EXHIBIT 10.7
WHEREVER CONFIDENTIAL INFORMATION IS OMITTED HEREIN (SUCH OMISSIONS ARE DENOTED
BY AN ASTERISK), SUCH CONFIDENTIAL INFORMATION HAS BEEN SUBMITTED SEPARATELY TO
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.
AMENDED AND RESTATED SECURITY AGREEMENT
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This Amended and Restated Security Agreement ("ARSA") is made as of June
28, 2004 (the "Effective Date"), by and between Nevada Gold & Casinos, Inc., a
Nevada corporation ("NGC"), and its wholly-owned subsidiary, Blackhawk Gold,
Ltd., a Colorado corporation ("BHG"), both with their principal places of
business at 0000 Xxxx Xxx Xxxx., Xxxxx 000, Xxxxxxx, Xxxxx 00000-0000; and [*]
(* name changed to the defined term "Lender" throughout the Agreement*), an
individual who resides in [*], as her separate property.
I. RECITALS
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A. Through loan documents dated December 23, 1999, Lender loaned to NGC
$7,000,000.00. The loan documents were comprised of a Term Note, a Continuing
Loan Agreement, and a Security Agreement, each dated December 23, 1999, between
NGC and Lender. Subsequently, pursuant to the Amendment to Continuing Loan
Agreement and Term Note dated March 31, 2001, Lender loaned to NGC an additional
$6,000,000.00, for an aggregate total amount loaned to NGC of $13,000,000.00.
The December 23, 1999, Continuing Loan Agreement and Term Note and the March 31,
2001, Amendment to Continuing Loan Agreement and Term Note are collectively
referred to in this ARSA only as the "Original Loan Documents." The Original
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Loan Documents have been completely amended and restated by the Amended and
Restated Secured Promissory Note dated June 28, 2004 (the "Note"). The Note is
incorporated by reference in this ARSA for all purposes as if fully set forth at
length.
B. To induce Lender to make the loans provided for in the Original Loan
Documents, to induce Lender to loan to NGC the additional amounts under the
Note, and to induce Lender to loan an additional amount to NGC under a credit
facility dated June 28, 2004 (the "Credit Facility"), up to a maximum aggregate
principal amount of outstanding indebtedness owed by NGC to Lender of $40
million (and possibly additional amounts if the parties agree), NGC and BHG have
agreed to grant a security interest in certain collateral described below as
security for the repayment of the loans. The parties agree that this Amended
and Restated Security Agreement is intended to completely modify and replace the
original Security Agreement dated December 23, 1999, and any amendments to that
Security Agreement that may exist.
C. BHG is a wholly-owned subsidiary of NGC. BHG, by and through the
action of its board of directors, determined in 1999 that it could reasonably
expect to benefit, directly or indirectly, from granting a lien upon the
collateral described below in order to secure the loans to NGC pursuant to the
Original Loan Documents, and it reconfirms that determination in this ARSA.
II. AGREEMENTS
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Amended and Restated Security Agreement _______
NGC-BHG-Lender/June 2004 HTW Page 1 of 13
In consideration of the above items and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
parties agree to the following terms and conditions:
A. DEFINED TERMS. Attached to this ARSA is Appendix I, which contains
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definitions of specific capitalized terms used in this ARSA as well as in the
Note. Appendix I is incorporated by reference into this ARSA for all purposes.
The definitions in Appendix I shall control unless the context of the usage of a
term requires a different definition. Terms not defined in this ARSA (including
Appendix I) or in the Note that are defined in the Texas Uniform Commercial
Code, as amended and effective as of January 1, 2004 (the "UCC"), have the
meanings specified in the UCC, and the definitions specified in Article 9 of the
UCC control in the case of any conflicting definitions in the UCC. The singular
number includes the plural and vice versa. Captions of sections in this ARSA do
not limit the terms of those sections.
B. SECURITY INTEREST. To secure the payment and performance of the
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Obligations (as that term is defined in Appendix I), NGC and BHG grant to Lender
a security interest (the "Security Interest") in the following described
property, and all of their products and proceeds, whether now owned or
subsequently acquired (collectively called the "Collateral"):
1. a continuing security interest in all of NGC's interest in BHG,
including but not limited to NGC's revenues from BHG and from NGC's
ownership interest in BHG;
2. a continuing security interest in all of BHG's interest in the
Isle of Capri Black Hawk, L.L.C. ("IC-BH"), including but not limited to
BHG s revenues from and undivided percentage interest in the assets of
IC-BH, and all of the rights, but none of the obligations, of BHG under the
Operating Agreement;
3. all investment property and other property, rights, or
interests of any description at any time issued or issuable to BHG or held
in any securities account as an addition to, in substitution or exchange
for or with respect to BHG s interest in IC-BH, including without
limitation additional percentages or interests issued or given as a result
of any amendment, reclassification, split-up, dissolution, or other limited
liability company reorganization or property distributed pursuant to a
reorganization or amendment of the Operating Agreement;
4. all distributions, proceeds, monies, income, and benefits
arising from, by virtue of, or payable with respect to BHG s interest in
IC-BH or NGC's interest in BHG; and
5. any and all notes receivable and/or cash flow rights granted to
NGC from investments in any and all projects financed in whole or in part
through the loan proceeds from this Note.
