JANUARY 2006 SECURITY AGREEMENT
EXHIBIT
10.17
WHEREVER
CONFIDENTIAL INFORMATION IS OMITTED HEREIN (SUCH DELETIONS ARE DENOTED BY AN
ASTERISK), SUCH CONFIDENTIAL INFORMATION HAS BEEN SUBMITTED SEPARATELY TO THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT
JANUARY
2006 SECURITY AGREEMENT
This
January 2006 Security Agreement (A1/06
SA@)
is made
as of January 19, 2006 (the AEffective
Date@),
by and
between Nevada
Gold & Casinos, Inc.,
a
Nevada corporation (ANGC@)
(as
Maker), and its wholly-owned subsidiary, Black
Hawk Gold, Ltd.,
a
Colorado corporation (ABHG@)
(as
Guarantor), both with their principal places of business at 0000 Xxxx Xxx Xxxx.,
Xxxxx 000, Xxxxxxx, Xxxxx, 00000-0000; and of *
[name
changed to the defined term “Lender” throughout this Agreement*].
I. Recitals
A. To
induce
Lender to loan to NGC under a credit facility dated June 29, 2004, and amended
on January 19, 2006 (collectively referred to as the ACredit
Facility@),
and
under any Promissory Notes executed pursuant to the Credit Facility, up to
a
maximum aggregate principal amount of $55 million, NGC and BHG have agreed
to
grant a security interest in and to pledge certain collateral described below
as
security for the repayment of the loans and for performance of all of the terms
and conditions of the Credit Facility and Notes executed under it. The parties
agree that this 1/06 SA is intended to completely modify the preexisting Amended
and Restated Security Agreement dated June 29, 2004, as of the effective date
of
this 1/06 SA.
B. BHG
is a
wholly-owned subsidiary of NGC. BHG, by and through the action of its board
of
directors, determined in 2004 that it could reasonably expect to benefit,
directly or indirectly, from granting a lien upon the collateral described
below
in order to secure the loans made by Lender to NGC pursuant to the Credit
Facility, and BHG reconfirms that determination in this 1/06 SA. BHG
acknowledges that it is a Debtor and Guarantor of the terms, provisions, and
obligations under the Credit Facility, and Notes issued under it, and under
this
1/06 SA.
II. Agreements
In
consideration of the above items and for other good and valuable consideration,
the receipt and sufficiency of which are acknowledged, the parties agree to
the
following terms and conditions:
A. Defined
Terms.
Attached
to this 1/06 SA is Appendix I, which contains definitions of some of the
specific capitalized terms used in this 1/06 SA as well as in the Credit
Facility (and any Notes or Security Instruments executed pursuant to the Credit
Facility). Appendix I is incorporated by reference into this 1/06 SA for all
purposes. The definitions in Appendix I shall control unless the context of
the
usage of a term requires a different definition. Terms not defined in this
1/06
SA (including Appendix I) or in the Credit Facility (and in any Notes or
Security Instruments executed pursuant to the Credit Facility) that are defined
in the Texas
Uniform Commercial Code,
as
amended and effective as of January 1, 2006 (the AUCC@),
have
the meanings specified in the UCC, and the definitions specified in Article
9 of
the UCC control in the case of any conflicting definitions in the UCC. The
singular number includes the plural and vice
versa.
Captions of sections in this 1/06 SA do not limit the terms of those
sections.
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B. Security
Interest.
To
secure the payment and performance of the Obligations (as that term is defined
in Appendix I) by NGC and BHG under this 1/06 SA, (1) the Credit Facility (and
any Notes or Security Instruments issued pursuant to it), (2) the multiple
Collateral Assignments of Notes, Security Interests, and Membership Interests
(the ACollateral
Assignments@),
(3)
the multiple Commercial Pledge Agreements, and (4) BHG=s
Guaranty (all of which are incorporated by reference into this 1/06 SA for
all
purposes), NGC and BHG grant to Lender a security interest (the ASecurity
Interest@)
in
ALL
ASSETS of NGC and BHG,
including but
not limited to
the
items of collateral described in the Schedule of Collateral, Notes, Security
Interests, and Ownership Interests (the ASchedule@)
that is
attached to and incorporated in this 1/06 SA. This Security Interest is intended
to extend to all products, accessions to, and cash and other proceeds of all
of
the assets of NGC and BHG, including but not limited to those items specifically
described in the Schedule, all of which are collectively referred to in this
1/06 SA as the ACollateral.@
The
Schedule may be executed in counterparts and shall bind NGC, BHG, and each
and
every Debtor that has executed any copy of the Schedule.
Notwithstanding
the provisions of this Section or Section III(C), if NGC invests in a new
subsidiary or acquires assets and the investment or acquisition is financed
in
whole or in part by a third party lender (and no proceeds of the Credit Facility
are used by NGC to finance the investment or acquisition), then the ACollateral@
as
defined above shall not include NGC=s
ownership interest in the new subsidiary or the acquired assets. Lender agrees
to file a UCC-3 terminating any security interest Lender would otherwise have
in
NGC=s
ownership interest in the new subsidiary or the acquired assets and shall
provide, upon the reasonable request of NGC or its third party lender, written
confirmation that the Collateral for the Credit Facility does not include
NGC=s
ownership interest in the new subsidiary or the acquired assets.
