the sums secured by this Deed of Trust.
Any such application of proceeds to principal shall not extend or postpone
the due date of the installments referred to in paragraphs 4 (Payment of
Principal and Interest) and 23 (Escrow Funds for Taxes and Insurance) nor change
the amount of such installments.
12. Borrower Note Released. Extension of the time for payment or
modification of amortization of sums secured by this Deed of Trust granted by
Lender to any successor in interest of Borrower shall not operate to release, in
any manner, the liability of the original Borrower, nor Borrower's successors in
interest, from the original terms of this Deed of Trust. Lender shall not be
required to commence proceedings against such successor or refuse to extend time
for payment or otherwise modify amortization of the sums secured by this Deed of
Trust by reason of any demand made by the original Borrower's successors in
interest.
13. Forbearance by Lender Not a Waiver. Any forbearance by Lender in
exercising any right or remedy hereunder, or otherwise afforded by law, shall
not be a waiver or preclude the exercise of any such right or remedy.
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14. Remedies Cumulative. Each remedy provided in the Note and this Deed
of Trust is distinct from and cumulative to all other rights or remedies under
the Note and this Deed of Trust or afforded by law or equity, and may be
exercised concurrently, independently, or successively.
15. Successors and Assigns Bound; Joint and Several Liability; Captions.
The covenants and agreements herein contained shall bind, and the rights
hereunder shall inure to, the respective successors and assigns of Lender and
Borrower, subject to the provisions of paragraph 24 (Transfer of the Property;
Assumption). All covenants and agreements of Borrower shall be joint and
several. The captions and headings of the paragraphs in this Deed of Trust are
for convenience only and are not to be used to interpret or define the
provisions hereof.
16. Notice. Except for any notice required by law to be given in another
manner, (a) any notice to Borrower provided for in this Deed of Trust shall be
in writing and shall be given and be effective upon (1) delivery to Borrower or
(2) mailing such notice by first-class U.S. mail, addressed to Borrower at
Borrower's address stated herein or at such other address as Borrower may
designate by notice to Lender as provided herein, and (b) any notice to Lender
shall be in writing and shall be given and be effective upon (1) delivery to
Lender or (2) mailing such notice by first-class U.S. mail, to Lender's address
stated herein or to such other address as Lender may designate by notice to
Borrower as provided herein. Any notice provided for in this Deed of Trust
shall be deemed to have been given to Borrower or Lender when given in any
manner designated herein.
17. Governing Law; Severability. The Note and this Deed of Trust shall be
governed by the law of Colorado. In the event that any provision or clause of
this Deed of Trust or the Note conflicts with the law, such conflict shall not
affect other provisions of this Deed of Trust or the Note which can be given
effect without the conflicting provision, and to this end the provisions of the
Deed of Trust and Note are declared to be severable.
18. Acceleration; Foreclosure; Other Remedies. Except as provided in
paragraph 24 (Transfer of the Property; Assumption), upon Borrower's breach of
any covenant or agreement of Borrower in the Note or in this Deed of Trust, or
upon the occurrence of any Event of Default as set forth below, at Lender's
option, all of the sums secured by this Deed of Trust shall be immediately due
and payable (Acceleration). To exercise this option, Lender may invoke the
power of sale and any other remedies permitted by law. Lender shall be entitled
to collect all reasonable costs and expenses incurred in pursuing the remedies
provided in the Note and this Deed of Trust, including, but not limited to,
reasonable attorney's fees.
If Lender invokes the power of sale, Lender shall give written notice to
Trustee of such election. Trustee shall give such notice to Borrower of
Borrower's rights as is provided by law. Trustee shall record a copy of such
notice as required by law. Trustee shall advertise the time and place of the
sale of the Property, for not less than four (4) weeks in a newspaper of general
circulation in each county in which the Property is situated, and shall mail
copies of such notice of sale to Borrower and other persons as prescribed by
law. After the lapse of such time as may be required by law, Trustee, without
demand on Borrower, shall sell the Property at public auction to the highest
bidder for cash at the time and place (which may be on the Property or any part
thereof as permitted by law) in one or more parcels as Trustee may think best
and in such order as Trustee may determine. Lender or Lender's designee may
purchase the Property at any sale. It shall not be obligatory upon the
purchaser at any such sale to see to the application of the purchase money.
Trustee shall apply the proceeds of the sale in the following order: (a)
to all reasonable costs and expenses of the sale, including, but not limited to,
reasonable Trustee's and attorney's fees and costs of title evidence; (b) to all
sums secured by this Deed of Trust; and (c) the excess, if any, to the person or
persons legally entitled thereto.