Lender shall maintain possession of the Collateral and any and all powers of
attorney necessary to enforce her security interest in any or all of the
Collateral until any and all amounts due under the Note, the Credit Facility,
and/or any other instrument or agreement between the Parties are paid in full
and the instruments are all terminated, and/or until she exercises her rights
against the Collateral in an Event of Default, and/or the Collateral is
substituted as provided in the respective instrument and she no longer has any
security interest in any of the Collateral under any instrument.
III. REPRESENTATIONS AND COVENANTS
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Amended and Restated Security Agreement _______
NGC-BHG-Lender/June 2004 HTW Page 2 of 13
A. REPRESENTATIONS. NGC and BHG represent to Lender as follows:
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1. NGC and BHG are the respective legal and beneficial owners of
the Collateral;
2. to the best of NGC's and BHG's knowledge, no dispute, setoff,
or counterclaim exists with respect to any part of the Collateral;
3. the Collateral is owned by NGC and BHG, respectively, free and
clear of any pledge, mortgage, hypothecation, lien, charge, encumbrance, or
security interest except as previously held by Lender or as created or
permitted in this ARSA, and except for the second lien given in favor of
[*], which NGC and BHG both warrant and represent is secondary and
subordinated to Lender's lien on the Collateral;
4. the BHG Interest, as defined in Appendix I, constitutes the
entire ownership interest of NGC in BHG, and no other shares of capital
stock in BHG have ever been issued to NGC or to any other person or entity
since December 23, 1999;
5. the IC-BH Interest, as defined in Appendix I, constitutes the
entire ownership interest of BHG in IC-BH, and no other Units in IC-BH have
ever been issued to BHG, NGC, or to any other person or entity since
December 23, 1999;
6. there are no restrictions upon the transfer of any of the
Collateral other than as set forth in the Operating Agreement or as may
appear on the face of any ownership certificates in BHG and IC-BH;
7. NGC and BHG have the full power, authority, and legal right to
transfer their respective items of Collateral free of any encumbrances and
without obtaining the consent of any other person or entity that has not
already been obtained;
8. the execution and delivery of this ARSA, and the performance of
its terms, will not result in any violation of any provision of the
Operating Agreement or violate or constitute a default under the terms of
any material agreement, material indenture or other instrument, license,
judgment, decree, order, law, statute, ordinance, or other governmental
rule or regulation applicable to NGC or to BHG or any of their respective
property;
9. this ARSA is a valid assignment of and creates a valid first
lien upon and security interest in the Collateral and the proceeds of the
Collateral;
10. NGC is organized under the laws of Nevada and its exact legal
name is that as is set forth in the opening paragraph of this ARSA, and BHG
is organized under the laws of Colorado and its exact legal name is that as
is set forth in the opening paragraph of this ARSA;
11. NGC does not conduct business under any other name (although it
does have several wholly-owned subsidiaries that conduct business under
their own names), and BHG does not conduct business under any other name;
and
12. BHG shall not vote any of its units in IC-BH or amend the
Operating Agreement in any manner that would cause the IC-BH Interest or
any part of it to be governed under Article 8 of the Colorado UCC.
Amended and Restated Security Agreement _______
NGC-BHG-Lender/June 2004 HTW Page 3 of 13
The representations set forth in items 1 through 12 of this Section shall be
deemed given again whenever NGC and/or BHG deliver additional Collateral that
may be required by this ARSA.
B. COVENANTS. NGC and BHG covenant to do the following:
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1. deliver to Lender's designated agent any certificates or
instruments that represent NGC's interest in BHG and BHG*s interest in
IC-BH or the Collateral, and to notify IC-BH that a security interest in
the IC-BH Interest has been granted to Lender in the form attached to this
ARSA as Exhibit A, and upon an Event of Default give irrevocable directions
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to IC-BH in the form of Exhibit B attached to this ARSA to pay all
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distributions on the Collateral directly to Lender;
2. from time to time promptly execute and deliver to Lender all
other assignments, certificates, proxies, entitlement orders, supplemental
writings, and financing statements, and do all other acts and things that
Lender may reasonably request in order to evidence the assignment and
perfect and enforce the security interest granted in this ARSA;
3. promptly furnish to Lender or her attorney or agent with any
and all information or writings that Lender or her attorney or agent may
reasonably request concerning the Collateral;
4. promptly notify Lender and her attorney of any claim, action,
or proceeding affecting the Security Interest title to the Collateral or
any part of the Security Interest or Collateral, and at the request of
Lender, appear in and defend, at their own expense, the action or
proceeding;
5. notify Lender immediately if either of them becomes aware of
the occurrence of any Event of Default or of any fact, condition, or event
that only with the giving of notice or passage of time or both, could
become an Event of Default, or the failure of either NGC or BHG to observe
any of their responsibilities under this ARSA;
6. if an event of default occurs, then NGC and BHG, jointly and
severally, shall promptly pay to Lender the amount of all court costs,
reasonable attorney*s fees, and expenses of litigation incurred by Lender
in enforcing this ARSA;
7. if an Event of Default occurs and continues, promptly deliver
all proceeds constituting part of the Collateral to Lender as and when
first received by BHG or NGC;
8. without the prior written consent of Lender, not agree to the
release, termination, compromise, amendment, or adjustment of the
membership interest of BHG in IC-BH, any distribution percentages with
respect to its membership interest in IC-BH, the Collateral, or the
Operating Agreement in any manner that is materially adverse to Lender; and
9. not sell, assign, or transfer the Collateral or the lien
created by this ARSA, nor create any other lien or security interest in, or
otherwise encumber the BHG Interest or the IC-BH Interest or any of the
Collateral, nor permit any of the Collateral to be or become subject to any
financing statement, lien, attachment, execution, sequestration, or other
legal
Amended and Restated Security Agreement _______
NGC-BHG-Lender/June 2004 HTW Page 4 of 13
or equitable process, nor any lien or encumbrance of any kind other than as
permitted by this Agreement.