The
security granted under this 1/06 SA and under the terms of any and all
Commercial Pledge Agreements, Collateral Assignments of Notes, Collateral
Assignments of Membership Interests, or other security instruments executed
and
delivered at any time, now or in the future, pursuant to the terms of the Credit
Facility shall secure the obligations and indebtedness described in the Credit
Facility and this 1/06 SA and any and all future advances under them, whether
arising by agreement between NGC and Lender or by operation of the provisions
of
any of the documents executed pursuant to the Credit Facility. All makers,
borrowers, debtors, and assignors under any of the various Security Agreements,
Commercial Pledge Agreements, Collateral Assignments of Notes, Collateral
Assignments of Membership Interests, or other security instruments executed
and
delivered at any time, now or in the future, pursuant to the terms of the Credit
Facility, waive any notice of any proposed or implemented future advance of
credit by Lender to NGC or BHG and they agree that a security interest shall
attach in the properties pledged pursuant to any of these instruments
immediately upon the delivery or occurrence of any future advance under the
Credit Facility without their express knowledge or consent.
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C. Perfection
by Possession.
In
addition to any Financing Statements that are required to be filed by Lender
or
that may at her option be filed, Lender or her designee shall have the right
to
maintain possession of the Collateral and any and all powers of attorney
necessary to enforce her Security Interest in any or all of the Collateral
until
any and all amounts due under the Credit Facility and/or any other instrument
or
agreement between the Parties are paid in full and the instruments are all
terminated.
III.
Representations
and Covenants
A. Representations.
NGC and
BHG represent to Lender as follows:
1. NGC
(or
its wholly or partially-owned subsidiaries) and BHG are the respective legal
and
beneficial owners of the Collateral, and BHG is the legal and beneficial owner
of the IC-BH interest;
2. to
the
best of NGC=s
and
BHG=s
knowledge, no dispute, setoff, or counterclaim exists with respect to any part
of the Collateral;
3. the
Collateral is owned by NGC and BHG, respectively, free and clear of any pledge,
mortgage, hypothecation, lien, charge, encumbrance, or security interest except
as previously held by Lender or as created or permitted in this 1/06 SA, and
except for any second lien or subordinated security interest on certain of
the
Collateral given in favor of *, which NGC and BHG both warrant and represent
is
secondary and subordinated to Lender=
lien on
the Collateral;
4. the
BHG
Interest, as defined in Appendix I and as described in the Schedule, constitutes
the entire ownership interest of NGC in BHG, and no other shares of capital
stock in BHG have ever been issued to NGC or to any other person or entity
since
December 23, 1999;
5. the
IC-BH
Interest, as defined in Appendix I and as described in the Schedule, constitutes
the entire ownership interest of BHG in IC-BH, and no other Units in IC-BH
have
ever been issued to BHG, NGC, or to any other person or entity since December
23, 1999;
6. there
are
no restrictions upon the transfer of any of the Collateral other than as set
forth in the entities=
respective Bylaws or Operating Agreement or as may appear on the face of any
ownership certificates and as clearly disclosed by NGC to Lender in the
Schedule;
7. NGC
and
BHG have the full power, authority, and legal right to transfer their respective
items of Collateral free of any encumbrances and without obtaining the consent
of any other person or entity that has not already been obtained (except as
provided in the Schedule);
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8. except
as
provided in the Schedule, the execution and delivery of this 1/06 SA, the
Schedule, the Collateral Assignments, the Credit Facility (and any Notes or
Security Instruments executed pursuant to it), and the performance of their
terms will not result in any violation of any provision of any applicable Bylaws
or Operating Agreement or violate or constitute a default under the terms of
any
material agreement, material indenture or other instrument, license, judgment,
decree, order, law, statute, ordinance, or other governmental rule or regulation
applicable to NGC or to BHG or any of their respective property;
9. this
1/06
SA and the Collateral Assignments are valid assignments of and create a valid
first lien upon and security interest in the Collateral and the proceeds of
the
Collateral;
10. NGC
is
organized under the laws of Nevada and its exact legal name is set forth in
the
opening paragraph of this 1/06 SA, and BHG is organized under the laws of
Colorado and its exact legal name is set forth in the opening paragraph of
this
1/06 SA;
11. NGC
does
not conduct business under any other name (although it does have several
wholly-owned subsidiaries that conduct business under their own names), and
BHG
does not conduct business under any other name; and
12. BHG
shall
not vote any of its units in IC-BH or amend the Operating Agreement in any
manner that would cause the IC-BH Interest or any part of it to be governed
under Article 8 of the Colorado UCC, nor shall it vote any right, take any
action, make any agreement, or suffer an other event that would diminish or
impair the Security Interest granted to Lender under this 1/06 SA.
The
representations set forth in items 1 through 12 of this Section shall be deemed
given again whenever NGC and/or BHG deliver additional Collateral that may
be
required by this 1/06 SA.
