Exhibit 10.8
FINAL EXECUTION COPY
DEVELOPMENT AND LOAN AGREEMENT
This Development and Loan Agreement (the "Agreement") is entered into
as of this 26th day of August, 2001, by and between the Dry Creek Rancheria Band
of Pomo Indians, a federally-recognized Indian tribe (the "Tribe") and DRY CREEK
CASINO, LLC, a Texas limited liability company (the "Developer").
RECITALS
A. Tribe is a federally recognized Indian tribe that occupies and
exercises Tribal governmental jurisdiction over real property held in trust for
it by the United States ("Reservation").
B. Tribe and the State of California are parties to a Tribal-State
gaming compact pursuant to the Indian Gaming Regulatory Act ("IGRA") that has
been approved by the Secretary of the Interior and is in effect ("Compact").
Tribe has adopted an ordinance regulating gaming on the Reservation ("Gaming
Ordinance") that has been approved in accordance with IGRA by the Chairman of
the National Indian Gaming Commission ("NIGC").
C. Tribe is governed generally by its Tribal Council, consisting of
Tribal members of voting age. The day to day administration of the Tribe is
conducted by an elected body known as the Dry Creek Board of Directors
("Board"). In accordance with the Gaming Ordinance and the Compact, Tribe has
formed a governmental agency to regulate gaming on the Reservation, known as the
Dry Creek Tribal Gaming Commission ("TGC"). Tribe has also formed a Tribal
committee to provide Tribal input into the development of economic development
projects, including any Tribal gaming projects, which the Tribe is considering
formalizing into a Tribal governmental economic development agency ("EDA").
D. Tribe desires to construct and operate a temporary casino
("Facility") capable of being opened as soon as possible ("Commencement Date"),
to be operated pending the development and construction of a permanent casino,
hotel, and retail resort complex. Tribe intends the temporary casino to
accommodate 1600 gaming devices and ancillary facilities and services, at a
location on the top portion of the Reservation, tentatively named the "Dry Creek
Ridge Casino." Tribe lacks its own funds to construct such a Facility. Developer
has agreed, pursuant to the terms herein, to assist Tribe in the development and
financing of the temporary Dry Creek Ridge Casino, on the terms and conditions
set forth herein. Developer will have no role whatsoever in the operation of the
casino. In addition to arranging for Tribe to borrow funds for development,
Developer has agreed to make certain Development Advances to Tribe to assist it
in the administration of its government and to meet pending obligations,
including those arising out of the immediate need by certain Tribal Members for
housing assistance.
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X. Xxxxxxxxxx xxx Xxx Xxxxx Xxxxx Casino also involves developing a
water supply and tanks, an associated fire suppression system, appropriate
sewage treatment, and the preparation of roads and parking on, and possibly off,
the Reservation (the Dry Creek Ridge Casino and said additional development is
referred to collectively herein as the "Project").
F. In anticipation of earlier plans to construct an interim casino (the
"Sonoma Canyon casino") that were unexpectedly interrupted, residents of the Dry
Creek Reservation moved off the Reservation and are now immediately in need of
replacement housing ("Relocated Members"). A portion of the Financing proceeds
provided for herein will be used to meet the housing needs of the Relocated
Members.
G. Prior to entering into this Agreement certain documents were
executed with third parties with respect to 1) the Sonoma Canyon casino (the
"Sonoma Canyon Documents") and 2) a permanent casino, hotel, and retail resort
complex, known as the "Sonoma Falls" project (the "Sonoma Falls Documents").
Tribe has not and does not intend to negotiate with Developer regarding a
permanent casino, hotel and retail resort complex. The parties to this Agreement
believe that the Sonoma Canyon Documents contemplate an interim casino that was
to be built prior to May 15, 2001, which casino was not constructed. Neither the
Sonoma Canyon Documents nor any other documents govern the future construction
of a temporary casino on the Dry Creek Reservation pending development of the
permanent casino complex. This Agreement and the activities contemplated under
it do not interfere in any way with the rights and duties, if any, of the
parties to the Sonoma Canyon Documents or the Sonoma Falls Documents.
NOW THEREFORE, in consideration of the representations, warranties and
mutual promises contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
parties agree as follows:
ARTICLE I
DEFINITIONS
In addition to initially capitalized terms defined elsewhere in this
Agreement, the following terms shall have the meanings set forth below:
"Affiliate" means any person or entity directly or indirectly
controlled by or under common ownership or control with the Tribe, including,
but not limited to, all commercial or business entities, agencies, corporations,
Projects or other instrumentalities of the Tribe. The TGC and EDA are affiliates
of the Tribe.
"Agreement" means this Development and Loan Agreement.
"Available Cash Flow" means the Net Revenues each month remaining after
Tribe has received its Tribal Draw and Debt Service (other than interest paid as
part of the Operating Expenses) has been paid.
"Buy-Out Option" means the option described in Section 6.9 of this
Agreement.
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"Class II Gaming" means Class II Gaming as defined in IGRA.
"Class III Gaming" means Class III Gaming as defined in IGRA.
"Collateral" means all Net Revenues and all Furnishings and Equipment.
"Commencement Date" means the date on which the Project first opens to
the public for business.
"Commitment" has the meaning assigned to that term in Section 2.2.
"Compact" means the Tribal-State Gaming Compact between the Tribe and
the State of California.
"Cost Budget " means the budget attached hereto as Exhibit "A" setting
forth the approximate costs the parties anticipate will be incurred in order to
prepare the Project for the Commencement Date and including certain costs
incurred by the Tribe in connection with conducting gaming on the Reservation
prior to the execution of this Agreement. The Cost Budget is to be funded from
the Development Advances and Loan proceeds. "Credit Enhancement Fee" means
twenty percent (20%) of Net Revenues payable to Developer pursuant to this
Agreement.
"Credit Enhancement Term" means the period beginning on (i) the Final
Completion Date, if it occurs on the first day of any calendar month, (ii) the
fifteenth day of the month in which the Final Completion Date occurs, if it
occurs on any of the second through the fifteenth day of any calendar month or
(iii) the first day of the calendar month following that during which the Final
Completion Date occurs, if the Final Completion Date occurs on any of the
sixteenth through the thirty-first day of any calendar month, and ending in all
cases 60 months thereafter, subject to adjustment for any Tolling Period
pursuant to Section 6.8.3, unless terminated earlier pursuant to the Buy-Out
Option.
"Credit Enhancer" is defined in Section 2.2.1 of this Agreement.
"Debt Service" means all interest and principal due under the Financing
Documents.
"Developer" means DRY CREEK CASINO, LLC, a Texas limited liability
company.
"Development Advances" means the advances to Tribe made pursuant to
Section 2.1 of this Agreement.
"Final Completion Date" means the date on which not less than 1400 of
the Tribe's authorized gaming devices are placed in operation in the Project or
May 15, 2002, whichever shall first occur.
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"Financing" means all monies lent to Tribe pursuant to this Agreement,
including the Development Advances and the Loan proceeds.
"Financing Documents" means this Agreement, the Note, the Security
Agreement and any other agreements, documents, or instruments from time to time
evidencing, guarantying, securing, or otherwise relating to the Financing,
including such forms of loan agreement, promissory note, security agreement and
such other documents and instruments as shall be required by Lender in
connection with the Loan, as they may be amended, modified, extended, renewed,
or supplemented from time to time.
"Furnishings and Equipment" shall mean all furniture, fixtures and
equipment required for the operation of the Project in accordance with the
standards set forth in this Agreement, including, without limitation:
(a) cashier, money sorting and money counting equipment,
surveillance and communication equipment and security
equipment;
(b) electronic gaming terminals and video games of
chance, table games, bingo blowers, electronic
displays, Class II Gaming pull-tab dispensers, table
games, and other Class II Gaming and Class III Gaming
equipment, as permitted pursuant to the Compact and
the IGRA, which are not purchased pursuant to the
Gaming Device Agreements;
(c) office furnishings and equipment;
(d) specialized equipment necessary for the operation of
any portion of the Project for accessory purposes,
including, but not limited to, equipment for
kitchens, laundries, dry cleaning, cocktail lounges,
restaurants, public rooms, commercial and parking
spaces, and recreational facilities; and all other
furnishings and equipment hereafter located and
installed in or about the Facility which are used in
the operation of the Project in accordance with the
standards set forth in this Agreement.
"Gaming" means any and all activities defined as either Class II Gaming
or Class III Gaming under IGRA and the Compact.
"Gaming Ordinance" means the Dry Creek Gaming Act, and any regulations
promulgated thereunder, which has been enacted and approved in accordance with
IGRA.
"Gross Revenues" means all revenues of any nature derived directly or
indirectly from the Project including, without limitation, all Gaming revenue,
all food and beverage sales, all entertainment and retail sales, all parking
fees and all other rental or other receipts from lessees, sublessees, licensees
and concessionaires (but not the gross receipts of such lessees, sublessees,
licensees or concessionaires, provided that such lessees, sublessees, licensees
and concessionaires are not subsidiaries or affiliates of the Tribe).
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"IGRA" means the Indian Gaming Regulatory Act of 1988, as amended,
codified at 25 USC 2701 et seq., and all regulations promulgated thereunder.
"Land" means the real property located within the Reservation.
"Legal Requirements" means any and all present and future federal,
State, local and Tribal judicial, administrative, or legislative rulings or
decisions, as well as any and all present and future federal, state, local or
Tribal laws, codes, rules, regulations, permits, licenses and certificates, in
any way applicable to the Tribe, Developer, the Land, the Facility, and the
Project, including, without limitation, the IGRA, the Compact and the Gaming
Ordinance, as then currently in effect.
"Lender" means one or more third-party federally or state regulated
banks or savings and loan institutions that together, through Developer's
efforts and pursuant to the Commitment, agree to provide the Loan to Tribe for
the Project.
"Loan" means the loan provided by the Lender.
"Maturity Date" means the fifth anniversary of the Commencement Date or
the date on which all obligations under the Financing Documents have been
repaid, whichever first occurs.
"MOU" means that certain Memorandum of Understanding being negotiated
between and among the Tribe, Sonoma County, and certain local and county
agencies, in order to mitigate possible off-reservation environmental impacts
identified through the processes required under the Compact.
"Net Revenues" means the Gross Revenues after prizes and payouts
(including deductions for allocation of shared jackpots) to reach the "win" as
referred to by accountants familiar with the gaming industry, less Operating
Expenses.
"Note" means that certain promissory note to be executed by Tribe in
favor of the Developer to evidence the Development Advances, substantially in
the form of Exhibit "B" attached hereto.
"Operating Expenses" means expenses incurred in the ordinary course of
operating the interim casino as recognized under GAAP, and including but not
limited to costs associated with and payments due under the MOU, rent (and, with
respect to capital leases, interest expenses) in connection with the rental or
lease of any gaming equipment or device, including but not limited to royalties,
license fees and other costs associated with the play of such equipment or
device, including themed or progressive-style slot machines, interest paid on
the Loan, regulatory fees, costs and assessments imposed under the Legal
Requirements, and payments due under the Compact, but excluding the Credit
Enhancement Fees, principal due under the Loan, any Tribal Draws, or any amounts
paid to Indemnitees under Section 4.5 of this Agreement. For avoidance of doubt,
"Operating Expenses" shall not include (a) the repair and replacement reserve
(or expenses) described in Section 2.11 (e) of this Agreement, (b) depreciation,
or (c) any expense which is incurred for some purpose other than the generation
of income or the maintenance or protection of the Project.
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For purposes of this Agreement, Operating Expenses considered in the computation
of Net Revenues shall be limited to those expenses which are reasonable and
necessary in accordance with common business practices in the gaming industry,
giving effect to the size, location, customer base, level of competition and
Gross Revenues of the Project (hereinafter "Reasonable Expenses"). If any party
believes that Operating Expenses for any contract year are in excess of
Reasonable Expenses, the matter shall be submitted to arbitration to be resolved
by one arbitrator in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect unless Tribe and Developer
mutually agree otherwise. This agreement to arbitrate shall be specifically
enforceable under the prevailing arbitration law. The award rendered by the
arbitrator shall not include any award of attorneys' fees and costs to the
prevailing party, shall be final, and judgment may be entered upon it in
accordance with applicable law in any court having jurisdiction.
Notice of the demand for arbitration shall be filed in writing with the other
party to the agreement and with the American Arbitration Association. The demand
for arbitration shall be made within a reasonable time after the dispute has
arisen, and in no event shall it be made later than 60 days after the later of
(a) delivery by Tribe of Year End Operating Statements for the year in question
in accordance with the provisions of Section 2.7.3, or (b) completion of
examination by Developer of the books and records in accordance with the
provisions of Section 2.7.3.
The notice of demand for arbitration submitted by each party to the American
Arbitration Association shall request the American Arbitration Association to
provide each party with a list of arbitrators that have at least ten (10) years
experience in Indian gaming operations. From this list, each party shall strike
the names of those arbitrators that such party would prefer not to have
arbitrate the dispute and attach a brief explanation of the reasons therefor.
Each party shall then list, in priority, the remaining arbitrators and return
such list to the American Arbitration Association to select the one arbitrator
for the arbitration proceeding based on the list returned by each party to the
American Arbitration Association.
"Project " means the temporary gaming facility on the Land, to be known
as the Dry Creek Ridge Casino, together with ancillary development and all
fixtures, Furnishings and Equipment attached to, forming a part of the Project,
or necessary or useful for the operation of the Project.
"Qualified Costs" means (i) all costs of developing, designing,
constructing, equipping and furnishing the Project, including consulting fees,
supplies, utility costs, regulatory costs, fees and assessments under Legal
Requirements, infrastructure improvements, landscaping, parking, curb cuts,
access enhancement, off-site road improvement and other infrastructure
improvements related to or necessary for the Project, architectural, engineering
and contractors' fees and costs, construction labor and materials, finishes,
signs, Furnishings and Equipment, the initial working capital for the Facility
and the Project necessary or desirable for implementing the operation of
Project, Developer's and Tribe's attorneys' and consultant's fees and legal
costs in connection with the Project, other professional fees in connection with
the Project, all pre-opening costs, and initial operating capital, to the extent
approved by Developer and set forth in the Cost Budget, (ii) Tribal governmental
and regulatory expenses as set forth in Exhibit "C", including, but not limited
to, Tribal Gaming Commission funding, and $90,000 per month from the date on
which the Loan is funded until the Commencement Date to continue to fund Tribal
governmental, housing and operating expenses, and (iii) all financing fees and
expenses, interest payments and any scheduled principal payments, incurred prior
to the Commencement Date; provided that all Qualified Costs shall be allocated
in accordance with GAAP, consistently applied and shall not include costs
incurred prior to the date of this Agreement, unless the costs are specifically
set forth on Exhibit "C" hereto.
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"Reservation" means the real property within Sonoma County, California
that is owned in trust by the United States for Tribe, which Tribe occupies and
over which it exercises governmental jurisdiction, and on which all gaming
conducted as part of the Project shall be conducted.
"Security Agreement" means the Security Agreement executed by the Tribe
to secure repayment of the Development Advances, securing the Collateral for the
benefit of Developer and Lender pursuant to this Agreement, substantially in the
form of Exhibit "D" attached hereto.
"Sonoma Canyon Documents" means the documents by that name referred to
in paragraph G of the Recitals.
"Sonoma Falls Documents" means the documents referred to by that name
in paragraph G of the Recitals.
"Third-Party Disputes" means all disputes or claims relating, directly
or indirectly, to any Gaming on the Reservation, the Sonoma Canyon Documents,
the Sonoma Falls Documents, any other claimed agreements between the Tribe and
any third party, Gross Revenues, the Facility or any Collateral, and brought by
a person or entity not a party to this Agreement, against the Tribe, Developer,
Lender, or the Credit Enhancer, with respect to a claim which, if successful,
would materially affect Developer's economic rights under this Agreement.
"Tolling Period" means period of cessation of operations pursuant to
Section 6.8.3.
"Tribal Draw" means an amount of up to $300,000 (depending on
availability) of Net Revenues to be drawn by the Tribe each month in accordance
with Section 2.11 (a).
"Tribe" means the Dry Creek Rancheria Band of Pomo Indians, a
federally recognized Indian tribe.
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ARTICLE II
THE LOAN AND THE PROJECT FINANCING
2.1 Developer shall advance the following funds (the "Development
Advances") to Tribe on the dates indicated for the purpose of assisting Tribe
meet its current obligations and expenses: (a) $320,000 upon execution of this
Agreement, which shall be used for said housing relocation expenses and a
$10,000 non-refundable expense deposit payable to the placement agent named
below, and the balance of which as the Tribe shall determine to meet both Tribal
operational needs and obligations related to the Project, including prior
efforts to develop a gaming project on the Reservation; and (b) $90,000 per
month on each of 30, 60 and 90 days after execution of this Agreement, to fund
Tribal governmental, housing and regulatory expenses until such time as the Loan
is funded. For purposes of this Agreement, Development Advances shall also be
deemed to include $30,000 loaned to Tribe for governmental purposes by an
Affiliate of Developer pursuant to a Loan Agreement dated June 15, 2001, and
such other advances as may be made by or through Developer on Tribe's behalf in
furtherance of Project development or otherwise, or as made necessary, if at
all, pursuant to Section 4.4(b) hereof. Such Development Advances shall earn
interest at the rate of 12% per annum, and shall be repaid as set forth below.
2.1.1 Repayment. The parties intend that the Development
Advances shall be repaid from the Loan proceeds. In
the event the Loan proceeds are insufficient, the
balance of the unpaid Development Advances shall be
repaid as recoupment in accordance with the
provisions of Section 2.11(d). Provided, that if
Tribe and Credit Enhancer do not fully execute and
deliver the Financing Documents and this Agreement
terminates pursuant to Section 2.3, then all
principal and accrued interest in connection with the
Development Advances shall be repaid by Tribe on or
before 90 days after the terminating date pursuant to
Section 2.3 (the "Due Date"), provided that principal
and accrued interest, at 12% per annum, not paid by
the Due Date shall accrue additional interest thereon
until paid in full, and provided further that any
repayment due hereunder shall be paid solely from Net
Revenues of any gaming operation or other commercial
enterprises, to the extent such revenues are in
excess of the Tribal Draw, then or thereafter
operated by or on behalf of Tribe.
2.1.2 Security. As security for Tribe's payment obligations
with respect to the Development Advances, Tribe
grants to Developer a first lien security interest in
the Collateral ("Developer's Lien"), which security
interest shall be superior to all other claims
against the Collateral. Tribe will execute and
deliver all documents required and reasonably
requested by Developer to evidence such security
interest from time to time. It shall be Tribe's sole
responsibility to cause the removal of any lien,
encumbrance or other claim against the Collateral.
Developer shall sign, deliver and record such
instruments as are required to remove Developer's
Lien upon the first to occur of (a) full execution
and delivery of the Financing Documents by Lender,
Credit Enhancer and Tribe, or (b) full repayment of
all Development Advances. Notwithstanding anything to
the contrary contained in this Agreement, Developer
acknowledges and agrees that prior to the execution
of this Agreement, the Sonoma Canyon Documents, the
Sonoma Falls Documents, or documents related to the
parties therein or their principals were executed and
may create liens or security interests that conflict
with the provisions of this Section and other
security interests contained herein ("Third Party
Liens"). The existence of any enforceable Third Party
Liens shall not be deemed to be a violation of this
Section or a breach of this Agreement.
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2.2 Loan Commitment. Developer shall use its best efforts to arrange
for the Tribe to receive Loan proceeds no later than December 15, 2001, in the
amount of Twenty Seven Million Five Hundred Thousand and No/00 Dollars
($27,500,000) less the amount of the Development Advances (in total, the "Loan")
to be disbursed for the payment of Qualified Costs to facilitate the immediate
commencement of development and construction activities with respect to the
Project. Said Loan shall be funded through the Commitment described below to the
extent such Commitment is available, provided that both parties shall cooperate
in seeking the lowest interest rate, terms and Loan fees and the most favorable
terms available through the placement agent named below, consistent with current
market conditions:
2.2.1 Attached hereto as Exhibit "E" is a Loan placement
commitment (the "Commitment") from Xxxxxx Xxxxxxx
Xxxxxxxx Xxxxxxx, Inc ("MJSK"), which Developer has
obtained on behalf of Tribe in the amount of
$27.5 million. Developer (or one or more of its LLC
Members) shall act as a guarantor (the "Credit
Enhancer") of the Loan covered by the Commitment, to
the extent a guaranty is required by the Lender.
Lender may substitute a third party to act as Credit
Enhancer provided such party meets all the Legal
Requirements for lending funds to the Project, agrees
to the terms and conditions agreed to by Developer
under this Agreement, and does not require any delay
in the commitments made by Developer herein. Tribe
and Developer hereby consent to the terms and
conditions of the Commitment. Tribe agrees to execute
the Financing Documents as borrower, provided they
conform in material part to the Commitment and this
Agreement and subject to Tribe's reasonable approval.
Developer agrees to cause the Credit Enhancer to
execute the Financing Documents as guarantor,
provided they conform in material part to the
Commitment and this Agreement and subject to Credit
Enhancer's reasonable approval.
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2.3 Tribe shall execute all Financing Documents reasonably required,
upon commercially reasonable terms and consistent with this Agreement, to enable
Developer to timely meet the Loan funding obligations herein. In the event that
the Tribe has not timely executed the Financing Documents in accordance with
this Agreement by December 15, 2001, or Developer has not caused the Loan
described in Section 2.2 above to fund by such date, either through the
Commitment or otherwise, this Agreement shall thereupon be null and void, and
neither party shall have any further or continuing obligation to the other,
except that (a) Tribe's obligation to repay the Development Advances in
accordance with the provisions of Section 2.1.1, (b) all provisions herein
related to security granted by Tribe to secure repayment of said Development
Advances, and (c) all remedies granted to Developer hereunder to enforce Tribe's
obligations under Section 2.1.1 (including without limitation Sections 4.5, 5.2,
5.3, and 5.4) shall remain in full force and effect. Further, in the event that
the Loan is available for funding in accordance with the terms of the Commitment
by December 15, 2001, then any failure of the Tribe to accept such funding,
whether as a result of its failure to execute any of the Financing Documents
reasonably required, upon commercially reasonable terms and consistent with this
Agreement and the Commitment, or to reasonably satisfy any material condition
precedent to funding set forth in this Agreement or any of the Financing
Documents which is within the control of the Tribe, shall be deemed to be and
shall constitute an exercise by the Tribe of the Buy-Out Option provided for in
Section 6.9 of this Agreement.