C. ADDITIONAL LIENS. All references in this Section to "NGC" expressly
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include BHG, and BHG may not grant a second or any other lien on any of the
Collateral without complying with the provisions of this Section. Before NGC
may place a second or any other lien on any or all of the Collateral in favor of
anyone other than [*], NGC must give Lender formal written notice of the name of
the proposed second or other lienholder (if known) and of the specific terms and
conditions of the proposed loan transaction for which the second or other lien
would be granted (including but not limited to the closing date, interest rate,
principal amount, and maturity date), and Lender shall have seven business days
from the date on which the notice is received by her to notify NGC of her desire
to make the loan. NGC agrees to promptly provide Lender with any documentation
she requests related to the proposed transaction with the third party in order
to assist her in making her decision. If Lender does not respond within seven
business days, Lender shall be presumed to have declined to make the loan. NGC
shall give Lender informal notice of its intent or desire to obtain additional
financing and grant a second or other lien on the Collateral as far in advance
as is practicable, which is presumed to be approximately thirty days before the
contemplated closing date of the transaction. NGC is not required to resubmit
to Lender any financing resulting in a second or other lien if the closing date,
interest rate, principal amount, and/or maturity date on the final loan
transaction are equal or less favorable to Lender than the original terms
proposed by NGC.
In the event NGC complies with this notice provision and is allowed to
grant a second or other lien on the Collateral, NGC agrees that it must comply
with all of the following provisions before it may grant an effective second or
other lien on the Collateral:
1. Any second or other lien given on the Collateral must be made
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expressly subordinate to Lender's lien. NGC shall ensure that the paperwork
documenting the transaction with the second or other lienholder properly
notifies the second and/or other lienholder of the existence of Lender's
first lien and that the second and any other lienholder clearly
acknowledges Lender's existence and status as first lienholder on all of
the Collateral and that the subsequent lienholder's debt and security
interest is subordinated to Lender.
2. NGC shall ensure that the paperwork documenting the transaction
with the second and any other lienholder clearly instructs the second and
any other lienholder that it may not even attempt to collect or execute on
the Collateral without first ensuring that the entire first lien balance is
paid in full and all loan or credit transactions between NGC and Lender are
completely terminated and are no longer in effect. The second and any other
lienholder must be required to give notice of any default by NGC to NGC and
Lender concurrently before the second or any other lienholder may exercise
any collection efforts against the Collateral.
3. NGC shall defend, at its own expense, against any claims by any
lienholders other than Lender against the Collateral.
4. NGC shall keep Lender's counsel informed of the status of any
second and any other lien and of any default or alleged default by NGC on
the transaction secured in whole or in part by the second and/or other
lien, and shall reimburse Lender for any and all attorney's fees, court
costs, and expenses incurred by Lender that Lender or her counsel deemed
necessary to protect the Collateral within thirty days after the submission
of an invoice for the fees or expenses to NGC by Lender's counsel.
Amended and Restated Security Agreement _______
NGC-BHG-Lender/June 2004 HTW Page 5 of 13
5. NGC shall provide Lender's counsel with fully-executed copies
of all documents related to any transaction giving any third party a second
or other lien on any or all of the Collateral within three business days of
the last signature date on the transaction or the date the transaction is
funded, whichever is earlier.
6. NGC shall provide to Lender's counsel on or before June 28,
2004, copies of the fully-executed documents related to the transaction
giving [*] a second lien and shall require him and his counsel to provide
counsel for Lender (as set forth below) with copies of any and all notices,
including but not limited to notice of default, that arise from or relate
to any of his agreements with NGC that relate in any way to the second
lien. NGC shall ensure that [*] agreement expressly and clearly states that
his lien on the Collateral is subordinate to Lender's lien and security
interest.
