SECURITY AGREEMENT
EXHIBIT
10.11
THIS
SECURITY AGREEMENT (“Agreement”) is made and entered into as of the 31st day of
December, 2008, by and among Nevada Gold Holdings, Inc., a
Delaware corporation (the “Company”), Nevada Gold Enterprises, Inc.,
a Nevada corporation (“Subsidiary”), and the Buyers (as defined
below).
RECITALS:
WHEREAS, the Company will
issue and deliver to each party listed as a buyer (the “Buyers”) on the Schedule
of Buyers attached to that certain Securities Purchase Agreement dated of even
date herewith (“Securities Purchase Agreement”) its 10% Secured Convertible
Promissory Note (each, a “Note” and together, the “Notes”) in the aggregate
principal amount of up to One Hundred Fifty Thousand Dollars ($150,000), the
first of which Notes shall be dated as of the date of this Agreement;
and
WHEREAS, pursuant to the
Securities Purchase Agreement, the Company has agreed to grant and to cause the
Subsidiary to grant a security interest in and to the Collateral (as defined in
this Agreement) to the Buyers on the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, for and in
consideration of the premises and intending to be legally bound, the parties
covenant and agree as follows:
1. Definitions. In
addition to the words and terms defined elsewhere in this Agreement, the
following words and terms shall have the following meanings, unless the context
otherwise clearly requires:
“Accounts”
shall have the meaning given to that term in the Code and shall include without
limitation all rights of the Company or the Subsidiary, whenever acquired, to
payment for goods sold or leased or for services rendered, whether or not earned
by performance.
“Agent”
shall mean ____________________________.
“Chattel
Paper” shall have the meaning given to that term in the Code and shall include
without limitation all writings owned by the Company or the Subsidiary, whenever
acquired, which evidence both a monetary obligation and a security interest in
or a lease of specific goods.
“Code”
shall mean the Uniform Commercial Code as in effect on the date of this
Agreement and as amended from time to time, of the state or states having
jurisdiction with respect to all or any portion of the Collateral from time to
time.
“Collateral”
shall mean (i) all tangible and intangible assets of Company and the Subsidiary,
including, without limitation, collectively the Accounts, Chattel Paper, Deposit
Accounts, Documents, Equipment, Fixtures, General Intangibles, Instruments,
Intellectual Property, Inventory, Investment Property, and Proceeds of each of
them.
“Deposit
Accounts” shall have the meaning given to that term in the Code and shall
include a demand, time, savings, passbook or similar account maintained with a
bank, savings bank, savings and loan association, credit union, trust company or
other organization that is engaged in the business of banking.
“Documents”
shall have the meaning given to that term in the Code and shall include without
limitation all warehouse receipts (as defined by the Code) and other documents
of title (as defined by the Code) owned by the Company or the Subsidiary,
whenever acquired.
“Equipment”
shall have the meaning given to that term in the Code and shall include without
limitation all goods owned by the Company or the Subsidiary, whenever acquired
and wherever located, used or brought for use primarily in the business or for
the benefit of the Company or the Subsidiary and not included in Inventory of
the Company or the Subsidiary, together with all attachments, accessories and
parts used or intended to be used with any of those goods or Fixtures, whether
now or in the future installed therein or thereon or affixed thereto, as well as
all substitutes and replacements thereof in whole or in part.
“Event of
Default” shall mean (i) any of the Events of Default described in the Notes or
the Loan Documents, or (ii) any default by the Company or the Subsidiary in the
performance of its obligations under this Agreement.
“Fixtures”
shall have the meaning given to that term in the Code, and shall include without
limitation leasehold improvements.
“General
Intangibles” shall have the meaning given to that term in the Code and shall
include, without limitation, all leases under which the Company or the
Subsidiary now or in the future leases and or obtains a right to occupy or use
real or personal property, or both, all of the other contract rights of the
Company or the Subsidiary, whenever acquired, and customer lists, choses in
action, claims (including claims for indemnification), books, records, patents,
copyrights, trademarks, blueprints, drawings, designs and plans, trade secrets,
methods, processes, contracts, licenses, license agreements, formulae, tax and
any other types of refunds, returned and unearned insurance premiums, rights and
claims under insurance policies, and computer information, software, records and
data, and oil, gas, or other minerals before extraction now owned or acquired
after the date of this Agreement by the Company or the Subsidiary.
