JULY 2009 AMENDED AND RESTATED SECURITY AGREEMENT
This July 2009 Amended and Restated
Security Agreement (“ARSA”) is made as of July 7, 2009 (the “Effective Date”),
by and between Nevada
Gold & Casinos, Inc., a Nevada corporation (“NGC”) (as Maker), its
principal place of business at 00 Xxxxx Xxxxxx Xxxx, Xxxxx 000X, Xxxxxxx, Xxxxx,
00000-0000; affiliates and subsidiaries of NGC as additional securing parties:
Gold
Mountain Development, L.L.C., a Colorado limited liability company
(“GMD”), CGC Holdings,
L.L.C., a Nevada limited liability company (“CGC”), Colorado
Grande Enterprises, Inc., a Colorado corporation (“CGE”), and Nevada
Gold BVR, L.L.C., a Nevada limited liability company (“NGBVR”); and
Xxxxxx
X. Xxxxxx, an individual who resides in Tyler, Xxxxx County, Texas, as
her separate property (“Xxxxxx”). NGC, GMD, CGC, CGE, NGBVR, and Xxxxxx
are all collectively referred to in this as the “Parties.” NGC, GMD,
CGC, CGE, and NGBVR are referred to collectively as the “NGC Parties.”
I.
Recitals
X. Xxxxxx
has previously and from time to time loaned NGC funds in exchange for NGC
granting to Xxxxxx a security interest in certain collateral and NGC causing its
subsidiaries and affiliates GMD, CGC, CGE, and NGBVR to also xxxxx Xxxxxx a
security interest in certain collateral. Currently, the total
principal amount owed by NGC to Xxxxxx on these loans is Six Million and No/100
Dollars ($6,000,000.00), represented by that certain Amended and Restated
Promissory Note dated July 7, 2009 (the “Note”). The NGC Parties have
each granted a security interest in and have pledged certain collateral
described below to Xxxxxx as security for the repayment of the amounts owed by
NGC to Xxxxxx under the Note and for NGC’s performance of all of the terms and
conditions of the Note and this ARSA.
B. The
Parties all agree that this ARSA is intended to completely modify the
preexisting January 2006 Security Agreement dated January 19, 2006, and the
March 2008 Amended and Restated Security Agreement dated March 1, 2008, as of
the effective date of this ARSA, and to ratify and re-affirm the security
interests already granted to Xxxxxx for prior loans made by Xxxxxx to NGC to the
extent the Collateral for those agreements remains listed as Collateral for this
ARSA.
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. The definitions in this ARSA shall control unless the
context of the usage of a term requires a different definition. Terms
not defined in this ARSA or that are defined in the Texas
Uniform Commercial Code, as amended as of the date of this ARSA (the
“UCC”), have the meanings specified in the UCC, and the definitions specified in
Article 9 of the UCC control in the case of any conflicting definitions in the
UCC. The singular number includes the plural and vice
versa. Captions of sections in this ARSA do not limit the
terms of those sections.
1. “Loan
Documents” means the (1) this ARSA; (2) the Guarantees provided by GMD,
CGC, CGE, and NGBVR; (3) the Schedule of Collateral, Notes, Security Interests,
and Ownership Interests attached to this ARSA; (4) any and all Notes or Security
Instruments issued pursuant to or incorporated by reference into this Agreement;
(5) the Commercial Pledge Agreements of GMD, CGC, CGE, and NGBVR dated July 7,
2009; and (6) the Collateral Assignments of Notes, Contract Rights, Security
Interests, and Ownership Interests of GMD, CGC, CGE, and NGBVR dated July 7,
2009; and they are all incorporated by reference in this Agreement for all
purposes as if fully set forth at length. The Loan Documents are the
final integration of the complete agreement between the Parties regarding the
grant of a loan by Xxxxxx to NGC. All prior agreements,
representations, negotiations, and offers are merged into the terms of the Loan
Documents, save and
except that no preexisting rights or remedies of Xxxxxx related to or
arising from the perfection of security interests in the Collateral described in
this ARSA that were previously granted under the March 2008 Amended and Restated
Security Agreement dated March 1, 2008; the Amended and Restated Credit Facility
dated January 19, 2006; the January 2006 Security Agreement dated January 19,
2006; the Collateral Assignment; and the Credit Facility and Amended and
Restated Security Agreement, both dated June 29, 2004; are intended to be
extinguished by the merger of the Loan Documents. The Loan Documents
completely express the entirety of the agreement between the
Parties.
