1
EXHIBIT 10.30
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") is made and given this 22nd day of
October, 1996, by 000 XXXXX XXXXXX XXXXXXX XXXXXX, a Minnesota limited
partnership ("Debtor"), whose post office address is 0000 Xxxx 00xx Xxxxxx,
Xxxxx 000, Xxxx Xxxxxxx, Xxxxxxxxx 00000 to XXXXXX & XXXXXXXXX INVESTMENTS
CORPORATION, a Minnesota corporation ("Secured Party"), whose post office
address is 300 Pillsbury Center, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx
00000.
PRELIMINARY STATEMENT OF FACTS:
A. National Gaming Companies, Inc., a Minnesota corporation ("Borrower") is
the owner of certain parcels of real estate situate in City of Cripple Creek,
County of Teller, State of Colorado all as more fully described in Exhibit "A"
attached hereto.
B. Debtor is the owner of an additional parcel of land also situate in the
City of Cripple Creek, County of Teller, State of Colorado as described in
Exhibit "A" on which land there is located improvements which are operated as a
gaming casino commonly known as the "Jubilee Casino" ("Casino"). The other
parcels owned by the Borrower provide parking and other facilities for use by
the Casino. As used in this Agreement the term "Premises" includes all of real
property and improvements thereon described in Exhibit "A" attached
("Premises").
C. The Borrower is a limited partner of the Debtor holding a 97.165647%
interest in the Debtor. Cripple Creek Corporation, a Minnesota corporation, is
also a partner of the Debtor and holds a 2% interest as general partner and
holds the remaining percentage interest of the Debtor as a limited partner.
D. The Secured Party is making a loan to the Borrower in the amount of up
to Three Million Five Hundred Sixty-Four Thousand and no/100 Dollars
($3,564,000.00) ("Loan") the proceeds of which are being used to among other
things reimburse the Borrower for costs of acquiring its interest in the Debtor,
the stock of Cripple Creek Corporation, the Premises, to retire existing
indebtedness of the Debtor, to pay off short term debt of the Debtor, to cover
future development costs and to fund various reserves required by the Secured
Party.
E. In order to assure the payment to the Secured Party of the Loan the
Borrower will execute and deliver to the Secured Party its Promissory Note to be
dated of even date herewith in the principal amount of the Loan ("Note") and the
Borrower and Debtor are executing and delivery to the Public Trustee of the
County of Teller, Colorado their Deed of Trust and Security Agreement and
Fixture Financing Statement of even date herewith conveying in trust for the
benefit of Secured Party the Premises (the "Deed of Trust") and other security
instruments ("Other Security Instruments").
2
F. The Note, Deed of Trust and Other Security Instruments are herein
sometimes collectively referred to as the "Loan Documents".
G. The Undersigned are either shareholders of the Debtor and/or National
Lodgings, Inc., or are benefited by the Loan, and each is financially interested
in the Casino.
H. The Loan and all sums due and payable under the Note, the Deed of Trust
and this Assignment are herein sometimes referred to as the "Indebtedness
Secured Hereby".
I. As a condition to the making of the Loan the Undersigned has required
that the Debtor execute and deliver its Guaranty of the Loan guarantying to
Secured Party the due and prompt payment of the Note and performance and
observance of the terms and conditions of the Deed of Trust and other security
documents ("Guaranty").
J. In order to induce the Secured Party to make the Loan and accept the
Guaranty the Secured Party requires that the Debtor grant a security interest to
the Secured Party in the Collateral as set forth in this Agreement.