B. Covenants.
NGC and
BHG covenant to do the following:
1. deliver
to Lender and/or her designated agent any certificates or instruments that
represent NGC=s
interest in BHG and BHG’s interest in IC-BH or the Collateral, to notify any
entity represented within the Collateral that a security interest has been
granted to Lender, to obtain consent from IC-BH that a security interest in
the
IC-BH Interest has been granted to Lender, and to comply with any additional
notice, consent, acknowledgement, waiver, or agreement requirements that may
be
set forth in the Schedule;
2. deliver
to Lender and/or her designated agent any certificates or instruments that
represent NGC=s
and/or
its subsidiaries=
interest
in the ownership interests provided as Collateral, to notify any entity
represented within the Collateral that a security interest has been granted
to
Lender, to obtain consent from each entity requiring consent that a security
interest has been granted to Lender, and to comply with any additional notice,
consent, acknowledgement, waiver, or agreement requirements that may be set
forth in the Schedule or in the respective entity=s
governing documents;
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3. from
time
to time promptly execute and deliver to Lender all other assignments,
certificates, proxies, entitlement orders, supplemental writings, and financing
statements, and do all other acts and things that Lender may reasonably request
in order to evidence the assignment and perfect and enforce the Security
Interest granted in this 1/06 SA;
4. promptly
furnish to Lender or her attorney or agent with any and all information or
writings that Lender or her attorney or agent may reasonably request concerning
the Collateral;
5. promptly
notify Lender and her attorney of any claim, action, or proceeding affecting
the
Collateral or any part of the Collateral, and at the request of Lender, appear
in and defend, at their own expense, the action or proceeding;
6. notify
Lender and her attorney immediately if either of them becomes aware of the
occurrence of any event, fact, or condition that could become an Event of
Default under this 1/06 SA or under the Credit Facility (or any Note issued
pursuant to the Credit Facility);
7. if
an
event of default occurs, then NGC and BHG, jointly and severally, shall promptly
pay to Lender the amount of all court costs, actual attorneys’ fees, and
expenses of litigation incurred by Lender in enforcing this 1/06 SA and the
Credit Facility (or any Note or Security Instrument issued pursuant to the
Credit Facility) and/or of BHG=s
guaranty;
8. if
an
Event of Default occurs and continues, promptly deliver all proceeds
constituting part of the Collateral to Lender as and when first received by
BHG
or NGC;
9. without
the prior written consent of Lender, not agree to the release, termination,
compromise, amendment, or adjustment of the membership interest of BHG in IC-BH,
any distribution percentages with respect to its membership interest in IC-BH,
the Collateral, or the Operating Agreement in any manner that is materially
adverse to Lender; and
10. not
attempt to or actually sell, assign, or transfer the Collateral (other than
the
sale of furniture, fixtures, and equipment in the ordinary course of business)
or the lien created by this 1/06 SA, nor create any other lien or security
interest in, or otherwise encumber the BHG Interest or the IC-BH Interest or
any
of the Collateral, nor permit any of the Collateral to be or become subject
to
any financing statement, lien, attachment, execution, sequestration, or other
legal or equitable process, nor any lien or encumbrance of any kind other than
as permitted by this 1/06 SA.
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C. Additional
Liens.
All
references in this Section to ANGC@
expressly include BHG, and BHG may not grant a second or any other lien on
any
of the Collateral without complying with the provisions of this Section. Before
NGC may place a second or any other lien on any or all of the Collateral in
favor of anyone other than *, NGC must give Lender, through her counsel (*)
and
her financial advisor (*), formal written notice of the name of the proposed
second or other lienholder (if known) and of the specific terms and conditions
of the proposed loan transaction for which the second or other lien would be
granted (including but not limited to the closing date, interest rate, principal
amount, and maturity date), and Lender shall have seven business days from
the
date on which the notice is received by her to notify NGC of her desire to
make
the loan herself. NGC agrees to promptly provide Lender, through her counsel
(*)
and her financial advisor (*), with any documentation she requests related
to
the proposed transaction with the third party in order to assist her in making
her decision. If Lender does not respond within seven business days, Lender
shall be presumed to have declined to make the loan herself. NGC shall give
Lender, through her counsel (*) and her financial advisor (*), informal notice
of its intent or desire to obtain additional financing and grant a second or
other lien on the Collateral as far in advance as is practicable, which is
presumed to be approximately thirty days before the contemplated closing date
of
the transaction. NGC is not required to resubmit to Lender any financing
resulting in a second or other lien if the closing date, interest rate,
principal amount, and/or maturity date on the final loan transaction are equal
or less favorable to Lender than the original terms proposed by
NGC.
In
the
event NGC complies with this notice provision and is allowed to grant a second
or other lien on the Collateral, NGC agrees that it must comply with all of
the
following provisions before it may grant an effective second or other lien
on
the Collateral:
1. Any
second or other lien given on the Collateral must
be made
expressly subordinate to Lender=s
lien.
NGC shall ensure that the paperwork documenting the transaction with the second
or other lienholder properly notifies the second and/or other lienholder of
the
existence of Lender=s
first
lien and that the second and any other lienholder clearly acknowledges
Lender=s
existence and status as first lienholder on all of the Collateral and that
the
subsequent lienholder=s
debt
and security interest is subordinated to Lender.
2. NGC
shall
ensure that the paperwork documenting the transaction with the second and any
other lienholder clearly instructs the second and any other lienholder that
it
may not even attempt to collect or execute on the Collateral without first
ensuring that the entire first lien balance is paid in full and all loan or
credit transactions between NGC and Lender are completely terminated and are
no
longer in effect. The second and any other lienholder must be required to give
notice of any default by NGC to NGC and Lender concurrently before the second
or
any other lienholder may exercise any collection efforts against the
Collateral.
3. NGC
shall
defend, at its own expense, against any claims by any lienholders other than
Lender against the Collateral.
4. NGC
shall
keep Lender=s
counsel
informed of the status of any second and any other lien and of any default
or
alleged default by NGC on the transaction secured in whole or in part by the
second and/or other lien, and shall reimburse Lender for any and all
attorney=s
fees,
court costs, and expenses incurred by Lender that Lender or her counsel deemed
necessary to protect the Collateral within thirty days after the submission
of
an invoice for the fees or expenses to NGC by Lender=s
counsel.
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5. NGC
shall
provide Lender=s
counsel
with fully-executed copies of all documents related to any transaction giving
any third party a second or other lien on any or all of the Collateral within
three business days of the last signature date on the transaction or the date
the transaction is funded, whichever is earlier.
6. NGC
has
provided to Lender=s
counsel
copies of the fully-executed documents related to the transaction giving *
a
second lien and shall require him and his counsel to provide counsel for Lender
(as set forth below) with copies of any and all notices, including but not
limited to notice of default, that arise from or relate to any of his agreements
with NGC that relate in any way to the second lien. NGC warrants and agrees
that
is has ensured that * agreement expressly and clearly states that his lien
on
the Collateral is subordinate to Lender=s
lien
and Security Interest.
D. Perfection;
Protection of Collateral; Indemnification.
NGC
shall cause the execution of any instrument reasonably necessary to carry out
the terms of and its Obligations under this 1/06 SA or under the Credit Facility
and any accompanying or related Promissory Note and/or Security Instrument.