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“Instruments”
shall have the meaning given to that term in the Code and shall include, without
limitation, all negotiable instruments (as defined in the Code), all
certificated securities (as defined in the Code) and all other writings which
evidence a right to the payment of money now or after the date of this Agreement
owned by the Company or the Subsidiary.
“Inventory”
shall have the meaning given to that term in the Code and shall include without
limitation all goods owned by the Company or the Subsidiary, whenever acquired
and wherever located, held for sale or lease or furnished or to be furnished
under contracts of service, and all raw materials, work in process and materials
owned by the Company or the Subsidiary and used or consumed in the Company’s or
the Subsidiary’ business, whenever acquired and wherever located.
“Investment
Property,” “Securities Intermediary” and “Commodities Intermediary” each shall
have the meaning set forth in the Code.
“Know-How”
means all documented and undocumented research, ideas, data, theories,
conclusions, reports, drawings, designs, blueprints, schematics, exhibits,
models, prototypes, source code, object code, flow charts, manuals, processes,
specifications, formulae, product configurations, notes, inventions (whether or
not patentable and whether or not reduced to practice) and any other information
of any kind developed, in development or maintained by the Company or the
Subsidiary or any of their respective employees, agents or representatives
relating to any goods or services sold or licensed or offered for sale or
license by the Company or the Subsidiary or goods or services which
the Company or the Subsidiary have a present intention to sell or
license.
“Loan
Documents” shall mean collectively, this Agreement, the Notes, the Securities
Purchase Agreement and all other agreements, documents and instruments executed
and delivered in connection therewith, as each may be amended, supplemented or
modified from time to time.
“Permitted
Liens” shall mean all (i) all existing liens on the assets of the Company and
the Subsidiary which have been disclosed to the Buyer by the Company on a
Schedule attached hereto, and (ii) all purchase money security interests
hereinafter incurred by the Company or the Subsidiary in the ordinary course of
business.
“Proceeds”
shall have the meaning given to that term in the Code and shall include without
limitation whatever is received when Collateral or Proceeds are sold, exchanged,
collected or otherwise disposed of, whether cash or non-cash, and includes
without limitation proceeds of insurance payable by reason of loss of or damage
to Collateral.
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“Trade
Secret Rights” means all documentation, Know-How and other materials owned by
the Company or the Subsidiary that is considered to be proprietary to the
Company or the Subsidiary, is maintained on a confidential or secret basis, and
is generally not known to other persons or entities who are not subject to
confidentiality restrictions.
2. Security
Interest.
(a) As
security for the full and timely payment of the Notes in accordance
with the terms of the Securities Purchase Agreement and the performance of the
obligations of the Company under the Notes and the Securities Purchase
Agreement, the Company and the Subsidiary agree that the Buyers shall have, and
the Company and the Subsidiary shall grant and convey to and create in favor of
the Buyers, a security interest under the Code in and to such of the Collateral
as is now owned by the Company or the Subsidiary. The security interest granted
to the Buyers in this Agreement shall be a first priority security interest,
prior and superior to the rights of all third parties existing on or arising
after the date of this Agreement, subject to the Permitted Liens.
(b) All
of the Equipment, Inventory and Goods owned by Company or the Subsidiary is
located in the states as specified on Schedule I attached
hereto (except to the extent any such Equipment, Inventory or Goods is in
transit or located at a Company or the Subsidiary’s job site in the ordinary
course of business). Except as disclosed on Schedule I, none of
the Collateral is in the possession of any bailee, warehousemen, processor or
consignee. Schedule I discloses
such Company and the Subsidiary’s names as of the date hereof as it appears in
official filings in the state or province, as applicable, of its incorporation,
formation or organization, the type of entity of both the Company and the
Subsidiary (including corporation, partnership, limited partnership or limited
liability company), organizational identification number issued by both Company
and the Subsidiary state of incorporation, formation or organization (or a
statement that no such number has been issued), both Company and the Subsidiary
state or province, as applicable, of incorporation, formation or organization
and the chief place of business, chief executive officer and the office where
both Company and the Subsidiary keep their respective books and
records. Both the Company and the Subsidiary have only one state or
province, as applicable, of incorporation, formation or
organization. Company and the Subsidiary do not do business and have
not done business during the past five (5) years under any trade name or
fictitious business name except as disclosed on Schedule I attached
hereto.