NOW THEREFORE, in consideration of the sum of One Dollar ($1.00) and other
good and valuable consideration receipt and sufficiency of which is hereby
acknowledged and in order to induce the Secured Party to disburse the Loan:
1. Security Interest. The Debtor grants to Secured Party a security
interest in and to all of the following, to wit ("Collateral"):
a. ACCOUNTS. All Accounts now owned or hereafter acquired by the
Debtor and, which in any event, includes, without limitation, (i) all
accounts receivable, book debts and other forms of obligations now owned or
hereafter received or acquired by or belonging or owing to the Debtor
(including, without limitation, under any trade name, style or division
thereof) whether arising out of goods sold or services rendered by the
Debtor, or from any other transaction, whether or not the same involves the
sale of goods or services by the Debtor (including, without limitation, any
such obligation which might be characterized as an account or contract
right under the UCC), (ii) all of the Debtor's rights in, to and under all
purchase orders or receipts now owned or hereafter acquired by it for goods
or services, and all of the Debtor's rights to any goods represented by any
of the foregoing (including, without limitation, unpaid seller's rights of
rescission, repletion, reclamation and stoppage in transmit and rights to
returned, reclaimed or repossessed goods), (iii) all moneys due or to
become due to the Debtor under all contracts for the sale of goods or the
performance of services or both by the Debtor (whether or not yet earned by
performance on the part of the Debtor or in connection with any other
transaction), now in existence or hereafter occurring, including, without
limitation, the right to receive the proceeds of said purchase orders and
contracts, and (iv) all collateral security and guarantees of any kind
given by any person with respect to any of the foregoing, and
2
3
b. INCOME. All income derived from the operations conducted in the
Casino including all cash, all bank accounts and all payments from any
consumer credit/charge card organization, whether or not now existing or
owed or hereinafter credited or owed, and all proceeds of the foregoing,
whether cash or non-cash, and
c. COMPUTER HARDWARE AND SOFTWARE. All computer hardware and
software and which in any event includes (i) all computer and other
electronic data processing hardware, whether now owned, licensed or leased
or hereafter acquired by the Debtor, including, without limitation, all
integrated computer systems, central processing units, memory units,
display terminals, printers, features, computer elements, card readers,
tape drives, hard and soft disk drives, cables, electrical supply hardware,
generators, power equalizers, accessories and all peripheral devices and
other related computer hardware; (ii) all software programs, whether now
owned, licensed or leased or hereafter acquired by the Debtor, designed for
use on the computers and electronic data processing hardware described in
clause (i) above, including, without limitation, all operating system
software, utilities and application programs in whatsoever form (source
code and object code in magnetic tape, disk or hard copy format or any
other listings whatsoever); (iii) all firmware associated therewith,
whether now owned, licensed or leased or hereafter acquired by the Debtor
including, without limitation, flow charts, logic diagrams, manuals,
specifications, training materials, charts and pseudo codes; (iv) all
documentation for such hardware, software and firmware described in the
preceding clauses (i), (ii) and (iii) above, and (v) all rights with
respect thereto, including, without limitation, any and all licenses,
options, warranties, service contracts, program services, test rights,
maintenance rights, support rights, improvement rights, renewal rights and
indemnifications, and any substitutions, replacements, additions or modern
conversions of any of the foregoing; whether now owned, licensed or leased
or hereafter acquired by the Debtor.