2.3.1 Notwithstanding the provisions of Section 2.2, it is
mutually agreed and understood that Developer's
obligation to use its best efforts to cause the Loan
proceeds to be provided to Tribe is expressly
conditioned upon satisfaction of the conditions set
forth in Sections 2.5, 2.5.1, 2.5.2 and such other
conditions set forth in the Financing Documents as
shall be required by Lender, and delivery to
Developer of each of the following:
(1) Resolution of the Tribal Council authorizing
the execution, delivery and performance of
this Agreement and the Financing Documents
to which the Tribe is a party;
(2) Certificates signed by the Chairman of the
Board as to the incumbency and proper
signature of the person or persons
authorized to execute and deliver the
Financing Documents and any other
certificates or documents to be delivered by
the Board; and
(3) a certificate of the Chairman of the Board
stating that, after giving effect to this
Agreement or the Financing Documents, to the
best of his knowledge the representations
and warranties contained herein are true and
accurate and no Event of Default exists as
of the date hereof with respect to the
Development Advances.
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2.4 Loan. Upon satisfaction of all the conditions precedent for
obtaining the Loan, Developer agrees to make available, or cause Lender to make
available, to Tribe the Loan proceeds within five (5) days of the execution of
the Financing Documents, which shall be advanced, deposited and disbursed
pursuant to the Financing Documents and to the extent agreed by Tribe, which
agreement shall not be unreasonably withheld. Tribe agrees that the Loan funds
shall be used solely for the payment of Qualified Costs in furtherance of the
purposes set forth in this Agreement.
2.4.2 In addition to said principal amount of the Loan set
forth in the preceding subparagraph, Developer agrees
to make available to Tribe as and when needed, but no
sooner than 30 days after the Commencement Date, its
credit enhancement for, and its best efforts to
assist Tribe in obtaining, an additional loan of up
to Nine Million Dollars ($9,000,000) ("Stand-by
Loan") to be used solely for liquidating any Third
Party Dispute claim as Tribe, in its sole discretion,
deems justified.
2.5 Conditions Precedent to Development Advances. Developer's
obligation to make Development Advances pursuant to this Agreement shall become
effective only upon satisfaction of the following conditions precedent at the
sole cost and expense of Tribe:
2.5.1 Representations and Warranties Accurate. The
representations and warranties by Tribe in Section
4.2 herein are correct on and as of the date of this
Agreement and on the date of each Development
Advance.
2.5.2 Documents. Developer shall have received the
following agreements, documents and instruments, each
duly executed by the parties thereto:
(i) Security Documents. The Security Agreement and
such other documents, agreements, and instruments as may be
required by Developer, securing the Collateral for the benefit
of Developer or perfecting such security interest;
(ii) Certificate. Certificates signed by the Chairman
of the Board as to the incumbency and proper signature of the
person or persons authorized to execute and deliver any such
documents, agreements and instruments and any other
certificates or documents to be delivered by the Board;
(iii) Tribal Documents. Copies of the following,
certified as to authenticity by the Secretary of the Board:
(1) Resolution of the Tribal Council authorizing
the execution, delivery and performance of
this Agreement and other documents to which
the Tribe is a party.
(2) Resolution of the Tribal Council authorizing
execution of the Compact.
(3) the fully executed Compact.
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(4) evidence of the publication of notice of the
Compact in the Federal Register as required
by IGRA.
(5) letter from Secretary of the Interior as to
effectiveness of Compact.
(6) Resolution of the Tribal Council adopting
Gaming Ordinance.
(7) the Gaming Ordinance.
(8) all Gaming regulations, if any, adopted
under the Gaming Ordinance.
(9) evidence that the Gaming Ordinance has been
approved by the NIGC to the extent required
by IGRA, or an opinion of legal counsel to
the Tribe that such approval is not required
for the Tribe to be in compliance with IGRA.
(10) all licenses issued or required to be issued
by the TGC, or any government authority to
the Tribe in connection with the operation
of the Project.
(11) to the extent not identified above in this
Section, and except as may be prohibited by
law or agreement, all other agreements or
contracts of the Tribe or any affiliate of
the Tribe concerning the conduct of gaming
activities on the Reservation or the
development, financing, design,
construction, installation, equipping or
operation of the Project, including any
off-site improvement or development
contracts, any multi-game device,
consulting, management, joint venture,
partnership, purchase, financing, mortgage,
loan or equipment transportation agreement,
and any lease, franchise, licensing or
easement contract.
(12) to the extent not identified above in this
Section, all resolutions and ordinances of
the Tribe relating to the Project, this
Agreement or the Development Advances,
including those that relate to or may affect
any action relating to:
o the sovereign immunity of the Tribe;
o the powers and authority of the Tribe;
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o the development, design, financing,
construction, installation, equipping,
or operation of the Project;
o the Land on which the Project is
located;
o secured financing matters, including
the uniform commercial code;
o other forms of borrowing or pledging of
Tribe's assets;
o commercial transactions;
o permits and licenses relevant to the
Gaming Facilities and the conduct of
the operations of the Tribe at the
Gaming Facilities;
o investment restrictions or
requirements; and
o any tax imposed on the development,
design, financing, construction,
installation, equipping or operation of
all or any portion of the Project.
(iv) a certificate of the Chairman of the Board
stating that after giving effect to this Agreement, and to the
best of his knowledge, the representations and warranties
contained herein are true and accurate and that no Event of
Default exists as of the date hereof hereunder;
(v) chattel lien searches covering the name of the
Tribe, the Project or any Affiliate, current within seven (7)
days of the effective date of this Agreement, reflecting no
liens or encumbrances on the Project, or the Collateral;
(vi) searches within seven (7) days of the effective
date of this Agreement evidencing no bankruptcies, tax liens,
or judgments relating to the Tribe, any affiliate of the Tribe
or any of the properties that are not consented to by
Developer;
(vii) the opinion of legal counsel for the Tribe in
substantially the form attached hereto as Exhibit "F";
(viii) evidence of the insurance coverage required by
Section 2.10 hereof,
(ix) Evidence of Completion of Filings and
Recordings. Evidence of completion of all recordings and
filings to establish and maintain perfection and priority of
the Collateral; and
Page 13
(x) Other Items. Such other agreements, documents,
and instruments as Lender or Developer may reasonably require,
including, without limitation, invoices and other documents
evidencing the Qualified Costs.
2.5.3 Waiver of Conditions. Delay or failure by Lender or
Developer to insist on satisfaction of any condition
of a Loan or Development Advance shall not be a
waiver of such condition precedent or any other
condition precedent. If Tribe is unable to satisfy
any condition precedent, the making of the Loan shall
not preclude Lender or Developer from thereafter
declaring the condition or event causing such
inability to be an Event of Default.
2.6 Credit Enhancement Fee.
2.6.1 In addition to all other payments paid to the
Developer under the Financing Documents, Tribe shall
pay to Developer from Available Cash Flow the Credit
Enhancement Fee. Payment to Developer of the Credit
Enhancement Fee is in consideration of Developer
providing the Credit Enhancer and all other services
under this Agreement, and shall be paid to Developer
during the entire Credit Enhancement Term and during
the period between the Commencement Date and the
Final Completion Date (the "Pre-Completion Period"),
unless Tribe exercises the Buy-Out Option. The Credit
Enhancement Fee is considered due and payable on the
15th day of each month of the Credit Enhancement Term
and of the Pre-Completion Period.
2.6.2 As additional security for Tribe's payment
obligations with respect to the Credit Enhancement
Fee, Tribe grants to Developer a first lien security
interest in the Collateral, which security interest
shall be superior to all other claims against the
Collateral. Tribe will execute and deliver all
documents required and reasonably requested by
Developer and or the Lender to evidence such security
interest. It shall be Tribe's sole responsibility to
cause the removal of any lien, encumbrance or other
claim against the Collateral, including without
limitation any lien, encumbrance or other claim, from
a Third Party Dispute. Notwithstanding the foregoing
provisions of this Section 2.6.2, Developer agrees to
subordinate the foregoing lien to any lien required
by Lender as a condition of funding the Loan.
2.6.3 The Tribe shall pay interest on overdue Credit
Enhancement Fees at the rate equal to 12% per annum
to the extent lawful; it shall pay interest
(including post-petition interest in any proceeding
under any bankruptcy law) on overdue installments of
such interest (without regard to any applicable grace
period) at the same rate to the extent lawful. All
interest shall be automatically included into
the next month's Credit Enhancement Fee payment.
Insufficient Available Cash Flow from which to pay
any portion of the Credit Enhancement Fee shall not
be deemed to render payment of such fee "overdue" or
to constitute an event of default under this or any
other agreement.
Page 14
2.7 Accounting and Books of Account.
2.7.1 Pursuant to GAAP and the Legal Requirements, the
Tribe shall prepare and provide access to or make
available to Developer:
(a) Project operating statements, operating
budgets, the annual business plan and the
capital budget and a budget for capital
replacements;
(b) full and accurate books of account of the
Project, located at an office in or near the
Project. Developer shall have reasonable
access, to be exercised during business
hours on at least 24 hours notice, to the
Project and its books and records for the
purpose of auditing the payments and
determinations thereof under this Agreement,
and shall have the unlimited right to
inspect, examine, and copy all such books
and supporting business records. Such rights
may be exercised through an agent, employee,
attorney, or independent accountant acting
on behalf of the Developer;
(c) Project internal control systems as defined
by IGRA; and
(d) an annual audit of the Project by a
nationally recognized independent certified
public accounting firm. Such audits shall be
provided by the Tribe to all applicable
federal and state agencies, as required by
law.
2.7.2 Commencing with the first month after the
Commencement Date, and continuing until completion of
the Credit Enhancement Term, within fifteen (15) days
of the end of each calendar month, the Tribe shall
provide to Developer operating statements for the
preceding month, which after a full year of operation
will include comparative statements, which set forth
among other things, Gross Revenues, Operating
Expenses, Net Revenues, cash flow from operations and
the amount of the Credit Enhancement Fee paid or
payable to Developer. Such statements shall be
prepared in accordance with GAAP. The Tribe will also
promptly provide to Developer such other information
concerning the business, property or financial
condition of the Project as Developer may reasonably
request.
Page 15
2.7.3 Within ninety (90) days following the end of the
fiscal year in which the Commencement Date occurs and
thereafter following the end of each fiscal year (or
portion thereof) until the last day of the Credit
Enhancement Term, the Tribe shall provide to
developer, operating statements derived from audited
financial statements (the "Year End Operating
Statements") for the preceding fiscal year, which
after a full year of operation will include
comparative statements, which set forth among other
things, Gross Revenues, Operating Expenses, Net
Revenues, cash flow from operations and the amount of
the Credit Enhancement Fee paid or payable to
Developer. Such statements shall be prepared in
accordance with GAAP and by a nationally recognized
certified public accounting firm with demonstrated
experience and expertise in the gaming industry.
Developer shall have the right to audit these Year
End Operating Statements by examination of all or any
part of the books and records of the Project as
Developer, in its sole discretion, may require,
provided it is exercised in accordance with Section
2.1(b) above. To the extent that the Year End
Operating Statements on Developer's audit determines
that the Credit Enhancement Fees paid during the
preceding Fiscal Year require an increase in the
amount due, then that increase shall be paid by the
Tribe within fifteen (15) days of notification by
Developer to the Tribe. Overpayments by Tribe to
Developer shall be refunded to Tribe in like fashion.
2.8 Prepayment. Tribe may at any time prepay, in whole or part,
principal and interest due on the Development Advances or the Loan without
penalty; provided, such repayment will not relieve Tribe of paying the Credit
Enhancement Fee during the full Credit Enhancement Term, except as set forth in
Section 6.9.
2.9 Tribal Taxes and Assessments. Except for regulatory and background
fees, costs and assessments imposed under the Legal Requirements, neither Tribe
nor any agent, agency, affiliate or representative of Tribe shall impose any
taxes, fees, assessments or other charges of any nature whatsoever on or against
Lender or the Developer relating to this Agreement, the Development Advances,
Loan, or the Financing Documents.
2.10 Insurance. The Tribe shall arrange for, obtain and maintain, or
cause its agents to arrange for, obtain and maintain, with responsible insurance
carriers licensed to do business in the State of California, insurance in the
amounts and containing terms and conditions satisfactory to Lender, Developer,
and the Board covering the design, development and construction of the Project,
the Facility and the operations of the Project. Such insurance shall name the
Tribe, the Developer, the Credit Enhancer, and the Lender as insured.
2.11 Payment of Fees and Tribal Disbursement. Within fifteen (15) days
after the end of each calendar month of operations, the Tribe shall calculate
Gross Revenues, Operating Expenses, Net Revenues of the Project, and Available
Cash Flow for the previous month's operations and the year's operations to date.
Except as otherwise required by the Financing Documents, Net Revenues shall be
disbursed from the Project bank account(s) to the extent available in the
following order of priority:
Page 16
(a) the Tribal Draw;
(b) current principal, interest (to the extent,
if any, not paid as part of the month's
Operating Expenses), and any other payments
due pursuant to the Financing Documents, the
Note, and principal payments on any capital
leases;
(c) the Credit Enhancement Fee;
(d) recoupment payments to Developer for
Development Advances not covered by the
Loan, and any other funds advanced to the
Project or the Tribe or expenses incurred by
Developer pursuant to Section 2.1 or
referenced in Sections 4.4(b) and 4.5 of
this Agreement; and
(e) a reasonable reserve for repairs and
replacement of Project building, furniture
and equipment.
The priority of payments from available funds
which is described in this Section does not control
the calculation of the amount of each of these
obligations. The calculation of the amounts of these
obligations shall be as otherwise provided by this
Agreement. The Tribe agrees that it will disburse all
Net Revenues and pay all Operating Expenses in
accordance with the terms of this Agreement.
ARTICLE III
PROJECT DEVELOPMENT
3.1 Developer to Provide Project Development Assistance. Tribe
recognizes that Developer has substantial expertise in the development of gaming
facilities. For this reason, Tribe has sought Developer's assistance in the
development of the Project. At all times, however, Tribe has had and shall
continue to have exclusive proprietary control and absolute discretion in
Project development and operational matters. Developer has served and shall
continue to serve only at Tribe's request and solely as a pre-Commencement Date
consultant to collaborate with Tribe on all material aspects of the Project's
development, design and construction. In that capacity, Developer shall provide
advice to Tribe on the following types of issues:
(a) Project Design. Developer shall provide
recommendations on the selection and
retention of an architect to develop a
design that meets the Tribe's needs and
requirements with respect to Project
facilities, including but not limited to the
Tribe's determinations of appropriate themes
and decorative designs. During the course of
construction, Developer will be available to
meet with the architect to seek
interpretation as to the meaning and intent
of drawings and specifications and assist in
the resolution of design questions that may
arise.
Page 17
(b) Project Construction. Developer shall
provide recommendations on the selection and
retention of a construction manager and
general contractor and other construction
and design professionals, and shall provide
advice on methods of negotiating, bidding
and awarding construction contracts.
Developer shall also provide recommendations
on quality control measures, such as
retention of an inspecting architect to
verify that construction is proceeding
according to plans and specifications.
Moreover, Developer shall assist Tribe in
(i) preparing construction timetables and
schedules, (ii) developing change orders, if
any, (iii) monitoring construction and
development costs, including developing cash
flow reports and forecasts, (iv)
implementing procedures for review and
processing of construction expenditures, (v)
meeting with contractors and subcontractors
to resolve issues, (vi) assisting in the
review and evaluation of claims arising out
of construction matters, and (vii) reviewing
implementation of safety programs. Developer
shall not make any commitments or agreements
on Tribe's behalf without specific written
authorization from Tribe to do so.
(c) Financial Planning. Developer shall assist
Tribe in the development of preliminary
design, construction and operating budgets,
and shall assist Tribe in updating and
refining budget figures to reflect
increasing detail and refinement. Developer
shall also advise Tribe on amounts of
insurance coverage that are standard for the
industry and as to sources for obtaining
such insurance.
(d) Purchasing. Developer shall advise Tribe in
the purchasing of materials, furniture,
furnishings and equipment for the Project.
(e) Staffing. Developer shall advise Tribe in
identifying experts of various aspects of
Project development, including kitchen
design, telephone and communications
systems, sound systems, computer systems,
security and surveillance systems, sign
equipment, gaming equipment, uniforms and
the like. Developer shall also advise Tribe
on recruiting personnel, including but not
limited to participation in one or more job
fairs held by Tribe.
Page 18
(f) Marketing. Developer shall assist Tribe in
the development of a marketing plan for the
Project, in the preparation and coordination
of pre-opening advertising, public relations
and other marketing activities for the
Project. In addition, Developer will provide
advice on developing Project logos, trade
names, trade marks, copyrights and other
intellectual property.
(g) Records. Developer will make recommendations
on establishing appropriate accounting,
internal financial controls, and financial
reporting systems, including the development
of a system for maintaining books, records
and other data relating to the Project.
Nothing contained herein shall be construed as rendering Developer
liable or responsible for the actions or activities of Tribe or anyone else
performing services for or supplying materials to the Project, whether
recommended by Developer or not. Further, Developer shall not be responsible for
incurring any costs of construction or development of the Project, rather Tribe
shall be solely responsible for such costs. Neither shall Developer be
responsible for supervising construction or development of the Project, or for
any defect or defects therein. To the contrary, it is acknowledged that the
services rendered by Developer to Tribe are advisory in nature only, and Tribe
may accept or reject Developer's advice as Tribe so chooses.
3.2 No Assignment. Tribe has hired Developer to provide assistance on
Project development matters based on Developer's expertise in the field. As
such, Developer may not assign or subcontract its responsibilities in that
regard without Tribe's prior written approval; provided, however, Developer may
assign this Agreement without the Tribe's approval on or after the Completion
Date.
3.3 Exclusivity. During the Credit Enhancement Term, and until all fees
and obligations due to the Developer, together with any interest or arrearage,
are paid to Developer in full, and while any obligation of Developer under the
Financing Documents remains outstanding:
(a) Developer shall be the exclusive
pre-Commencement Date provider of the
construction and loan assistance services
described herein with respect to the Project
except to the extent any court of competent
jurisdiction shall finally determine that
any other party has rights with respect to
the Project which are superior to those of
Developer.
Page 19
(b) During the term of this Agreement, Developer
will have a right of first refusal to (i) be
the exclusive developer of any future
developments, including but not limited to,
future casinos, hotels, entertainment
facilities, and gaming-related facilities
for the Tribe or any of the Affiliates which
are identified by Tribe or become the
subject of discussions or negotiations with
Developer (collectively "Future Projects"),
and (ii) to provide consulting services or
to serve in a similar capacity with respect
to all of the Future Projects, provided that
this subparagraph shall be deemed void and
stricken if the NIGC determines that it in
any way renders this Agreement to be a
Management Contract under IGRA, and
provided, further, that, as to any permanent
casino project, the rights granted to
Developer herein shall be subject to any
enforceable rights granted in the Sonoma
Falls Documents to the developer or manager
therein, unless and until the parties
thereto shall terminate the Sonoma Falls
Documents or consent to or waive any
inconsistency with this Agreement, or any
court of competent jurisdiction shall
finally determine that the Sonoma Falls
Documents do not constitute a binding
agreement of the parties thereto enforceable
in accordance with its terms. If Developer
desires to exercise its right of first
refusal, it must do so in writing within
sixty (60) days after submission by Tribe to
Developer of any third party bona fide
contract, consulting or similar offer
regarding the Future Projects ("Future
Project Documents"). This right of first
refusal does not grant Developer the right
to manage any other gaming operations of the
Tribe. The Tribe covenants to act in good
faith and negotiate all Future Project
Documents accepted by Developer and in which
it is a party, on a reasonable basis, and to
use its best efforts to expedite seeking BIA
or NIGC approval of such Future Project
Documents to the extent such approval is
required under the Legal Requirements.
(c) Subject to the preceding subparagraph,
Developer and the Tribe both agree that
unless a court of competent jurisdiction
finally determines that the tribe is
obligated to proceed under the Sonoma Canyon
Documents or the Sonoma Falls Documents,
none of Developer, Tribe nor any of the
Tribe's Affiliates will, directly or
indirectly, by any means whatsoever, develop
any Gaming facilities that will reduce the
Gross Revenues or the amount of Gaming
devices or machines currently located at the
Facility, without the written consent of the
other party; provided that nothing shall
restrict Developer or its affiliates from
placing games or gaming devices in or
providing services related to such placement
at any facility owned by an unaffiliated
third party, provided such facility is
outside the boundaries of Marin, Sonoma,
Napa, Mendocino and Lake Counties (the
"Preference Area").
Page 20
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1 Representations and Warranties of Developer. Developer represents
and warrants that:
(a) Developer has duly authorized the execution
and delivery of this Agreement and the
third-party loan Commitment to Tribe on the
terms described herein. No further act or
approval of Developer is required as a
condition for entering into or fully
performing under this Agreement.
(b) The execution and delivery of this Agreement
and Developer's performance hereunder do not
conflict with or violate any law, contract
or agreement by which Developer is bound.
(c) Developer knows of no reason under gaming
license suitability criteria set forth in
IGRA, the Compact, the Gaming Ordinance, or
California law, why Developer would not be
deemed suitable as a Developer or licensee.
Developer shall immediately apply for,
obtain and maintain any licenses, including
gaming licenses, required by federal and
state law, the Compact, and the Gaming
Ordinance.
4.2 Representations and Warranties of Tribe. Subject to the effect, if
any, of the Sonoma Canyon Documents and the Sonoma Falls Documents, which the
Tribe does not believe are in conflict with this Agreement, Tribe represents and
warrants that;
(a) Tribe is a federally-recognized Indian
tribe.
(b) The execution and delivery of this Agreement
and Developer's performance hereunder do not
conflict with or violate any law, contract
or agreement by which Tribe is bound, except
as the documents referred to in Section 3.3
(b) may be determined to create such
conflict or violation."
(c) Tribe has duly authorized the execution and
delivery of this Agreement on the terms
described herein. No further act or approval
of Tribe, other than the TGC (as required
under the Compact), is required as a
condition for entering into or fully
performing under this Agreement.
Page 21
(d) The Land is "Indian lands," as defined in 25
U.S.C.ss.2703(4), and the Tribe has full
right, power and authority under applicable
law to conduct Class II and Class III gaming
on the Land.
(e) The Compact and the Gaming Ordinance are in
full force and effect.
(f) Subject to the qualifications set forth in
the opinion of legal counsel for the Tribe
in the form attached hereto as Exhibit "F"
and hereby incorporated by reference, Tribe
has purchased sufficient Gaming Device
Licenses under the Compact to enable it to
operate a total of 1600 gaming devices at
the Project;
(g) There are no suits, actions, proceedings or
investigations, pending or threatened,
against or affecting the Tribe before any
court or governmental agency, except as set
forth in Exhibit "F-1 ";
(h) To the best of Tribe's knowledge, this
Agreement is not subject to approval of the
NIGC, and is fully enforceable in accordance
with its terms and conditions, without
approval by the NIGC.