D. PROTECTION OF COLLATERAL; INDEMNIFICATION. Consistent with the
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terms of this ARSA, the Note, and the Credit Facility, as long as any amounts
are owed to Lender under the Note or the Credit Facility, NGC agrees that it
will use its best efforts to defend against the attempts of any creditor who
tries to take any of the Collateral. NGC also agrees that it will use its best
efforts to protect the Collateral; to prevent any loss, theft, substantial
damage, destruction, sale, or encumbrance to or of any of the Collateral; and to
defend against any actual or attempted levy, seizure, or attachment of or on any
of the Collateral. In the event Lender finds it necessary to take action to
protect the Collateral against the actions of third parties or against any
wrongful conduct of NGC or any failure by NGC to use its best efforts to protect
the Collateral, NGC agrees that it shall indemnify Lender for any attorney's
fees, court costs, and any and all other expenses incurred in her efforts to
protect the Collateral. NGC understands and agrees that it shall promptly
reimburse Lender for any and all of these expenses, but in no event shall these
attorney's fees and expenses be paid later than thirty days after the date on
which they are submitted to NGC.
IV. EFFECTS OF AND REMEDIES FOR AN EVENT OF DEFAULT
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A. NOTICE OF DEFAULT. Lender is not required to provide NGC with any
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notice whatsoever of any Default by NGC or any failure of NGC to timely make the
principal payment when due, save and except that Lender must give notice of a
late interest payment before that late payment is deemed a Default as described
in the Note, Credit Facility, or other applicable loan document. However,
failure by Lender to give notice of any late interest payment to NGC does not
relieve NGC of its obligation to make the payment or of the application of the
default interest rate upon the failure to timely make the interest payment as
provided in Section 4 of the Note or as provided in the Credit Facility.
B. ADJUSTMENTS AND DISTRIBUTIONS. If an Event of Default has occurred
------------------------------
and continues, all payments and distributions of any nature pertaining to the
Collateral shall be delivered to Lender to be applied toward payment of the
Obligations. If any of the Collateral is converted into another type of
property or if any money or other proceeds are paid or delivered to or for
credit to the account of NGC or BHG as a result of either of their rights in the
Collateral, all of that property, money, and other proceeds are part of the
Collateral. After an Event of Default, NGC and BHG will immediately pay and
deliver all property, money, and other proceeds of Collateral that either of
them has or has received to Lender, and NGC and BHG shall take all other steps
necessary to ensure Lender has control over the Collateral. In this event, and
if Lender so requests, NGC and BHG will promptly endorse or assign all other
property and proceeds to Lender and deliver to Lender all proceeds that require
perfection by possession under the UCC and that Lender does not already have.
If any of this
Amended and Restated Security Agreement _______
NGC-BHG-Lender/June 2004 HTW Page 6 of 13
property requires any additional security agreement, financing statement, or
other writing to create or perfect a security interest in favor of Lender, NGC
and BHG shall promptly execute and deliver or cause to be executed and delivered
to Lender any document or instrument Lender deems is reasonably necessary or
proper for those purposes. Lender shall not be liable for any error, omission,
or delay occurring in the settlement, collection, or payment related to the
IC-BH Interest or the Collateral or of any property or instrument received
pursuant to this ARSA.
C. REMEDIES. If an Event of Default occurs and continues, in addition
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to any other rights and remedies that Lender may have under this ARSA, under the
UCC, or otherwise, Lender may, to the extent permitted by applicable law and at
her discretion, and without notice to NGC or BHG except as specifically
provided, take any one or more of the following actions without liability except
to account for property actually received by her, and NGC and BHG agree that it
is commercially reasonable for Lender to do any of the following:
1. cease making any further advances or loans to NGC or any of its
related entities under this Credit Facility or any other instrument, and
any obligation of Lender to make any further advances or loans to NGC shall
terminate;
2. receive the income, property, and other distributions related
to the Collateral and hold them or apply them to the Obligations in any
order selected by Lender;
3. exchange any of the Collateral for other property upon a
reorganization, dissolution, or other readjustment and, in connection with
the exchange, deposit any of the Collateral with any committee or
depository upon any terms that Lender may determine;
4. in her name, or in the name of NGC and/or BHG, demand, xxx for,
collect, or receive any money or property at any time payable with respect
to any of the Collateral and, in connection with these efforts, endorse
notes, checks, drafts, money orders, and other instruments in the name of
NGC or BHG, as applicable;
5. apply any cash held as Collateral to the Obligations and reduce
her claim to judgment or foreclose or otherwise enforce the Security
Interest, in whole or in part, by any available procedure;
6. make any compromise or settlement deemed advisable with respect
to any of the Collateral;
7. renew, extend, or otherwise change the terms and conditions of
any of the Collateral or the Obligations;
8. take or release any other collateral as security for any of the
Collateral or the Obligations;
9. add or release any guarantor, endorser, surety, or other party
to any of the Collateral or the Obligations;
10. without demanding performance or making any other demand,
advertisement, or notice of any kind (except the notice specified in the
Note for the late payment of interest, and the notice specified below of
public sale or private sale if required under the UCC) to or upon NGC
and/or BHG (as applicable), or upon any other person (all of which are, to
the
Amended and Restated Security Agreement _______
NGC-BHG-Lender/June 2004 HTW Page 7 of 13
extent permitted by law, expressly waived), immediately convert the
Collateral or any part of it into cash, and sell or otherwise dispose of
or, if appropriate, issue entitlement orders with respect to, or deliver
the Collateral or any part of it or interest in it in one or more parcels
at public or private sale or sales at Lender* office or elsewhere, at any
price and on any terms (including, without limitation, a requirement that
any purchaser of any of the Collateral purchase the Collateral for
investment without any intention to make any distribution of it) that she
deems best, for cash or on credit, or for future delivery without
assumption of any credit risk, with any purchaser to purchase the
Collateral at any sale free from any right of equity of redemption in NGC
or BHG (as applicable), and this right or equity is expressly waived and
released by NGC and BHG;
11. request an appropriate court to appoint a receiver for the
Collateral, or any part of it, and NGC and BHG, by their execution of this
ARSA, both consent to the appointment of a receiver; and
12. exercise any other rights she may have under this ARSA, under
the UCC, or otherwise. NGC and BHG grant to Lender an irrevocable power of
attorney regarding the Collateral, and all rights, powers, and remedies of
an owner and all of the rights, powers, and remedies set forth above in
this ARSA, exist through this power of attorney until all of the
Obligations have been paid and performed in full.