d. CONTRACTS. All Contracts, undertakings or other agreements in or
under which the Debtor may now or hereafter have any right, title or
interest, including, without limitation, with respect to an Account, any
agreement relating to the terms of payment or the terms of performance
thereof, and
e. EQUIPMENT. All Equipment whether now owned, licensed or leased
or hereafter acquired by the Debtor and, which in any event, includes,
without limitation, (i) all equipment and fixtures of every kind and nature
owned by Debtor used in connection with the gaming operations in the Casino
included but not limited to all gaming tables, slot machines, computerized
games and other electronic equipment, (ii) tables, chairs, booths, bar
equipment, utensils, food service equipment, all equipment used in
preparing food for use in the Casino, freezers, refrigerators, dishwashers,
ice machines and entertainment equipment; (iii) all televisions, radios,
cabling, phone and communications systems, and wiring, cash registers,
office equipment, coin wrappers, and the like used in operating the Casino
(iv) all ground keeping lawn sprinklers and lawn maintenance systems owned
by Debtor; (v) all
3
4
vehicles used in the Casino operations including courtesy vans and courtesy
cars; (vi) all food stock, liquor and inventory on hand or on order for the
food and beverage service provided in the Casino; (vii) all cleaning
supplies and equipment; (viii) all convenience items furnished to guests of
the Casino; and all stationery, brochures, booklets, written materials and
writing supplies furnished or made available to the guests of the Casino,
(ix) all of the furniture, fixtures and equipment owned by Debtor used in
the operation of the Premises as a gaming casino including but not limited
to all carpeting, floor coverings, draperies, curtains, lamps, beds,
mattresses, box springs, towels, linens, chests, chairs, lobby furniture
and other furniture used in the operation of the Casino, (x) all security
systems, cameras, monitors, security devices and wiring, and (xi) all other
machinery, equipment, furnishings, fixtures, vehicles, computers and other
electronic data-processing and office equipment and any and all additions,
substitutions and replacements of any of the foregoing, wherever located,
together with all attachments, components, parts, equipment and accessories
installed thereon or affixed thereto, and
f. GENERAL INTANGIBLES. All General Intangibles now owned, licensed
or leased, or hereafter acquired by the Debtor and, which in any event,
includes, without limitation, customer lists, trademarks, patents, rights
in intellectual property, licenses, permits, copyrights, trade secrets,
proprietary or confidential information, inventions (whether patented or
patentable or not) and technical information, procedures, designs,
knowledge, know-how, software data bases, data, skill, expertise,
experience, processes, models, drawings, materials and records, goodwill,
rights of indemnification, all right, title and interest which the Debtor
may now or hereafter have in or under any Contract, and now owned or
hereafter acquired by the Debtor, all licenses and permits used, useful or
necessary in the operation of the Casino, all liquor licenses, gaming
licenses, elevator permits, beverage and food licenses, all right and
interest and into the use of the name and logo "Jubilee Casino" and
"Jubilee Casino and Old Homestead" and all derivatives thereof, all books,
records, writings, data bases, information and other property relating to,
used or useful in connection with, evidencing, embodying, incorporating, or
referring to any of the foregoing, and
g. INSURANCE PROCEEDS AND AWARDS. All awards, payments, proceeds now
or hereafter obtainable by Debtor under any policy of insurance insuring
the Premises including but not limited to the proceeds of casualty
insurance, title insurance, business interruption/rents insurance or other
insurance maintained with respect to the Premises whether by Debtor or
otherwise, and
h. RENTS, INCOME, LEASES AND PROFITS. All rents, income, contract
rights, leases and profits now due or which may hereafter become due under
or by virtue of any lease, license or agreement, whether written or verbal,
for the use or occupancy of the Premises or any part thereof together with
all tenant security deposits, and
4
5
i. CONDEMNATION AWARDS. All awards, compensation and settlements in
lieu thereof made as a result of the taking by power of eminent domain of
the whole or any part of the Premises, including any awards for damages
sustained to the Premises, for a temporary taking, change of grade of
streets or taking of access; and
j. INVENTORY. All inventory of Debtor, whether now owned or
hereafter acquired and wherever located.
Together with improvements, accessions, appurtenances, substitutions and
replacements thereof, insurance proceeds and condemnation awards payable
therefrom together with all proceeds and products thereof and all rights
thereto now or hereafter existing.
2. Representations and Warranties. Debtor warrants and represents to
Secured Party that:
a. Debtor is the true and lawful owner of the Collateral free and
clear from any and all liens, security interest, encumbrances or other
rights, title or interest of any other person, firm or corporation;
b. the Debtor shall defend the Collateral against all claims and
demands of all or any other persons at any time claiming the same or any
interest therein adverse to Secured Party;
c. there are no actions at law, suits in equity, or proceedings
before any governmental agency, commission, bureau or tribunal or any
arbitration proceedings that if adversely determined would adversely affect
the present condition, financial or otherwise, of the Collateral or would
adversely affect the right of the Debtor to pledge and assign all or any
part of the Collateral or rights and security afforded Secured Party
hereunder;
d. The Collateral is used in or for the business of operating the
Casino and all Collateral will be located at the Casino.