4.3 Covenants of Tribe. The Tribe covenants as follows:
(a) Prompt Payment. Tribe shall promptly pay
when due all principal and interest on the
Development Advances or the Loan and all
Credit Enhancement Fee payments, as
evidenced by the Note and the other
Financing Documents.
(b) Ownership. Tribe or a wholly-owned Affiliate
of Tribe shall retain complete ownership and
control over the Project.
(c) No Amendment. That Tribe shall not act in
any way whatsoever, directly or indirectly,
to cause this Agreement and all other
instruments and agreements executed between
the parties in connection with this
Agreement to be amended, modified, canceled,
or terminated, except pursuant to its
express terms, and shall take all actions
necessary to ensure that this Agreement and
all other instruments and agreements
executed between the parties in connection
with this Agreement shall remain in full
force and effect at all times.
Page 22
(d) No Violation. Subject to Section 3.3 (b)
above, that Tribe will not proceed to
develop, operate or invest in any Gaming of
any kind in violation of this Agreement or
any other instruments and agreements
executed between the parties in connection
with this Agreement. Tribe will always meet
the requirements of the IGRA and the
applicable regulations under the IGRA and be
consistent with the provisions of this
Agreement and not adversely affect the
rights of Developer hereunder and
thereunder.
(e) Performance. Tribe agrees to enter into the
Financing Agreements, and execute all
documents necessary to carry out the
purposes of this Agreement in accordance
with the terms of the Compact, the Legal
Requirements pertaining to the Project, and
factual particulars for development,
construction and operation of the Project
for Class III Gaming, and Class II Gaming if
applicable.
(f) No Law Impairing Obligation. That during the
Credit Enhancement Term, Tribe shall enact
no law impairing the obligations entered
into in this Agreement without the prior
written consent of Developer.
(g) Specific Enforcement. That this Agreement,
the Security Agreement, and all other
instruments and agreements executed between
the parties in connection with this
Agreement shall be specifically enforceable
in accordance with their terms.
(h) Compliance With Law. That in its performance
of this Agreement and all other instruments
and agreements executed between the parties
in connection with this Agreement, Tribe
shall comply with all Legal Requirements.
That during the Credit Enhancement Term all
Gaming at the Project and on the Property
shall be conducted in accordance with the
IGRA, the Compact, and the governing law of
Tribe. That if the State of California or
any local government attempts to impose any
tax including any possessory interest tax
upon any party to this Agreement or with
respect to the Project, the Project or the
Property, the Project and Tribe in the name
of the appropriate party or parties in
interest, shall resist such attempt through
legal action.
(i) Property. That Tribe will maintain the Land
throughout the Credit Enhancement Term as
land held in trust by the United States of
America for the benefit of Tribe.
Page 23
(j) Access. That during the Credit Enhancement
Term, that Developer shall and may peaceably
have complete access to and presence in the
Property and the Project in accordance with
but to the extent limited by the terms of
this Agreement, it being the intention of
the parties that Developer shall not operate
or otherwise be present at the Project
except for the auditing and other limited
purposes solely related to the verification
of accounting records and payments due as
provided in this Agreement, free from
molestation, eviction and disturbance by
Tribe or by any other person or entity;
provided, however, that such right of access
to and presence in the Project shall cease
upon the termination of this Agreement
pursuant to its terms.
(k) State Taxes. That, if the State of
California or any local government attempts
to impose any tax, including any possessory
interest tax upon any party to this
Agreement or with respect to the Project,
the Project or the Property, the Project and
Tribe, in the name of the appropriate party
or parties in interest, shall resist such
attempt through legal action.
(l) No Tribal Taxes. That neither Tribe nor any
agent, agency, Affiliate or representative
of Tribe will impose any taxes, fees,
assessments or other charges of any nature
whatsoever on payments of any debt service
to Developer or to any Lender furnishing
financing for the Project or for the
Project, or on the Project, the Project, the
revenues therefrom or on the Credit
Enhancement Fee on the salaries or benefits,
or dividends paid to, any of Developer's
members, stockholders, officers, directors,
or employees, any of the employees of the
Project or any provider of goods, materials
or services to the Project.
(m) No Liens. That during the Credit Enhancement
Term Tribe shall not act in any way
whatsoever, either directly or indirectly,
to cause or permit any person or entity to
become a holder of an encumbrance or lien on
the Property or the Project, other than
Developer, or Lender, or to allow any person
or entity to obtain any interest in this
Agreement without the prior written consent
of Developer and, where applicable, consent
from the United States.
Page 24
(n) Stay, Extension and Usury Laws. That (to
the extent that it may lawfully do so) it
shall not at any time insist upon, plead, or
in any manner whatsoever claim or take the
benefit or advantage of, any stay, extension
or usury law wherever enacted, now or at any
time hereafter in force, that may affect the
covenants or the performance of this
Agreement, and Tribe (to the extent that it
may lawfully do so) hereby expressly waives
all benefit or advantage of any such law,
and covenants that it shall not, by resort
to any such law, hinder, delay or impede the
execution of any power herein granted to
Developer, but shall suffer and permit the
execution of every such power as though no
such law has been enacted.
4.4 Covenants of Developer. The Developer covenants as follows:
(a) Compliance with Legal Requirements. That, in
its performance of this Agreement and all
other instruments and agreements executed
between the parties in connection with this
Agreement, Developer shall comply in all
material respects with all Legal
Requirements that are material to its
performance under this Agreement.
(b) Defense of Third-Party Disputes. That, in
the event any Third-Party Dispute is brought
against Tribe prior to the Commencement Date
in at least one of the respects specified
below (a "Qualifying Third-Party Dispute"),
Developer shall pay, as a Development
Advance, all of Tribe's legal fees and
expenses reasonably and necessarily incurred
(by counsel selected by Tribe and reasonably
approved by Developer and pursuant to a fee
arrangement approved by Developer, or, in
the alternative, Developer shall have the
right to assume the defense of any such
Qualifying Third-Party Dispute with counsel
selected by Developer and reasonably
satisfactory to Tribe) in defense of or
otherwise in connection with such Qualifying
Third-Party Dispute. If the Loan proceeds are
insufficient to repay Developer such
Development Advance, repayment shall be made
by Tribe in accordance with Section 2.11 (d)
hereof. A Qualifying Third-Party Dispute
shall be a Third-Party Dispute which
involves any of the following: (i) a claim
against the Developer or the Lender; (ii) a
claim challenging the validity of this
Agreement; (iii) a claim challenging the
security interest of the Developer or the
Lender in or to any of the Collateral or
asserting any interest in or to the
Collateral that is senior to or pari passu
with the interest therein or thereto of the
Developer or the Lender; (iv) a claim
challenging the right of Tribe to develop
and open or operate the Project; or (v) a
claim challenging the Credit Enhancement
Fee, any Development Advances, the Buy-Out
Fee or the Loan, or the obligations of Tribe
to make payments with respect thereto or the
right of Developer or Lender to receive any
such payment. Developer's obligation to make
any payment pursuant to this Section 4.4 (b)
shall terminate 60 days after the
Commencement Date and shall not affect in
any respect its rights or the obligations of
Tribe pursuant to Section 4.5.
Page 25
4.5 Hold Harmless. To the fullest extent permitted by law, the Tribe
and any Affiliate shall fully protect, reimburse, indemnify, defend and hold
harmless Developer and its respective members, partners, affiliates, officers,
directors, agents, sureties, servants and employees and successors and assigns
(hereinafter collectively "Indemnitees") for, from and against any and all
liabilities, claims, damages, demands, losses, costs or expenses (including,
without limitation, reasonable attorneys' fees for counsel of Developer's
choosing), arising out of or resulting from, either directly or indirectly, the
performance of this Agreement, or any Third Party Dispute, regardless of whether
or not arising from the negligence or any other act or omission of the
Developer, provided that the foregoing indemnity will not, as to any indemnified
person, apply to losses, claims, damages, liabilities or related expenses, to
the extent they are found by a final, non-appealable judgment of a court to
arise from the willful misconduct or gross negligence of such indemnified
person. The reasonable cost of defending a Third Party Dispute and any
liability, damages, demands, losses, costs or expenses incurred by Developer or
Tribe under this Section shall not be an Operating Expense and shall be paid by
Tribe from its share of Net Revenues when incurred.
ARTICLE V
EVENTS OF DEFAULT AND DISPUTE RESOLUTION
5.1 Events of Default. Each of the following events, or any Event of
Default in the Security Agreement or the Financing Documents, shall be an event
of default under this Agreement upon the giving of written notice by the party
claiming default and the continuation of such event for five (5) business days,
unless waived by the party claiming default:
(a) Tribe fails to pay when due any installment
of principal or interest on the Development
Advances or the Loan as required by this
Agreement or the Financing Documents or any
installment of the Credit Enhancement Fee or
the Buy-Out Fee as defined in Section 6.9 or
to make any indemnity payment required by
Section 4.5;
(b) Tribe shall breach any of its other
obligations hereunder (including without
limitation, those set forth in Section 4.3
hereof) or under the Security Agreement or
the Financing Documents;
(c) Developer fails to make any Development
Advance when due as required by this
Agreement, provided that Developer shall
have received a Note duly executed by Tribe
evidencing such Development Advance;
Page 26
(d) Any representation or warranty that Tribe or
Developer has made under this Agreement
shall prove to have been untrue when made;
(e) Any proceeding, judgment or order shall be
instituted or entered, as applicable,
against Tribe, which materially adversely
impairs the ability of Tribe to perform any
one of its obligations under this Agreement,
the Security Agreement or the Financing
Documents;
(f) Tribe or any Affiliate develops or operates
any casino or Gaming facility on its own or
in conjunction with any third-party during
the Credit Enhancement Term;
(g) An event of default shall have occurred
under any Financing Document evidencing the
Loan; or
(h) Developer places games or gaming devices or
provides services related to such placement
in the Preference Area during the Credit
Enhancement Term other than upon terms
contemplated in this Agreement.
5.2 Rights Upon Default.
(a) In an Event of Default by Tribe, Developer
or the Lender may cease making Development
Advances and declare all amounts outstanding
thereunder immediately due and payable, and
the same shall thereupon be immediately due
and payable, without presentment or other
notice or demand other than written notice
of the breach.
(b) In an Event of Default by Tribe, Developer
or the Lender, may exercise or enforce any
and all rights and remedies available to
them under any of the Financing Documents or
otherwise;
(c) In an Event of Default by either party, the
other party may exercise or enforce any and
all other rights or remedies available by
law or agreement against the other party,
including but not limited to this Agreement.
Page 27
5.3 Waiver of Sovereign Immunity. Tribe waives its sovereign immunity
from suit in Federal District Court in the Northern District of California, and
all appellate courts related thereto, or in the event said court lacks subject
matter jurisdiction, in the Superior Court of California for the County of
Sonoma, and all appellate courts related thereto. This waiver is provided for
the sole and limited purpose of enforcing Tribe's obligations to Developer under
this Agreement, Security Agreement, and the Financing Documents, provided
further, that Tribe's waiver shall not be construed to permit recovery against
any of Tribe's assets, other than (i) the Net Revenues, (ii) the Collateral, and
(iii) the gross revenues from any other Gaming activity conducted by Tribe or
any Affiliate (whether or not Developer is involved) after prizes and payouts
and other usual deductions (including deductions for allocation of shared
jackpots) to reach the "win" as referred to by accountants familiar with the
gaming industry, provided that any recovery permitted hereunder shall be
subordinate to Tribe's Draw each month. Nothing contained in this limited waiver
shall be construed to confer any benefit, tangible or intangible, on any person
or entity not a party to this Agreement or as a waiver with respect to any such
third person or entity, and the presence of any such third person or entity as a
party to any proceeding shall constitute a revocation and rescission of the
waiver of sovereign immunity granted herein with respect only to such third
party or entity.
5.4 Waiver of Exhaustion of Tribal Remedies. Tribe hereby waives any
requirement of exhaustion of tribal remedies. Without in any way limiting the
generality of the foregoing, Tribe expressly authorizes any governmental
authorities who have the right and duty under applicable law to take any action
authorized or ordered by any court, to take such action, including, without
limitation, repossessing any cash, property and equipment subject to a security
interest or otherwise giving effect to any judgment entered; provided, however,
that in no instance shall any enforcement of any kind whatsoever be allowed
against any assets of Tribe other than the limited assets specified in Section
5.3, or against any real property.
ARTICLE VI
MISCELLANEOUS
6.1 No Waiver: Remedies Cumulative. No failure on the part of the Tribe
or Developer to exercise and no delay in exercising any right, power or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The remedies provided herein are cumulative and not exclusive of
any remedies provided by law or in equity or by statute.
6.2 Notice. Notices permitted or required to be given hereunder shall
be deemed sufficient if given by facsimile or by nationally recognized overnight
courier or by registered or certified mail, postage prepaid, return receipt
requested, addressed to the respective addresses of the parties or at such other
addresses as the respective parties may designate by like notice from time to
time. Notices so given shall be effective upon the earlier of (a) receipt by the
party to which notice is given, or (b) on the third (3rd) business day following
the date such notice was posted if by mail, or the first (1st) business day
following the date such notice was posted if by overnight courier. Any notice
given by facsimile pursuant to this Section shall be deemed received by the
receiving party if electronic confirmation of delivery is received by the
sending party during normal business hours, otherwise notice shall be deemed
given on the next following business day. Any notices to the Developer shall be
addressed to:
Page 28
DRY CREEK CASINO, LLC
c/o Nevada Gold & Casinos, Inc.
0000 Xxxx Xxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: 713/621-6919
Attention: H. Xxxxxx Xxxx
and
Xxxx X. Keluche
0000 Xxxxxxxx Xxxxxxx
Xxxxxxxx Xxxxxxx, XX 00000
Facsimile: 719/527-1649
with copies to: Xxxxxx X. Xxxxx
0000 Xxxxxxxx Xx
Xxxx, XX 00000
Facsimile: 775/853-3981
Xxxxxx X. Tower, Esq.
00 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Facsimile: 602/870-2946
Xxxxxx Xxxxxxxxx, Esq.
Xxxxxx & Xxxxxxxxx
0 Xxxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: 713/659-5302
Xxxx X. Xxxxxxxxx, Esq.
Xxxxxxxxx Xxxxxxx, LLP
0000 Xxxxxxxx Xxxxxx
Xxxxx 000 X
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Facsimile: 310/586-7800
Any notices to Tribe shall be addressed to:
Page 00
Xxx Xxxxx Xxxxxxxxx Band of Pomo Indians
000 Xxxxx Xxxx, #X,
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attn: Chairperson
with copies to: Xxxxxx X. Xxxxxx, Esq.
Holland & Knight LLP
000 Xxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Facsimile: 213/896-2450
6.3 Amendments. No amendment, modification or waiver of any provision
hereof, and no consent to any departure by a party therefrom, shall in any event
be effective unless the same shall be in writing and signed by the other party,
and then such amendment, modification, waiver or consent shall be effective only
in the specific instance and for the purpose for which given. Neither this
Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against whom enforcement of the change, waiver, discharge or termination is
sought.
6.4 Reliance. All covenants, agreements, representations and warranties
made herein by a party shall, notwithstanding any investigation by the other
party, be deemed to be material to and to have been relied upon by the other
party and shall survive the execution and delivery of this Agreement.
6.5 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
6.6 Relationship; No Management. The parties are not and shall not by
reason of any provision of this Agreement be deemed to be joint venturers with
or partners or agents of one another. Other than project development advice
provided by Developer, their relationship is solely that of Tribe and Developer.
Notwithstanding anything expressed or implied to the contrary, Developer shall
have no rights whatsoever to plan, organize, direct, coordinate, control,
manage, or participate in any way in the operations of Tribe's gaming facility.
After the Commencement Date, neither the Developer nor its representatives or
agents will maintain any ongoing physical presence at the Project. The parties
shall submit this Agreement to the NIGC for review and determination that it is
not a "management contract" under IGRA. If the NIGC finds that this Agreement
does constitute a management contract, then the parties shall immediately take
all necessary steps to modify the Agreement in a way that preserves the economic
benefits of the transaction without constituting a management contract.
Page 30
6.7 Governing Law. This Agreement shall be governed by, and construed
in accordance with, applicable federal law and the substantive law of the State
of California (including the Compact). Whenever possible, each provision hereof
and any other statement, instrument or transaction contemplated hereby or
thereby or relating hereto or thereto shall be interpreted in such manner as to
be effective and valid under such applicable law. But, if any provision of this
Agreement or any other statement, instrument or transaction contemplated hereby
or thereby or relating hereto or thereto shall be held to be prohibited or
invalid under such applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions hereof or any other statement,
instrument or transaction contemplated hereby or thereby or relating hereto or
thereto. The parties shall endeavor in good-faith negotiations to replace any
invalid, illegal or unenforceable provisions with a valid provision the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provision.
6.8 Recommencement of Operations. If Gaming, or Gaming construction and
development on the Land is prohibited by Legal Requirements, or is otherwise
impossible or impractical, Developer shall have the option to terminate or
continue its interest in this Agreement and to commence or recommence the
construction and development, subject to the approval of the Board if, at some
point during the Credit Enhancement Term, such commencement or recommencement
shall be legally and commercially feasible (the "Recommencement").
6.8.1 Repair or Replacement If the Facility is damaged,
destroyed or condemned so that continued development
and construction or Gaming cannot be or can no longer
be continued at the Facility, the Facility shall be
reconstructed if the insurance or condemnation
proceeds are sufficient to restore or replace the
Facility to a condition at least comparable to that
before the casualty occurred. If the insurance
proceeds or condemnation awards are insufficient to
reconstruct the Facility to such condition, Developer
may, upon the approval of the Board, supply such
additional funds as are necessary to reconstruct the
Facility to such condition and such funds shall, with
the prior consent of the Tribe and the United States,
as appropriate, constitute a loan to the Tribe,
secured by the revenues from the Project and
repayable upon such terms as may be agreed upon by
the Tribe and Developer. If the insurance proceeds
are not sufficient and are not used to repair the
Facility, the Tribe and Developer shall jointly
adjust and settle any and all claims for such
insurance proceeds or condemnation awards, and such
proceeds or award shall be applied first, to the
amounts due under the Note (including principal and
interest); second, to any accrued Credit Enhancement
Fees, or any other loans; and third, any surplus
shall be distributed to the Tribe.
6.8.2 Other Business Purposes. In the event of
Recommencement, Developer may propose that the Tribe
should alter the intended use of the Facility for
other purposes included in the Project, provided that
no such plan shall be implemented unless the Board
has approved such purposes. For any purpose other
than Gaming, Developer shall obtain all approvals
necessary under applicable law.
Page 31
6.8.3 Tolling of the Credit Enhancement Term. If,
subsequent to the Commencement Date, operation of the
Project ceases with respect to 20% or more of the
Project casino, for any reason not solely
attributable to Developer, including but not limited
to a loss or suspension of the gaming facility's
license or any casualty loss, the period of cessation
shall not be deemed to have been part of the Credit
Enhancement Term and the date of expiration of the
Credit Enhancement Term shall be extended by the
number of days of such cessation period. Any
reasonable payments made to any third party to
eliminate rights acquired in the Land, the Facility
or the Project during the period of cessation shall
not constitute Operating Expenses of the Project, but
shall be the sole expense of the Tribe.
6.9 Buy-Out Option.
a. Following the end of the second full year of the Credit Enhancement
Term, or at any time in the event of a final judgement or good faith settlement
in any action based on a Third-Party Dispute pursuant to which Tribe is required
to grant any third party any Net Revenue participation rights in any gaming
operation on the Reservation, Tribe may terminate this Agreement with Developer,
or it shall be deemed to do so as provided in Section 2.3 ("Buy-Out Option"), by
paying, and it shall be obligated to pay (1) all amounts outstanding with
respect to the Financing, including amounts owed to the Lender with respect to
the Loan and the outstanding balance owing by Tribe to Developer under this
Agreement, including outstanding Development Advances and accrued interest, and
(2) an amount equal to the "Base Price" as defined below, adjusted, if at all,
as set forth in subparagraph d (the "Buy-Out Fee"). The Base Price shall be
determined by multiplying the average monthly Credit Enhancement Fee earned
during the 12-month period immediately preceding the month in which the Buy-Out
Option is exercised, adjusted as set forth in subparagraph d, below, by the
number of months (including partial months) remaining in the Credit Enhancement
Term ("Month Multiplier").
b. In the event the Buy-Out Option is exercised prior to the
Commencement Date, and the Tribe engages in gaming within six years after the
Buy-Out Option is exercised, the Buy-Out Fee shall be determined and paid from
the date such gaming commences, based on the Credit Enhancement Fee that would
have been payable if the Buy-Out Option had not been exercised, subject to the
adjustments provided below in this subparagraph b and in subparagraph c, and
continuing to the end of the second full year of operation and the recomputation
of the Base Fee in accordance with subparagraph c, provided that in the event
the amount of the Financing actually funded is less than $27,500,000 due to (i)
a refusal of Lender to fund the Loan solely as a result of any failure or breach
of Developer, or any other reason not under Tribe's control, that is not cured
by Developer within 30 days after written notice to Developer, or (ii) the
development and construction of the Project being permanently enjoined as a
result of a court order arising from a Third-Party Dispute that is final and
non-appealable (the "Cessation Order"), and all amounts outstanding with respect
to the Financing, including amounts owed to the Lender with respect to the Loan
and the outstanding balance owing by Tribe to Developer under this Agreement,
including outstanding Development Advances and accrued interest, have been paid
in full no later than twelve (12) months following the entry of the Cessation
Order, then in any such event the Credit Enhancement Fee percentage (20%) shall
be reduced proportionally based on the ratio of the Financing actually funded to
$27,500,000. For example, if the amount of the Financing that is actually funded
prior to a Cessation Order is $13,750,000, the Credit Enhancement Fee percentage
of 20% would be reduced by one-half to 10%. Nothing in this Section shall be
construed as granting Developer any additional rights in the event this
Agreement is terminated pursuant to Section 2.3 hereof.