The sale of any part of the Collateral shall not exhaust Lender* power of sale
on the remaining Collateral. The proceeds of any disposition of the Collateral
or other action by Lender shall be applied in any order or manner determined
solely by Lender, any instruction from NGC or BHG to the contrary
notwithstanding. NGC and BHG both waive and agree not to assert any rights or
privileges that they may have under Sec.9.112 of the UCC, save and except its
right to receive any surplus under Sec.Sec.9.502(b), 9.504(a), and/or 9.504(b),
and NGC and BHG shall be liable for any deficiency if the proceeds of any sale
or other disposition of the Collateral are insufficient to pay all amounts to
which Lender is entitled. Lender is under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges, or options expressly or
implicitly granted to Lender in this ARSA, and Lender is not responsible for any
failure to do so or delay in so doing.
D. NOTIFICATION OF SALE. Reasonable notification of the time and place
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of any public or private sale or disposition of the Collateral, shall be sent to
NGC and BHG and to any other person entitled under law to notice; provided that
if any of the Collateral threatens to decline speedily in value or is of the
type customarily sold on a recognized market, Lender may sell, issue entitlement
orders, or otherwise dispose of the Collateral without notification,
advertisement, or other notice of any kind. NGC and BHG both agree that notice
sent or given not less than seven calendar days prior to the taking of the
action to which the notice relates is reasonable notice for purposes of this
Section.
E. ENFORCEMENT OF RIGHTS. NGC and BHG agree that it is commercially
----------------------
reasonable for Lender to exercise her rights related to the Collateral in any
manner and in any order Lender may determine. Nothing contained in this ARSA
requires Lender to sell all or any part of the Collateral or to collect, or
attempt to collect, any sum payable by reason of the Collateral before Lender
may assert liability and collect the Obligations, nor is Lender obligated to
attempt to collect the Obligations before selling all or any part of the
Collateral. Lender may, without foreclosing on the Collateral, collect and
otherwise enforce all amounts owing under the Note on the Collateral or any
proceeds or otherwise enforce all of NGC's, BHG*s, or Lender* rights under the
Note or in any of the Collateral and apply those collections as provided in this
ARSA, or she may foreclose on the Collateral. Lender may hold funds as
additional Collateral or may, at her discretion, apply them to the Obligations.
Amended and Restated Security Agreement _______
NGC-BHG-Lender/June 2004 HTW Page 8 of 13
Lender may attempt to collect from any person liable to NGC and/or BHG to
deliver any proceeds related to the Collateral, by suit or otherwise, any sums
due and to otherwise to enforce NGC and/or BHG*s rights regarding those
proceeds.
F. POWER OF ATTORNEY.
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1. NGC appoints Lender, and her successors and assigns, as NGC*s
attorney-in-fact (without requiring her to act in that capacity), with full
power of substitution, to do any act that NGC is obligated to do by this
ARSA, including but not limited to the power to do the following: (a)
endorse the name of NGC on all checks, drafts, money orders, or other
instruments for the payment of monies that are payable to NGC and
constitute collections of the Collateral; (b) execute in the name of NGC
any schedules, assignments, instruments, documents, financing statements,
applications for registration, and other papers to perfect, preserve, or
enforce the Security Interest; (c) exercise all rights of NGC in the
Collateral, save and except NGC's voting rights, which pass to Lender only
----
after an Event of Default has occurred and continues; (d) make collections
and execute all papers and instruments and do all other things it deems
appropriate to preserve and protect the Collateral and to protect Lender*
interest in the Collateral; (e) release any party liable on the Collateral
and to give receipts and acquittances and compromise disputes related to
the Collateral; (f) release security for any Collateral; (g) make
withdrawals from deposit accounts and other accounts with any financial
institution, wherever located, into which proceeds from the Collateral may
have been deposited and to apply those funds to the payment of the
Obligations; and (h) do all acts and things and execute all documents in
the name of NGC or otherwise, that Lender reasonably deems are necessary,
proper, and convenient in connection with the preservation, perfection, and
enforcement of her rights under this ARSA.