3. Provisions Applicable to the
Collateral. The parties agree that the following provisions shall be
applicable to the Collateral:
(a) The
Company and the Subsidiary each covenants and agrees that at all times during
the term of this Agreement it shall keep accurate and complete books and records
concerning the Collateral that is now owned by the Company and the
Subsidiary.
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(b) The
Buyers or their representatives shall have the right, upon reasonable prior
written notice to the Company and during the regular business hours of the
Company, to examine and inspect the Collateral and to review the books and
records of the Company or the Subsidiary concerning the Collateral that is now
owned or acquired after the date of this Agreement by the Company or the
Subsidiary and to copy the same and make excerpts therefrom; provided, however,
that from and after the occurrence of an Event of Default, the rights of
inspection and entry shall be subject to the requirements of the
Code.
(c) The
Company and the Subsidiary shall at all times during the term of this Agreement
keep the Equipment, Inventory and Fixtures that are now owned by the Company or
the Subsidiary in the states set forth on Schedule I or, upon
written notice to the Buyers, at such other locations for which the Buyers have
filed financing statements, and in no other states without 20 days’ prior
written notice to the Buyers, except that the Company or the Subsidiary shall
have the right until one or more Events of Default shall occur to sell or
otherwise dispose of Inventory and other Collateral in the ordinary course of
business.
(d) The
Company shall not move the location of its principal executive offices without
prior written notification to the Buyers.
(e)
Without the prior written consent of the Buyers, the Company and the Subsidiary
shall not sell, lease or otherwise dispose of any Equipment or Fixtures, except
in the ordinary course of their business.
(f)
Promptly upon request of the Buyers from time to time, the Company or the
Subsidiary shall furnish the Buyers with such information and documents
regarding the Collateral and the Company’s or the Subsidiary’s financial
condition, business, assets or liabilities, at such times and in such form and
detail as the Buyers may reasonably request.
(g)
During the term of this Agreement, the Company or the Subsidiary shall deliver
to the Buyers, upon their reasonable, written request from time to time, without
limitation,
(i) all
invoices and customer statements rendered to account debtors, documents,
contracts, chattel paper, instruments and other writings pertaining to the
Company’s or the Subsidiary’s contracts or the performance of the Company’s or
the Subsidiary’s contracts,
(ii)
evidence of the Company’s or the Subsidiary’s accounts and statements showing
the aging, identification, reconciliation and collection thereof,
and
(iii)
reports as to the Company’s or the Subsidiary’s inventory and sales, shipment,
damage or loss thereof, all of the foregoing to be certified by authorized
officers or other employees of the Company or the Subsidiary, and Company or the
Subsidiary shall take all necessary action during the term of this Agreement to
perfect any and all security interests in favor of Company or the Subsidiary and
to assign to Buyers all such security interests in favor of Company or the
Subsidiary.
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(h)
Notwithstanding the security interest in the Collateral granted to and created
in favor of the Buyers under this Agreement, the Company or the Subsidiary shall
have the right until one or more Events of Default shall occur, at their own
cost and expense, to collect the Accounts and the Chattel Paper and to enforce
their contract rights.
(i) After
the occurrence of an Event of Default, the Agent shall have the right, in its
sole discretion, to give notice of the Buyers’ security interest to account
debtors obligated to the Company or the Subsidiary and to take over and direct
collection of the Accounts and the Chattel Paper, to notify such account debtors
to make payment directly to the Buyers and to enforce payment of the Accounts
and the Chattel Paper and to enforce the Company’s or the Subsidiary’s contract
rights. It is understood and agreed by the Company and the Subsidiary that Agent
shall have no liability whatsoever under this subsection (i) except for their
own gross negligence or willful misconduct.