2. “Collateral”
means the following specific assets [these specific items of Collateral are more
particularly described in the Schedule of Collateral, Notes, Security Interests,
and Ownership Interests attached to the ARSA (the “Schedule”)], and all proceeds
of the following assets:
a. NGC’s
100% interest in CGC;
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b. all
assets of CGC, including but not limited to
furniture, fixtures, equipment (including but not limited to machinery,
furniture, fixtures, manufacturing equipment, shop equipment, office equipment,
parts, and tools, wherever located), inventory, cash, accounts, accounts
receivable, contract rights, chattel paper, promissory notes, securities, and
general intangibles (including but not limited to all copyrights, trademarks,
service marks, patents, inventions, trade secrets, exclusive licenses,
processes, systems, and goodwill), any and all after-acquired property, and any
and all proceeds of any of CGC’s assets that now exist or that are subsequently
acquired;
c. CGC’s
100% interest in CGE;
d. all
assets of CGE, including but not limited to
furniture, fixtures, equipment (including but not limited to machinery,
furniture, fixtures, manufacturing equipment, shop equipment, office equipment,
parts, and tools, wherever located), inventory, cash, accounts, accounts
receivable, contract rights, chattel paper, promissory notes, securities, and
general intangibles (including but not limited to all copyrights, trademarks,
service marks, patents, inventions, trade secrets, exclusive licenses,
processes, systems, and goodwill), any and all after-acquired property, and any
and all proceeds of any of CGE’s assets that now exist or that are subsequently
acquired;
e. NGC’s
100% interest in Gold Mountain Development, L.L.C.;
f. all
assets of GMD, including but not limited to
furniture, fixtures, equipment (including but not limited to machinery,
furniture, fixtures, manufacturing equipment, shop equipment, office equipment,
parts, and tools, wherever located), inventory, cash, accounts, accounts
receivable, contract rights, chattel paper, promissory notes, securities, and
general intangibles (including but not limited to all copyrights, trademarks,
service marks, patents, inventions, trade secrets, exclusive licenses,
processes, systems, and goodwill), any and all after-acquired property, and any
and all proceeds of any of GMD’s assets that now exist or that are subsequently
acquired;
g. NGC’s
100% interest in Nevada Gold BVR, L.L.C.;
h. all
assets of NGBVR, including but not limited to
furniture, fixtures, equipment (including but not limited to machinery,
furniture, fixtures, manufacturing equipment, shop equipment, office equipment,
parts, and tools, wherever located), inventory, cash, accounts, accounts
receivable, contract rights, chattel paper, promissory notes, securities, and
general intangibles (including but not limited to all copyrights, trademarks,
service marks, patents, inventions, trade secrets, exclusive licenses,
processes, systems, and goodwill), any and all after-acquired property, and any
and all proceeds of any of NGBVR’s assets that now exist or that are
subsequently acquired;
i. contractual
financial obligation payable to NGBVR in the amount of $4,000,000 from B.V. Oro,
L.L.C., dated November 25, 2008;
j. NGBVR’s
distributions from its 5% carried interest in the Class B membership interest in
Buena Vista Development Company, L.L.C.;
k. NGC’s
100% interest in NG Washington, L.L.C., a Washington State limited liability
company;
l. deed
of trust for all real property owned by GMD and/or assignment of the proceeds of
any sale of the GMD real property;
m. all
earnings, cash, distributions, proceeds, monies, income, and benefits arising
from, by virtue of, or payable with respect to NGC’s interest in GMD, CGC, CGE,
and NGBVR;
n. all
distributions, proceeds, monies, income, and benefits arising from, by virtue
of, or payable with respect to the promissory notes, collateral, and ownership
and other interests of the items of Collateral described above;
o. the
Schedule of Collateral, Notes, Security Interests, and Ownership Interests (the
“Schedule”) that is attached to and incorporated by reference into this ARSA;
and
p. any
and all products of, accessions to, substitutions for, insurance distributions
for, and cash and other proceeds of any and all of the items of Collateral
described above.
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3.