Page 32
c. In the event the Buy-Out Option is exercised prior to the end of the
second full year of operations during the Credit Enhancement Term, the Buy-Out
Fee (subject to the adjustment provided in subparagraph d below) shall be
computed following the completion of the second full year of operations of the
Project or any successor to the Project to reflect the increased amount, if any,
which would have been due if the Base Fee had been calculated on the basis of
operating results for the Project or any successor Project during said second
year.
d. Notwithstanding anything in this Section 6.9 to the contrary, if the
amount of the Financing that is actually funded exceeds $5,500,000, the Credit
Enhancement Fee shall be increased by multiplying it by 100% plus any percentage
by which the Gross Revenues for the immediately preceding 12-month period ("Base
Period") have increased when compared to the 12-month period immediately
preceding the Base Period (which total percentage multiplier shall be referred
to as the "Adjustment Multiplier"), provided that if the Buy-Out Option is
exercised before the end of the second full year of the Credit Enhancement Term,
the Adjustment Multiplier shall be deemed to be 120%, and provided further that
the Adjustment Multiplier shall not exceed 120% under any circumstances.
e. The Buy-Out Fee shall be paid in equal monthly installments of
principal plus interest at the rate of twelve percent (12%) per annum, on the
15th day of each month, over a period of months equal to the Month Multiplier,
shall be evidenced by a promissory note in the form of Exhibit "G" hereto and,
subject to any enforceable Third Party Liens, shall be secured to the same
extent as the Note. Tribe may prepay this amount at any time without penalty. In
no event shall any payment on account of the Buy-Out Fee exceed fifty percent
(50%) of Available Cash Flow. If such limitation is applicable, any payment
actually made for such month shall first be treated as a payment of interest,
with any balance applied against the principal payment which is otherwise due
and owing, and with any unpaid interest treated as an addition to principal, as
of the payment date. Any amounts which are not paid when otherwise due as a
result of this Available Cash Flow limitation shall be paid as soon as possible
without violating such limitation, if and to the extent that 50% of Available
Cash Flow for any subsequent month exceeds the amount payable therefor on
account of the Buy-Out Fee.
Page 33
6.10 No Third-Party Beneficiaries. Except as provided in Section 4.5
with respect to indemnification of Indemnitees hereunder, nothing in this
Agreement shall confer any rights or remedies upon any person other than the
parties hereto and their respective heirs, legal representatives, successors and
permitted assigns.
IN WITNESS WHEREOF, Developer and Tribe have executed this Agreement as
of this 1st day of September, 2001, effective as of the date first written above
upon ratification by the Tribe's Tribal Council.
DRY CREEK CASINO, LLC., a DRY CREEK RANCHERIA BAND OF
Texas limited liability company POMO INDIANS, a federally-recognized
Indian tribe
By: Wintun Lodge, LLC, Member
By: /s/ Xxxx X. Keluche By: /s/ Xxxxxxx Xxxxx
--------------------------- ----------------------------
Xxxx X. Keluche Xxxxxxx Xxxxx, Chairman
Manager
By: Nevada Gold & Casinos, Inc., Member
By: /s/ H. Xxxxxx Xxxx
---------------------------
H. Xxxxxx Xxxx
President
By: Xxxxxxx Entertainment, LLC, Member
By: /s/ Xxx X. Xxxxxxx
---------------------------
Xxx X. Xxxxxxx
Manager
Page 34
EXHIBIT A
Dry Creek Temporary Casino - Preliminary Estimated Development Costs
Dry Creek Temporary Casino
Preliminary Conceptual Budget of Development Costs
Tribal Revision #1
1 Site Construction
2 Permanent Casino Construction
3 Site Architecture & Engineering
4 Casino Architecture & Engineering, Temp Casino
5 Additional Development Costs
6 Temporary Casino Construction
7 FF&E, Special Equipment & Services
8 Pre-Opening Expense
9 Working Capital & Opening Deficit
10 Project Contingency
Total for Temporary Casino
Total Budget
1/10/02
Phase 1
3,417,597
0
770,000
632,500
2,792,986
4,059,287
76,500
2,100,000
400,000
750,000
14,998,869
15,000,000
Dry Creek Temporary Casino
Preliminary Estimated Development Costs
Site Construction $7,405,030
Site Architecture & Engineering 640,000
Casino Architecture & Engineering, Temp Casino 697,000
Additional Development Costs 2,164,055
Tribal Admin & Relocation 1,500,000
Legal Contingency Fund 350,000
Temporary Casino Construction 6,879,274
Parking Allowance 2,000,000
FF&E, Special Equipment & Services 1,281,061
Pre-Opening Expense 2,400,000
Working Capital & Opening Deficit 850,000
Project Contingency 1,260,000
-----------
Total Estimated Development Costs 27,426,420
===========
Total Budget $27,500,000
===========
EXHIBIT B
Note in the face amount of $1,500,000 made by Dry Creek Rancheria Band of Pomo
Indians in favor of Dry Creek Casino, LLC, dated August 26, 2001
NOTE
THIS NOTE IS SECURED BY PERSONAL PROPERTY COLLATERAL
$1,500,000.00 Sonoma County, California
August 26, 2001
This Note is hereby given as of the date written above by DRY CREEK
RANCHERIA BAND OF POMO INDIANS, a federally-recognized Indian tribe with an
address at 000 Xxxxx Xxxx, #X, Xxxxxxxxxx, Xxxxxx Xxxxxx, Xxxxx of California
95448 ("Maker"), in favor of DRY CREEK CASINO, LLC, which has an address at c/o
Nevada Gold & Casinos, Inc., 0000 Xxxx Xxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx
00000 ("Lender").
Recitals
A. Pursuant to that certain Development and Loan Agreement dated as of
August 26, 2001 ("Loan Agreement") by and between Lender and Maker, Lender will
make certain Development Advances (as such term is defined in the Loan
Agreement) to Maker from time to time, to be evidenced by this Note; and
B. Pursuant to that certain Security Agreement dated as of the date
hereof ("Security Agreement" and together with this Note and the Loan Agreement,
the "Loan Documents"), this Note shall be secured by the Collateral (as such
term is defined in the Security Agreement), which security interest shall be a
first priority lien on the Collateral (as such term is defined in the Security
Agreement), subject only to enforceable Third Party Liens, as set forth in the
Loan Agreement.
Terms of Note
NOW THEREFORE, Maker hereby promises to pay to the order of Lender, or
the holder-in-due-course of this Note, ("Holder") the principal sum of One
Million Five Hundred Thousand and No/100 Dollars ($1,500,000.00), or so much
thereof as may be advanced from time to time, and interest from the date hereof
on the balance of principal from time to time outstanding, in United States
currency, at 12% per annum, in accordance with the terms and conditions set
forth below.
Payment of this Note is governed by the Loan Agreement (including
without limitation, Article II thereof), the terms of which are incorporated
herein by express reference as if fully set forth herein. Capitalized terms used
herein without a definition shall have the meanings ascribed to them in the Loan
Agreement.
All payments on this Note shall be applied first to the payment of
accrued and unpaid interest, and the remainder thereon shall be applied to the
reduction of the unpaid principal balance of this Note. At any time when the
unpaid principal balance of this Note is equal to zero, the Holder shall cancel
this Note and redeliver it to the Maker.
All payments hereunder shall be made in lawful money of the United
States of America and shall be hand delivered or mailed by prepaid registered or
certified first class mail to the Holder at such place and in such manner as the
Holder shall specify by written notice to the Maker.
If any payment under this Note is not made when due, the Maker, and
every entity or person who assumes the obligations of this Note, promises to pay
to the Holder all damages and costs of collection, including, without
limitation, reasonable attorney's fees, whether or not suit is filed hereon.
Notwithstanding any provision to the contrary contained in this Note,
the Maker shall not be required to pay, and the Holder shall not be permitted to
collect, any amount of interest in excess of the maximum amount of interest
permitted by applicable law ("Excess Interest"). If any Excess Interest is
provided for or determined by a court of competent jurisdiction to have been
provided for in this Note, then in such event: (1) the provisions of this
paragraph shall govern and control; (2) the Maker shall not be obligated to pay
any Excess Interest; (3) any Excess Interest that the Holder may have received
hereunder shall be, at the Holder's option, (a) applied as a credit against the
outstanding principal balance of this Note (not to exceed the maximum amount
permitted by applicable law), (b) refunded to the party which had paid such
Excess Interest, or (c) any combination of the foregoing; and (4) the interest
rate(s) provided for herein shall be automatically reduced to the maximum lawful
rate allowed from time to time under applicable law, and this Note shall be
deemed to have been, and shall be, reformed and modified to reflect such
reduction.
The Maker waives presentment, demand, protest, notice of protest,
notice of dishonor, notice of nonpayment, and demand and notice of any kind with
respect to this Note.
No delay or omission on the part of the Holder or any holder hereof in
exercising any rights hereunder or under any other Loan Documents shall operate
as a waiver of any such right or of any other right under the Loan Documents. A
waiver on any one occasion shall not be construed as a bar to or a waiver of any
such right and/or remedy on any future occasion.
Maker understands, acknowledges and agrees that Maker's obligations and
liabilities hereunder are and shall be separate and independent from, and in
addition to, those under the other Loan Documents and that Maker's obligation
and liabilities hereunder or under the Loan Agreement shall not be deemed merged
into or superseded or satisfied by foreclosure upon the Collateral (as defined
in the Security Agreement).
Whenever in this Note reference is made to the Maker or the Holder,
such reference shall be deemed to include, as applicable, a reference to their
respective successors and assigns. The provisions of this Note shall be binding
upon and shall inure to the benefit of such successors and assigns, including,
without limitation, a receiver, trustee or debtor in possession of or for the
Maker or the Holder.
All communications required or permitted under this Note shall be in
writing and shall be delivered in accordance with the notice provisions of the
Loan Agreement.
2
This Note may not be modified, amended, waived, extended, changed,
discharged or terminated orally or by any act or failure to act on the part of
the Maker or Holder, but only by an agreement in writing signed by the party
against whom enforcement of any modification, amendment, waiver, extension,
change, discharge or termination is sought.
This Note, made in the State of California, shall be construed and
enforced according to the laws of the State of California, and if any provision
of this Note is in conflict with the laws of the State of California or is
otherwise unenforceable for any reason, then such provision shall be deemed
separable from and shall not invalidate any other provisions of this Note.
Maker agrees, covenants, represent and warrants that the Loan proceeds
shall be used solely as set forth in the Loan Agreement and not for personal,
family or household purposes. Maker further represents and warrants as follows:
Maker is a federally-recognized Indian tribe with full power and authority to
give this Note. This Note has been duly authorized, executed and delivered by
Maker and constitutes the valid and legally binding obligations of Maker,
enforceable in accordance with its terms against Maker. The execution and
delivery of this Note by Maker and the performance of its duties and obligations
hereunder do not result in a breach of any of the terms, conditions or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, credit agreement, note or other evidence of indebtedness, or any lease or
other agreement, or any license, permit, franchise or certificate to which Maker
is a party or by which it is bound or to which its properties are subject or
require any authorization or approval under or pursuant to any of the foregoing,
or violate any applicable laws, or require any governmental consent that Maker
has not already obtained.
IN WITNESS WHEREOF, Maker has caused this Note to be duly executed and
delivered by its duly authorized officers as of the day first above written.
DRY CREEK RANCHERIA BAND OF POMO
INDIANS, a federally-recognized Indian tribe
By:____________________________________
Name:__________________________________
Title:_________________________________
3
EXHIBIT C
Tribal Government and Regulatory Expenses
Start-up Budget Tribal Administration/Relocated Members/Gaming Commission 9/25/01
Exhibit "C"
Relocated Members Budget August September October November December January February March
Nine Family's 302,500 100,000 22,500 22,500 22,500 22,500 22,500 22,500 22,500
Xxxxx Dollar 27,500 10,000 2,500 2,500 2,5OO 2,500 2,500
Xxxxx Dollar 27,500 10,000 2,500 2,500 2,500 2,500 2,500
Xxxx Xxxxx 173,500 6,000 155,000 2,500 2,500 2,500 2,500 2,500
Xxxx Xxxxx 27,500 10,000 2,500 2,500 2,500 2,500 2,500
Xxxxx Xxxxx 27,500 10,000 2,500 2,500 2,500 2,500 2,500
Xxxxxx Xxxx 27,500 10,000 2,500 2,500 2,500 2,50O 2,500
Xxxxxx Xxxxxx 172,500 155,000 2,500 2,500 2,500 2,500 2,500
Xxxxx Xxxxxxxx 27,500 10,000 2,500 2500 2,500 2,500 2,500
Monthly Totals $100,000 $28,500 $392,500 $42,500 $42,500 $42,500 $42,500 $42,500
------------------------------------------------------------------------------
Total $ 818,600
=========
Tribal Administration
Staff (wages) 101,700 11,300 11,300 11,300 11,300 11,300 11,300 11,300
Accounts Payable 49,820 16,606 16,606 16,608 --
Payback Funds (BIA Program) 111,000 27,750 27,750 27,750 27,750 -- -- --
Past Due Professional Services 10,000 10,000 --
*Attorney Fees (Holland & Knight) 200,000 200,000
CILS 40,000 10,000 -- 20,000 10,000
Past Due Living Expense 11,915 11,915
Property Taxes 15,000 15,000
Phone/Communications 4,500 500 500 500 500 500 500 500
Travel Expense 6,000 1,000 1,000 1,000 1,000 1,000
Replacement Funds (Tribal) 28,956 4,826 4,826 4,826 4,826 4,826 4,826 --
Meeting Expense 6,300 700 700 700 700 700 700 700
Audit Costs 4,552 -- 4,552
Monthly Totals $293,597 $61,682 $102,236 $56,076 $18,326 $18,326 $13,500
------------------------------------------------------------------------------
Total $ 589,743
=========
Relocated Members April May June Total Budget
Nine Family's 22,500 22,500 --
Xxxxx Dollar 2,500 2,500 --
Xxxxx Dollar 2,500 2,500 --
Xxxx Xxxxx 2,500 2,500 --
Xxxx Xxxxx 2,500 2,500 --
Xxxxx Xxxxx 2,500 2,500 --
Xxxxxx Xxxx 2,500 2,500 --
Xxxxxx Xxxxxx 2,500 2,500 --
Xxxxx Xxxxxxxx 2,500 2,500 --
Monthly Totals $42,500 $42,500 $ --
--------------------------
Total $818,500
========
Tribal Administration
Staff (wages) 11,300 11,300 --
Accounts Payable
Payback Funds (BIA Program) --
Past Due Professional Services
*Attorney Fees (Holland & Knight)
CILS
Past Due Living Expense
Property Taxes
Phone/Communications 500 500
Travel Expense 1,000
Replacement Funds (Tribal) --
Meeting Expense 700 700
Audit Costs
Monthly Totals $13,500 $12,500 --
--------------------------
Total $589,743
========
Start-up Budget
Tribal Administration/Relocated Members/Gaming Commission
9/25/01
Exhibit "C"
Budget August September October November December January February
------ ------ --------- ------- -------- -------- ------- --------
Tribal Gaming Commission
Commissioners (3) 135,416 10,833 10,833 16,250 16,250 16,250 16,250
Secretary (1) 20,412 2,916 2,916 2,916 2,916
Investigators (5) 32,076
Compliance Agent (3) 17,500
Auditor(1) 12,498
Administrator(1) 7,500
Equipment/Supplies 85,000 12,142 12,142 12,142 12,142
Professional Services
Training 40,000 10,000
Background lnvestigations 75,000 10,714 10,714 10,714 10,714
Misc. 50,000 8,333 8,333 8,333
Monthly Totals 10,833 10,833 42,022 50,355 50,355 60,355
------------------------------------------------------------------
Total $ 476,402
==========
Monthly Grand Totals $100,000 $332,930 $465,015 $186,758 $148,931 $111,181 $121,181
----------------------------------------------------------------------------
Total Budget $1,883,645
==========
Current Funds Available
Dry Creek Casino LLC $ 420,000 $ 90,000 $ 90,000 $ 90,000
Current Expenditures
Relocated Members S100,000 $ 28,500 $ 392,500 $ 42,500 $ 42,500 $ 42,500 $ 42,500
Tribal Administration $293,597 $ 61,682 $ 102,236 $ 56,076 $ 18,326 $ 18,326
Gaming Commission 10,833 42,022 50,355 50,355 60,355
Required C/F from Available Funds $320,000 $ 87,903 $(287,112) $(383,870) $(532,801) $(643,982) $(765,163)
March April May
----- ----- ---
Tribal Gaming Commission
Commissioners (3) 16,250 16,250 16,250 --
Secretary (1) 2,916 2,916 2,916
Investigators (5) 2,916 14,580 14,580
Compliance Agent (3) 2,500 7,500 7,500
Auditor(1) 4,166 4,166 4,166
Administrator(1) 3,750 3,750
Equipment/Supplies 12,142 12,142 12,142
Professional Services
Training 15,000 15,000
Background lnvestigations 10,714 10,714 10,714
Misc. 8,333 8,333 8,333
Monthly Totals 74,937 95,351 8,0351 --
------------------------------------
Total $ 475,402
=========
Monthly Grand Totals $130,937 $151,351 $135,351
------------------------------------
Total Budget Total $1,883,645
=========
Current Funds Available
Dry Creek Casino LLC
Current Expenditures
Relocated Members $ 42,500 $ 42,500 $ 42,500
Tribal Administration $ 13,500 $ 13,500 $ 12,500
Gaming Commission 74,937 95,351 80,351
Required C/F from Available Funds $(896,100) $(1,047,451) $(1,182,802)
* Partial payment w/ balance deferred until permanent financing.
EXHIBIT D
Security Agreement made by Dry Creek Rancheria Band of Pomo Indians in favor of
Dry Creek Casino, LLC, dated August 26, 2001
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement"), dated as of August 26,
2001, is entered into by and between DRY CREEK RANCHERIA BAND OF POMO INDIANS, a
federally-recognized Indian tribe with an address at 000 Xxxxx Xxxx, #X,
Xxxxxxxxxx, Xxxxxx Xxxxxx, Xxxxx of California 95448 ("Debtor"), and DRY CREEK
CASINO, LLC, which has an address at c/o Nevada Gold & Casinos, Inc., 0000 Xxxx
Xxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000 ("Secured Party"). Capitalized
terms used herein without a definition shall have the meanings ascribed to them
in that certain Development and Loan Agreement dated as of August 26, 2001
("Loan Agreement") by and between Debtor and Secured Party.
WHEREAS, pursuant to the Loan Agreement and in connection with Debtor's
purchase of certain of the Collateral, Secured Party is and will be making the
Development Advances ("Loan") to Debtor, which Loan is evidenced by that certain
Note dated as of the date hereof ("Note" and together with the Loan Agreement
and this Agreement, the "Loan Documents"); and
WHEREAS, it is one of the conditions precedent to Secured Party's
making of such Loan to Debtor that Debtor execute and deliver this Agreement;
NOW, THEREFORE, in consideration of the above premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by Debtor, Debtor hereby represents, warrants and grants to and
agrees and covenants with Secured Party as follows:
Section 1. Grant of Security. To secure the prompt and
complete payment, observance and performance when due (whether at
stated maturity, by acceleration or otherwise) of all of the
obligations ("Obligations") with respect to the Loan under the Loan
Documents, Debtor hereby collaterally assigns and pledges to Secured
Party, and grants to Secured Party a security interest and lien in and
to, the Collateral.
Section 2. Representations and Warranties. The Debtor
represents and warrants to Secured Party as follows:
(a) Name; Taxpayer ID Number. The correct and complete name of
Debtor is set forth in the first paragraph of this Agreement, and
Debtor does not conduct and, during the five-year period immediately
preceding the date of this Agreement, has not conducted, business under
any trade name or other fictitious name. The Internal Revenue Service
taxpayer identification number, as applicable, of Debtor is 94 2422476.
(b) Liens. None of the Collateral is, as of the date hereof,
subject to any Lien other than the security interest granted herein in
favor of Secured Party and any enforceable Third Party Liens, as set
forth in Section 2.1.2 of the Loan Agreement. No financing statement
(other than that in favor of Secured Party) under the Uniform
Commercial Code of any jurisdiction which names Debtor as debtor and
covers any of the Collateral, or any other notice, has been filed and
is still effective in any state or other
jurisdiction, and Debtor has not signed any such financing statement or
notice, other than in connection with the Sonoma Canyon Documents and
the Sonoma Falls Documents.
(c) Tribal Administrative Office. The tribal administrative
office and principal place of business of Debtor and its books and
records are located at the address set forth in the first paragraph of
this Agreement.
(d) Places of Business. The addresses (including the
applicable county) of the sole place of business of Debtor are set
forth in the first paragraph of this Agreement.
(e) Security Interest. Subject to subsection (b) above, it is
the intent of Debtor that this Agreement create a valid and perfected
first-priority security interest in the Collateral, securing the
payment of the Obligations, and all filings and other actions necessary
or desirable to perfect such security interest under the Uniform
Commercial Code as enacted in any relevant jurisdiction have been duly
taken.
(f) No Disputes. Except as may arise as a result of subsection
(b) above, no dispute, right of setoff, counterclaim or defenses exist
with respect to all or any part of the Collateral.
(g) Loan Proceeds. Certain of the Loan proceeds shall be used
to purchase certain Furnishings and Equipment.
(h) Intended Purpose. The Collateral will be not used or
bought for personal, family or household purposes.
(i) Due Authorization. Debtor is a federally-recognized Indian
tribe with full power and authority to enter into this Agreement. This
Agreement has been duly authorized, executed and delivered by Debtor
and constitutes the valid and legally binding agreement of Debtor,
enforceable in accordance with its terms against Debtor. The execution
and delivery of this Agreement by Debtor and the performance of its
duties and obligations hereunder do not result in a breach of any of
the terms, conditions or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, credit agreement, note or other
evidence of indebtedness, or any lease or other agreement, or any
license, permit, franchise or certificate to which Debtor is a party or
by which it is bound or to which its properties are subject or require
any authorization or approval under or pursuant to any of the
foregoing, or violate any Applicable Law, or require any governmental
consent that Debtor has not already obtained.
Section 3. Continued Priority of Security Interest.
(a) Subject to the existence of any enforceable Third Party
Liens, the security interest granted herein shall at all times be
valid, perfected and of first priority and enforceable against Debtor
and all other Persons, in accordance with the terms of this Agreement,
as security for the Obligations.
2
(b) Debtor shall, at its sole cost and expense, take all
actions that may be necessary or desirable, or that Secured Party may
request, so as at all times to maintain the validity, perfection,
enforceability and priority of the Security Interest in the Collateral
in conformity with the requirements of Section 3(a), or to enable
Secured Party to exercise or enforce its rights hereunder, including
without limitation:
(1) Paying all taxes, assessments and other claims lawfully
levied or assessed on any of the Collateral;
(2) Obtaining landlords', mortgages', mechanics', bailees',
warehousemen's or processors' releases, subordinations or waivers with
respect to any or all of the Collateral, in form and substance
satisfactory to Secured Party; and
(3) Executing and delivering financing statements, pledges,
designations, hypothecations, notices and assignments, in each case in
form and substance satisfactory to Secured Party, relating to the
creation, validity, perfection, priority or continuation of the
Security Interest under the Uniform Commercial Code.
(c) Secured Party is hereby authorized to execute, file and
record in all necessary and appropriate jurisdictions (as determined
by Secured Party) one or more financing or continuation statements (or
any other document or instrument referred to in Section 3(b)(3) above)
in the name of Debtor and to sign Debtor's name thereto.