(j) At
all times during the term of this Agreement, Company and the Subsidiary shall
promptly deliver to the Agent, upon their written request, all existing leases,
and all other leases entered into by Company or the Subsidiary from time to
time, covering any Equipment or Inventory (“Leased Inventory”) which is leased
to third parties.
(l)
Company and the Subsidiary shall not change its name, entity status, federal
taxpayer identification number, or provincial organizational or registration
number, or the state under which it is organized without the prior written
consent of the Buyers, which consent shall not be unreasonably
withheld.
(m)
Company and the Subsidiary shall not close any of its Deposit Accounts or open
any new or additional Deposit Accounts without first giving the Buyers at least
fifteen (15) days prior written notice thereof.
(n) The
Company and the Subsidiary shall cooperate with the Buyers, at Company’s
expense, in perfecting Buyers’ security interest in any of the
Collateral.
(o) Agent
may file any necessary financing statements and other documents Agent deems
necessary in order to perfect Buyers’ security interest without Company’s or the
Subsidiary’s signature. Company and the Subsidiary grant to Agent a power of
attorney for the sole purpose of executing any documents on behalf of Company or
the Subsidiary which Agent deems necessary to perfect Buyers’ security interest.
Such power, coupled with an interest, is irrevocable.
4. Actions with Respect to
Accounts. The Company irrevocably makes, constitutes and appoints Agent
its true and lawful attorney-in-fact with power to sign its name and to take any
of the following actions after the occurrence and prior to the cure of an Event
of Default, at any time without notice to the Company or the Subsidiary and at
the Company’s expense:
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(a)
Verify the validity and amount of, or any other matter relating to, the
Collateral by mail, telephone, telegraph or otherwise;
(b)
Notify all account debtors that the Accounts have been assigned to the Buyers
and that the Buyers has a security interest in the Accounts;
(c)
Direct all account debtors to make payment of all Accounts directly to the
Buyers;
(d) Take
control in any reasonable manner of any cash or non-cash items of payment or
proceeds of Accounts;
(e)
Receive, open and dispose of all mail addressed to the Company or the
Subsidiary;
(f) Take
control in any manner of any rejected, returned, stopped in transit or
repossessed goods relating to Accounts;
(g)
Enforce payment of and collect any Accounts, by legal proceedings or
otherwise, and for such purpose the Buyers may:
(1)
Demand payment of any Accounts or direct any account debtors to make payment of
Accounts directly to the Buyers;
(2)
Receive and collect all monies due or to become due to the Company or the
Subsidiary pursuant to the Accounts;
(3)
Exercise all of the Company’s or the Subsidiary’s rights and remedies with
respect to the collection of Accounts;
(4) Settle,
adjust, compromise, extend, renew, discharge or release Accounts in a
commercially reasonable manner;
(5) Sell
or assign Accounts on such reasonable terms, for such reasonable amounts and at
such reasonable times as the Buyers reasonably deems advisable;
(6)
Prepare, file and sign the Company’s or the Subsidiary’s name or names on any
Proof of Claim or similar documents in any proceeding filed under federal or
state bankruptcy, insolvency, reorganization or other similar law as to any
account debtor;
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(7)
Prepare, file and sign the Company’s or the Subsidiary’s name or names on any
notice of lien, claim of mechanic’s lien, assignment or satisfaction of lien or
mechanic’s lien or similar document in connection with the
Collateral;
(8)
Endorse the name of the Company or the Subsidiary upon any chattel papers,
documents, instruments, invoices, freight bills, bills of lading or similar
documents or agreements relating to Accounts or goods pertaining to Accounts or
upon any checks or other media of payment or evidence of a security interest
that may come into the Buyers possession;
(9) Sign
the name or names of the Company or the Subsidiary to verifications of Accounts
and notices of Accounts sent by account debtors to the Company ; or
(10) Take
all other actions that the Buyers reasonably deems to be necessary or desirable
to protect the Company’s or the Subsidiary’s interest in the
Accounts.