e. Debtor will keep the Collateral insured at all times against loss
by fire and/or other hazards concerning which, in the judgment of the
Secured Party, insurance protection is reasonably necessary, in a company
or companies satisfactory to the Secured Party and in amounts sufficient to
protect Secured Party against loss or damage to said Collateral and will
pay the premiums therefor; that such policy or policies of insurance will
be delivered to and held by the Secured Party, together with loss payable
clauses in favor of the Secured Party as its interest may appear, in form
satisfactory to the Secured Party; and Secured Party may act as attorney
for Debtor in obtaining, adjusting, settling and canceling such insurance
and endorsing any drafts.
5
6
f. Debtor will keep the Collateral in good condition and repair,
reasonable wear and tear excepted, and will permit Secured Party to enter
upon any lands owned, leased or otherwise controlled by the Debtor at
reasonable times for the purpose of examining the Collateral.
g. Debtor will pay as part of the debt hereby secured all amounts,
including reasonable attorneys' fees and legal expenses, with interest
thereon, paid by Secured Party (a) for taxes, levies, insurance, repairs
to, or maintenance of the Collateral, and (b) in taking possession of,
disposing of or preserving the Collateral after any default hereinafter
described.
h. Debtor will immediately notify Secured Party of any change in
Debtor's principal office or place of business.
i. Debtor will not without the prior written consent of Secured
Party (a) permit any liens or security interests (other than the security
interest granted hereby) to attach to any of the Collateral; (b) permit any
of the Collateral to be levied upon or attached by legal process; (c) sell
or offer to sell or otherwise transfer the Collateral; (d) do or permit
anything to be done that may impair the value of the Collateral; or (e)
remove or permit the Collateral to be removed from the Collateral.
j. No part of the Collateral are or shall become fixtures.
Notwithstanding and not in derogation of the foregoing, if any of the
Collateral is or is to become a fixture, Debtor agrees to furnish Secured
Party, at its request, with a statement or statements signed by all persons
who have or claim an interest in the real estate concerned, which
statements shall provide that the signer consents to the security interest
created hereby and disclaims any interest in the Collateral as fixtures.
k. No financing statement covering any of the Collateral is on file
in any public office, and at request of Secured Party, Debtor will join
with Secured Party in executing one or more financing statements pursuant
to the Uniform Commercial Code in form satisfactory to Secured Party and
will pay the cost of filing the same in all public offices wherever filing
is deemed necessary or desirable by Secured Party.
3. UCC Law. This Agreement constitutes a Security Agreement under the
Uniform Commercial Code of the State of Colorado (the "Code") and shall be
governed by the Code.
4. Event of Default. An event of default ("Event of Default") shall
occur hereunder upon any of the following:
a. failure to comply with any of the provisions of the Note
including without limitation the failure to make any payment of principal
or interest on the Note when and as the same becomes due (whether at the
stated maturity or at a date fixed for any installment payment or any
accelerated payment date or otherwise); or
6
7
b. failure to pay when due any other Indebtedness Secured Hereby; or
c. an Event of Default as defined therein shall occur under any of
the Loan Document; or
d. Debtor or its general partner shall fail to pay its debts as they
become due, or shall make an assignment for the benefit of its creditors,
or shall admit in writing its inability to pay its debts as they become
due, or shall file a petition under any chapter of the Federal Bankruptcy
Code or any similar law, state or federal, now or hereafter existing, or
shall become "insolvent" as that term is generally defined under the
Federal Bankruptcy Code, or shall in any involuntary bankruptcy case
commenced against it file an answer admitting insolvency or inability to
pay its debts as they become due, or shall fail to obtain a dismissal of
such case within sixty (60) days after its commencement or convert the case
from one chapter of the Federal Bankruptcy Code to another chapter, or be
the subject of an order for relief in such bankruptcy case, or be adjudged
a bankrupt or insolvent, or shall have a custodian, trustee or receiver
appointed for, or have any court take jurisdiction of its property, or any
part thereof, in any proceeding for the purpose of reorganization,
arrangement, dissolution or liquidation, and such custodian, trustee or
receiver shall not be discharged, or such jurisdiction shall not be
relinquished, vacated or stayed within sixty (60) days of the appointment;
or
e. any material representation or warranty made by either Debtor
herein, in the Note, any Loan Documents or in any other instrument given as
security for the Note shall be false, breached or dishonored; or
f. Debtor shall be dissolved, liquidated or wound up or shall fail
to maintain its partnership existence; or
g. the general partner of the Debtor shall be dissolved, liquidated
or wound up or shall fail to maintain its corporate existence.