(d) The Debtor shall xxxx its books and records as may be
necessary or appropriate to evidence, protect and perfect the Security
Interest and shall cause its financial statements to reflect the
Security Interest.
Section 4. Covenants Regarding Collateral Generally.
(a) Delivery of Instruments. In the event any of the
Collateral becomes evidenced by a promissory note, trade acceptance or
any other instrument, Debtor will immediately thereafter deliver such
instrument to Secured Party, appropriately endorsed to Secured Party.
(b) Defense of Title. The Debtor shall at all times be the
sole owner of the Collateral and shall defend, at its sole cost and
expense, its title in and to, and the Security Interest in, the
Collateral against the claims and demands of all other Persons.
3
(c) Maintenance and Service of Collateral. The Debtor shall
maintain or cause to be maintained the Collateral in good and workable
condition and repair (and in accordance with the maintenance schedule
and procedure recommended by the seller of the Collateral), with
reasonable allowance for wear and tear, and shall exercise proper
custody over the Collateral.
(d) Insurance. The Debtor shall at all times maintain
insurance covering the Collateral against such insurable losses as is
required by the Loan Agreement and the other Financing Documents and as
is consistent with commercially reasonable and sound business practice,
in amounts (which shall not be less than the aggregate amount of the
Obligations) and under policies issued by Debtor's present insurers or
other insurers reasonably acceptable to Secured Party. All premiums on
such insurance shall be paid by Debtor and certified copies of the
policies, or other evidence of insurance acceptable to Secured Party,
shall be provided to Secured Party promptly upon Secured Party's
request. The Debtor shall not use or permit the Collateral to be used
unlawfully or outside of any insurance coverage. All insurance policies
required under this Section shall contain loss payable clauses on
standard loss payee forms or other forms satisfactory to Secured Party,
naming Secured Party as loss payee, and providing that:
(1) All proceeds thereunder shall be payable directly to
Secured Party;
(2) No such insurance shall be affected by any act or neglect
of the insured or owner of the property described in such policy;
(3) Such policies and loss payable clauses may not be
canceled, amended or terminated with respect to Secured Party unless at
least thirty days' prior written notice is given to Secured Party; and
(4) There shall be no recourse against Secured Party for
payment of premiums or other amounts with respect thereto.
Any proceeds of insurance referred to in this Section which are paid to
Secured Party shall be applied to the payment or prepayment of the Obligations
in accordance with Section 9 hereof.
(e) Location of Office. The Debtor's tribal administrative
office, principal place of business, and its books and records relating
to the Collateral shall continue to be kept at the address set forth in
the first paragraph of this Agreement and Debtor will not change the
location of such office and place of business or such books and records
without giving Secured party forty five (45) days' prior written
notice thereof.
(f) Change of Name, Structure, Etc. Without giving Secured
Party sixty day's prior written notice, Debtor shall not (i) change its
name, identity or structure or (ii) conduct business under any trade
name or other fictitious name.
(g) Inspection. Secured Party (by any of its officers,
employees, agents or representatives) shall have the right, to the
extent that the exercise of such right shall be
4
within the control of Debtor, upon 24 hours' prior written notice and
during normal business hours, to inspect the Collateral; all records
and files relating thereto and the premises upon which any of the
Collateral is located.
(h) Merger, Consolidation and Sale of Assets. The Debtor shall
not merge or consolidate with any other Person or sell, lease or
transfer or otherwise dispose of the Collateral or all or a substantial
portion of its assets to any Person other than in the ordinary course
of business.
Section 5. Secured Party Appointed Attorney-in-Fact. The
Debtor hereby irrevocably appoints Secured Party Debtor's
attorney-in-fact, with full authority in the place and stead of Debtor
and in the name of Debtor or otherwise, from time to time upon the
occurrence and during the continuance of an Event of Default in Secured
Party's discretion to take any action and to execute any instrument or
document which Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement or to exercise any rights and
remedies Secured Party may have under this Agreement or Applicable Law,
including, without limitation: (i) to obtain and adjust insurance
required to be maintained pursuant to Section 4(d) hereof; (ii) to ask,
demand, collect, xxx for, recover, compromise, receive and give
acquittance and receipts for moneys due and to become due in respect of
the Collateral; and (iii) to file any claims or take any action or
institute any proceedings which Secured Party may deem necessary or
desirable for the foreclosure of the Collateral or otherwise to enforce
the rights of Secured Party with respect to the Collateral. The
power-of-attorney granted hereby shall be irrevocable and coupled with
an interest.
Section 6. Secured Party May Perform. If Debtor fails to
perform any agreement or covenant contained herein, Secured Party may,
without notice to Debtor, itself perform, or cause the performance of,
such agreement or covenant, and the expenses of Secured Party incurred
in connection therewith shall be payable by Debtor under Section 11
hereof.
Section 7. Secured Party's Duties. The powers conferred on
Secured Party hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon Secured Party to exercise
any such powers. Except for the safe custody of the Collateral in its
possession and the accounting for moneys actually received by it
hereunder, Secured Party shall have no duty as to the Collateral.
Secured Party shall be deemed to have exercised reasonable care in the
custody of the Collateral in its possession if the Collateral is
accorded treatment substantially equal to that which Secured Party
accords its own property (it being understood that Secured Party shall
be under no obligation to take any necessary steps to preserve rights
against prior parties or any other rights pertaining to the Collateral,
but may do so at its option, and all expenses incurred in connection
therewith shall be for the sole account of Debtor and shall be added to
the Obligations).
Section 8. Remedies. Secured Party may take any or all of the
following actions upon the occurrence of an Event of Default hereunder.
5
(a) Acceleration.
(1) Automatic. Upon an Event of Default (or if the Event of
Default is other than the failure to pay money, upon Debtor's failure
to commence and diligently prosecute the cure of the Event of Default
within 10 days after written notice from Secured Party), then all of
the Obligations shall be due and payable without presentment, demand,
protest, or other notice of any kind, all of which are expressly
waived, anything in this Agreement or any other agreement evidencing or
securing the Obligations to the contrary notwithstanding.
(2) Optional. If any other Event of Default shall have
occurred and be continuing, Secured Party may declare all of the
Obligations to be forthwith due and payable, whereupon the same shall
immediately become due and payable without presentment, demand, protest
or other notice of any kind, all of which are expressly waived,
anything in this Agreement or any other agreement evidencing or
securing any Obligations to the contrary notwithstanding.
(b) Possession.
(1) Entry. Secured Party may enter upon any premises on which
the Collateral may be located and, without resistance or interference
by Debtor, take physical possession thereof and maintain such
possession on such premises or move the same or any part thereof to
such other place or places as Secured Party shall choose, without being
liable to Debtor on account of any loss, damage or depreciation that
may occur as a result thereof, other than for actions that were not
taken in good faith and so long as Secured Party acts in a commercially
reasonable manner.
(2) Assembly. The Debtor shall, upon request of and without
charge to Secured Party, assemble the Collateral and maintain or
deliver it into the possession of Secured Party or any agent or
representative of Secured Party at such place or places as Secured
Party may designate and as are reasonably convenient to both Secured
Party and Debtor.
(3) Warehousing. Secured Party may, at the expense of Debtor,
cause the Collateral to be placed in a public or field warehouse, and
Secured Party shall not be liable to Debtor on account of any loss,
damage or depreciation that may occur as a result thereof, other than
for actions that were not taken in good faith and so long as Secured
Party acts in a commercially reasonable manner.
(c) Use of Premises and Patents. Secured Party may without
notice, demand or other process, and without payment of any rent or any
other charge enter any of Debtor's premises and, without breach of the
peace, until Secured Party completes the enforcement of its rights in
the Collateral and remain on such premises to prepare the Collateral
for disposition and disposing thereof.
6
(d) Cash Collateral. Secured Party may apply any cash
Collateral to the payment of the Obligations in any order in which
Secured Party may elect or use such cash in connection with the
exercise of any of its other rights hereunder.
(e) Rights as a Secured Creditor. Secured Party may exercise
all of the rights and remedies of a secured party under the Uniform
Commercial Code and under any other Applicable Law, including, without
limitation, the right, without notice except as specified below and
with or without taking possession thereof, to sell the Collateral or
any part thereof in one or more public or private sales at any location
chosen by Secured Party, for cash, on credit or for future delivery,
and at such price or prices and upon such other terms as Secured Party
may deem commercially reasonable. The Debtor agrees that, to the extent
notice of sale shall be required by law, at least ten (10) days notice
to Debtor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification. Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Secured
Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was
so adjourned.
(f) Waiver of Marshaling. The Debtor hereby waives any right
to require any marshaling of assets and any similar right.
(g) Appointment of Receiver. Secured Party shall be entitled
to the appointment of a receiver, to take possession of all or any
portion of the Collateral and to exercise such power as the court shall
confer upon such receiver.
Section 9. Application of Proceeds. All proceeds from each
sale of, or other realization upon, all or any part of the Collateral
following an Event of Default shall be applied or paid over as follows:
(a) First, to the payment of all costs and expenses incurred
in connection with such sale or other realization, including attorney's
fees and disbursements;
(b) Second, to the payment of the interest due upon any of the
Obligations in any order which Secured Party may elect;
(c) Third, to the payment of the principal due upon any of the
Obligations in any order which Secured Party may elect; and
(d) Fourth, the balance (if any) of such proceeds shall be
paid to Debtor or to whomsoever may be legally entitled thereto.
Section 10. Rights Cumulative. The rights and remedies of
Secured Party under this Agreement and the Note (collectively, the
"Loan Documents") shall be cumulative and not exclusive of any rights
or remedies which it would otherwise have, including, but not limited
to, those rights afforded by the Uniform Commercial Code and
7
other Applicable Laws. In exercising its rights and remedies, Secured
Party may be selective and no failure or delay by Secured Party in
exercising any right shall operate as a waiver of it, nor shall any
single or partial exercise of any power or right preclude its other or
further exercise or the exercise of any other power or right. Any and
all periods of notice, grace and cure contained herein and in the other
Loan Documents shall run concurrently, and not consecutively.
Section 11. Expenses. The Debtor will pay, on demand, all
out-of-pocket expenses incurred by Secured Party in connection with:
(a) the collection or enforcement of the Obligations including fees and
disbursements of counsel to Secured Party; and (b) the exercise by
Secured Party of any right or remedy granted to it under this
Agreement.
Section 12. Amendments, Etc. No amendment or waiver of any
provision of this Agreement nor consent to any departure by Debtor
herefrom shall in any event be effective unless the same shall be in
writing and signed by the parties hereto, and then such waiver or
consent shall be effective only in the specific instance and for the
specific purpose for which it is given.
Section 13. Notices. Except as otherwise provided herein, all
notices and communications required or permitted under this Agreement
shall be in writing and shall be hand delivered, sent by facsimile
transmission or nationally recognized courier service, or mailed, by
prepaid registered or certified first class mail, return receipt
requested, properly addressed to the respective parties, at the
addresses set forth in the first paragraph of this Agreement (or at
such other addresses, if any, set forth in the most recent notice of
address change provided by the addressee party). All such notices and
communications shall be deemed received when actually received (or
delivery is refused) by the addressee party on a Business Day.
Section 14. Continuing Security Interest. This Agreement shall
create a continuing security interest in the Collateral and shall (i)
remain in full force and effect until indefeasible payment in full of
the Obligations, (ii) be binding upon Debtor, its successors and
assigns and (iii) inure to the benefit of Secured Party, and its
successors and assigns. The Debtor's successors and assigns shall
include, without limitation, a receiver, trustee or
debtor-in-possession thereof or therefor.
Section 15. Applicable Law; Severability. This Agreement shall
be governed by, and construed in accordance with, the laws of the State
of California. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid
under Applicable Law, but if any provision of this Agreement shall be
prohibited by or invalid under Applicable Law, such provisions shall be
ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provisions or the remaining
provisions of this Agreement.
(a) Litigation/Waivers. (a) SECURED PARTY AND DEBTOR BOTH
ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY WHICH ARISE UNDER THIS
AGREEMENT OR THE RELATIONSHIP OF DEBTOR AND
8
SECURED PARTY ESTABLISHED HEREBY AND BY THE OTHER LOAN DOCUMENTS WOULD
BE BASED UPON DIFFICULT AND COMPLEX ISSUES. ACCORDINGLY, EACH OF
SECURED PARTY AND DEBTOR HEREBY WAIVES ITS RESPECTIVE RIGHT TO A TRIAL
BY JURY.
(b) THE FOREGOING WAIVERS HAVE BEEN MADE WITH THE ADVICE OF
COUNSEL AND WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES
THEREOF.
Section 16. Indemnification. The Debtor agrees to indemnify
Secured Party, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
or disbursements of any kind or nature whatsoever which may at any time
be imposed on, incurred by, or asserted against Secured Party in any
way relating to or arising out of the Debtor's business, the
Collateral, or any action taken by Secured Party pursuant to the terms
of this Agreement; provided, however, that Debtor shall not be liable
to the extent such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
result solely from Secured Party's negligent or willful misconduct.
Without limiting the generality of the foregoing, Debtor agrees to
reimburse Secured Party promptly upon demand for any out-of-pocket
expenses (including reasonable counsel fees and disbursements) incurred
by Secured Party in connection with its enforcement of any terms and
conditions of this Agreement. The agreements in this Section shall
survive the termination of this Agreement. Secured Party agrees to give
Debtor prompt notice of any suit or cause of action brought against
Secured Party which is covered by this Section.
Section 17. Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original and all of which,
taken together, shall constitute but one and the same instrument.
Section 18. Definitions. For the purposes of this Agreement,
the terms listed below shall have the following meanings:
"Applicable Law" means all applicable provisions of constitutions,
statutes, laws, rules, regulations and orders of all governmental (including
tribal) bodies and all orders, rulings and decrees of all courts and
arbitrators.
"Business Day" means any day other than Saturday, Sunday or other day
on which banks in San Francisco, California are authorized or required to close.
"Collateral" means all of Debtor's right, title and interest in and to
all Net Revenues and all Furnishings and Equipment (as such terms are defined in
the Loan Agreement), now or hereafter acquired, and any and all additions,
substitutions, replacements and proceeds thereto, thereof or therefrom
(including without limitation, any and all insurance proceeds).
"Event of Default" means any of the following events, whatever the
reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to
9
any judgment or order of any court or any order, rule or regulation of any
government or non-governmental body:
(a) the occurrence of any "Event of Default" or other default
under any of the Loan Documents.
(b) the failure of Debtor to perform or observe any covenant,
obligation, agreement or undertaking under this Agreement or any other
Loan Document; or
(c) a breach of any representations or warranties made by
Debtor herein or in any of the Loan Documents.
"Lien", as applied to the property of any Person, means any security
interest, lien, encumbrance, mortgage, deed to secure debt, deed of trust,
pledge, charge, conditional sale or other title retention agreement, or other
encumbrance of any kind, or upon the products, income or profits therefrom or
any agreement to convey any of the foregoing or any other agreement or interest
covering such property which is intended to provide collateral security for the
obligation of such Person.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or unincorporated organization, or a
government or any agency or political subdivision thereof.
"Security Interest" means the Lien of Secured Party upon, and the
collateral assignments to Secured Party of, the Collateral effected hereby or
pursuant to the terms hereof.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect in the State of California, as the same may be amended from time to time,
unless otherwise set forth herein to the contrary. All terms not otherwise
defined herein and which are defined in the Uniform Commercial Code are used
herein with the meanings ascribed to them in the Uniform Commercial Code.
IN WITNESS WHEREOF, Debtor has caused this Agreement to be duly
executed and delivered by its duly authorized officers as of the day first above
written.
DRY CREEK RANCHERIA BAND OF POMO
INDIANS, a federally-recognized Indian tribe
By:_________________________________
Name:_______________________________
Title:______________________________
10
EXHIBIT E
Engagement Letter among Xxxxxx Xxxxxxx Xxxxxxxx Xxxxxxx, Inc., Dry Creek
Rancheria Band of Pomo Indians, and Dry Creek Casino, LLC, regarding placement
of Loan in the aggregate principal amount of $27,500,000
[MJSK Letterhead]
August 22, 2001
Xxxxxxx X. Xxxxx
Dry Creek Rancheria Band of Pomo Indians
000 X Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
RE: Temporary Casino- Engagement Letter
Dear Chairman Xxxxx:
Xxxxxx Xxxxxxx Xxxxxxxx Xxxxxxx (the "Placement Agent"), welcomes the
opportunity to represent the Dry Creek Band of Pomo Indians (the "Borrower") in
conjunction with the placement of an aggregate amount of approximately
$27,5000,000 in debt financing (the "Debt") secured by certain gaming facilities
revenues from the Temporary Casino on Trust land located approximately one
hour's drive north of San Francisco (the "Property") and other collateral
otherwise as described in the Term Sheets attached hereto (the "Financing")
which financing shall be fully guaranteed as to the payment of principal and
interest when due by Nevada Gold and Casinos, Inc. (the "Guarantor"). Pursuant
to this Engagement Letter, we will act as agent to make an offering of the
Financing and we will work with you, your legal counsel and other outside
advisors or consultants as you may choose to employ, to structure and market the
Financing.
PLACEMENT AGENT RELATIONSHIP
Borrower hereby engages Placement Agent as the placement agent for the Debt. The
Placement Agent will perform all of its duties in accordance with the highest
professional standards and all applicable securities laws.
Placement Agent expects to perform the following explicit functions and other
appropriate services which may be necessary to assist you in carrying out the
Financing and the placement of the Debt. Assuming the full and continuing
cooperation of each of the parties, Placement Agent will:
o Work closely with Borrower to fully develop a financing plan generally
described on the attached Term Sheets that best achieve the Borrower's
goals.
o Assist the Borrower in retaining the professional services necessary for
execution of all aspects of the financing plan.
o Advise Borrower regarding the optimal structure of all components of the
Financing.
o Keep Borrower immediately advised on any unusual market generated
opportunity to improve the performance of the Financing.
o Coordinate the preparation of legal documentation and disclosure materials
by Placement Agent counsel and Borrower's counsel.
o Present the Financing to the marketplace in the manner which will minimize
the cost of the Financing.
o Coordinate and direct all other Financing activities in order to insure an
efficient and timely closing of the Financing.
TIMING AND CLOSING CONDITIONS
Placement Agent expects to and will employ its full resources and undertakes its
best efforts to close the Financing no later than October 31, 2001. The closing
will be subject to completion of Placement Agent's due diligence review and
final approval by Placement Agent's commitment committee. This does not
constitute a legally binding commitment to close the Financing by such date.
This agreement, as represented by this Engagement Letter, will be exclusive
through the [sic] 60 days following the date of execution hereof, subject to
ratification by Borrower's Tribal Counsel, by the Borrower or such other later
date as we may mutually establish. During this exclusive period, Borrower will
not approach other lenders, securities firms or other parties to offer the Debt
or otherwise in connection with this financing.
COMPENSATION FOR PLACEMENT AGENT SERVICES
Placement Agent compensation for this Financing shall be 3.5% of the principal
amount of debt provided. It is further acknoweldged and agreed that, in the
event that all of the debt having been sold, a closing date having been set, the
placement agent fees of Xxxxxx Xxxxxxx Xxxxxxxx Xxxxxxx will have been earned at
that time. The Placement Agent fees, having been earned, are due and payable at
loan closing, expected to be no later than October 23, 2001; provided, however,
that in the event this agreement in terminated by Borrower following acceptance
by Borrower of a funding commitment from a qualified lender, the Placement Agent
fees shall be payable immediately upon such termination.
NON-CIRCUMVENTION
Should Borrower complete a financing within twelve months of the completion or
termination of this engagement with a Lender or investors introduced to the
Borrower as a result of this engagement or from whom the Placement Agent
provides loan or bond purchase commitments, without the involvement of the
Placement Agent pursuant to the terms of a separate engagement letter, then
Borrower shall Agent 2% of the par value of such financing; provided, however,
that this provision shall be of no force and effect in the event that the
Borrower is prohibited by court order from completing the Temporary Casino
contemplated to be financed hereunder.
The following procedure shall be followed as to identifying and introducing to
the Borrower potential investors and lenders. First, Placement Agent will inform
the Borrower and Borrower's counsel of the identity of the proposed investor or
lender. If the proposed investor or lender is acceptable to the Borrower and has
not been previously introduced to the Borrower, the Borrower will promptly so
notify Placement Agent in writing; thereafter Placement Agent will be protected
as to its compensation as provided above for any Financing resulting from
Placement Agent's identification of such party or parties if such transaction is
consummated within 12 months from the date of this engagement letter pursuant to
the limitations set forth in the immediately preceding paragraph.
ALLOCATION AND PAYMENT OF EXPENSES
The Placement Agent will pay any out of pocket expenses of Placement Agent.
Borrower shall pay the fees and expenses of Placement Agent's counsel. The
Borrower's responsibility for Placement Agent's counsel fees shall be capped at
a fee not to exceed $50,000 plus disbursements. In order to secure the payment
of such costs, Borrower shall deliver to Placement Agent a non-refundable
expense deposit of $10,000 at the time of execution of this engagement letter.
Borrower shall not be responsible for any other expenses of Placement Agent.
In addition, Borrower expects to incur certain additional transaction costs
beyond the control of the Placement Agent and outside the scope of this
engagement letter. The Placement Agent accepts no responsibility for the payment
of such costs. Such costs may include financial advisory fees and expenses, fees
and disbursements of bond counsel, and of Tribal Counsel, fees and disbursements
of counsel, if any, to the lead bank or investor, cost of printing, copying and
distribution of loan and bond offering materials, trustee fees, any other fees
of consultants to the Borrower, out-of-pocket expenses of Borrower
representatives and other loan closing costs and filing and registration fees.
CONFIDENTIALITY
All information provided by Borrower shall be kept confidential and shall only
be furnished by Placement Agent to prospective lenders who will agree to
maintain such confidentiality.
TERMINATION
This Letter Agreement may be terminated at any time after the exclusivity period
described above, by either party by written notice to the other party, however,
such termination shall affect: (i) the obligation to pay any amounts due
Placement Agent under the sections entitled "Non-Circumvention" and "Allocation
and Payment of Expenses", and (ii) the representations and warranties regarding
confidentiality, limitation of liability, or governing law and venue. Such
termination shall also not affect the obligation to pay any amount due Placement
Agent under the section entitled "Compensation for Placement Agent Services" if
such termination occurs through no fault of Placement Agent after acceptance by
the Borrower of a funding commitment. In no event shall Placement Agent be
entitled to payment of fees under the "Non-Circumvention" provision and the
entitled "Compensation for Placement Agent Services" provision for the same
[sic] (i.e., no double payment).