(h)
Negotiate and endorse any Document in favor of the Buyers or its designees,
covering Inventory which constitutes Collateral, and related documents for the
purpose of carrying out the provisions of this Agreement and taking any action
and executing in the name(s) of Company or the Subsidiary any instrument which
the Buyers may reasonably deem necessary or advisable to accomplish the purpose
hereof. Without limiting the generality of the foregoing, the Agent shall have
the right and power to receive, endorse and collect checks and other orders for
the payment of money made payable to the Company or the Subsidiary representing
any payment or reimbursement made under, pursuant to or with respect to, the
Collateral or any part thereof and to give full discharge to the same. The
Company and each Subsidiary does hereby ratify and approve all acts of said
attorney and agrees that said attorney shall not be liable for any acts of
commission or omission, nor for any error of judgment or mistake of fact or law,
except for said attorney’s own gross negligence or willful misconduct. This
power, being coupled with an interest, is irrevocable until the Notes are paid
in full (at which time this power shall terminate in full) and the Company and
the Subsidiary shall have performed all of their obligations under this
Agreement. The Company and the Subsidiary each further agrees to use its
reasonable efforts to assist the Agent in the collection and enforcement of the
Accounts and will not hinder, delay or impede the Buyers in any manner in its
collection and enforcement of the Accounts.
5. Preservation and Protection
of Security Interest. Each of the Company and the Subsidiary represents
and warrants that it has, and covenants and agrees that at all times during the
term of this Agreement, it will have, good and marketable title to the
Collateral now owned by it free and clear of all mortgages, pledges, liens,
security interests, charges or other encumbrances, except for the Permitted
Liens and those junior in right of payment and enforcement to that of the Buyers
or in favor of the Buyers, and shall defend the Collateral against the claims
and demands of all persons, firms and entities whomsoever. Assuming Buyers has
taken all required action to perfect a security
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interest
in the Collateral as provided by the Code, each of the Company and the
Subsidiary represents and warrants that as of the date of this Agreement the
Buyers have, and that all times in the future the Buyers will have, a first
priority perfected security interest in the Collateral, prior and superior to
the rights of all third parties in the Collateral existing on the date of this
Agreement or arising after the date of this Agreement, subject to the Permitted
Liens. Except as permitted by this Agreement, each of the Company and the
Subsidiary covenants and agrees that it shall not, without the prior written
consent of the Buyers (i) borrow against the Collateral or any portion of the
Collateral from any other person, firm or entity, except for borrowings which
are subordinate to the rights of the Buyers, (ii) grant or create or permit to
attach or exist any mortgage, pledge, lien, charge or other encumbrance, or
security interest on, of or in any of the Collateral or any portion of the
Collateral except those in favor of the Buyers or the Permitted Liens, (iii)
permit any levy or attachment to be made against the Collateral or any portion
of the Collateral, except those subject to the Permitted Liens, or (iv) permit
any financing statements to be on file with respect to any of the Collateral,
except financing statements in favor of the Buyers or those with respect to the
Permitted Liens. The Company and the Subsidiary shall faithfully preserve and
protect the Buyers’ security interest in the Collateral and shall, at their own
cost and expense, cause, or assist the Buyers to cause that security interest to
be perfected and continue perfected so long as the Notes or any portion of the
Notes are outstanding, unpaid or executory. For purposes of the perfection of
the Buyers’ security interest in the Collateral in accordance with the
requirements of this Agreement, the Company and the Subsidiary shall from time
to time at the request of the Buyers file or record, or cause to be filed or
recorded, such instruments, documents and notices, including assignments,
financing statements and continuation statements, as the Buyers may reasonably
deem necessary or advisable from time to time in order to perfect and continue
perfected such security interest. The Company and the Subsidiary shall do all
such other acts and things and shall execute and deliver all such other
instruments and documents, including further security agreements, pledges,
endorsements, assignments and notices, as the Buyers in their discretion may
reasonably deem necessary or advisable from time to time in order to perfect and
preserve the priority of such security interest as a first lien security
interest in the Collateral prior to the rights of all third persons, firms and
entities, subject to the Permitted Liens and except as may be otherwise provided
in this Agreement. The Company and the Subsidiary agree that a carbon,
photographic or other reproduction of this Agreement or a financing statement is
sufficient as a financing statement and may be filed instead of the
original.