NGC
shall cause any entity in which it has the right or power to produce an
affirmative and effective act to execute guarantees, notes, and security
instruments as reasonably necessary to carry out this 1/06 SA or the Credit
Facility and to ensure the broadest and most effective security for Lender
for
all funds advanced under this 1/06 SA or under the Credit Facility. NGC shall
bear the cost of perfection of all Security Interests granted under this 1/06
SA
in any applicable or desirous jurisdiction as necessary to protect Lender,
and,
in addition, as may be directed by Lender or her attorney in her sole and
exclusive discretion. NGC shall be the guarantor of the perfection of Security
Interests under this 1/06 SA and no failure on the part of Lender to perfect
shall inure to the benefit of NGC or any assignee, holder, or trustee in
bankruptcy as any failure of this type shall be deemed the fault and to the
prejudice of NGC and its estate. NGC shall execute any and all documents
reasonably necessary to carry out the provisions of all of this 1/06 SA, the
Credit Facility, and/or any Note or Security Instrument executed pursuant to
the
Credit Facility. NGC shall pay all costs and all actual attorneys=
fees
incurred by Lender in connection with this 1/06 SA or the Credit Facility,
the
execution of any documents under it, and the perfection of any Security
Interests under it within ten days of presentation to it of these charges.
NGC
also agrees that it will use its best efforts to protect the Collateral; to
prevent any loss, theft, substantial damage, destruction, sale, or encumbrance
to or of any of the Collateral; and to defend against any actual or attempted
levy, seizure, or attachment of or on any of the Collateral.
In
the
event Lender finds it necessary to take action to protect the Collateral against
the actions of third parties or against any wrongful conduct of NGC, or in
the
event that Lender finds any failure by NGC to use its best efforts to protect
the Collateral, NGC agrees that it shall indemnify Lender for any and all
attorney=s
fees,
court costs, and any and all other expenses incurred in her efforts to protect
the Collateral. NGC understands and agrees that it shall promptly pay Lender
for
any and all of these expenses and shall do so, from time to time, as reasonably
necessary to fund and maintain the litigation so that Lender shall not be
required to expend her own funds on this litigation while pending, In no event
shall these attorney=s
fees
and expenses be paid later than thirty days after the date on which they are
submitted to NGC.
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IV. Effects
of and Remedies for an Event of Default
A. Notice
of Default.
Lender
is not required to provide NGC with any notice whatsoever of any Default by
NGC
or any failure of NGC to timely make any principal payment when due, save and
except that Lender must give notice of a late interest payment before that
late
payment is deemed a Default as described in the Credit Facility or in any other
applicable loan document. However, failure by Lender to give notice of any
late
interest payment to NGC does not relieve NGC of its obligation to make the
payment or of the application of the default interest rate upon the failure
to
timely make the interest payment as provided in the Credit
Facility.
B. Adjustments
and Distributions.
If an
Event of Default has occurred and continues, all payments and distributions
of
any nature pertaining to the Collateral shall be delivered to Lender to be
applied toward payment of the Obligations. If any of the Collateral is converted
into another type of property or if any money or other proceeds are paid or
delivered to or for credit to the account of NGC or BHG as a result of either
of
their rights in the Collateral, all of that property, money, and other proceeds
are part of the Collateral. After an Event of Default, NGC and BHG will
immediately pay and deliver all property, money, and other proceeds of
Collateral that either of them has or has received to Lender, and NGC and BHG
shall take all other steps necessary to ensure Lender has control over the
Collateral. In this event, and if Lender so requests, NGC and BHG will promptly
endorse or assign all other property and proceeds to Lender and deliver to
Lender all proceeds that require perfection by possession under the UCC and
that
Lender does not already have. If any of this property requires any additional
security agreement, financing statement, or other writing to create or perfect
a
security interest in favor of Lender, NGC and BHG shall promptly execute and
deliver or cause to be executed and delivered to Lender any document or
instrument Lender deems is reasonably necessary or proper for those purposes.
Lender shall not be liable for any error, omission, or delay occurring in the
settlement, collection, or payment related to the IC-BH Interest or the
Collateral or of any property or instrument received pursuant to this 1/06
SA.
C. Remedies.
If an
Event of Default occurs and continues, in addition to any other rights and
remedies that Lender may have under this 1/06 SA, under the UCC, or otherwise,
Lender may, to the extent permitted by applicable law and at her discretion,
and
without notice to NGC or BHG except as specifically provided, take any one
or
more of the following actions without liability except to account for property
actually received by her, and NGC and BHG agree that it is commercially
reasonable for Lender, in her sole discretion, to do any of the
following:
1. cease
making any further advances or loans to NGC or any of its related entities
under
the Credit Facility or any other instrument, and any obligation of Lender to
make any further advances or loans to NGC shall terminate;
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2. receive
the income, property, and other distributions related to the Collateral and
hold
them or apply them to the Obligations in any order selected by
Lender;
3. exchange
any of the Collateral for other property upon a reorganization, dissolution,
or
other readjustment and, in connection with the exchange, deposit any of the
Collateral with any committee or depository upon any terms that Lender may
determine;
4. in
her
name, or in the name of NGC and/or BHG, demand, xxx for, collect, or receive
any
money or property at any time payable with respect to any of the Collateral
and,
in connection with these efforts, endorse notes, checks, drafts, money orders,
and other instruments in the name of NGC or BHG, as applicable;
5. apply
any
cash held as Collateral to the Obligations and reduce her claim to judgment
or
foreclose or otherwise enforce the Security Interest, in whole or in part,
by
any available procedure;
6. make
any
compromise or settlement deemed advisable with respect to any of the
Collateral;
7. renew,
extend, or otherwise change the terms and conditions of any of the Collateral
or
the Obligations;
8. take
or
release any other collateral as security for any of the Collateral or the
Obligations;
9. add
or
release any guarantor, endorser, surety, or other party to any of the Collateral
or the Obligations;
10. without
demanding performance or making any other demand, advertisement, or notice
of
any kind (except the notice specified in the Credit Facility for the late
payment of interest, and the notice specified below of public sale or private
sale if required under the UCC) to or upon NGC and/or BHG (as applicable),
or
upon any other person (all of which are, to the extent permitted by law,
expressly waived), immediately convert the Collateral or any part of it into
cash, and sell or otherwise dispose of or, if appropriate, issue entitlement
orders with respect to, or deliver the Collateral or any part of it or interest
in it in one or more parcels at public or private sale or sales at Lender’s
office or elsewhere, at any price and on any terms (including, without
limitation, a requirement that any purchaser of any of the Collateral purchase
the Collateral for investment without any intention to make any distribution
of
it) that she deems best, for cash or on credit, or for future delivery without
assumption of any credit risk, with any purchaser to purchase the Collateral
at
any sale free from any right of equity of redemption in NGC or BHG (as
applicable), and this right or equity is expressly waived and released by NGC
and BHG;
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11. request
an
appropriate court to appoint a receiver for the Collateral, or any part of
it,
and NGC and BHG, by their execution of this 1/06 SA, both consent to the
appointment of a receiver; and
12. exercise
any other rights she may have under this 1/06 SA, under the UCC, or
otherwise.