“Obligations”
means any and all of the duties, responsibilities, and obligations of NGC
under the Loan Documents, including but not limited to repayment of all amounts
loaned by Xxxxxx to NGC pursuant to the Loan Documents (or any other loan
agreements between Xxxxxx and NGC), and to pay the expenses described in
Sections III(C)(4), III(D), VI(D), and VI(D) of this ARSA, and the obligations
of NGC:
a. to
pay the principal of, interest on, and any other indebtedness arising from the
Loan Documents in accordance with their terms, and all valid renewals,
extensions, modifications, and amendments of the Loan Documents or any part of
them;
b. to
repay to Xxxxxx all amounts advanced by Xxxxxx to or on behalf of NGC under the
Loan Documents or under any prior loan agreements between Xxxxxx and
NGC;
c. to
comply with and to perform fully all of the terms and provisions of the Loan
Documents;
d. to
reimburse Xxxxxx for all of Xxxxxx’ actual attorney’s fees, expenses, and costs
that NGC is obligated to pay pursuant to the terms of the Loan Documents,
excluding interest and principal payment obligations, within the time provided
for payment; and
e. to
provide to Xxxxxx the security and Collateral described in the Loan
Documents.
B. Security
Interest. To secure the payment and performance of the
Obligations (as that term is defined in this ARSA) by NGC under the Loan
Documents (and any Notes or Security Instruments issued pursuant to them), the
NGC Parties all grant to Xxxxxx a security interest (the “Security Interest”) in
each of their respective items described in the definition of “Collateral”
above. This Security Interest is intended to extend to all products,
accessions to, and cash and other proceeds of all of the items of Collateral
described above.
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 Loan Documents are used by NGC to finance
the investment or acquisition), then the “Collateral” as defined above shall not
include NGC’s ownership interest in the new subsidiary or the acquired
assets. Xxxxxx agrees to file a UCC-3 terminating any security
interest Xxxxxx 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 Loan Documents does not include NGC’s ownership interest in the new
subsidiary or the acquired assets.
The security granted under this ARSA
and under the terms of any and all Commercial Pledge Agreements, Collateral
Assignments of Notes, Collateral Assignments of Ownership Interests, or other
security instruments executed and delivered at any time, now or in the future,
pursuant to the terms of the Loan Documents shall secure the obligations and
indebtedness described in the Loan Documents. The NGC Parties all
waive notice of any proposed or implemented future advance of credit by Xxxxxx
to NGC, and the NGC Parties agree that a security interest shall immediately
attach to the Collateral pursuant to this ARSA and the Loan Documents
immediately upon the delivery or occurrence of any future advance under the Loan
Documents even if the advance is made without their express knowledge or
consent.
C. Perfection
by Possession. In addition to any Financing Statements that
are required to be filed by Xxxxxx or that may at her option be filed, Xxxxxx 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 Loan Documents
and/or any other instrument or agreement between the Parties are paid in full
and the instruments are all terminated.
D. Restrictions
on Use of Certain Funds. The Parties agree that $6 million in
cash funds remain in the “Projects Fund” established pursuant to the Agreement
Regarding Use of Proceeds of IC-BH Sale and Regarding Remaining Amount Due under
the Amended and Restated Credit Facility (as amended) dated November 13, 2007
(the “Proceeds Agreement”), and as of the date of this Agreement have not been
committed through at least a signed letter of intent by NGC for one or more new
acquisitions. NGC agrees that while Xxxxxx is releasing her lien on
these funds through this Agreement, NGC may only use these funds for an
acquisition intended to generate income and may not use these funds for ordinary
operating expenses.
III.
