Deed of Trust, Security Agreement

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DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING

THIS DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING (this " Deed of Trust" ) is executed on the date set forth in the acknowledgement below to be effective as of July 7, 2005, by 360 Global Wine Company , a Nevada corporation having an organizational identification number of C13452-2000 assigned by the Secretary of State of the State of Nevada (" Grantor" ), whose address for notice hereunder is 1 Kirkland Ranch Road, to Phillip Weller, Trustee (" Trustee" ), whose address is c/o Vinson & Elkins LLP, First City Tower, 1001 Fannin Street, Suite 2300, Houston, Texas 77002-6760, for the benefit of Laurus Master Fund, Ltd. , a Cayman Islands company (" Beneficiary" ), whose address for notice is c/o Laurus Capital Management, LLC, 825 Third Avenue, 14th Floor, New York, New York 10022, Attention: John E. Tucker.

ARTICLE 1
DEFINITIONS

Section 1.1

Definitions

. As used herein, the following terms shall have the following meanings:

" Indebtedness" : The sum of all (1) principal, interest and other amounts due under or secured by the Loan Documents, (2) principal, interest, and other amounts which may hereafter be loaned by Beneficiary, its successors or assigns, to or for the benefit of the owner of the Mortgaged Property, when evidenced by a promissory note or other instrument which, by its terms, is secured hereby, and (3) all other indebtedness, obligations and liabilities now or hereafter existing of any kind of Grantor to Beneficiary under documents which recite that they are intended to be secured by this Deed of Trust.

" Loan Documents" : The (1) Secured Convertible Term Note of even date, executed by the Companies (as defined in the Security Agreement), payable to the order of Beneficiary, in the stated principal amount of $ 34,500,000 ; Secured Revolving Note of even date, executed by the Companies, payable to the order of Beneficiary, in the stated principal amount of $ 3,000,000 ; and Secured Convertible Minimum Borrowing Note of even date, executed by the Companies, payable to the order of Beneficiary, in the stated principal amount of $500,000 (collectively, the " Notes" ), which mature on July 7, 2008 (the " Maturity Date" ), (2) this Deed of Trust, (3) the Security Agreement of even date executed by the Companies and Beneficiary to further secure payment of the Notes (the " Security Agreement" ) (reference is hereby made to the Security Agreement for all purposes; all defined terms used therein that are not otherwise defined in this Deed of Trust shall have the same meaning as given to them in the Security Agreement), (4) all other documents now or hereafter executed by Grantor, to evidence


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or secure the payment of the Indebtedness or the performance of the Obligations, and (5) all modifications, restatements, extensions, renewals and replacements of the foregoing.

" Mortgaged Property" : (1) the real property described in Exhibit A , together with any greater estate therein as hereafter may be acquired by Grantor (the " Land" ), (2) all buildings, structures and other improvements, now or at any time situated, placed or constructed upon the Land (the " Improvements" ), (3) all materials, supplies, equipment, apparatus and other items of personal property now owned or hereafter acquired by Grantor and now or hereafter attached to, installed in or used in connection with any of the Improvements or the Land, and water, gas, electrical, storm and sanitary sewer facilities and all other utilities whether or not situated in easements (the " Fixtures" ), (4) all right, title and interest of Grantor in and to all goods, accounts, general i ntangibles, instruments, documents, chattel paper and all other personal property of any kind or character, including such items of personal property as defined in the UCC, now owned or hereafter acquired by Grantor and now or hereafter affixed to, placed upon, used in connection with, arising from or otherwise related to the Land and Improvements or which may be used in or relating to the planning, development, financing or operation of the Mortgaged Property, including, without limitation, furniture, furnishings, equipment, machinery, money, insurance proceeds, accounts, contract rights, trademarks, goodwill, chattel paper, documents, trade names, licenses and/or franchise agreements, rights of Grantor under leases of Fixtures or other personal property or equipment, inventory, all refundable, returnable or reimbursable fees, deposits or other funds or evidences of credit or indebtedness deposited by or on behalf of Grantor with any governmental authorities, boards, corporations, providers of utility servi ces, public or private, including specifically, but without limitation, all refundable, returnable or reimbursable tap fees, utility deposits, commitment fees and development costs (the " Personalty" ), (5) all reserves, escrows or impounds required under the Loan Documents and all deposit accounts maintained by Grantor with respect to the Mortgaged Property, provided that upon payment in full of the Notes and release by Beneficiary pursuant of the Notes, that said reserves will be released to Grantor, (6) all plans, specifications, shop drawings and other technical descriptions prepared for construction, repair or alteration of the Improvements, and all amendments and modifications thereof (the " Plans" ), (7) all leases, subleases, licenses, concessions, occupancy agreements or other agreements (written or oral, now or at any time in effect) which grant a possessory interest in, or the right to use, all or any part of the Mortgaged Property, together with all rel ated security and other deposits (the " Leases" ), (8) all of the rents, revenues, income, proceeds, profits, to the extent that such are payable to Grantor as landlord under the lease, security and other types of deposits, and other benefits paid or payable by parties to the Leases other than Grantor for using, leasing, licensing, possessing, operating from, residing in, selling or otherwise enjoying the Mortgaged Property (the " Rents" ), (9) all other agreements, such as construction contracts, architects' agreements, engineers' contracts, utility contracts, maintenance agreements, management agreements, service contracts, permits, licenses, certificates and entitlements in any way relating to the development, construction, use, occupancy, operation, maintenance, enjoyment, acquisition or ownership of the Mortgaged Property (the " Property Agreements" ), (10) all rights, privileges, tenements, hereditaments, rights-of-way, easemen ts, appendages and appurtenances appertaining to the foregoing, and all right, title and interest, if any, of Grantor in and to any streets, ways, alleys, strips or gores of