D. Notification
of Sale.
Reasonable notification of the time and place of any public or private sale
or
disposition of the Collateral shall be sent to NGC and/or BHG (as applicable)
and to any other person or entity entitled under law to notice; provided that
if
any of the Collateral threatens to decline speedily in value or is of the type
customarily sold on a recognized market, Lender may sell, issue entitlement
orders, or otherwise dispose of the Collateral without notification,
advertisement, or other notice of any kind. NGC and BHG both agree that notice
sent or given not less than seven calendar days prior to the taking of the
action to which the notice relates is reasonable notice for purposes of this
Section. The sale of any part of the Collateral shall not exhaust Lender’s power
of disposition of any of the remaining Collateral. Lender is under no duty
to
exercise or withhold the exercise of any of the rights, powers, privileges,
or
options expressly or implicitly granted to Lender in this 1/06 SA, and Lender
is
not responsible for any failure to do so or delay in so doing.
E. Enforcement
of Rights.
NGC and
BHG agree that it is commercially reasonable for Lender to exercise her rights
related to the Collateral in any manner and in any order Lender may determine.
Nothing contained in this 1/06 SA requires Lender to sell all or any part of
the
Collateral or to collect, or attempt to collect, any sum payable by reason
of
the Collateral before Lender may assert liability and collect the Obligations,
nor is Lender obligated to attempt to collect the Obligations before selling
all
or any part of the Collateral. Lender may, without foreclosing on the
Collateral, collect and otherwise enforce on the Collateral or any proceeds
of
any Collateral all amounts owing under the Credit Facility (and/or under any
Note or Security Instrument issued pursuant to the Credit Facility) or otherwise
enforce all of NGC=s,
BHG’s,
or Lender’ rights under the Credit Facility or in any of the Collateral and
apply those collections as provided in this 1/06 SA, or she may foreclose on
the
Collateral. Lender may hold funds as additional Collateral or may, at her
discretion, apply them to the Obligations. Lender may attempt to collect from
any person liable to NGC and/or BHG to deliver any proceeds related to the
Collateral, by suit or otherwise, any sums due and to otherwise to enforce
NGC
and/or BHG’s rights regarding those proceeds.
F. Power
of Attorney.
1. NGC
appoints Lender (and her successors and assigns) as NGC’s attorney-in-fact
(without requiring her to act in that capacity), with full power of
substitution, to do any act that NGC is obligated to do by this 1/06 SA,
including but not limited to the power to do the following: (a) endorse the
name
of NGC on all checks, drafts, money orders, or other instruments for the payment
of monies that are payable to NGC and constitute collections of the Collateral;
(b) execute in the name of NGC any schedules, assignments, instruments,
documents, financing statements, applications for registration, and other papers
to perfect, preserve, or enforce the Security Interest; (c) exercise all rights
of NGC in the Collateral, save and except NGC=s
voting
rights, which pass to Lender only
after an
Event of Default has occurred and has not been timely cured by NGC; (d) make
collections and execute all papers and instruments and do all other things
it
deems appropriate to preserve and protect the Collateral and to protect Lender’
interest in the Collateral; (e) release any party liable on the Collateral
and
to give receipts and acquittances and compromise disputes related to the
Collateral; (f) release security for any Collateral; (g) make withdrawals from
deposit accounts and other accounts with any financial institution, wherever
located, into which proceeds from the Collateral may have been deposited and
to
apply those funds to the payment of the Obligations; and (h) do all acts and
things and execute all documents in the name of NGC or otherwise, that Lender
reasonably deems are necessary, proper, and convenient in connection with the
preservation, perfection, and enforcement of her rights under this 1/06 SA.
Lender is required to execute this Power of Attorney only for purposes proper
under this 1/06 SA, the Credit Facility, and any Notes executed pursuant to
this
1/06 SA for her benefit and she shall owe no other duty as agent when exercising
these powers.