The occurrence of any one or more of the following shall be deemed to be an
Event of Default hereunder:
a. Any payment required by the Note or by this Deed of Trust (or any
other instrument securing the Note) is not made in full within ten (10) days of
the date it is due;
b. The failure of Borrower to fully perform or comply with the terms
and conditions of and its obligations under the Note, this Deed of Trust, the
Contract, including, but not limited to, Borrower's obligations in paragraph 2.
of the Contract to provide liability insurance coverage, to timely pay the real
estate taxes on the Property,
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and to not dilute the Common Stock received by Lender; and in paragraph 18., 19.
and 20. of the Contract to indemnify and release Lender; or under any instrument
now or hereafter given to secure or guaranty the Note.
c. A breach by National Lodging Companies, Inc. ("NLC") of or the
failure of NLC to fully perform or comply with the terms and conditions of its
obligations under the Contract including, but not limited to NLC's obligations
under paragraphs 18., 19. and 20. of the Contract to release and indemnify
Lender; or under any other instrument now or hereafter given by NLC to secure or
guaranty the Note.
d. Borrower or any guarantor, endorser, or accommodation party under
the Note (or any successors or assigns) shall commence, or there shall be
commenced against any such party, any case, proceeding, or other action seeking
to have an order for relief entered with respect to any such party, or to
adjudicate any such party as a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, liquidation, dissolution, or composition under any law
relating to bankruptcy, insolvency, reorganization, or relief of debtors or
seeking appointment of a receiver, trustee, custodian, or other similar
fiduciary, with respect to any part of any such party's property;
e. Borrower (its affiliates, guarantors, endorsers, accommodation
parties, sister companies, subsidiaries, successors, assigns or any party
related to Borrower) defaults on any other debts, obligations, or liabilities to
Lender or defaults on any instrument or agreement executed and delivered to
secure any such debt, obligation or liability;
f. Any default or breach in the performance of any obligation of
Borrower hereunder or under any instrument or agreement executed and delivered
to secure payment of the Note or the Deed of Trust.
g. A default under any other security document or deed of trust now
or hereafter encumbering the Property, or any note which said documents secure.
h. A Transfer occurs as defined herein.
i. Any representation made by Borrower or any endorser or guarantor
under the Note, in the Contract, or in any certificate, agreement, or statements
furnished to Lender by or on behalf of Borrower shall prove to have been
inaccurate in any substantial and material respect when made or furnished.
j. Any other event occurs which under the Note, this Deed of Trust
or any other instrument securing same constitutes a default or gives the right
to accelerate the maturity of the indebtedness.
k. Any failure by Borrower to discharge or defend a mechanic's lien
placed against the Property, as provided in paragraph 26. hereof.
19. Borrower's Right to Cure Default. Whenever foreclosure is commenced
for nonpayment of any sums due hereunder, the owners of the Property or parties
liable hereon shall be entitled to cure said defaults by paying all delinquent
principal and interest payments due as of the date of cure, costs, expenses,
late charges, attorney's fees and other fees all in the manner provided by law.
Upon such payment, this Deed of Trust and the obligations secured hereby shall
remain in full force and effect as though no Acceleration had occurred, and the
foreclosure proceedings shall be discontinued.
20. Assignment of Rents; Appointment of Receiver; Lender in Possession. As
additional security hereunder, Borrower hereby assigns to Lender the rents of
the Property; however, Borrower shall, prior to Acceleration under paragraph 18
(Acceleration; Foreclosure; Other Remedies) or abandonment of the Property, have
the right to collect and retain such rents as they become due and payable.
Lender or the holder of the Trustee's certificate of purchase shall be
entitled to a receiver for the Property after Acceleration under paragraph 18
(Acceleration; Foreclosure; Other Remedies), and shall also be so entitled
during the time covered by foreclosure proceedings and the period of redemption,
if any; and shall be entitled thereto as a matter of right without regard to the
solvency or insolvency of Borrower or of the then owner of the Property, and
without
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regard to the value thereof. Such receiver may be appointed by any Court of
competent jurisdiction upon ex parte application and without notice - notice
being hereby expressly waived. The receiver shall not be required to post a
bond, and Borrower hereby waives such requirement.
Upon Acceleration under paragraph 18 (Acceleration; Foreclosure; Other
Remedies) or abandonment of the Property, Lender, in person, by agent or by
judicially-appointed receiver, shall be entitled to enter upon, take possession
of and manage the Property and to collect the rents of the Property including
those past due. All rents collected by Lender or the receiver shall be applied
first, to payment of the costs of preservation and management of the Property,
second, to the payments due upon prior liens, and then to the sums secured by
this Deed of Trust. Lender and the receiver shall be liable to account only for
those rents actually received.
21. Release. Upon payment of all sums secured by this Deed of Trust,
Lender shall cause Trustee to release this Deed of Trust and shall produce for
Trustee the Note. Borrower shall pay all costs of recordation and shall pay the
statutory Trustee's fees. If Lender shall not produce the Note as aforesaid,
then Lender, upon notice in accordance with paragraph 16 (Notice) from Borrower
to Lender, shall obtain, at Lender's expense, and file any lost instrument bond
required by Trustee or pay the cost thereof to effect the release of this Deed
of Trust.
22. Waiver of Exemptions. Borrower hereby waives all right of homestead
and any other exemption in the Property under state or federal law presently
existing or hereafter enacted.