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land adjoining the Land or any part thereof, (11) all accessions, replacements and substitutions for any of the foregoing and all proceeds thereof, (12) all insurance policies, unearned premiums therefor and proceeds from such policies covering any of the above property now or hereafter acquired by Grantor, (13) all mineral, water, oil and gas rights now or hereafter acquired and relating to all or any part of the Mortgaged Property, and (14) all of Grantor' s right, title and interest in and to any awards, remunerations, reimbursements, settlements or compensation heretofore made or hereafter to be made by any governmental authority pertaining to the Land, Improvements, Fixtures or Personalty. As used in this Deed of Trust, the term " Mortgaged Property" shall mean all or, where the context permits or requires, any portion o f the above or any interest therein.

" Obligations" : All of the agreements, covenants, conditions, warranties, representations and other obligations (other than to repay the Indebtedness) made or undertaken by Grantor or any other person or entity (including the Companies) to Beneficiary, Trustee or others as set forth in the Loan Documents.

" Permitted Encumbrances" : The outstanding liens, easements, restrictions, security interests and other exceptions to title set forth in the policy of title insurance insuring the lien of this Deed of Trust, together with the liens and security interests in favor of Beneficiary created by the Loan Documents, none of which, individually or in the aggregate, materially interferes with the benefits of the security intended to be provided by this Deed of Trust, materially and adversely affects the value of the Mortgaged Property, impairs the use or operations of the Mortgaged Property or impairs Grantor' s ability to pay its obligations in a timely manner.

" UCC" : The Uniform Commercial Code of Texas or, if the creation, perfection and enforcement of any security interest herein granted is governed by the laws of a state other than Texas, then, as to the matter in question, the Uniform Commercial Code in effect in that state.

ARTICLE 2
GRANT

Section 2.1

Grant

. To secure the full and timely payment of the Indebtedness and the full and timely performance of the Obligations, Grantor GRANTS, BARGAINS, SELLS and CONVEYS the Mortgaged Property to Trustee (subject, however, to the Permitted Encumbrances), TO HAVE AND TO HOLD, IN TRUST, WITH POWER OF SALE, and Grantor does hereby bind itself, its successors and assigns to WARRANT AND FOREVER DEFEND the title to the Mortgaged Property unto Trustee.

ARTICLE 3
WARRANTIES, REPRESENTATIONS AND COVENANTS

Grantor warrants, represents and covenants to Beneficiary as follows:


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Section 3.1

Title to Mortgaged Property and Lien of this Instrument

. Grantor owns the Mortgaged Property free and clear of any liens, claims or interests, except the Permitted Encumbrances. This Deed of Trust creates valid, enforceable first priority liens and security interests against the Mortgaged Property.

Section 3.2

First Lien Status

. Grantor shall preserve and protect the first lien and security interest status of this Deed of Trust and the other Loan Documents. If any lien or security interest other than the Permitted Encumbrances is asserted against the Mortgaged Property, Grantor shall promptly, and at its expense, (a) give Beneficiary a detailed written notice of such lien or security interest (including origin, amount and other terms), and (b) pay the underlying claim in full or take such other action so as to cause it to be released.

Section 3.3

Payment and Performance

. Grantor shall pay the Indebtedness when due under the Loan Documents and shall perform the Obligations in full when they are required to be performed.

Section 3.4

Replacement of Fixtures and Personalty

. Grantor shall not, without the prior written consent of Beneficiary, permit any of the Fixtures or Personalty to be removed at any time from the Land or Improvements, unless the removed item is removed temporarily for maintenance and repair or, if removed permanently, is obsolete and is replaced by an article of equal or better suitability and value, owned by Grantor subject to the liens and security interests of this Deed of Trust and the other Loan Documents, and free and clear of any other lien or security interest except such as may be first approved in writing by Beneficiary.