5. Remedies. Upon the occurrence of an Event of Default, the Secured
Party may without demand, advertisement or notice of any kind (except such
notice as may be required under the Code) and all of which are, to the extent
permitted by law, hereby expressly waived:
a. exercise any of the remedies available to a secured party under
the Code;
b. proceed immediately to exercise each and all of the powers,
rights, and privileges reserved or granted to Secured Party hereunder and
under the Note, and the Loan Documents;
7
8
c. proceed to protect and enforce this Agreement by suits or
proceedings or otherwise, and for the enforcement of any other legal or
equity available to Secured Party;
d. Realize upon the Collateral and hold, own or dispose of the same as
its own property.
Debtor agrees in the event of a default, to make the Collateral available
to Secured Party at a place to be designated by Secured Party which is
reasonably convenient and authorizes Secured Party to enter the Premises to
assemble, possess, store and sell the Collateral. Debtor further agrees to pay
all costs and expenses of Secured Party, including reasonable attorneys' fees,
in the enforcement of any of Secured Party's rights. If any notice of sale,
disposition or other intended action by Secured Party is required by laws to be
given to Debtor, such notice shall be deemed reasonably and properly given if
mailed to Debtor at the address specified above, or at such other address of
Debtor as may be shown on Secured Party's records, at least ten (10) days before
such sale, disposition or other intended action. Waiver of any default
hereunder by Secured Party shall not be waiver of any other default or of a same
default on a later occasion. No delay or failure by Secured Party to exercise
any right or remedy shall be a waiver of such right or remedy and no single or
partial exercise by Secured Party of any right or remedy shall preclude other or
further exercise thereof or the exercise of any other right or remedy at any
other time.
6. Rights Reserved. Unless an Event of Default shall have occurred and be
continuing the Debtor shall be entitled to utilize the Collateral for its use in
the operation of the Project. The Debtor shall be permitted to use the Cash in
the operations of the Casino in the ordinary and prudent course of business.
7. Further Instruments. Debtor agrees to execute such financing statements
as may be required under the Code to perfect the security interest hereunder and
shall from time to time at its expense execute and deliver such assignments and
endorsements and file such additional financing statements as may be required to
create and continue to perfect the security interest intended to be created
herein. Debtor hereby authorizes Secured Party at Debtor's expense, to do all
acts and things which Secured Party may deem necessary to perfect and continue
perfected the security interest created by this security agreement and to
protect the Collateral.
8. Controlling Law. Notwithstanding the place of execution of this
instrument, the parties to this instrument have contracted for Colorado law to
govern this instrument and it is controllingly agreed that this instrument is
made pursuant to and shall be construed and governed by the laws of the State of
Colorado without regard to the principles of conflicts of law.
9. Consent to Jurisdiction. The Debtor submit(s) and consent(s) to
personal jurisdiction of the Courts of the State of Minnesota and Courts of the
United States of America sitting in such State for the enforcement of this
instrument and waive(s) any and
8
9
all personal rights under the laws of any state or the United States of America
to object to jurisdiction in the State of Minnesota. Litigation may be
commenced in any state court of general jurisdiction for the State of Minnesota
or the United States District Court located in that state, at the election of
the Secured Party. Nothing contained herein shall prevent Secured Party from
bringing any action against any other party or exercising any rights against any
security given to Secured Party, or against the Debtor personally, or against
any property of the Debtor, within any other state. Commencement of any such
action or proceeding in any other state shall not constitute a waiver of consent
to jurisdiction or of the submission made by the Debtor to personal jurisdiction
within the State of Minnesota.