2. BHG appoints Lender, her successors and assigns, as BHG*s
attorney-in-fact (without requiring her to act in that capacity), with full
power of substitution, to do any act that BHG is obligated to do by this
ARSA, including but not limited to the power to do the following: (a)
endorse the name of BHG on all checks, drafts, money orders, or other
instruments for the payment of monies that are payable to BHG and
constitute collections of the Collateral; (b) execute in the name of BHG
any schedules, assignments, instruments, documents, financing statements,
applications for registration, and other papers to perfect, preserve, or
enforce the Security Interest; (c) exercise all rights of BHG in the
Collateral, save and except BHG's voting rights, which pass to Lender only
----
after an Event of Default has occurred and continues; (d) make collections
and execute all papers and instruments and do all other things it deems
appropriate to preserve and protect the Collateral and to protect Lender*
interest in the Collateral; (e) release any party liable on the Collateral
and to give receipts and acquittances and compromise disputes related to
the Collateral; (f) release security for any Collateral; (g) make
withdrawals from deposit accounts and other accounts with any financial
institution, wherever located, into which proceeds from the Collateral may
have been deposited and to apply those funds to the payment of the
Obligations; and (h) do all acts and things and execute all documents in
the name of BHG or otherwise, that Lender reasonably deems are necessary,
proper, and convenient in connection with the preservation, perfection, and
enforcement of her rights under this ARSA.
All persons dealing with Lender shall be fully protected in treating the powers
and authorities conferred by this paragraph as continuing in full force and
effect until advised by Lender that all Obligations are finally paid. The
powers and authority granted pursuant to this ARSA are made for valuable
consideration, are coupled with an interest, are irrevocable so long as any part
of the
Amended and Restated Security Agreement _______
NGC-BHG-Lender/June 2004 HTW Page 9 of 13
Obligations is unpaid, and shall not be terminated prior to full and final
payment of all of the Obligations, nor shall they be affected by any act of NGC
or BHG or any other person or by operation of law, including, without
limitation, the dissolution, death, disability, or incompetency of any person.
Lender agrees she will not exercise her powers as attorney-in-fact until an
Event of Default occurs and continues.
V. MISCELLANEOUS PROVISIONS
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A. NOTICES. Any notice required or permitted by this ARSA shall be
--------
effective if given in accordance with the provisions set forth in Section 23 of
the Note.
B. DUTIES OF LENDER. Lender* duty regarding the Collateral at any time
-----------------
prior to full and final payment of all of the Obligations is solely to use
reasonable care in the custody and preservation of the Collateral. Lender is
deemed to have exercised reasonable care in the custody and preservation of the
Collateral if the Collateral is accorded treatment substantially equal to that
which Lender accords her own property. Lender has no responsibility for
ascertaining or taking action with respect to fixing or preserving rights
against prior parties to the Collateral, calls, conversions, exchanges,
maturities, tenders, or other matters relative to any Collateral or for
informing NGC or BHG of these matters regardless of whether Lender has or is
deemed to have any knowledge of these matters. Lender is not required to take
any steps necessary to preserve any rights in the Collateral against prior
parties or to protect, perfect, preserve, or maintain any security interest
given to secure the Collateral. Lender is not liable for her failure to use due
diligence in the collection of the Obligations, or for her failure to give
notice to NGC or BHG of default in the payment of the Obligations, or in the
payment of or upon any security, whether pledged under this ARSA or otherwise,
nor for a decline in the market value of the Collateral.
C. INDEMNIFICATION. NGC and BHG both agree to indemnify and to hold
----------------
Lender harmless, in the absence of Lender* gross negligence or willful
misconduct, from and against any loss, claim, demand, or expense (including
attorneys* fees) by reason, or in any manner related to, the Collateral or the
foreclosure sale or other disposition and subsequent ownership of any part of
the Collateral, including but not limited to (1) any claim that may arise
because of any alleged breach of warranty concerning the Collateral; and (2) any
claims that any transferee of an interest in IC-BH has any liability for
existing or future obligations of IC-BH in excess of the transferee's interest
in IC-BH (a) through the terms of the Operating Agreement, (b) through the
failure of NGC, BHG, or IC-BH to comply with the Operating Agreement, (c)
through the failure of NGC, BHG, or IC-BH to comply with any state or federal
statute, rule, regulation, order, or decree, or (d) due to Lender* efforts to
enforce payment of the Obligations or the Collateral, including expenses
incurred in satisfying any applicable securities and banking laws.
D. EXPENSES. If an Event of Default under this ARSA, the Note, or the
---------
Credit Facility occurs, NGC and BHG, jointly and severally, shall promptly pay,
upon demand, any and all reasonable attorney's fees and out-of-pocket expenses
incurred by Lender related to the Event of Default to the extent permitted by
applicable law, but in no event shall these attorney's fees and expenses be paid
later than thirty days after the date on which they are submitted to NGC.
Additionally, NGC and BHG, jointly and severally, shall promptly pay all costs,
expenses, taxes, assessments, insurance premiums, court costs, reasonable
attorneys* fees, expenses of litigation, expenses of sales, and other similar
and related expenses incurred by Lender to enforce her rights and remedies under
this ARSA, regardless of whether they are incurred before or after the
occurrence of an Event of Default or incurred in connection with the perfection,
preservation, or defense of the Security Interest, or the custody, protection,
collection, repossession, enforcement, or sale of the
Amended and Restated Security Agreement _______
NGC-BHG-Lender/June 2004 HTW Page 10 of 13
Collateral. All of these expenses shall become part of the Obligations and
shall bear interest at the Default Rate (as defined in the Note) from the date
paid or incurred by Lender or her attorney until paid by NGC or BHG.