Section 3.5

Maintenance of Rights of Way, Easements and Licenses

. Grantor shall maintain all rights of way, easements, grants, privileges, licenses, certificates, permits, entitlements, and franchises necessary for the use of the Mortgaged Property and will not, without the prior consent of Beneficiary, consent to any public restriction (including any zoning ordinance) or private restriction as to the use of the Mortgaged Property. Grantor shall comply with all restrictive covenants affecting the Mortgaged Property, and all zoning ordinances and other public or private restrictions as to the use of the Mortgaged Property.

Section 3.6

Inspection

. Grantor shall permit Trustee and Beneficiary, and their agents, representatives and employees, upon reasonable prior notice to Grantor and during normal business hours, to inspect the Mortgaged Property and conduct such environmental and engineering studies as Beneficiary may require, provided that such inspections and studies shall not materially interfere with the use and operation of the Mortgaged Property. Trustee and Beneficiary acknowledge and agree that such third party reports are provided to Trustee and Beneficiary, and their agents and employees for information purposes only and do not constitute representations and warranties of Grantor.

Section 3.7

Other Covenants

. All of the covenants in the Loan Documents are incorporated herein by reference and, together with covenants in this Article 3 shall be covenants running with the land. Grantor further covenants: (a) against the further sale, transfer or encumbering of any of the Mortgaged Property, (b) to pay when due all taxes on the Mortgaged


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Property or assessed against Beneficiary with respect to the Notes, (c) to grant Beneficiary the right to inspect the Mortgaged Property, (d) to keep the Mortgaged Property insured as Beneficiary may require, (e) to comply with all legal requirements (including environmental laws), maintain the Mortgaged Property in good condition, and promptly repair any damage or casualty, and (f) except as otherwise permitted under the Loan Documents, to obtain Beneficiary' s consent prior to entering into or materially, modifying or taking other actions with respect to leases.

Section 3.8

Condemnation Awards and Insurance Proceeds.

(a)

Condemnation Awards . Grantor assigns all awards and compensation for any condemnation or other taking, or any purchase in lieu thereof, to Beneficiary and authorizes Beneficiary to collect and receive such awards and compensation and to give proper receipts and acquittances therefor, provided Grantor may contest the validity of such claims and demands so long as (1) Grantor notifies Beneficiary that it intends to contest such claim or demand, (2) Grantor provides Beneficiary with an indemnity, bond or other security satisfactory to Beneficiary (including an endorsement to Beneficiary' s title insurance policy insuring against such claim or demand) assuring the discharge of Grantor' s obligations for such claims and demands, including interest and penalties, and (3) Grantor is diligently contesting the same by appropriate legal proceedings in good faith and at its own expense and concludes such contest prior to the tenth (10th) day preceding the earlier to occur of the maturity date of the Notes or the date on which a Mortgaged Property is scheduled to be sold for non-payment. Grantor shall immediately notify Beneficiary of the institution of any proceeding for the condemnation or other taking of the Mortgaged Property or any portion thereof. Beneficiary may participate in any such proceeding and Grantor will deliver to Beneficiary all instruments necessary or required by Beneficiary to permit such participation. Without Beneficiary' s prior consent, Grantor (1) shall not agree to any compensation or award, and (2) shall not take any action or fail to take any action which would cause the compensation to be determined. All awards and compensation for the taking or purchase in lieu of condemnation of the Mortgaged Property or any part thereof are hereby assigned to and shall be paid to Beneficiary. Grantor authori zes Beneficiary to collect and receive such awards and compensation, to give proper receipts and acquittances therefor, and in Beneficiary' s sole discretion to apply the same toward the payment of the Notes, without premium or penalty and notwithstanding that the Notes may not then be due and payable, or to the restoration of the Mortgaged Property; however, if the award is less than or equal to $50,000 and Grantor requests that such proceeds be used for non-structural site improvements (such as landscape, driveway, walkway and parking area repairs) required to be made as a result of such condemnation, Beneficiary will apply the award to such restoration in accordance with disbursement procedures applicable to insurance proceeds provided there exists no Potential Default or Event of Default. Grantor, upon request by Beneficiary, shall execute all instruments requested to confirm the assignment of the awards and compensation to Beneficiary, free and clear of all liens, charges or encumbrances.

(b)

Insurance Proceeds . Grantor assigns to Beneficiary all proceeds of any insurance policies insuring against loss or damage to the Mortgaged Property. Grantor


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authorizes Beneficiary to collect and receive such proceeds and authorizes and directs the issuer of each of such insurance policies to make payment for all such losses directly to Beneficiary, instead of to Granto ...