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2. BHG
appoints Lender (and her successors and assigns) as BHG’s attorney-in-fact
(without requiring her to act in that capacity), with full power of
substitution, to do any act that BHG is obligated to do by this 1/06 SA,
including but not limited to the power to do the following: (a) endorse the
name
of BHG on all checks, drafts, money orders, or other instruments for the payment
of monies that are payable to BHG and constitute collections of the Collateral;
(b) execute in the name of BHG any schedules, assignments, instruments,
documents, financing statements, applications for registration, and other papers
to perfect, preserve, or enforce the Security Interest; (c) exercise all rights
of BHG in the Collateral, save and except BHG=s
voting
rights, which pass to Lender only
after an
Event of Default has occurred and continues; (d) make collections and execute
all papers and instruments and do all other things it deems appropriate to
preserve and protect the Collateral and to protect Lender’ interest in the
Collateral; (e) release any party liable on the Collateral and to give receipts
and acquittances and compromise disputes related to the Collateral; (f) release
security for any Collateral; (g) make withdrawals from deposit accounts and
other accounts with any financial institution, wherever located, into which
proceeds from the Collateral may have been deposited and to apply those funds
to
the payment of the Obligations; and (h) do all acts and things and execute
all
documents in the name of BHG or otherwise, that Lender reasonably deems are
necessary, proper, and convenient in connection with the preservation,
perfection, and enforcement of her rights under this 1/06 SA. Lender is required
to execute this Power of Attorney only for purposes proper under this 1/06
SA,
the Credit Facility, and any Notes executed pursuant to this 1/06 SA for her
benefit and she shall owe no other duty as agent when exercising these
powers.
All
persons dealing with Lender shall be fully protected in treating the powers
and
authorities conferred by this Section as continuing in full force and effect
until advised by Lender that all Obligations are finally paid. The powers and
authority granted pursuant to this 1/06 SA are made for valuable consideration,
are coupled with an interest, are irrevocable and non-terminable so long as
any
part of the Obligations is unpaid, and until NGC and BHG have fully and finally
complied with all of the Obligations. These Powers of Attorney are durable
and
they shall not be affected by any act of NGC or BHG or any other person or
by
operation of law, including, without limitation, the dissolution, death,
disability, or incompetency of any person. Lender agrees she will not exercise
her powers as attorney-in-fact until an Event of Default.
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V. Default
A. NGC
and/or BHG will be in default of this 1/06 SA, the Credit Facility, and of
each
and every Note and Security Instrument executed pursuant to the Credit Facility
if NGC fails in its performance of any duty imposed on it in the Credit
Facility, or if any of the following happens (ADefault@
or
AEvent
of
Default@):
1. NGC
fails
to timely make any principal payment at maturity;
2. on
any
funds obtained by NGC under the Credit Facility and then loaned by NGC to any
third party or to any fully or partially-owned subsidiary of NGC (collectively,
a Athird
party@),
if NGC
is repaid any principal by a third party and NGC fails to repay to Lender the
corresponding amount of principal it obtained under the Credit Facility within
five business days of its receipt of the third party principal repayment, then
NGC shall be in Default;
3. Lender
does not receive an interest payment on or before the fifth day after Lender
gives notice to NGC of the late payment;
4. NGC
defaults under any loan, extension of credit, security agreement, purchase
or
sales agreement, contractual obligation, or any agreement in favor of any
creditor or person (as Adefault@
is
defined in that instrument and after giving effect to all applicable cure
periods) and that default results in NGC owing, through default and/or
acceleration, an amount in excess of $3 million;
5. NGC
defaults on its agreement and/or subordinated loan agreement with * dated on
or
about June 29, 2004;
6. NGC
fails
to timely comply with the Obligations (other than those Obligations specifically
identified in this Section);
7. NGC
breaches any covenant, representation, or warranty in this 1/06 SA, the Credit
Facility, or in any other Note or Security Instrument executed pursuant to
the
Credit Facility, and NGC does not cure that breach within thirty days after
the
breach, and NGC agrees to give Lender prompt notice of the breach;
8. NGC
makes
an assignment for the benefit of creditors, files for bankruptcy protection,
is
adjudicated insolvent, a receiver is appointed for any wholly or partially
owned
entity in which NGC is a member, partner, shareholder, or equitable holder
of
any type, or any involuntary proceeding is commenced against NGC under any
bankruptcy or insolvency laws and that involuntary proceeding is not dismissed
within sixty days after it is filed;
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9. NGC
grants or attempts to grant to any third party a lien on the Collateral without
complying with the procedure and provisions in Section II(L) of the Credit
Facility; and/or
10. a
final,
non-appealable judgment in litigation or arbitration is entered against NGC
where the total amount of the judgment, including actual damages, pre- and
post-judgment interest, attorney=s
fees,
court costs, and/or punitive damage, exceeds $3 million.
B. If
an
Event or Default occurs, then Lender shall have all of the rights and remedies
available to her under the law as well as all of those set forth in the Credit
Facility and in this 1/06 SA.
VI. Miscellaneous
Provisions
A. Notices.
Any
notice required or permitted by this 1/06 SA shall be effective if given in
accordance with the provisions set forth in the Credit Facility.
B. Duties
of Lender.
Lender’s
duty regarding the Collateral at any time prior to full and final payment of
all
of the Obligations is solely to use reasonable care in the custody and
preservation of the Collateral. Lender is deemed to have exercised reasonable
care in the custody and preservation of the Collateral if the Collateral is
accorded treatment substantially equal to that which Lender accords her own
property. Lender has no responsibility for ascertaining or taking action with
respect to fixing or preserving rights against prior parties to the Collateral,
calls, conversions, exchanges, maturities, tenders, or other matters relative
to
any Collateral or for informing NGC or BHG of these matters regardless of
whether Lender has or is deemed to have any knowledge of these matters. Lender
is not required to take any steps necessary to preserve any rights in the
Collateral against prior parties or to protect, perfect, preserve, or maintain
any Security Interest given to secure the Collateral. Lender is not liable
for
her failure to use due diligence in the collection of the Obligations, or for
her failure to give notice to NGC or BHG of default in the payment of the
Obligations, or in the payment of or upon any security, whether pledged under
this 1/06 SA or otherwise, nor for a decline in the market value of the
Collateral.