E. FINANCING STATEMENT. NGC and BHG both authorize Lender to file
--------------------
financing statements (and, if necessary or appropriate, sign NGC's and BHG*s
names, respectively, on financing statements) describing the Collateral. A
carbon, photographic, or other reproduction of this ARSA or a financing
statement describing the Collateral shall be sufficient as a financing statement
to the full extent permitted by applicable law.
F. FURTHER ASSURANCES. NGC agrees to execute all other documents and
-------------------
instruments reasonably requested by Lender or her attorney to effectuate the
intent of this ARSA upon written request by Lender or her attorney after the
date of this Agreement.
G. AMENDMENT AND WRITTEN WAIVER. No waiver, modification, or
-----------------------------
alteration of any provision of this ARSA, nor consent to any departure from the
terms of it, or from the terms of any other document, shall be effective unless
it is in writing and signed by NGC, BHG, and Lender, and any executed waiver
shall be effective only for the specific purpose and in the specific instance
set forth in that document. Any document purporting to amend or modify this
ARSA shall be of no force or effect unless the document expressly states that it
is intended to amend or modify the ARSA and it is signed by all parties to this
ARSA. No waiver by Lender of any Event of Default shall be deemed to be a
waiver of any other or subsequent Event of Default nor shall the waiver be
deemed to be a continuing waiver.
H. BENEFIT. This ARSA is binding upon and inures to the benefit of
--------
NGC, BHG, and Lender and their respective heirs, legal representatives,
successors, and assigns, provided that neither NGC nor BHG may assign any
rights, powers, duties, or obligations under this ARSA without the prior written
consent of Lender.
I. REMEDIES CUMULATIVE. All rights and remedies of Lender under this
--------------------
ARSA are cumulative of each other and of every other right or remedy that Lender
may otherwise have at law or in equity or under any other document for the
enforcement of the security interest or the enforcement of any duties of BHG or
any other party liable in respect to the Obligations. The exercise by Lender of
one or more rights or remedies shall not in any way affect her right to exercise
any of her other rights or remedies, or to subsequently exercise the same rights
or remedies in the future.
J. COURSE OF DEALING. No course of dealing between NGC, BHG, and
------------------
Lender, nor any failure or delay by Lender in exercising any of her rights,
powers, or privileges under this ARSA or under the Note shall operate as a
waiver of any of Lender's rights, powers, or privileges; nor shall any single or
partial exercise of any right, power, or privilege under this ARSA or the Note
preclude any other or further exercise of that right, power, or privilege or the
exercise of any other right, power or privilege.
K. SEVERABILITY. The invalidity of any one or more phrases, sentences,
-------------
clauses, paragraphs, or sections of this ARSA shall not affect the remaining
portions of this ARSA. If any one or more of the phrases, sentences, clauses,
paragraphs, or sections contained in this ARSA are invalid, or operate to render
this ARSA invalid, then this ARSA shall be construed as if the invalid phrase or
phrases, sentence or sentences, clause or clauses, paragraph or paragraphs, or
section or sections had not been inserted.
Amended and Restated Security Agreement _______
NGC-BHG-Lender/June 2004 HTW Page 11 of 13
L. SATISFACTION OF OBLIGATIONS. Upon the full and final satisfaction
----------------------------
of all of the Obligations, as determined by Lender, this ARSA shall terminate,
and Lender shall deliver to NGC and to BHG, at their expense, the Collateral
remaining in her possession that has not been sold or otherwise applied pursuant
to this ARSA.
M. GOVERNING LAW. The substantive laws of the State of Texas govern
--------------
the validity, construction, enforcement, and interpretation of this ARSA unless
the laws of the State of Texas require the application of the laws of another
state. This ARSA is performable in Xxxxxxxxxx County, Texas.
N. CONTROLLING DOCUMENT. To the extent that this ARSA conflicts with
---------------------
or is in any way incompatible with any other loan document concerning the
Obligations that involves any loan of funds by Lender to NGC and/or BHG, any
promissory note or credit facility shall control over any other document, and if
the promissory note or credit facility does not address an issue, then each
other loan document executed by Lender shall control to the extent that it deals
most specifically with an issue.
O. INCORPORATION OF OTHER DOCUMENTS. The Parties agree that the
---------------------------------
Amended and Restated Secured Promissory Note and the Confidential Compromise
Settlement Agreement and Release between the Parties and both dated June 28,
2004, are incorporated by reference in this Note for all purposes as if fully
set forth at length.
The parties have executed this Security Agreement to be effective as of
June 28, 2004.
DEBTOR: DEBTOR:
------ ------
BLACKHAWK GOLD, LTD. NEVADA GOLD & CASINOS, INC.