10. Notices. Any notices and other communications permitted or required by
the provisions of this Agreement (except for telephonic notices expressly
permitted) shall be in writing and shall be deemed to have been properly given
or served by depositing the same with the United States Postal Service, or any
official successor thereto, designated as Registered or Certified Mail, Return
Receipt Requested, bearing adequate postage, or delivery by reputable private
carrier such as Federal Express, Airborne, DHL or similar overnight delivery
service, and addressed as hereinafter provided. Each such notice shall be
effective upon being deposited as aforesaid. The time period within which a
response to any such notice must be given, however, shall commence to run from
the date of receipt of the notice by the addressee thereof. Rejection or other
refusal to accept or the inability to deliver because of changed address of
which no notice was given shall be deemed to be receipt of the notice sent. By
giving to the other party hereto at least ten (10) days' notice thereof, either
party hereto shall have the right from time to time and at any time during the
term of this Agreement to change its address and shall have the right to specify
as its address any other address within the United States of America.
Each notice to Secured Party shall be addressed as follows:
Xxxxxx & Xxxxxxxxx Investments Corporation
000 Xxxxxxxxx Xxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Vice President - Mortgage Loans
Each notice to Debtor shall be addressed as follows:
000 Xxxxx Xxxxxx Limited Partnership
0000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxxx Xxxxxxx, Xxxxxxxxx 00000
11. Successors and Assigns. This Security Agreement and each and every
covenant and agreement and other provisions hereunder shall be binding upon the
Debtor and its successors and assigns and shall inure to the benefit of Secured
Party and its successors and assigns.
9
10
12. Invalid Provisions. Any enforceability or invalidity of any
provisions hereof shall not render any other provision or provisions herein
contained unenforceable or invalid.
13. Time of Essence. Time is of the essence of this Agreement.
IN FURTHERANCE WHEREOF, the undersigned has caused this Agreement to be
executed as of the date first above written.
000 XXXXX XXXXXX LIMITED
PARTNERSHIP, a Minnesota limited partnership
By: CRIPPLE CREEK CORPORATION, a
Minnesota corporation, its general partner
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------
Its: President
---------------
10
11
EXHIBIT "A"
Description of Premises
PARCEL 1A:
Lots 34 through 00,
Xxxxx 00,
XXXXXXX (xxx Xxxxxxx Xxxxx);
PARCEL 1B:
Lots 37 through 00,
Xxxxx 00,
XXXXXXX (xxx Xxxxxxx Xxxxx);
PARCEL 2:
Xxxx 00 xxx 00X,
(Xxx 00X being formerly known as Xxxx 00, 00 xxx 00),
Xxxxx 22,
FREMONT (now Cripple Creek),
according to the original plat as modified by the Subdivision Exemption
Plat recorded September 12, 1991 in Plat Book L Page 13;
PARCEL 3:
Xxxx 00, 00, xxx 00,
Xxxxx 00,
XXXXXXX (now Cripple Creek);
PARCEL 4:
The Surface only of
Lots 1 through 15,
Block 26,
FREMONT (now Cripple Creek);
PARCEL 5:
Xxxx 0 xxxxxxx 00,
Xxxxx 0,
XXXXXXX XXXXXXX ADDITION TO THE CITY OF CRIPPLE CREEK;
A-1
12
NOTE: The North 1/2 of Xxxxxx Avenue lying Easterly of Fourth
Street and Westerly of the Midland Terminal Railway Right of Way
appears to have been vacated and probably should be included in any
legal documents.
All in Teller County, Colorado.
A-2