LIMITED LIABILITY AND INDEMNIFICATION
The Borrower and the Guarantor each hereby represent and warrant that all
information provided to the Placement Agent pertaining to the Borrower and the
Guarantor, respectively, shall be true and correct and the Borrower and the
Guarantor, respectively, shall indemnify and hold Placement Agent free and
harmless from and any all obligations, costs, liability, expenses or claims,
judgment and reasonable attorneys' fees arising from the disclosure or use of
such information provided by such party. Placement Agent shall indemnify and
hold the Borrower free and harmless with respect to any obligations, costs,
claims, judgments or reasonable attorneys' fees based upon materials or
representations made by the Placement Agent, except where such claim or action
may arise out of materials or information provided to the Placement Agent by the
Borrower.
To the fullest extent permitted by law, the Tribe, the Guarantor and each
Affiliate of either of them shall jointly and severally fully protect,
reimburse, indemnify, defend and hold harmless Placement Agent and its
respective members, partners, affiliates, officers, directors, agents, sureties,
servants and employees and successors and assigns for, from and against any and
all liabilities, claims, damages, demands, losses, costs or expenses (including,
without limitation, reasonable attorneys' fees for counsel of Placement Agent's
choosing), arising out of or resulting from, either directly or indirectly, the
entering into or performance of this Agreement, or any Third Party Dispute
(defined below), whether or not arising from the negligence or any other act or
omission of the Placement Agent, provided that the foregoing indemnity will not,
as to any indemnified person, apply to losses, claims, damages, liabilities or
related expenses to the extent they are found by a final, non-appealable
judgment of a court to arise from the willful misconduct or gross negligence of
such indemnified person.
"Third Party Disputes" means all disputes or claims relating directly or
indirectly, to entering into or the execution of this Agreement, the Financing,
the Property or the conduct of the Borrower's gaming operations as contemplated
hereunder and brought by an entity not a party to this Agreement, against an
indemnified person.
APPLICABLE LAW, DISPUTE RESOLUTION AND WAIVER OF SOVEREIGN IMMUNITY
Borrower waives its sovereign immunity from suit and specifies the Federal
District Court in the Northern District of California, and all appellate courts
related thereto, or in the event said court lacks subject matter jurisdiction,
in the Superior Court of California for the County of Sonoma, and all appellate
courts related thereto as its choice of venue and further specifically consents
to the mandatory arbitration of disputes as set forth below.
This waiver is provided for the sole and limited purpose of enforcing the
Borrower's obligations to Placement Agent and Placement Agent's rights under
this Agreement, Nothing contained in this limited waiver shall be construed to
confer any benefit, tangible or intangible, on any person or entity not a party
to this Agreement or as a waiver with respect to any such third person or
entity, and the presence of any third person or entity as a party to any
proceeding shall constitute a revocation and recission of this waiver of
sovereign immunity granted herein with respect only to such third party or
entity.
Borrower hereby waives any requirement of exhaustion of tribal remedies.
Borrower expressly agrees that Placement Agent may seek satisfaction of judgment
arising hereunder from the undistributed and/or future revenues of gaming
facilities of the Borrower (collectively, "Revenues"). These Revenues are
subject to levy, attachment and/or execution under Federal and/or California law
by any of the aforementioned Courts to satisfy any judgment obtained by
Placement Agent against Borrower pursuant to the provisions of this paragraph.
Nothing in this Engagement Letter shall be construed to permit Placement Agent
to encumber or seek satisfaction of judgment from any assets of Borrower other
than the Revenues. Moreover, no interest in land, whether tangible or
intangible, legal or beneficial, vested or contingent, or any occupancy or other
rights or entitlements therein or related thereto, shall be subject to
attachment, execution, lien, judgment or other enforcement or satisfaction of
any kind, in whole or in part, with respect to any claim of Placement Agent
against Borrower on any basis whatsoever,
DISPUTE RESOLUTION
Arbitration. Any dispute, claim or controversy arising out of or relating to
this Agreement or the breach thereof, or the making of this contract including
claims of fraud in the inducement, shall be settled within the State the
California, by arbitration under the rules of commercial arbitration of the
American Arbitration Association (the "AAA"), as modified by this Section. Any
party may, by written notice to the other parties after such a controversy has
arisen hereunder, appoint one arbitrator. The other parties to the controversy
shall, by written notice, within ten (10) days after the receipt of such notice
by the first party, appoint a second arbitrator, and in default of such
appointment, the first arbitrator appointed shall be the sole arbitrator. When
two (2) arbitrators have been appointed, as hereinabove provided, they shall, if
possible, agree on a third arbitrator who shall be appointed by written notice
signed by both of them with a copy mailed to each party hereto within ten (10)
days after such appointment. No arbitrator shall be related to or affiliated
with any party hereto.
The arbitrators shall apply California law and applicable federal law, and shall
follow such rules of discovery and evidence as they may determine. In the event
that the arbitrators are unable to agree upon the rules of discovery and
evidence to follow, they shall follow the rules of discovery and evidence to
follow, they shall follow the rules of discovery and evidence as established by
the AAA, in any, and if the AAA has not established any rules, then the
arbitrators shall follow such rules as the United States District Court for the
State of California would apply. After receiving evidence and hearing witnesses,
in any, the arbitrators shall render their award, accompanied by filings of fact
and a statement of reasons for the decision.
The arbitrators shall have the authority, subject to the limitations provided
above in respect of Borrower's limited waiver of sovereign immunity, to award
any remedy or relief that Tribal, Federal or State Court could order or grant,
including, without limitation, equitable remedies, specific performance of any
obligation created under this Agreement, and the issuance of any injunction.
This Agreement is governed by and construed under the laws of the State of
California, and any action brought by either arty against the other party to
enforce or interpret this Letter Agreement shall be brought in an appropriate
court of such State. In the event of any such action, the prevailing party shall
recover all costs and expenses thereof, including reasonable attorneys' fees
from the losing party.
Respectfully submitted on behalf of
XXXXXX XXXXXXX XXXXXXXX XXXXXXX, INC.
/s/ Xxxxx X. Xxxxx
Vice President
This Engagement Letter is hereby agreed to and accepted on behalf of the Dry
Creek Band of Pomo Indians on this 28 day of August 2001.
By /s/ Xxxxxxx X. Xxxxx
Chairman
This Engagement Letter is hereby agreed to and accepted on behalf of Nevada Gold
and Casinos, Inc. on this 28 day of August, 2001.
By /s/ H. Xxxxxx Xxxx
President
EXHIBIT F
Opinion of Legal Counsel from Holland & Knight LLP in favor of Dry Creek Casino,
LLC, dated August 26, 2001
August 26, 2001 000-000-0000
VIA UPS and VIA ELECTRONIC MAIL
Dry Creek Casino, LLC
0000 Xxxxxxxx Xxxxxxx
Xxxxxxxx Xxxxxxx, XX 00000
Re: Development and Loan Agreement (the "Loan Agreement")
Between Dry Creek Rancheria Band of Pomo Indians ("Tribe")
and Dry Creek Casino, LLC ("Lender") dated as of August 26, 2001.
Ladies and Gentlemen:
We have acted as counsel for the Tribe and, with respect to the Loan Agreement
referred to above and in connection with the preparation, execution and delivery
of the Loan Documents described below. This letter is delivered to you pursuant
to Section 2.5.2(vii) of the Loan Agreement. Capitalized terms not defined in
this letter have the meanings ascribed to them in the Loan Agreement. For
purposes of this opinion, we have reviewed such documents and made such other
investigations as we have deemed appropriate. We have also examined, among other
documents, the following:
a. The Loan Agreement;
b. The Note dated August 26, 2001 issued under the Loan
Agreement to the Lender referred to therein (the "Note");
c. The Security Agreement dated August 26, 2001 made by the
Tribe in favor of the Lender;
d. The financing statement naming the Tribe, as Debtor, and
the Lender, as Secured Party, to be filed in the California
Office of the Secretary of State (the "Financing
Statement");
Dry Creek Casino, LLC
August 26, 2001
Page 2
e. The Articles of Association of the Tribe;
f. Resolution No. 00-00-00-00, adopted by the Tribal Council
(as defined below) on August 26, 2001 (the "Tribal
Resolution");
g. The Dry Creek Gaming Ordinance (the "Ordinance"); and
h. The Compact (as defined in paragraph 9 below).
The documents listed in items a. through c. above are referred to
herein as the "Loan Documents."
As to matters of fact, we have relied on the representations and
warranties made by the parties in the Loan Agreement and on a certificate of a
representative of the Tribe (a copy of which is attached as Schedule I hereto).
We have made no independent investigation of the accuracy or completeness of
such matters of fact.
In rendering the following opinions, we have, with your consent, relied
upon the following assumptions:
(i) each party to the Loan Documents (other than the Tribe) is
duly organized and is validly existing and in good standing in
its jurisdiction of organization;
(ii) each party to any Loan Document (other than the Tribe) has
full power and authority to execute, deliver and perform its
obligations under such Loan Document, and each Loan Document
has been duly authorized by all necessary action on such
party's part and has been duly executed and duly delivered by
it;
(iii) each Loan Document constitutes the valid and binding
obligation of each party to such Loan Document (other than the
Tribe), enforceable against such party in accordance with its
terms;
(iv) each natural person executing a Loan Document or any other
document referred to herein is legally competent to do so;
(v) each party to a Loan Document (other than the Tribe) has
complied with all legal requirements pertaining to its status
as such status relates to its rights to enforce such Loan
Document against the Tribe;
Dry Creek Casino, LLC
August 26, 2001
Page 3
(vi) each document submitted to us for review is accurate and
complete, each such document that is an original is authentic,
each such document that is a copy conforms to an authentic
original, and all signatures on each such document are
genuine;
(vii) there has not been any mutual mistake of fact or
misunderstanding, fraud, duress or undue influence;
(viii) each Loan Document will be enforced in circumstances and in a
manner in which it is commercially reasonable to do so and the
conduct of the parties complies with any requirement of good
faith and fair dealing;
(ix) no lender or developer who is a party to the Loan Documents
or any of them intends such documents to confer on them the
power, rights or control of, and will not be engaging in
conduct that could be construed as constituting that of, a
management contractor under 25 U.S.C. ss. 2711;
(x) there are no agreements or understandings among the parties,
written or oral, and there is no usage of trade or course of
prior dealing among the parties that would, in either case,
define, supplement or qualify the terms of such Loan Document;
(xi) the payment of all required documentary stamps, taxes and
fees imposed upon the execution, delivery, filing or recording
of documents has been made;
(xii) references to the "Uniform Commercial Code" or "UCC" are to
the Uniform Commercial Code as adopted in California;
(xiii) the Lender (i) holds a validly issued license or other
authorization under the Compact and the Ordinance to loan
moneys for gaming related purposes to the Tribe, or (ii) is a
federally regulated or state-regulated bank or savings and
loan, or other federally- or state-regulated lending
institution within the meaning of the Compact; and
(xiv) the Tribe is an organization, as such term is defined in
Section 1201(a)(28) of the Uniform Commercial Code, and not a
registered organization, as such term is defined in Section
9102(a)(70) of the Uniform Commercial Code.
Dry Creek Casino, LLC
August 26, 2001
Page 4
For purposes of this opinion letter, the term "to our knowledge" means
the conscious awareness of facts or other information, at the time of delivery
of this opinion letter, by the lawyers in our firm who have had involvement in
the negotiation and preparation of the Loan Agreement and the other Loan
Documents. Except to the extent expressly set forth herein, we have not
undertaken any independent investigation to determine the existence or absence
of any facts or other information, and no inference as to our knowledge or the
existence or absence of any such facts or other information should be drawn from
the fact of our representation of the Tribe as counsel.
Notwithstanding our opinions expressed herein, we express no opinion
with respect to any of the following:
(a) Waivers of (i) legal or equitable defenses, other than as to
the waiver of the Tribe's sovereign immunity, as set forth in
paragraph 12 below, (ii) rights to damages, (iii) rights to
counter-claim or set-off, (iv) statutes of limitations, (v)
rights to notice, (vi) the benefits of statutory, regulatory,
or constitutional rights, unless and to the extent the
statute, regulation, or constitution explicitly allows waiver,
and (vii) other benefits to the extent they cannot be waived
under applicable law, including, but not limited to, Division
9 of the California Uniform Commercial Code (referred to
herein as "Article 9 of the UCC");
(b) Provisions providing for forfeitures or the recovery of
amounts deemed to constitute penalties or for liquidated
damages;
(c) Except as expressly set forth in paragraph 13 below,
provisions restricting access to courts; waiver of service of
process requirements which would otherwise be applicable; and
provisions otherwise purporting to affect the jurisdiction and
venue of courts;
(d) Any Federal, state or local law relating to taxation, zoning,
land use, the environment, antitrust, securities or ERISA;
(e) Usury laws;
Dry Creek Casino, LLC
August 26, 2001
Page 5
(f) With respect to the opinions set forth in paragraph 13 below:
(i) the right, title or interest of any party in or to any
collateral or the description of such collateral in the Loan
Agreement or the Security Agreement; (ii) the laws of any
other state or the perfection or non-perfection of a security
interest in any collateral subject, whether by virtue of
California law or the law of another state, to the laws of any
state other than the State of California; (iii) the priority
of any security interest or, except as specifically set forth
in paragraph 13 below, the creation, validity, enforceability
or perfection of any security interest; (iv) the creation,
validity, perfection or enforceability of security interests
in fixtures, consumer goods, crops growing or to be grown,
timber to be cut or minerals or the like (including oil and
gas), accounts resulting from the sale thereof, or real
property held in trust by the United States of America (the
"United States") for the benefit of the Tribe; or (v) the
priority of any security interest in, or, except as provided
in paragraph 13 below, the creation, validity, perfection or
enforceability of any security interest sought to be created
in, any patents, trademarks, trade names, service marks,
copyrights, deposit accounts, insurance policies or any other
items of property to the extent that a security interest
therein is excluded from the coverage of Article 9 of the UCC,
including in particular those items of property set forth in
Sections 9109 of Article 9 of the UCC;
(g) We wish to point out that the security interest in the
collateral described in the Loan Agreement, in which the Tribe
acquires rights after the commencement of a case with respect
to the Tribe under the U.S. Federal Bankruptcy Code or within
the applicable preference period relating thereto may be
limited by Section 552 of the Bankruptcy Code;
(h) We wish to point out that in the case of proceeds (as defined
in Article 9 of the UCC), the continuation of perfection of
any security interest therein (i) is limited to the extent set
forth in Section 9315 of Article 9 of the UCC, and (ii) if
such proceeds consist of property in which a perfected
security interest cannot be obtained or maintained by the
filing of a financing statement in the California Secretary of
State Office, will require additional compliance with
applicable provisions of the UCC or otherwise;
Dry Creek Casino, LLC
August 26, 2001
Page 6
(i) The attachment or perfection of a security interest in any
after acquired property in which a security interest cannot be
perfected by the filing of the Financing Statement;
(j) The attachment, execution upon, or perfection of a security
interest in property located other than in California, or as
to any real property wherever situated which is held in trust
by the United States;
(k) We wish to point out that we have assumed for purposes of the
opinions in paragraph 13 hereof, that the party granting a
security interest has received value and has rights in the
collateral in which it is purporting to grant a security
interest, and that all collateral in which possession by the
secured party is or may be required under Article 9 of the UCC
in order to perfect a lien is held by the secured party and is
not subject to the control by another party;
(l) We call to your attention the fact that, with respect to
financing statements filed on or after July 1, 2001, other
than those filed in connection with a public finance
transaction, (i) Article 9 of the UCC requires the filing of
continuation statements within the period of six months prior
to the expiration of each five year period from the date of
the original filing of financing statements in order to
maintain the effectiveness of the filings referred to in
paragraph 13 of this opinion, and (ii) additional filings may
be necessary if the Tribe changes its name, identity or
organizational structure or the jurisdictions in which its
places of business, its chief executive office or the
collateral are located;
(m) We call to your attention the fact that the Lender's security
interest in the collateral under the Loan Documents is subject
to: (i) the rights of a buyer, in the ordinary course of
business, to acquire the collateral free of the security
interests pursuant to Section 9320(a) of Article 9 of the UCC,
and (ii) the rights of a buyer other than a buyer in the
ordinary course of business to take free of the security
interests to the extent permitted pursuant to Section 9323(d)
of Article 9 of the UCC;
Dry Creek Casino, LLC
August 26, 2001
Page 7
(n) We call to your attention the fact although the Loan Documents
do not purport to constitute a management contract or
agreements collateral thereto under 25 U.S.C. ss. 2711, the
National Indian Gaming Commission or its Chairman could
disagree with such stated intent and its or his opinion could
be persuasive to a court of law under rules of construction
which give deference to such agency determinations, and we
therefore render no opinion on whether or not the Loan
Documents or any of them constitutes a management contract or
requires federal approval;
(o) Provisions in the Loan Documents concerning a security
interest in any receivables that are or will be due from the
United States, any State, or any agency or department of the
United States or any State;
(p) Any matter referred to in Schedule III attached hereto;
(q) Compliance with the procedural requirements of California law
relating to the exercise of remedies by a secured creditor
(e.g. Section 9601 et seq. of Article 9 of the UCC, regarding
creditors' rights with respect to personal property collateral
upon the occurrence of a default in satisfying a secured
obligation);
(r) The enforceability of provisions of the Loan Documents where
circumstances have rendered performance by any party thereto
impossible;
(s) Provisions mandating contribution towards judgments or
settlements among various parties;
(t) Provisions that provide a time limitation after which a remedy
may not be enforced;
(u) Provisions that attempt to change or waive rules of evidence
or fix the method or quantum of proof to be applied in
litigation or similar proceedings; and
(v) The effect of California Civil Code Section 1670.5, which
provides that a contract may be unenforceable if any clause of
the contract is unconscionable at the time it is made.
Based on and subject to the foregoing and subject to the exceptions,
qualifications and limitations hereinafter set forth, we express the following
opinions:
Dry Creek Casino, LLC
August 26, 2001
Page 8
1. The Tribe is a federally recognized Indian tribe, organized under
its Articles of Association.
2. The governing body of the Tribe is its Tribal Council (the "Tribal
Council"). Subject to the Tribal Council ratification and approval required
under the Loan Documents, the Board of Directors of the Tribe has the power and
authority to bind the Tribe to the Loan Documents.
3. The Tribe has full power and authority to enter into the Loan
Documents and to perform its obligations thereunder.
4. Each of the Loan Documents has been duly authorized by all necessary
action of the Tribal Council, has been duly executed and delivered by the Tribe
and constitutes the valid and binding obligation of the Tribe enforceable in
accordance with its respective terms.
5. The Tribal Resolution has been duly adopted by the Tribal Council.
6. The execution and delivery by the Tribe of the Loan Documents, and
the performance by the Tribe of its obligations thereunder will not (a) result
in any violation of the Articles of Association of the Tribe, any laws of the
Tribe ("Dry Creek Tribal Law"), of any California State, or any Federal law, (b)
result in a breach or result in a default under any agreement, subject to the
qualifications set forth on Schedule II hereto, or (c) to our knowledge, result
in a breach of any order, writ, injunction or decree of any court,
administrative agency or governmental authority by which the Tribe, or its
properties are bound.
7. To our knowledge and without independent investigation, there are no
claims, actions, suits, investigations or proceedings before or by any
arbitrator, court, governmental authority or instrumentality pending or
threatened against or affecting the Tribe or involving the properties of the
Tribe which might materially and adversely affect the business, properties or
financial condition of the Tribe or which might materially adversely affect the
transactions or other acts contemplated by the Loan Documents or the validity or
enforceability of the Loan Documents, except as disclosed in Schedule III
hereto.
8. The Loan Documents state that they are to be construed in
accordance with and governed by the substantive laws of the State of California,
including the California Uniform Commercial Code. Such choice of law does not
violate or conflict with the Constitution of the Tribe or any provision of Dry
Creek Tribal Law, the Tribe's Articles of Association, and the Loan Documents
may be construed in accordance with and governed by the substantive laws of the
State of California except to the extent the documents explicitly provide
otherwise, irrespective of whether the execution and delivery of the Loan
Documents occur on the Tribe's reservation.
Dry Creek Casino, LLC
August 26, 2001
Page 9
9. The tribal-state gaming compact that the Tribe has entered into with
the State of California pursuant to IGRA ("Compact") has been duly and validly
authorized by the Tribe, has been approved by the United States Secretary of the
Interior (the "Secretary") as required by IGRA, notice of the Secretary's
approval has been published in the U.S. Federal Register as required by IGRA,
and the Compact is in force and effect in accordance with its terms.
10. The Project is located on lands the fee title to which is held by
the United States in trust for the Tribe and over which the Tribe exercises
governmental power within the meaning of IGRA. Such lands have been held in
trust by the United States for the Tribe since prior to October 17, 1988 and
constitute "Indian lands" within the meaning of 25 U.S.C. 2703(4).
11. Except as the provisions of Section 6.4.6 of the Compact may apply
to the Lender and the matters excepted and set forth on page 6, paragraph n, and
page 7, paragraph p, above, and except for the filing of the Financing
Statement, no consent, approval, authorization or order of, or declaration or
filing with, any Federal, state or Dry Creek tribal governmental authority or
any court, including specifically the Secretary, is required for the execution,
delivery, or performance by the Tribe of the Loan Documents, and the
consummation of the transactions contemplated thereby or the enforceability
thereof.
12. The consents to suit given by the Tribe in the Loan Documents
constitute a valid and enforceable (a) waiver to the limited extent described
therein of the sovereign immunity of the Tribe and (b) consent to the
jurisdiction of the courts specified in the Loan Documents. The courts of the
State of California have personal and subject matter jurisdiction over any
action against the Tribe to enforce the obligations of the Tribe under the Loan
Documents to the extent granted by the Tribe in such documents.
Dry Creek Casino, LLC
August 26, 2001
Page 10
13. The Security Agreement is sufficient to create a legal, valid and
binding security interest in favor of the Lender, enforceable in accordance with
the terms of the Security Agreement, in that portion of the personal property
described therein in which a security interest may be created under Article 9 of
the UCC (the "Security Interest" and the "Collateral," respectively), for the
payment and performance of the Secured Obligations. Upon the proper filing of
the Financing Statement with the California Secretary of State, the Security
Interest will constitute a perfected security interest in that portion of the
Collateral as to which a security interest may be perfected by filing of a UCC-1
financing statement in the State of California pursuant to Article 9 of the
UCC.
Our opinions are subject to bankruptcy, insolvency, fraudulent conveyance,
fraudulent transfer, reorganization, moratorium and other laws affecting the
rights and remedies of creditors generally and to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.