By: _________________________________ By: ____________________________________
H. Xxxxxx Xxxx, President H. Xxxxxx Xxxx, President
0000 Xxxx Xxx Xxxx., Xxxxx 000 0000 Xxxx Xxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000 Xxxxxxx, Xxxxx 00000-0000
SECURED PARTY:
-------------
[*]
_____________________________________
Lender
Amended and Restated Security Agreement _______
NGC-BHG-Lender/June 2004 HTW Page 12 of 13
APPENDIX I TO THE AMENDED AND RESTATED
--------------------------------------
SECURITY AGREEMENT
------------------
BETWEEN NEVADA GOLD & CASINOS, INC., BLACKHAWK GOLD, LTD.,
AND LENDER, DATED JUNE 28, 2004
DEFINITIONS
-----------
The "BHG INTEREST" means all of NGC*s ownership interest in BHG, which is
represented by certificate no. 1 in the amount of 1,000 shares of common stock
in BHG, dated May 15, 1997, and issued to NGC, and which constitute all of the
shares of capital stock issued to any person or entity by BHG.
"DEFAULT" and "EVENT OF DEFAULT" both mean that NGC will be in default if
any of the following happens:
(a) NGC fails to timely make the principal payment at maturity;
(b) Lender does not receive an interest payment on or before the fifth day
after Lender gives notice to NGC of the late payment;
(c) NGC defaults under any loan, extension of credit, security agreement,
purchase or sales agreement, contractual obligation, or any agreement in favor
of any creditor or person (as "default" is defined in that instrument and after
giving effect to all applicable cure periods) and that default results in NGC
owing, through default and/or acceleration, an amount in excess of $3 million;
(d) NGC fails to timely comply with the Obligations (other than those
Obligations specifically identified in this definition);
(e) NGC breaches any covenant, representation, or warranty in this Note,
the Credit Facility, or in the ARSA and does not cure that breach within thirty
days after the breach, and NGC agrees to give Lender prompt notice of the
breach;
(f) NGC makes an assignment for the benefit of creditors, files for
bankruptcy protection, is adjudicated insolvent, a receiver is appointed for
IC-BH or BHG, or any involuntary proceeding is commenced against NGC under any
bankruptcy or insolvency laws and that involuntary proceeding is not dismissed
within sixty days after it is filed;
(g) NGC grants or attempts to grant to any third party a lien on the
Collateral without complying with the procedure and provisions in Section II(C),
entitled "Second Lien," in the ARSA; or
(h) a final, non-appealable judgment in litigation or arbitration is
entered against NGC where the total amount of the judgment, including actual
damages, pre- and post-judgment interest, attorney's fees, court costs, and/or
punitive damage, exceeds $3 million.
"IC-BH" means Isle of Capri Black Hawk, L.L.C., a Colorado limited
liability company.
APPENDIX I TO THE AMENDED AND RESTATED SECURITY AGREEMENT
NGC-BHG-LENDER/JUNE 2004 PAGE 1 OF 2
The "IC-BH INTEREST" means all of BHG*s ownership interest in IC-BH, and
all of NGC's ownership interest in BHG, and represented by the following
certificates representing Units and shares of common stock as follows:
IC-BH Certificate No. 8 for 360 Units dated February 16, 1998, issued
to BHG;
IC-BH Certificate No. 10 for 40 Units dated February 16, 1998, issued
to BHG;
IC-BH Certificate No. 11 for 30 Units dated August 17, 1998, issued to
BHG; and
BHG Certificate No. 1 for 1,000 shares of common stock dated May 15,
1997, issued to NGC.
The IC-BH Units issued to BHG and described above constitute all of the Units
issued by IC-BH to BHG.
"OBLIGATIONS" means any and all of the duties, responsibilities, and
obligations of NGC and BHG under the Note, the Credit Facility, and this ARSA,
and to repay all amounts advanced by Lender pursuant to this ARSA and the Note,
the Credit Facility, and to pay the expenses described in Sections III(C)(4),
III(D), and V(D) of the ARSA, and the obligations of NGC and/or BHG:
(a) to pay the principal of, interest on, and any other indebtedness
arising from the Note in accordance with its terms, and all valid renewals,
extensions, modifications, and amendments of the Note or any part of it,
and any future advances made pursuant to the Note;
(b) to pay the principal of, interest on, and any other indebtedness
arising from the Credit Facility in accordance with its terms, and all
valid renewals, extensions, modifications, and amendments of the Credit
Facility or any part of it, and any future advances made pursuant to the
Credit Facility;
(c) to repay to Lender all amounts advanced by Lender under the
Original Loan Documents, this ARSA, the Note, or the Credit Facility to or
on behalf of NGC;
(d) to comply with and to perform fully all of the terms and
provisions of the Note, this ARSA, the Credit Facility, and the Compromise
Settlement Agreement and Release entered into between the Parties on the
same date as this ARSA; and
(e) to reimburse Lender for all of Lender (1) reasonable expenses and
costs that NGC and BHG are obligated to pay, jointly and severally,
pursuant to the terms of this ARSA, the Note, or the Credit Facility,
excluding interest and principal payment obligations, within the time
provided for payment.
"OPERATING AGREEMENT" means the Isle of Capri Black Hawk, L.L.C. Amended
and Restated Operating Agreement.
APPENDIX I TO THE AMENDED AND RESTATED SECURITY AGREEMENT
NGC-BHG-LENDER/JUNE 2004 PAGE 2 OF 2