6. Insurance. Risk of
loss of, damage to or destruction of the Equipment, Inventory and Fixtures is on
the Company and the Subsidiary. The Company and the Subsidiary shall insure the
Equipment, Inventory and Fixtures against such risks and casualties and in such
amounts and with such insurance companies as is ordinarily carried by
corporations or other entities engaged in the same or similar businesses and
similarly situated or as otherwise reasonably required by the Buyers in their
sole discretion. In the event of loss of, damage to or destruction of the
Equipment, Inventory or Fixtures during the term of this Agreement, the Company
and the Subsidiary shall promptly notify Buyers of such loss, damage or
destruction. At the reasonable request of the Buyers, each of the Company’s and
the Subsidiary’s policies of insurance shall contain loss payable clauses in
favor of the Company or the Subsidiary and the Buyers as their respective
interests may appear and shall contain provision for notification of the Buyers
thirty (30) days prior to the termination of such policy. At the request of the
Buyers, copies of all such policies, or certificates evidencing the same, shall
be deposited with the Buyers. If the Company or the Subsidiary fail to effect
and keep in full force and effect such insurance or fail to pay the premiums
when due, the Buyers may (but shall not be obligated to) do so for the account
of the Company or the Subsidiary and add the cost thereof to the Notes. The
Buyers are irrevocably appointed attorney-in-fact of the Company and the
Subsidiary to endorse any draft or check which may be payable to the Company in
order to collect the proceeds of such insurance. Unless an Event of Default has
occurred and is continuing, the Buyers will turn over to the Company or the
Subsidiary the proceeds of any such insurance collected by it on the condition
that the Company or the Subsidiary apply such proceeds either (i) to the repair
of damaged Equipment, Inventory or Fixtures, or (ii) to the replacement of
destroyed Equipment, Inventory or Fixtures with Equipment, Inventory or Fixtures
of the same or similar type and function and of at least equivalent value (in
the sole judgment of the Buyers), provided such replacement Equipment, Fixtures
or Inventory is made subject to the security interest created by this Agreement
and constitutes a first lien security interest in the Equipment, Inventory and
Fixtures subject only to Permitted Liens and other security interests permitted
under this Agreement, and is perfected by the filing of financing statements in
the appropriate public offices and the taking of such other action as may be
necessary or desirable in order to perfect and continue perfected such security
interest. Any balance of insurance proceeds remaining in the possession of the
Buyers after payment in full of the Notes shall be paid over to the Company or
the Subsidiary or their order.
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7. Maintenance and
Repair. The Company and the Subsidiary shall maintain the Equipment,
Inventory and Fixtures, and every portion thereof, in good condition, repair and
working order, reasonable wear and tear alone excepted, and shall pay and
discharge all taxes, levies and other impositions assessed or levied thereon as
well as the cost of repairs to or maintenance of the same. If the Company and
the Subsidiary fail to do so, the Buyers may (but shall not be obligated to) pay
the cost of such repairs or maintenance and such taxes, levies or impositions
for the account of the Company or the Subsidiary and add the amount of such
payments to the Notes.
8. Preservation of Rights
Against Third Parties; Preservation of Collateral in Buyers’s Possession.
Until such time as the Buyers exercise their right to effect direct collection
of the Accounts and the Chattel Paper and to effect the enforcement of the
Company’s or the Subsidiary’s contract rights, the Company and the Subsidiary
assume full responsibility for taking any and all commercially reasonable steps
to preserve rights in respect of the Accounts and the Chattel Paper and their
contracts against prior parties. The Buyers shall be deemed to have exercised
reasonable care in the custody and preservation of such of the Collateral as may
come into its possession from time to time if the Buyers take such action for
that purpose as the Company or the Subsidiary shall request in writing, provided
that such requested action shall not, in the judgment of the Buyers, impair the
Buyers’ security interest in the Collateral or its right in, or the value of,
the Collateral, and provided further that the Buyers receive such written
request in sufficient time to permit the Buyers to take the requested
action.
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9. Events of Default and
Remedies.