C. Indemnification.
NGC and
BHG both agree to indemnify and to hold Lender harmless, in the absence of
Lender’s gross negligence or willful misconduct, from and against any loss,
claim, demand, or expense (including attorneys’ fees) by reason, or in any
manner related to, the Collateral or the foreclosure, sale, or other disposition
and subsequent ownership of any part of the Collateral, including but not
limited to (1) any claim that may arise because of any alleged breach of
warranty concerning the Collateral; and (2) any claims that any transferee
of an
interest in IC-BH has any liability for existing or future obligations of IC-BH
in excess of the transferee=s
interest in IC-BH (a) through the terms of the Operating Agreement, (b) through
the failure of NGC, BHG, or IC-BH to comply with the Operating Agreement, (c)
through the failure of NGC, BHG, or IC-BH to comply with any state or federal
statute, rule, regulation, order, or decree, or (d) due to Lender’s efforts to
enforce payment of the Obligations or the Collateral, including expenses
incurred in satisfying any applicable securities and banking laws.
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D. Expenses.
If an
Event of Default under this 1/06 SA, the Credit Facility, or any Note or
Security Instrument issued pursuant to the Credit Facility occurs, NGC and
BHG,
jointly and severally, shall promptly pay, upon demand, any and all actual
attorney=s
fees
and out-of-pocket expenses incurred by Lender related to the Event of Default
to
the extent permitted by applicable law, but in no event shall these
attorney=s
fees
and expenses be paid later than thirty days after the date on which they are
submitted to NGC and/or BHG. Additionally, NGC and BHG, jointly and severally,
shall promptly pay all costs, expenses, taxes, assessments, insurance premiums,
court costs, actual attorneys’ fees, expenses of litigation, expenses of sales,
and other similar and related expenses incurred by Lender to enforce her rights
and remedies under this 1/06 SA, regardless of whether they are incurred before
or after the occurrence of an Event of Default or incurred in connection with
the perfection, preservation, or defense of the Security Interest, or the
custody, protection, collection, repossession, enforcement, or sale of the
Collateral. All of these expenses shall become part of the Obligations and
shall
bear interest at the Default Rate (as defined in the Credit Facility) from
the
date paid or incurred by Lender or her attorney until paid by NGC or
BHG.
E. Financing
Statement.
NGC and
BHG both authorize Lender to file financing statements (and, if necessary or
appropriate, sign NGC=s
and
BHG’s names, respectively, on financing statements to authenticate them)
describing the Collateral. Lender shall be entitled, but not required, to file
financing statements describing the assets as AALL
ASSETS, including but not limited to the assets listed on the attached
>Schedule
of Collateral, Notes, Security Interests, and Ownership Interests,=@
or
similar language, and to attach a copy of the Schedule to the financing
statement. A carbon, photographic, or other reproduction of this 1/06 SA or
a
financing statement describing the Collateral with the attached Schedule shall
be sufficient as a financing statement to the full extent permitted by
applicable law.
F. Further
Assurances.
NGC and
BHG both agree to execute all other documents and instruments reasonably
requested by Lender or her attorney to effectuate the intent of this 1/06 SA
upon written request by Lender or her attorney after the date of this 1/06
SA.
G. Amendment
and Written Waiver.
No
waiver, modification, or alteration of any provision of this 1/06 SA, nor
consent to any departure from the terms of it or from the terms of any other
document, shall be effective unless it is in writing and signed by NGC, BHG,
and
Lender, and any executed waiver shall be effective only for the specific purpose
and in the specific instance set forth in that document. Any document purporting
to amend or modify this 1/06 SA shall be of no force or effect unless the
document expressly states that it is intended to amend or modify the 1/06 SA
and
it is signed by all parties to this 1/06 SA. No waiver by Lender of any Event
of
Default shall be deemed to be a waiver of any other or subsequent Event of
Default nor shall the waiver be deemed to be a continuing waiver.
H. Benefit.
This
1/06 SA is binding upon and inures to the benefit of NGC, BHG, and Lender and
their respective heirs, legal representatives, successors, and assigns, provided
that neither NGC nor BHG may assign any rights, powers, duties, or obligations
under this 1/06 SA without the prior written consent of Lender.
I. Remedies
Cumulative.
All
rights and remedies of Lender under this 1/06 SA are cumulative of each other
and of every other right or remedy that Lender may otherwise have at law or
in
equity or under any other document for the enforcement of the Security Interest
or the enforcement of any duties of NGC, BHG, or any other party liable in
respect to the Obligations. The exercise by Lender of one or more rights or
remedies shall not in any way affect her right to exercise any of her other
rights or remedies, or to subsequently exercise the same rights or remedies
in
the future.
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J. Course
of Dealing.
No
course of dealing between NGC, BHG, and Lender, nor any failure or delay by
Lender in exercising any of her rights, powers, or privileges under this 1/06
SA
or under the Credit Facility shall operate as a waiver of any of
Lender=s
rights,
powers, or privileges; nor shall any single or partial exercise of any right,
power, or privilege under this 1/06 SA or the Credit Facility preclude any
other
or further exercise of that right, power, or privilege or the exercise of any
other right, power or privilege.
K. Severability.
The
invalidity of any one or more phrases, sentences, clauses, paragraphs, or
sections of this 1/06 SA shall not affect the remaining portions of this 1/06
SA. If any one or more of the phrases, sentences, clauses, paragraphs, or
sections contained in this 1/06 SA are invalid, or operate to render this 1/06
SA invalid, then this 1/06 SA shall be construed as if the invalid phrase or
phrases, sentence or sentences, clause or clauses, paragraph or paragraphs,
or
section or sections had not been inserted.
L. Satisfaction
of Obligations.