Our opinions are also subject to the effect of:
(i) Rules of law that limit or affect the enforcement of provisions of
a contract that purport to waive, or to require waiver of, the obligations of
good faith, fair dealing, diligence and reasonableness;
(ii) Rules of law that provide that forum selection clauses in
contracts are not necessarily binding on the court(s) in the forum selected;
(iii) Rules of law that limit the availability of a remedy under
certain circumstances where another remedy has been elected;
(iv) Rules of law that limit the enforceability of provisions
releasing, exculpating or exempting a party from, or requiring indemnification
of a party for, liability for its own action or inaction, to the extent the
action or inaction involves negligence, recklessness, willful misconduct,
unlawful conduct, violation of law or public policy or litigation against
another party determined adversely to such party;
(v) Rules of law that may, if less than all of a contract is
unenforceable, limit the enforceability of the remainder of the contract to
circumstances in which the unenforceable portion is not an essential part of the
agreed exchange;
(vi) Rules of law that govern and afford judicial discretion regarding
the determination of damages and entitlement to attorneys' fees and other costs;
Dry Creek Casino, LLC
August 26, 2001
Page 11
(vii) Rules of law that permit a party that has materially failed to
render or offer performance required by the contract to cure that failure unless
(i) permitting a cure would unreasonably hinder the aggrieved party from making
substitute arrangements for performance, or (ii) it was important in the
circumstances to the aggrieved party that performance occur by the date stated
in the contract;
(viii) 28 U.S.C. 1360, which provides,, among other things, that such
statutory provision does not confer jurisdiction upon any State to adjudicate
the ownership or right to possession of property held in trust by the U.S.
Federal government for any federally recognized Indian tribe; and
(ix) 25 USC ss. 2711 or 25 USC ss. 81, to the extent any approvals may
be required to be obtained thereunder.
(x) The Prop 1A Litigation, as defined in Schedule III, attached
hereto.
This opinion letter is based as to matters of law solely on (i) the
internal laws of the State of California (but not including any statutes,
ordinances, administrative decisions, or regulations of any political
subdivision of such state), (ii) Federal law, to the extent such laws and other
matters pertain to federally-recognized Indian tribes, and (iii) Dry Creek
Tribal Law.
Our advice on each legal issue addressed herein represents our opinion
concerning how that issue would be resolved were it to be considered by the
highest court of the jurisdiction upon whose law our opinion on that issue is
based. The manner in which any particular issue would be treated in any actual
court case would depend in part on facts and circumstances peculiar to the case,
and our opinions are not a guaranty of an outcome of any legal dispute which may
arise with regard to the Loan Documents.
This letter speaks as of the date hereof. We disclaim any obligation to
provide you with any subsequent opinion or advice by reason of any future
changes or events, which may affect or alter any opinion rendered herein.
Dry Creek Casino, LLC
August 26, 2001
Page 12
This opinion is rendered pursuant to your request and is intended
solely for your benefit in connection with the Loan Documents. This opinion is
not to be furnished, quoted, or referred, to any other party or to any
governmental agency or used for any other purpose without our prior written
consent.
Sincerely,
HOLLAND & KNIGHT LLP
SCHEDULE I
CHAIRMAN'S CERTIFICATE
DRY CREEK RANCHERIA BAND OF POMO INDIANS
The undersigned, Xxxxxxx Xxxxx, hereby certifies that he is the duly
elected or appointed, qualified and incumbent Chairman of the Dry Creek
Rancheria Band of Pomo Indians, a federally recognized Indian tribe (the
"Tribe"). This certificate is given for the benefit of Holland & Knight LLP
("Counsel") in rendering its legal opinion in connection with that certain
Development and Loan Agreement dated as of August 26, 2001, by and among the
Tribe and Dry Creek Casino, LLC (the "Loan Agreement").
Capitalized terms used and not otherwise defined herein have the
respective meanings given such terms in the Loan Agreement.
I hereby certify as follows:
1. The Articles of Association of the Tribe ("Articles"), a copy of
which is attached hereto as Exhibit "A," is considered by the Tribe
to be an integral and guiding standard by which the Tribe conducts
its affairs under its customs and traditions, and no action has been
taken to amend, rescind, modify or revoke the Articles as of the
date hereof.
2. The resolutions of the Tribe, numbered 00-00-00-00 and adopted by
the Tribal Council as of August 26, 2001, a copy of which is
attached hereto as Exhibit "B," are in full force and effect as of
the date hereof, and no action has been taken to amend, rescind,
modify or revoke such resolutions as of the date hereof.
3. To my knowledge, there are no orders, writs, injunctions or decrees
of any court, administrative agency or governmental authority by
which the Tribe or its properties are bound.
4. To my knowledge, there are no claims, actions, suits, investigations
or proceedings before or by any arbitrator, court, administrative
agency, governmental authority or instrumentality pending or
threatened against or affecting the Tribe or involving the
properties of the Tribe, except as disclosed in Schedule F-1 of the
Loan Agreement.
The undersigned understands and acknowledges that this certificate will
be relied upon by Holland & Knight LLP in connection with its legal opinion to
be delivered pursuant to the Loan Agreement.
IN WITNESS WHEREOF, the undersigned has hereunto set his name as of the
26th day of August, 2001.
By:
--------------------------
Xxxxxxx Xxxxx
Tribal Chairman
ARTICLES OF ASSOCIATION
OF THE
DRY CAREER RANCHERIA
PREAMBLE
We, the Indians of the Dry Creek Rancheria, in order to establish a formal
organization and to promote the general welfare of our people in building unity,
development of tribal lands, creation of resources and other human development
as deemed necessary, do hereby adopt the following Articles of Association.
ARTICLE I - NAME
The name of this organization shall be the Dry Creek Rancheria Tribal Council,
hereinafter referred to as the Tribal Council.
ARTICLE II - TERRITORY
The jurisdiction of the Tribal Council shall extend to the land now and
hereafter comprised within the Dry Creek Rancheria.
ARTICLE III - MEMBERSHIP
The general membership shall consist of all those persons in the following
categories, who have completed an application for membership.
A. Persons living on the effective day of this document whose names
appear on the census of the Indians in, near and up Dry Creek from
Healdsburg and on the census of Indians in and near Geyserville
included in a letter dated June 4, 1915, from Xxxx X. Xxxxxxx, Special
Indian Agent, to Xxx. Xxxx Sells, Commissioner of Indian Affairs.
B. Persons living on the effective date of this document, and those
born thereafter whose ancestors are named on the census rolls described
in (a) above, regardless of whether the named ancestors are living or
deceased.
C. Spouses of members who hold valid assignments on the rancheria,
providing the spouse is a California Indian.
D. Persons who meet the requirements of A, B and C above, shall be
ineligible for membership if they have been affiliated with any other
tribe, band or group to the extent of being included on a formal
membership roll, have received an allotment or formal assignment of
land or have been named as a distributee or dependent family member of
a distributee in a reservation distribution plan.
2
E. The board of Directors, as provided for in Article IV, shall keep
the membership roll current by removing the names of persons who became
ineligible for membership, or who relinquish their membership in
writing, and by adding the names of new members.
ARTICLE IV - GOVERNING BODY
The governing body shall be the Tribal Council, which shall consist of all
members eighteen (18) years of age or over. Subject to any limitations imposed
by the applicable statutes of the United States or the State of California, all
powers and responsibilities shall be vested in the Tribal Council which may
delegate powers to the Board of Directors. The Tribal Council shall elect from
its membership a Board of Directors consisting of a Chairman, Vice-Chairman,
Secretary-Treasurer and two (2) delegates, and such other temporary or permanent
committees as are deemed necessary by the Tribal Council.
ARTICLE V - MEETINGS
Meetings of the Tribal Council will be held during the months of April and
September of each year, at times and places to be prescribed by the Chairman.
Special meetings may be called by the Chairman or by any two (2) members of the
Board of Directors, provided that seven (7) days notice be given stating the
purpose of the meeting. No business shall be conducted in the absence of a
quorum consisting of not less than fifteen (15%) percent of the voting
membership.
ARTICLE VI - VOTING RIGHTS & ELECTIONS
Any member of the Tribal Council, eighteen (18) years of age or older shall have
the right to vote and if duly nominated and elected may hold office. All
elections, whether for office or referendum, shall be by secret ballot. Notice
of an election shall be given in writing seven (7) days prior to the election
day. Nomination of officers shall be held each two years at the tribal council
meeting in September. The date for the election is to be selected at this
meeting. A member must be present at the site of the election to vote.
ARTICLE VII - BOARD OF DIRECTORS
The Board of Directors shall take such actions as are necessary to carry into
effect the ordinances, resolutions, or other directions of the Tribal Council,
represent the community in all negotiations with local, state and federal
governments and shall faithfully advise the Tribal Council of all
3
such negotiations. Members of the Board of Directors shall hold office for two
years, or until their successors are duly elected and installed. If an officer
shall die, resign, be found guilty of a felony, or be recalled from office, the
vacancy so created shall be filled by the Board of Directors at its next
meeting, and the replacement shall serve out the unexpired term of office of his
predecessor.
ARTICLE VIII - MEETINGS OF BOARD OF DIRECTORS
The Board of Directors shall meet once a month at a time and place set by the
Chairman. Notice of meeting shall be given at least 48 hours in advance either
by mail or verbal communication. Special meetings shall be convened on call of
the Chairman or by two (2) board members. Written notice, stating the purpose of
the meeting must be given 24 hours in advance of the meeting date. A quorum
shall consist of three (3) members, and no business shall be conducted in the
absence of a quorum.
ARTTICLE IX - ASSIGNMENTS
The power of the Tribal Council to make assignments of land on the Dry Creek
Rancheria shall be set forth in an assignment ordinance, passed by the Tribal
Council and approved by the Secretary of the Interior or his authorized
representative. Members who own a home or are buying a home off the rancheria
will not be eligible for an assignment on the rancheria.
ARTICLE X - XXXX OF RIGHTS
The protection guaranteed to persons by Title II of the Civil Rights Act of 1968
(82 Stat. 73) against actions of a tribe in the exercise of its powers of
self-government shall apply to the Dry Creek Rancheria, its officers and all
persons within its jurisdiction.
ARTICLE XI - DUTIES OF OFFICERS
A. The chairman of the Board of Directors shall preside at all meetings of the
Tribal Council and of the Board of Directors, and shall execute on behalf of the
rancheria all contracts, leases, or other documents approved by the Tribal
Council. He shall have general supervision of all other officers, employees and
committees of the rancheria and see that their duties are properly performed.
When neither the Tribal Council nor the Board of Directors is in session, he
shall be the official representative of the rancheria.
B. The vice-chairman shall assist the chairman when called upon to do so, and in
the absence of the chairman he shall have the duties of that officer.
C. The secretary-treasurer shall keep the minutes of all meetings and shall
attest to the enactment of all resolutions and ordinances. Copies of all
minutes, resolutions, and ordinances shall be submitted by him to the Bureau of
Indian Affairs as soon after enactment as possible. The secretary-treasurer
shall carry out the financial directives of the Tribal Council, receive all
local monies of the rancheria, and keep an accurate account of the receipts and
disbursements. Funds shall be deposited in the rancheria account in a local bank
selected by the Tribal Council where depositors' funds are insured by the
Federal Deposit Insurance Corporation. All disbursements shall be made by check
in accordance with resolutions of the Tribal Council and shall be co-signed by
the chairman or the vice-chairman in the absence of the chairman. The
secretary-treasurer shall file a bond satisfactory to the Tribal Council and the
Area Director, when either are of the opinion sufficient funds have accumulated
in the rancheria treasury. The Tribal Council shall authorize payment of the
annual bond premium from the local rancheria funds. The secretary-treasurer
shall give a financial report to the Tribal Council at each meeting, and all
financial records shall be available for inspection by any member of the Dry
Creek Indian Rancheria and by representatives of the Bureau of Indian Affairs.
ARTICLE XII - ADOPTION
The Articles of Association shall be effective upon approval of the Commissioner
of Indian Affairs. With sixty (60) days after the document has been approved,
the Tribal Council shall elect a Board of Directors, pursuant to Articles IV and
VI of these articles.
ARTICLE XIII - AMENDMENTS
The Articles of Association may be amended by a majority vote of the eligible
voters of the Tribal Council, provided at least fifty-one percent(51%) of the
eligible voters participate in a referendum election called for that purpose. A
referendum election to amend the Articles of Association must be preceded by a
duly called meeting of the Tribal Council at which the proposed amendment has
been explained.
CERTIFICATE OF ADOPTION
The undersigned certifies that the foregoing Articles of Association were
adopted at a referendum election held September 13, 1972, which election was
participated in by a majority of the adult Indians of the Dry Creek Rancheria,
resulting in a vote of 17 for, and 0 against.
/s/ Xxxx X. Xxxxxxx
------------------------------------
Xxxx X. Xxxxxxx, Chairman
Dry Creek Rancheria
APPROVAL
The foregoing Articles of Association of the Dry Creek Rancheria, adopted
September 13, 1972, are hereby approved with the understanding that (1) Public
Law 280 is applicable to Territory; (2) that the word "ancestors" as it appears
in Section B of Article III means lineal ancestors; and (3) that the felonious
conviction justifying removal of an official from office under Article VII of
these Articles of Association must occur during the term of office from which
the official is to be removed.
[Signature illegible]
Deputy Assistant Secretary of the Interior
Date: APR 16 1973
Washington, D.C.
S-1100
REFER IN REPLY TO THE FOLLOWING: ADDRESS ONLY THE
COMMISSIONER OF INDIAN AFFAIRS
DEPARTMENT OF THE INTERIOR
OFFICE OF INDIAN AFFAIRS
ID. ED. aLLOTMENTS
[84485] - 1915
84777 - 1915.
P.S. N. Pur. Band Calif. WASHINGTON: Santa Rosa, Calif.
Xxx. Xxxx Sells,
Commissioner Indian Affairs,
Washington, D.C.
Dear Sir: - Herewith you will please find warranty deed properly executed by
X.X. Xxxxxx and wife conveying to the United States of America 75 acres of land,
together with abstract of title thereto a census of the Indians of Dry Creek and
in and near Geyserville in Sonoma County, California.
The land named in this deed is situated about 3 1/2 miles by road
southeast from Geyserville, on the east side of the Russian river and about 1/2
to 3/4 mile back in the hills approaching the valley land of that river. It is
well watered by two perpetual running streams fed by springs, one of the streams
carrying considerable water, in which the Indians may catch more or less fish in
proper season; has amply supply of fine timbers for all domestic purposes, that
is, for fuel, fencing and considerable suitable for house-building.
In my opinion the timbers will virtually reproduce themselves about as
fast as the Indians may use same for domestic purposes.
The 75 acres would likely cut clean produce 2,000 cords of wood.
Most of this land is rough, there being only sufficient small spots of
land at several points of character suitable for location of houses and small
gardens, though those portions not covered with timber are well set in fine
grasses. There can be no question but that the tract is well suited for an
Indian Village, situated as it is near enough, not too near Geyserville, and the
rich valley lands
Page 2
of the Russian river, all of which are in high state cultivation in grape, hops,
berries and the many fruits of this country; and therefore, the Indian is
insured plenty or work nearby during most of the year.
The probabilities are the Indians will be able to always secure work
sufficiently near this land to go and come therefrom each day without loss of
time during working hours. They will be far enough from any town or place of
loafing or drinking, Geyserville being the closest place, to very greatly
improve their social, physical and moral conditions.
In my efforts to secure land for a home for these Indians I was after
a general scouring of the country for many miles around Geyserville and up and
down Dry Creek and surrounding country, almost concluding I was going to fail,
when by good luck and through the persistent and untiring efforts of Wm. Tooly,
the leading Indian of the Geyserville band, we found this Xxxxxx tract. The few
tracts suggested by the local land agents were either unsuitable, too high, too
much land, refusing to divide, and most generally did not care to have located
so near them a permanent INDIAN Village in the subdivision of so small tract of
land, etc.
I do not in the least hesitate in the recommendation of the purchase of
this 75 acres of land for a suitable and permanent home for the two bands of
Indians named. Xx. Xxxxxx first insisted on his selling to certain points, on
account of the topography of the land, that is, the run of the creeks, etc,
which according to our first survey embraced 89 acres, but suggesting that
the Office would hardly permit the expenditure of more than $25.00 per acre for
over 75 acres, was able at last to [xxxxxx] to cut and survey the tract to
contain the 75 acres embodied in his deed.
On account of the small number of Indians in the Geyserville band
[xxxxxx] made an effort to induce the Cleverdale band to united with the
Geyserville [xxxxxx] and in this effort in [xxxxxxxxx] Xxxxxx down from
Cleverdale to [xxxxxxx]
on the ground during the surveying, which he did, coming down by rail from place
of employment near Cloverdale. While he expressed no objections himself, as well
as that some of the other people of his band would not object yet knew on
account of past friction with some others that it would be next to impossible to
induce several of his band to join the Geyserville band.
In that I might cause the expenditure of the $1875-00 for the 75 acres
reach as many Indians as possible I pressed with the Geyserville Indians the
necessity of consolidating with them the Dry Creek Indians, which after hearing
the many circumstances and conditions confronting me, they very kindly consented
to do, and after supper two of them, Elgin and Xxxxxxx, accompanied Xx. Xxxxxx
and myself in his auto 7 miles over on Dry Creek to the home of Xxxxxxx Xxxxx.
Xxxxx assured us that his people were so very anxious for a home that they would
be delighted to come over and join the Geyserville people. Xxxxx and his big fat
young wife came over next day walking the [xxxxx] and assisted us in the
surveying the land, staying over night with the Geyserville Indians.
By the consolidation of these two bands they will have enough of
children to justify a permanent school. This school suggestion meets the hearty
approval of most of the more intelligent Indians.
These two bands are delighted at the prospect of at an early date being
permitted to build their homes on land from which they will never be driven off,
and from which they will be able to secure work nearby.
It is very difficult, almost impossible with most Indians, to induce
them to go any great distance from where they have been born and raised.
They are very shy and slow to form new acquaintances.
If my recommendation for the purchase of this land is accepted I beg
to most earnestly urge and insist that all possible energy be at earliest date
to put behind its speedy consumation. I am forced to make this insistance for
the reason that one of the principal reasons inducing Xx. Xxxxxx
to sell so near his beautiful home this land for an Indian village was he needs
at an early date some money to meet pressing demands.
He has said to me, and urges me to say to the Department, that if this
proposed sale is to be tied up for some 2 or 3 months before final consumation
and receipt of the consideration, that he desires all papers be returned to him
at once, as he cannot afford to tie up his land indefinitely.
He may have been the more insistant in this regard for the reason that
some one has told him that it will take "six months or one year before he will
see a dollar for his land. Xx. Xxxxxx has 3 quite attractive daughters, two
having but recently passed from short dresses and the other soon to follow,
besides two boys about 18 and 20, and they are burning more or less auto oil; so
you will understand the demands on "Dad" are not likely modest, few and far
between. Again in this case "Dad" is an exceedingly kind and indulgent father.
Permit me to say, in this same connection, that is, what was termed "long
tedious, long drawnout red tape route to get any thing through the departments
at Washington", Xx. XxXxxxxxx, General Land Commissioner at San Francisco, when
in his office recently, on my suggestion that sales to the Government were cash,
etc., had to say "his experience with sales of Land usually "required from 1 1/2
to 4 years" to actually come in possession of the cash representing the sale",
etc. I assured him that such delay would not be permitted under present
administration of the Indian Office.
Also another good and sufficient reason for earliest possible
consumation of these purchase of lands for the Indians is the fact the Indians
are so enthused and encouraged in the thought of a home of his own, and from
time to time, and more especially before the gathering of the fruit crops, will
have opportunity to begin the building and improving of his
home at intervals, getting ready for the coming winter, all of which causes me
to indulge the conviction of speedy action in the consumation of these sales.
I realize that I am not exactly following instructions the Office in
forwarding the enclosed deed and abstract in advance of first forwarding with my
recommendation a definite offer in writing from the presumable owner of the land
to be conveyed; however, on account of fact party so earnestly urges the
earliest possible consumation of sale, and that his warranty deed is best and
stronger evidence of his good faith than an offer in writing, have felt that
the sending in the deed and abstract, would be, so to speak, "cutting across
lots," expedite matters and really burden the Office with less labor.
Xx. Xxxxxx'x P.O. is Geyserville, Calif.
Just received your Xx. Xxxxx'x favor of the 29th, ultimo, accompanied
by copy of Xxxxxx Xxxxxx'x letter, requesting that at some suitable time I
investigate and report as to the conditions of the Indians at Manchester,
Mendocino County, Calif. I hope to be able to get away from here by tomorrow
afternoon for Little River in that county, stopping off at Cloverdale for one
day, possibly two; with view of finding land for the Indians in and near that
place, having heretofore failed, though I spent some 3 or 4 days there in an
effort to do so. I have a letter from Wm. Xxxxxx, the leading Indian there
insisting "they have at last found a suitable piece of land that can be
purchased," etc.
While in Mendocino county will carefully investigate and report on the
conditions of the indians at Manchester in that county.
From Little River I expect to go on North to Big Lagoon in Humbolt
county, where I shall likely make my P.O. for 3,4 or 5 days.
It now seems probably I shall go from Big Lagoon to Colfax in [Placer]
county, as I am in receipt of a recent letter from Xx. Xxxxxx of Reno, advising
that there are a number of needy and worth indians there that should have early
attention.
From Colfax I expect to work South, likely going through the following
places, viz: Placerville, Fairplay, Omo Ranch, Indian [Xxxxxxx, Thoepranch] and
[xxxx], counties of Eldorado, Xxxxxx and Calaveras.
On my return from Big Lagoon through Santa Xxxx will stop off for mail
or any orders that may meet me, which will likely be 10 days to two weeks from
now.
Very respectfully,
/s/ Xxxx X. Xxxxxxx
Special Indian Agent
Census of the Indians in, near and up Dry Creek from Healesburg
in Sonoma County California.
95 85 42
Old man Xxxx Xxxxx, wife and 3 children, viz: Charley, 2.
23 32
Xxxxxx and Xxxx (Xxxx single) 1.
42 40
Xxxxxxx Xxxxx and wife 2.
Xxx Xxxxxx and wife (Xxxxxx Xxxxx) 2.
48
Xxxx Xxxx 1.
13 10
Lizzie and Xxx Xxxx- at school at Xxxxxx. 2.
32 27 school at Xxxxxx
Xxxx Xxxxxxx, wife and 2 children, viz:Xxxxx & Xxxxxx in 4.
Xxxxxx Xxxxx 6 years old in local school 1.
19 18
Xxxxx Xxxxxx and Xxxxx Xxxxxx 2.
Xxx Xxxx, Wife and 2 children, Xxxxx Xxxx, single 3.
Xxx Xxxxxxx, wife (Xxxx Xxxx) and 8 children viz:
Louisa (Married to Xxxxxx Xxxxxxxx Xxxx married to Xxxx
17 14 12 6 3
Xxxxxxx) Xxx Xxxxxxx Xx. Xxxx, Xxxx Xxxx, Xxxx & baby girl 6.