(a) If
any one or more of the Events of Default shall occur or shall exist, the Agent
may then or at any time thereafter, so long as such default shall continue,
foreclose the lien or security interest in the Collateral in any way permitted
by law, or upon fifteen (15) days prior written notice to the Company or the
Subsidiary, sell any or all Collateral at private sale at any time or place in
one or more sales, at such price or prices and upon such terms, either for cash
or on credit, as the Agent, in its sole discretion, may elect, or sell any or
all Collateral at public auction, either for cash or on credit, as the Agent, in
its sole discretion, may elect, and at any such sale, the Agent may bid for and
become the purchaser of any or all such Collateral. Pending any such action the
Agent may liquidate the Collateral.
(b) If
any one or more of the Events of Default shall occur or shall exist, the Agents
may then, or at any time thereafter, so long as such default shall continue,
grant extensions to, or adjust claims of, or make compromises or settlements
with, debtors, guarantors or any other parties with respect to Collateral or any
securities, guarantees or insurance applying thereon, without notice to or the
consent of the Company or the Subsidiary, without affecting the Company’s or the
Subsidiary’s liability under this Agreement or the Notes. Each of the Company
and the Subsidiary waives notice of acceptance, of nonpayment, protest or notice
of protest of any Accounts or Chattel Paper, any of its contract rights or
Collateral and any other notices to which the Company or the Subsidiary may be
entitled.
(c) If
any one or more of the Events of Default shall occur or shall exist and be
continuing, then in any such event, the Agent shall have such additional rights
and remedies in respect of the Collateral or any portion thereof as are provided
by the Code and such other rights and remedies in respect thereof which it may
have at law or in equity or under this Agreement, including without limitation
the right to enter any premises where Equipment, Inventory and/or Fixtures are
located and take possession and control thereof without demand or notice and
without prior judicial hearing or legal proceedings, which the Company and the
Subsidiary expressly waive.
(d) The
Agent shall apply the Proceeds of any sale or liquidation of the Collateral,
and, subject to Section 5, any Proceeds received by the Agent from insurance,
first to the payment of the reasonable costs and expenses incurred by the Agent
in connection with such sale or collection, including without limitation
reasonable attorneys’ fees and legal expenses, second to the payment of the
Notes, pro rata , whether on account of principal or interest or otherwise as
the Agent, in its sole discretion, may elect, and then to pay the balance, if
any, to the Company or the Subsidiary or as otherwise required by law. If such
Proceeds are insufficient to pay the amounts required by law, the Company shall
be liable for any deficiency.
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(e) Upon
the occurrence of any Event of Default, the Company or the Subsidiary shall
promptly upon written demand by the Agent assemble the Equipment, Inventory and
Fixtures and make them available to the Buyers at a place or places to be
designated by the Agent The rights of the Agent under this paragraph to have the
Equipment, Inventory and Fixtures assembled and made available to it is of the
essence of this Agreement and the Agent may, at its election, enforce such right
by an action in equity for injunctive relief or specific performance, without
the requirement of a bond.
10. Defeasance.
Notwithstanding anything to the contrary contained in this Agreement upon
payment and performance in full of the Notes, this Agreement shall terminate and
be of no further force and effect and the Buyers shall thereupon terminate their
security interest in the Collateral. Until such time, however, this Agreement
shall be binding upon and inure to the benefit of the parties, their successors
and assigns, provided that, without the prior written consent of the Buyers, the
Company and the Subsidiary may not assign this Agreement or any of its rights
under this Agreement or delegate any of its duties or obligations under this
Agreement and any such attempted assignment or delegation shall be null and
void. This Agreement is not intended and shall not be construed to obligate the
Buyers to take any action whatsoever with respect to the Collateral or to incur
expenses or perform or discharge any obligation, duty or disability of the
Company.
11. Miscellaneous.
(a) The
provisions of this Agreement are intended to be severable. If any provision of
this Agreement shall for any reason be held invalid or unenforceable in whole or
in part in any jurisdiction, such provision shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without in any
manner affecting the validity or enforceability of such provision in any other
jurisdiction or any other provision of this Agreement in any
jurisdiction.