Upon the
full and final satisfaction of all of the Obligations, as determined by Lender,
this 1/06 SA shall terminate, and Lender shall deliver to NGC and to BHG, at
their expense, the Collateral remaining in her possession that has not been
sold
or otherwise applied pursuant to this 1/06 SA, and Lender shall provide any
other termination statements reasonably required by NGC and/or BHG, also at
their expense.
M. Governing
Law.
The
substantive laws of the State of Texas govern the validity, construction,
enforcement, and interpretation of this 1/06 SA unless the laws of the State
of
Texas require the application of the laws of another state. This 1/06 SA is
performable in Xxxxxxxxxx County, Texas.
N. Controlling
Document.
To the
extent that this 1/06 SA conflicts with or is in any way incompatible with
any
other loan document concerning the Obligations that involves any loan of funds
by Lender to NGC and/or BHG, this 1/06 SA shall control over any other document,
and if this 1/06 SA does not address an issue, then each other loan document
executed by Lender shall control to the extent that it deals most specifically
with an issue.
O. Incorporation
of Other Documents.
The
Parties agree that (1) the Amended and Restated Credit Facility dated January
19, 2006, any Notes or Security Instruments issued pursuant to it; (2) the
Schedule of Collateral, Notes, Security Interests, and Ownership Interests
attached to the January 2006 Security Agreement; (3) the multiple Commercial
Pledge Agreements; (4) the multiple Guarantees; and (5) the multiple Collateral
Assignments of Notes, Security Interests, and Membership Interests dated January
19, 2006, are all incorporated by reference in this 1/06 SA for all purposes
as
if fully set forth at length, and that these documents are collectively referred
to as the ACredit
Facility Documents.@
The
Credit Facility Documents are the final integration of the complete agreement
between the Parties regarding the grant of a Credit Facility by Lender to NGC.
All prior agreements, representations, negotiations, and offers are merged
into
the terms of the Credit Facility Documents, although no preexisting rights
or
remedies of Lender, including but not limited to perfection of security
interests in any Collateral, under the June 29, 2004, Credit Facility and
Amended and Restated Security Agreement are intended to be extinguished by
the
merger of the Credit Facility Documents. The Credit Facility Documents
completely express the entirety of the agreement between the
Parties.
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The
parties have executed this instrument to be effective as of January 19,
2006.
| Maker: | Guarantor: | |||
| Nevada Gold & Casinos, Inc. | Black Hawk Gold, Ltd. | |||
| By: |
/s/
H. Xxxxxx Xxxx
|
By: |
/s/
H. Xxxxxx Xxxx
|
|
|
H.
Xxxxxx Xxxx,
Chief Executive Officer
|
H.
Xxxxxx Xxxx,
President
|
|||
|
0000
Xxxx Xxx Xxxx., Xxxxx 000
|
0000
Xxxx Xxx Xxxx., Xxxxx 000
|
|||
|
Xxxxxxx,
Xxxxx 00000-0000
|
Xxxxxxx,
Xxxxx 00000-0000
|
|||
Secured Party:
/s/
Lender
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APPENDIX
I
TO
THE JANUARY 2006 SECURITY AGREEMENT
Between
Nevada Gold & Casinos, Inc., Black Hawk Gold, Ltd.,
and
Lender, dated January 19, 2006
Definitions
The ABHG
Interest@
means
all of NGC’s ownership interest in BHG, which is represented by certificate no.
1 in the amount of 1,000 shares of common stock in BHG, dated May 15, 1997,
and
issued to NGC, and which constitute all of the shares of capital stock issued
to
any person or entity by BHG.
AIC-BH@
means
Isle of Capri Black Hawk, L.L.C., a Colorado limited liability
company.
The AIC-BH
Interest@
means
all of BHG’s ownership interest in IC-BH, and all of NGC=s
ownership interest in BHG, and represented by the following certificates
representing Units and shares of common stock as follows:
IC-BH
Certificate No. 8 for 360 Units dated February 16, 1998, issued to
BHG;
IC-BH
Certificate No. 10 for 40 Units dated February 16, 1998, issued to
BHG;
IC-BH
Certificate No. 11 for 30 Units dated August 17, 1998, issued to BHG;
and
BHG
Certificate No. 1 for 1,000 shares of common stock dated May 15, 1997, issued
to
NGC.
The
IC-BH
Units issued to BHG and described above constitute all of the Units issued
by
IC-BH to BHG.
AObligations@ means
any
and all of the duties, responsibilities, and obligations of NGC and BHG under
the Credit Facility, the Collateral Assignment, and this 1/06 SA, and to repay
all amounts advanced by Lender pursuant to the Credit Facility and this 1/06
SA,
and to pay the expenses described in Sections III(C)(4), III(D), and VI(D)
of
the 1/06 SA, and the obligations of NGC and/or BHG:
(a) to
pay
the principal of, interest on, and any other indebtedness arising from the
Credit Facility in accordance with its terms, and all valid renewals,
extensions, modifications, and amendments of the Credit Facility or any part
of
it, and any future advances made pursuant to the Credit Facility;
(b) to
repay
to Lender all amounts advanced by Lender under the Credit Facility to or on
behalf of NGC;
(c) to
comply
with and to perform fully all of the terms and provisions of this 1/06 SA,
the
Collateral Assignment, and the Credit Facility;
(d) to
reimburse Lender for all of Lender’s actual expenses and costs that NGC and BHG
are obligated to pay, jointly and severally, pursuant to the terms of this
1/06
SA or the Credit Facility, excluding interest and principal payment obligations,
within the time provided for payment; and
(e) to
provide to Lender the security and Collateral described in the Collateral
Assignment, the Credit Facility, and this 1/06 SA.
AOperating
Agreement@
means
the Isle of Capri Black Hawk, L.L.C. Amended and Restated Operating Agreement
and any and all amendments to it.