23. Taxes and Insurance. Borrower shall pay or cause to be paid in full
when due, and in any event before any penalty or interest attaches, all general
taxes and assessments, special taxes and assessments, water charges, sewer
service charges, and all other charges against the Property and shall furnish
the Lender official receipts evidencing the payment thereof within thirty (30)
days of a written request therefor by the Lender. Borrower shall deliver to
Lender copies of official receipts showing payment of all real and personal
property taxes and assessments levied against the Property, within thirty (30)
days of the date on which taxes and assessments were due.
24. Transfer of the Property; Assumption. The following events shall be
referred to herein as a "Transfer": (i) a transfer or conveyance of title (or
any portion thereof, legal or equitable) of the Property (or any part thereof or
interest therein); (ii) the execution of a contract or agreement creating a
right to title (or any portion thereof, legal or equitable) in the Property (or
any part thereof or interest therein); (iii) or an agreement granting a
possessory right in the Property (or any portion thereof); (iv) a sale or
transfer of, or the execution of a contract or agreement creating a right to
acquire or receive, more than fifty percent (50%) of the controlling interest or
more than fifty percent (50%) of the beneficial interest in the Borrower; (v)
the reorganization, liquidation or dissolution of the Borrower; and or (vi) the
creation of any lien or encumbrance against the Property. At the election of
Lender, in the event of each and every Transfer:
a. All sums secured by this Deed of Trust shall become immediately
due and payable (Acceleration).
b. If a Transfer occurs and should Lender not exercise Lender's
option pursuant to this paragraph 24 to Accelerate, Transferee shall be deemed
to have assumed all of the obligations of Borrower under this Deed of Trust
including all sums secured hereby whether or not the instrument evidencing such
conveyance, contract or grant expressly so provides. This covenant shall run
with the Property and remain in full force and effect until said sums are paid
in full. The Lender may without notice to Borrower deal with Transferee in the
same manner as with the Borrower with reference to said sums including the
payment or credit to Transferee of undisbursed reserve Funds on payment in full
of said sums, without in any way altering or discharging the Borrower's
liability hereunder for the obligations hereby secured.
c. Should Lender not elect to Accelerate upon the occurrence of such
Transfer then, subject to (b) above, the mere fact of lapse of time or the
acceptance of payment subsequent to any of such events, whether or not Lender
had actual or constructive notice such Transfer, shall not be deemed a waiver of
Lender's right to make such election nor shall Lender be estopped therefrom by
virtue thereof. The issuance on behalf of the Lender of a routine statement
showing the status of the loan, whether or not Lender had actual or constructive
notice of such Transfer, shall
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not be a waiver or estoppel of Lender's said rights. The Borrower specifically
acknowledges that it agrees to the foregoing transfer restriction in order to
induce the Lender to make the loan secured hereby.
25. Borrower's Copy. Borrower acknowledges receipt of a copy of the Note
and this Deed of Trust.
26. Mechanics Liens. Borrower will keep the Property free and clear of
all liens and claims of liens by contractors, subcontractors, mechanics,
laborers, materialmen, and other such persons, and will cause any recorded
statement of any such lien to be released of record within thirty (30) days
after the recording thereof. Notwithstanding the preceding sentence, however,
Borrower will not be deemed to be in default under this section if and so long
as: (a) Borrower contests in good faith, the validity or amount of the asserted
lien and diligently prosecutes or defends an action appropriate to obtain a
binding determination of the disputed matter, and (b) provides Lender with such
security as Lender may reasonably require to protect Lender against all loss,
damage and expenses, including attorneys fees, which Lender might incur if the
asserted lien is determined to be valid.
27. Defensive Actions. Borrower will defend, at their expense, any
action, proceeding or claim which affects the Property encumbered hereby or any
interest of Lender in the Property and will indemnify and hold Lender harmless
from all loss, damage, cost, or expense, including attorneys fees, which Lender
may incur in connection therewith.
28. Enforcement. Lender shall be entitled to collect all of its costs
and expenses incurred including reasonable attorneys fees and costs in the event
any action is brought to interpret or enforce the terms of this Deed of Trust.
29. Assumption. Notwithstanding any provisions of said Deed of Trust,
the holder of the Note secured by this Deed of Trust shall have not duty of
"good faith" or otherwise to allow assumption of said Note or this Deed of
Trust, and may, with or without cause, accelerate all amounts owed in the event
of sale, conveyance, alienation, disposal or other "transfer" of the Property as
described in this Deed of Trust.
BORROWER:
National Gaming Companies, Inc.,
a Minnesota corporation
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------
Its: President
-----------------------------
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNIPIN )
Subscribed and sworn to before me this 14 day of June, 1996, by Xxxxxx X.
Xxxxxxx, the President of National Gaming Companies, Inc., a Minnesota
corporation.
Witness my hand and official seal.
My commissions expires: January 31, 2000
/s/ Xxxxxx Xxxxx
---------------------------------
Address:
0000 X. 00xx Xx.
---------------------------------
Xxxxxxxxxxx, XX 00000
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