Xxxxxx Xxxxxxxx, wife and 2 children 4.
Xxxxx Xxxx and 2 children 3.
Xxxx Xxxx, wife and one child, Xxxx 13 years old 3.
20 14
Christian and Xxxx Xxxxxxxx 2.
Xxxx Xxxxx- widow. 1.
Xxxxxxx Xxxxxxx and wife 2.
--------------
43.
N-B: Xxxxxxx Xxxxx is the leading Indian among the
Dry Creek band. He manifested a deep interest in securing
land for permanent homes for his people, he and his wife
walking 6 or 7 miles from their present home on Dry Creek to
East of Geyserville and assisting in the surveying of the land
named in the deed from Xx. Xxxxxx and wife to the United States
of America for his and the Geyserville band's homes, he and his wife
staying over night with the Geyserville Indians.
Respectfully submitted
/s/ Xxxx X. Xxxxxxx, Special Indian Agent,
Census of the Indians in and near Geyserville
Sonoma County California:
"Old" Xxx Xxxx, widower, no living children 1.
78 75 32 12
Dick Low, wife and son Johny & his son Ora 4.
80 Indians
Geyserville Xxx (wife dead) has a daughter with Cloverdale 1.
60 65
Charley Managil, wife and 4 children 6.
Xxxxxx Xxxx, wife and 5 children, 3 boys and 2 girls, viz: 2.
9 7 5 3 1 1/2
Willie, Lary, Katie, Xxxxx and Xxxxxx Xx. 5.
25 23 7
Xxxx Xxxx, wife and stepson 3.
50 11
Xxx. Xxxxxxxx and son Ike 2.
19 22
Xxxx Xxxxxxx and wife [Xxxxx Soma] 2.
23 20 7 4 1
Gib. Elgin, wife and 3 children, May, Xxxx and Xxxxx 5.
52
Xxxx Xxxx- widower. 1.
--------------
Dry Creek band 32.
Geyserville 43.
--------------
75. Total
N-B: Gib Elgin and Xxxx Xxxxxxx are the leading Indians
of the Geyserville band. They each manifested much interest
in securing land for a permanent home for their people.
They spent the better part of three days with me in my
efforts to secure land, and when found assisted in the surveying,
working as axmen. They accompanied me by night over to the Dry
Creek country to see Xxxxxxx Xxxxx, one of the leaders of that band
to assist me and otherwise show an unmistakable evidence of welcome
to the Dry Creek Indians to join them in their contemplated new
home, etc.
Respectfully submitted:
/s/Xxxx X. Xxxxxxx
Special Indian Agent,
Tribal Operations
076.2 Dry Creek
NOV 1, 1979
Ms. Xxx Xxxxxx, Chairperson
Dry Creek Rancheria
P.0. Xxx 000
Xxxxxxxxxxx, Xxxxxxxxxx 00000
Dear Xx. Xxxxxx:
The four (4) Amendments to the Article of Association that were passed at the
General Membership Meeting on September 22, 1979, are in effect.
They became in effect the day the General Membership apprpved them. In our
October 16, 1979 memo to the Area Director, we stated that in accordance with
Article XIII of the Articles of Association for Dry Creek Rancheria, that no
other approval authority is required. In the Area Director's memo of October 19,
1979, he concurred with our decision.
Should you have any questions, feel free to contact our office.
Sincerely yours,
/s/ [illegible]
Superintendent
CERTIFICATION
This is to certify that the above Resolution was duly adopted at a meeting of
Dry Creek Rancheria members, a quorum of 51% of the eligible voters being
present, as required by Article XIII, on September 22, 1979, by a vote of 16
ayes, 0 nays and 0 abstaining.
/s/ Xxx X. Xxxxxx
----------------------------
Xxx X. Xxxxxx, Chairperson
Attest: /s/ Xxxxx Xxxxx
---------------------
DRY CREEK RANCHERIA
[LOGO]
0000 Xxxxxxx 000 Xxxx
Xxxxxxxxxxx, XX. 00000
(000) 000-0000
RESOLUTION
WHEREAS, these amendments to the Articles of Association of Dry Creek Rancheria
were proppsed to the membership at the general meeting on April 29,
1979:
Amendment I:
Article V of the Articles, Meetings, shall be amended by substituting
"fifteen (15%)" in place of "twenty-five (25%)." Article V as amended
shall read as follows:
Meetings of the Tribal Council will be held during the months
of April and September of each year, at times and places to be
prescribed by the Chairman. Special meetings may be called by
the Chairman, or by any two (2) members of the Board of
Directors, provided that seven (7) days notice be given
stating tba purpose of the meeting. No business shall be
conducted in the absence of a quorum consisting of not less
than fifteen (15%) percent of the voting membership.
Amendment II:
Article VII of the Articles, Board of Directors, shall be amended by
adding (a) Procedure for Recall. Section (a) shall read as follows:
(a) procedure for Recall:
In the event of recall of a member of the Board of Directors
for any reason, the same shall be accomplished by majority
vote of duly qualified voting members of the Tribal Council,
at a special meeting of the Council for that purpose, written
notice of
such meeting having been duly given at least seven (7) days
prior to the date of such special meeting.
Amendment III:
Article XIII of the Articles, Amendments, shall be amended by
substituting "thirty percent (30%)" in place of "fifty-one percent
(51%)." Article XIII as amended shall read as follows:
The Articles of Association may be amended by a majority vote
of the eligible voters of the Tribal Council, provided at
least thirty percent (30%) of the eligible voters participate
in a referendum election called for that purpose. A referendum
election to amend the Articles of Association must
be preceded by a duly called meeting of the Tribal Council at
which the proposed amendments has been explained.
Amendment IV:
By adding Article XIV to the Articles. Article XIV to read as follows
Articie XIV - Housing Authority:
Tribal Council shall have the power to enact an ordinance for
the purpose of establishing a housing authority or to join an
existing housing authority.
and
WHEREAS, the membership reviewed and discussed these amendments at the general
meeting of September 22, 1979, and
WHEREAS, the members feel it is within the best interest of Dry Creek Rancheria
to incorporate these amendments into the existing Articles of
Association.
NOW THEREFORE BE IT RESOLVED that Amendment numeral I, II, III, and IV
respectively be approved by the Tribal Council of Dry Creek Rancheria.
[LOGO] Dry Creek Rancheria
BAND OF POMO INDIANS
000 X XXXXX XXXX, XXXXXXXXXX, XX 00000
P. O. XXX 000, XXXXXXXXXXX, XX 00000
PHONE: 000-000-0000 FAX 000-000-0000
E-MAIL - xxxxxxxx@xxxxx.xxx
RESOLUTION TO RATIFY TRANSACTION DOCUMENTS
FOR TRIBE'S INTERIM CASINO
RESOLUTION No. 00-00-00-000
WHEREAS, Dry Creek Rancheria (the Tribe) is a federally recognized Indian tribe
organized under the tribe's Articles of Association (the Articles),
adopted on September 13, 1972, and approved by the Deputy Assistant
Secretary of the Interior on April 16, 1973, by virtue of powers
inherent in tribal sovereignty and those delegated by the United States
of America; and
WHEREAS, the General Membership shall elect from its membership a Board of
Directors and all powers and responsibilities shall be vested in the
General Membership which may delegate powers to the Board of Directors
pursuant to Article IV of the Articles.
WHEREAS, The General Membership authorizes the Board of Directors to pass
resolutions and/or ordinances so they could carry out the daily
business of the tribe and represent the local community in all
negotiations with the local, state and federal governments, pursuant to
Article VII of the Articles.
NOW, THEREFORE BE IT RESOLVED, that all actions of the Board of Directors with
respect to the transactional documents, including the approval and execution of
such documents, and with respect to any documents and agreements related thereto
which are necessary for the implementation of the transaction, and any further
actions which must be taken by the Board of Directors in order to carry out the
intent of this resolution and the purpose of the transactional documents,
including but not limited to entering into such construction, consulting,
purchasing and professional agreements as may be necessary for the tribe's
construction and operation of the casino, are hereby authorized, approved and
ratified, and the Board of Directors is hereby directed to execute and implement
such documents and agreements and to construct and operate the casino as
contemplated therein.
Page 1 of 2 Resolution No. 00-00-00-000
CERTIFICATION
The foregoing resolution was presented at a Special Meeting of the Board of
Directors on the 26th of August, 2001 with a quorum present. Motion was made by
Xxxxx Xxxxx seconded by Xxxxx Xxxxx and approved by a vote of 100 ayes, 31 noes,
and 0 abstentions.
/s/ Xxxxxxx Xxxxx
----------------------------------
Xxxxxxx Xxxxx, Tribal Chairman
ATTESTED
/s/ Xxxxx X. Xxxxxxxxxx
----------------------------------------
Xxxxx X. Xxxxxxxxxx, Secretary/Treasurer
Page 2 of 2 Resolution No. 00-00-00-000
SCHEDULE II
QUALIFICATIONS REGARDING AGREEMENTS
Item number 6 of Holland & Knight LLP's legal opinion is hereby qualified as
follows:
1. There is a claim or threatened claim by Advent Communications & Entertainment
Company and its partners, affiliates and co-ventureres (including each party
identified under "Third Party Disputes" in the Loan Agreement) that the
negotiation and execution of the Loan Agreement is an express breach of the
Sonoma Canyon Documents and/or the Sonoma Falls Documents (as such terms are
defined in the Loan Agreement) and documents related thereto, including an
"Exclusive Negotiating Agreement" dated August 7, 1999, all of which claims are
acknowledged by Developer.
SCHEDULE III
DISCLOSURES
The following disclosures are made in connection with item number 7 of
Holland & Knight's legal opinion:
1. that certain claim made by the Alexander Valley Association against Borrower
pursuant to a letter dated September 12, 2000, alleging certain violations by
Borrower of the federal Endangered Species Act and correspondence from the
National Marine Fisheries Service regarding potential takings by the Borrower
under that Act with respect to the creek bed on the lower part of the Dry Creek
Rancheria, review of which has been acknowledged by Developer;
2. a claim or threatened claim set forth in a letter dated October 27, 1999,
from Xxxxx X. Xxxxxxx, Xx., Esq., of XxxxxXxxxxx, Xxxxxxx & Xxxxxxx, as
attorneys for Xxxxxxx Xxxxxxxxx, the owner of the property burdened by the
access easement to the Property, to Ms. Xxx Xxxxxx, that such access easement
does not permit the use of such access for utilization of the Property for
casino use, and subsequent assertions of that claim by Proschold and others
related to him, all of which claims have been acknowledge by Developer;
3. a dispute by certain voting members of the Tribe who claim they have
successfully recalled the present members of the Tribe's Board of Directors and
replaced them with an "interim board." The Bureau of Indian Affairs continues to
recognize the current board. An appeal of that recognition is pending;
4. a claim or threatened claim by Advent Communications & Entertainment Company
and its partners, affiliates and co-ventureres (including each party identified
under "Third Party Disputes" in the Loan Agreement) that the negotiation and
execution of the Loan Agreement is an express breach of the Sonoma Canyon
Documents and/or the Sonoma Falls Documents (as such terms are defined in the
Loan Agreement) and documents related thereto, including an "Exclusive
Negotiating Agreement" dated August 7, 1999, all of which claims have been
acknowledged by Developer;
5. that certain litigation entitled Artichoke Joe's, et al. x. Xxxxxx, et al.
(No. CV-S-01-248 DFL/GGH, E.D. Calif.) filed on February 7, 2001 challenging the
constitutionality of California Constitution Article IV, Section 19 (f), the
effect of which, if successful, cannot be determined but could limit the Tribe's
ability to offer certain gaming in the Tribe's gaming facility (the "Prop 1A
Litigation"); and
6. the opinion of the Attorney General of California dated February 23, 2001
that California "Compacts entered into by the State and 62 federally recognized
Tribes contemplate that the Gambling Control Commission ("GCC")
will issue the licenses for gaming devices pursuant to the Compact's
provisions;" that the Tribe purchased gaming device licenses that were issued on
or about May 15, 2000 through a process established by the Compact tribes
utilizing the Xxxxxxx Xxxxx Accountancy Corporation and not by the GCC, although
the State commended the tribes on the process at the time; that gaming devices
operated pursuant to those licenses were not placed in commercial operation
within 12 months of issuance as required under the Compact; that further gaming
device license issuance and other compliance procedures may be necessary to
effectuate the Tribe's right to operate more than 350 gaming devices; and that
further licenses may not be available if and when needed. Members of the GCC
have indicated informally that it is possible that new licenses to replace those
issued through the Sides process will be issued by the GCC and that the one-year
deadline will not begin to run until then, but there has been no formal
announcement to that effect.
EXHIBIT F-1
Disclosures
EXHIBIT F-1
DISCLOSURES
The following disclosures are hereby made to Developer:
1. that certain claim made by the Alexander Valley Association against Borrower
pursuant to a letter dated September 12, 2000, alleging certain violations by
Borrower of the federal Endangered Species Act and correspondence from the
National Marine Fisheries Service regarding potential takings by the Borrower
under that Act with respect to the creek bed on the lower part of the Dry Creek
Rancheria, review of which is acknowledged by Developer;
2. a claim or threatened claim set forth in a letter dated October 27, 1999,
from Xxxxx X. Xxxxxxx, Xx., Esq., of XxxxxXxxxxx, Xxxxxxx & Xxxxxxx, as
attorneys for Canton Proschold, the owner of the property burdened by the access
easement to the Property, to Ms. Xxx Xxxxxx, that such access easement does not
permit the use of such access for utilization of the Property for casino use,
and subsequent assertions of that claim by Proschold and others related to him,
all of which claims are acknowledge by Developer;
3. a dispute by certain voting members of the Tribe who claim they have
successfully recalled the present members of the Tribe's Board of Directors and
replaced them with an "interim board." The Bureau of Indian Affairs continues to
recognize the current board. An appeal of that recognition is pending; and
4. a claim or threatened claim by Advent Communications & Entertainment Company
and its partners, affiliates and co-ventureres (including each party identified
under "Third Party Disputes" in the Loan Agreement) that the negotiation and
execution of the Loan Agreement is an express breach of the Sonoma Canyon
Documents and/or the Sonoma Falls Documents (as such terms are defined in the
Loan Agreement) and documents related thereto, including an "Exclusive
Negotiating Agreement" dated August 7, 1999, all of which claims are
acknowledged by Developer;
5. that certain litigation entitled Artichoke Joe's, et al. x. Xxxxxx, et al.
(No. CV-S-01-248 DFL/GGH, E.D. Calif.) filed on February 7, 2001 challenging
the constitutionality of California Constitution Article IV, Section 19 (f), the
effect of which, if successful, cannot be determined but could limit the Tribe's
ability to offer certain gaming in the Tribe's gaming facility (the "Prop lA
Litigation");
6. the opinion of the Attorney General of California dated February 23, 2001
that California "Compacts entered into by the State and 62 federally recognized
Tribes contemplate that the Gambling Control Commission ("GCC") will issue the
licenses for gaming devices pursuant to the Compact's
provisions;" that the Tribe purchased gaming device licenses that were issued on
or about May 15, 2000 through a process established by the Compact tribes
utilizing the Xxxxxxx Xxxxx Accountancy Corporation and not by the GCC, although
the State commended the tribes on the process at the time; that gaming devices
operated pursuant to those licenses were not placed in commercial operation
within 12 months of issuance as required under the Compact; that further gaming
device license issuance and other compliance procedures may be necessary to
effectuate the Tribe's right to operate more than 350 gaming devices; and that
further licenses may not be available if and when needed. Members of the GCC
have indicated informally that it is possible that new licenses to replace those
issued through the Sides process will be issued by the GCC and that the one-year
deadline will not begin to run until then, but there has been no formal
announcement to that effect; and
7. a claim or threatened claim by Advent Communications & Entertainment Company
and its partners, affiliates and co-venturers (including each party identified
under "Third Party Disputes" in the Loan Agreement) that the negotiation and
execution of the Loan Agreement is an express breach of the Sonoma Canyon
Documents and/or the Sonoma Falls Documents (as such terms are defined in the
Loan Agreement) and documents related thereto, including an "Exclusive
Negotiating Agreement" dated August 7, 1999, all of which claims are
acknowledged by Developer.
EXHIBIT G
Specimen of Buy-out Promissory Note
NOTE
THIS NOTE IS SECURED BY PERSONAL PROPERTY COLLATERAL
$_______________________ Sonoma County, California
____________, 200_
This Note is hereby given as of the date written above by DRY CREEK
RANCHERIA BAND OF POMO INDIANS, a federally-recognized Indian tribe with an
address at 000 Xxxxx Xxxx, #X, Xxxxxxxxxx, Xxxxxx Xxxxxx, Xxxxx of California
95448 ("Maker"), in favor of DRY CREEK CASINO, LLC, which has an address at c/o
Nevada Gold & Casinos, Inc., 0000 Xxxx Xxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx
00000 ("Lender").
Recitals
A. Pursuant to that certain Development and Loan Agreement dated as of
August 26, 2001 ("Loan Agreement") by and between Lender and Maker, Lender will
make certain Development Advances (as such term is defined in the Loan
Agreement) to Maker from time to time, to be evidenced by this Note; and
B. Pursuant to that certain Security Agreement dated as of the date
hereof ("Security Agreement" and together with this Note and the Loan Agreement,
the "Loan Documents"), this Note shall be secured by the Collateral (as such
term is defined in the Security Agreement), which security interest shall be a
first priority lien on the Collateral (as such term is defined in the Security
Agreement), subject only to enforceable Third Party Liens, as set forth in the
Loan Agreement.
Terms of Note
NOW THEREFORE, Maker hereby promises to pay to the order of Lender, or
the holder-in-due-course of this Note, ("Holder") the principal sum of
Dollars ($ ), or so much thereof as may be advanced from time to time, and
interest from the date hereof on the balance of principal from time to time
outstanding, in United States currency, at 12% per annum, in accordance with the
terms and conditions set forth below.
Payment of this Note is governed by the Loan Agreement (including
without limitation, Paragraph 6.9 thereof), the terms of which are incorporated
herein by express reference as if fully set forth herein. Capitalized terms used
herein without a definition shall have the meanings ascribed to them in the Loan
Agreement.
All payments on this Note shall be applied first to the payment of
accrued and unpaid interest, and the remainder thereon shall be applied to the
reduction of the unpaid principal balance of this Note. At any time when the
unpaid principal balance of this Note is equal to zero, the Holder shall cancel
this Note and redeliver it to the Maker.
All payments hereunder shall be made in lawful money of the United
States of America and shall be hand delivered or mailed by prepaid registered
or certified first class mail to the Holder at such place and in such manner as
the Holder shall specify by written notice to the Maker.
If any payment under this Note is not made when due, the Maker, and
every entity or person who assumes the obligations of this Note, promises to pay
to the Holder all damages and costs of collection, including, without
limitation,, reasonable attorney's fees, whether or not suit is filed hereon.
Notwithstanding any provision to the contrary contained in this Note,
the Maker shall not be required to pay, and the Holder shall not be permitted to
collect, any amount of interest in excess of the maximum amount of interest
permitted by applicable law ("Excess Interest"). If any Excess Interest is
provided for or determined by a court of competent jurisdiction to have been
provided for in this Note, then in such event: (1) the provisions of this
paragraph shall govern and control; (2) the Maker shall not be obligated to pay
any Excess Interest; (3) any Excess Interest that the Holder may have received
hereunder shall be, at the Holder's option, (a) applied as a credit against the
outstanding principal balance of this Note (not to exceed the maximum amount
permitted by applicable law), (b) refunded to the party which had paid such
Excess Interest, or (c) any combination of the foregoing; and (4) the interest
rate(s) provided for herein shall be automatically reduced to the maximum lawful
rate allowed from time to time under applicable law, and this Note shall be
deemed to have been, and shall be, reformed and modified to reflect such
reduction.
The Maker waives presentment, demand, protest, notice of protest,
notice of dishonor, notice of nonpayment, and demand and notice of any kind with
respect to this Note.
No delay or omission on the part of the Holder or any holder hereof in
exercising any rights hereunder or under any other Loan Documents shall operate
as a waiver of any such right or of any other right under the Loan Documents. A
waiver on any one occasion shall not be construed as a bar to or a waiver of any
such right and/or remedy on any future occasion.
Maker understands, acknowledges and agrees that Maker's obligations and
liabilities hereunder are and shall be separate and independent from, and in
addition to, those under the other Loan Documents and that Maker's obligation
and liabilities hereunder or under the Loan Agreement shall not be deemed merged
into or superseded or satisfied by foreclosure upon the Collateral (as defined
in the Security Agreement).
Whenever in this Note reference is made to the Maker or the Holder,
such reference shall be deemed to include, as applicable, a reference to their
respective successors and assigns. The provisions of this Note shall be binding
upon and shall inure to the benefit of such successors and assigns, including,
without limitation, a receiver, trustee or debtor in possession of or for the
Maker or the Holder.
All communications required or permitted under this Note shall be in
writing and shall be delivered in accordance with the notice provisions of the
Loan Agreement.
2
This Note may not be modified, amended, waived, extended, changed,
discharged or terminated orally or by any act or failure to act on the part of
the Maker or Holder, but only by an agreement in writing signed by the party
against whom enforcement of any modification, amendment, waiver, extension,
change, discharge or termination is sought.
This Note, made in the State of California, shall be construed and
enforced according to the laws of the State of California, and if any provision
of this Note is in conflict with the laws of the State of California or is
otherwise unenforceable for any reason, then such provision shall be deemed
separable from and shall not invalidate any other provisions of this Note.
Maker agrees, covenants, represent and warrants that the Loan proceeds
shall be used solely as set forth in the Loan Agreement and not for personal,
family or household purposes. Maker further represents and warrants as follows:
Maker is a federally-recognized Indian tribe with full power and authority to
give this Note. This Note has been duly authorized, executed and delivered by
Maker and constitutes the valid and legally binding obligations of Maker,
enforceable in accordance with its terms against Maker. The execution and
delivery of this Note by Maker and the performance of its duties and obligations
hereunder do not result in a breach of any of the terms, conditions or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, credit agreement, note or other evidence of indebtedness, or any lease or
other agreement, or any license, permit, franchise or certificate to which Maker
is a party or by which it is bound or to which its properties are subject or
require any authorization or approval under or pursuant to any of the foregoing,
or violate any applicable laws, or require any governmental consent that Maker
has not already obtained.
IN WITNESS WHEREOF, Maker has caused this Note to be duly executed and
delivered by its duly authorized officers as of the day first above written.
DRY CREEK RANCHERIA BAND OF POMO
INDIANS, a federally-recognized Indian tribe
By:
------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
3