(b) No
failure or delay on the part of the Buyers in exercising any right, remedy,
power or privilege under this Agreement and the Notes shall operate as a waiver
thereof or of any other right, remedy, power or privilege of the Buyers under
this Agreement, the Notes or any of the other Loan Documents; nor shall any
single or partial exercise of any such right, remedy, power or privilege
preclude any other right, remedy, power or privilege or further exercise thereof
or the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges of the Buyers under this Agreement, the Notes
and the other Loan Documents are cumulative and not exclusive of any rights or
remedies which they may otherwise have.
(c)
Unless otherwise provided herein, all demands, notices, consents, service of
process, requests and other communications hereunder shall be in writing and
shall be delivered in person or by overnight courier service, or mailed by
certified mail, return receipt requested, addressed:
12
If to
Company or the Subsidiary:
0000 Xxxxxxx Xxx
Xxxxxx Xxxxx, XX
00000
Attention: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile:
with a
copy to:
Gottbetter & Partners,
LLP
000
Xxxxxxx Xxxxxx, 00xx
Xxxxx
Xxx Xxxx,
XX 00000
Attn:
Xxxx X. Xxxxxxxxxx, Esq.
Facsimile:
(000) 000-0000
If to
Agent:
Attn:
Facsimile:
with a
copy to:
Attn:
Facsimile:
Any such
notice shall be effective (a) when delivered, if delivered by hand delivery
or overnight courier service, or (b) five (5) days after deposit in the
United States mail, as applicable.
(d) The
section headings contained in this Agreement are for reference purposes only and
shall not control or affect its construction or interpretation in any
respect.
(e)
Unless the context otherwise requires, all terms used in this Agreement which
are defined by the Code shall have the meanings stated in the Code.
(f) The
Code shall govern the settlement, perfection and the effect of attachment and
perfection of the Buyers’ security interest in the Collateral, and the rights,
duties and obligations of the Buyers, the Company and the Subsidiary with
respect to the Collateral. This Agreement shall be deemed to be a contract under
the laws of the State of New York and the execution and delivery of this
Agreement and, to the extent not inconsistent with the preceding sentence, the
terms and provisions of this Agreement shall be governed by and construed in
accordance with the laws of that State.
13
(g) This
Agreement may be executed in several counterparts, each of which shall be deemed
an original but all of which shall constitute one and the same instrument. All
of such counterparts shall be read as though one, and they shall have the same
force and effect as though all the signers had signed a single
page.
[SIGNATURE PAGE
FOLLOWS]
14
IN
WITNESS WHEREOF, and intending to be legally bound, the parties have executed
and delivered this Security Agreement as of the day and year set forth at the
beginning of this Security Agreement.
|
BUYER:
By:______________________
Name:
Title:
BUYER:
By:______________________
Name:
Title:
BUYER:
By:______________________
Name:
Title:
|
COMPANY:
By:______________________
Name: Xxxxx
Xxxxxx
Title: Chief
Executive Officer
SUBSIDIARY
NEVADA
GOLD ENTERPRISES, INC.
By:______________________
Name: Xxxxx
Xxxxxxxxx
Title: Chief
Executive Officer
|
Agreed
and Accepted by:
Agent:
By:______________________
Name:
Title:
[SIGNATURE
PAGE TO SECURITY AGREEMENT]
Schedule
I
|
|
1.
|
States
in which Collateral is located:
|
Nevada
Gold Holdings, Inc. - Nevada.
Nevada
Gold Enterprises, Inc. - Nevada.
|
|
2.
|
Company
and Subsidiary Information:
|
|
Company
|
Subsidiary
|
|
a
Delaware corporation
DE
ID No.: [_____________]
Executive
Offices Address:
0000
Xxxxxxx Xxx
Xxxxxx
Xxxxx, XX 00000
Chief
Executive Officer: Xxxxx Xxxxxx
Foreign
Corporation Qualification Numbers:
|
Nevada
Gold Enterprises, Inc.
a
Nevada corporation
NV
ID No.: [_____________]
Executive
Offices Address:
0000
Xxxx Xxxxx
Xxxxxxx,
XX 00000
Chief
Executive Officer: Xxxxx Xxxxxxxxx
Foreign
Corporation Qualification Numbers:
|