Representations and
Covenants
A. Representations. The
NGC Parties all represent to Xxxxxx as follows:
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1. the
NGC Parties are the legal and beneficial owners of the Collateral expressly
identified as Collateral provided by each of them, respectively;
2. to
the best of the NGC Parties’ knowledge, no dispute, setoff, or counterclaim
exists with respect to any part of the Collateral;
3. the
Collateral is owned by the NGC Parties, respectively, free and clear of any
pledge, mortgage, hypothecation, lien, charge, encumbrance, or security interest
except as previously held by Xxxxxx or as created or permitted in this
ARSA;
4. 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 the NGC
Parties to Xxxxxx in the Schedule;
5. the
NGC Parties 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);
6. except
as provided in the Schedule, the execution and delivery of this ARSA, the
Schedule, the Collateral Assignments, the Loan Documents (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 any of the NGC Parties or any of its respective
property;
7. this
ARSA 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 (except as expressly set forth in this ARSA);
8. NGC
is organized under the laws of Nevada and its exact legal name is set forth in
the opening paragraph of this ARSA;
9. CGC
is organized under the laws of Nevada and its exact legal name is set forth in
the opening paragraph of this ARSA;
10. CGE
is organized under the laws of Colorado and its exact legal name is set forth in
the opening paragraph of this ARSA;
11. GMD
is organized under the laws of Colorado and its exact legal name is set forth in
the opening paragraph of this ARSA;
12. NG
Washington, L.L.C., is organized under the laws of the State of Washington and
its exact legal name is set forth in this paragraph;
13. NGBVR
is organized under the laws of California and its exact legal name is set forth
in the opening paragraph of this ARSA; and
14. the
NGC Parties do not conduct business under any other names than those under which
they were organized.
The
representations set forth in items 1 through 14 of this Section shall be deemed
given again whenever any of the NGC Parties delivers additional Collateral that
may be required by this ARSA.
B. Covenants. The
NGC Parties covenant to do the following:
1. deliver
to Xxxxxx and/or her designated agent any certificates or instruments that
represent their interest in the ownership interests provided as Collateral, to
notify any entity represented within the Collateral that a security interest has
been granted to Xxxxxx, to obtain consent from each entity requiring consent
that a security interest has been granted to Xxxxxx, 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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2. from
time to time promptly execute and deliver to Xxxxxx all other assignments,
certificates, proxies, entitlement orders, supplemental writings, and financing
statements, and do all other acts and things that Xxxxxx may reasonably request
in order to evidence the assignment and perfect and enforce the Security
Interest granted in this ARSA;
3. promptly
furnish to Xxxxxx or her attorney or agent with any and all information or
writings that Xxxxxx or her attorney or agent may reasonably request concerning
the Collateral;
4. promptly
notify Xxxxxx and her attorney of any claim, action, or proceeding affecting the
Collateral or any part of the Collateral, and at the request of Xxxxxx, appear
in and defend, at their own expense, the action or proceeding;
5. notify
Xxxxxx 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 the Loan Documents (or any Note issued pursuant to the Loan
Documents);
6. if
an event of default occurs, then the NGC Parties shall, jointly and severally,
promptly pay to Xxxxxx the amount of all court costs, actual attorneys’ fees,
and expenses of litigation incurred by Xxxxxx in enforcing the Loan
Documents;
7. if
an Event of Default occurs and continues, promptly deliver all proceeds
constituting part of the Collateral to Xxxxxx as and when first received by any
of the NGC Parties; and
8. not
attempt to or actually sell, assign, or transfer the Collateral or the lien
created by this ARSA, nor create any other lien or security interest in, or
otherwise encumber 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 ARSA.
C. Additional
Liens. The NGC Parties all expressly agree that they 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 Xxxxxx’ lien. The NGC Party granting the
lien 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 Xxxxxx’ first lien and that the second and any other lienholder
clearly acknowledges Xxxxxx’ existence and status as first lienholder on all of
the Collateral and that the subsequent lienholder’s debt and security interest
is fully and completely subordinated to Xxxxxx.
2. The
NGC Party granting the lien 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
Xxxxxx are completely terminated and are no longer in effect. The
second and any other lienholder must be required to give notice of any default
related to the subordinated lien to NGC and Xxxxxx 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 Xxxxxx against the Collateral.
4. NGC
shall keep Xxxxxx’ counsel informed of the status of any second and any other
lien granted by any of the NGC Parties and of any default or alleged default by
any of the NGC Parties on the transaction secured in whole or in part by the
second and/or other lien, and shall reimburse Xxxxxx for any and all actual
attorney’s fees, court costs, and expenses incurred by Xxxxxx that Xxxxxx 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 Xxxxxx’
counsel.
5. The
NGC Parties shall provide Xxxxxx’ 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.
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D. Perfection;
Protection of Collateral; Indemnification. The NGC Parties
shall cause the execution of any instrument reasonably necessary to carry out
the terms of and its Obligations under the Loan Documents 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 the provisions of the Loan Documents and to
ensure the broadest and most effective security for Xxxxxx for all funds loaned
to NGC by Xxxxxx. NGC shall bear the cost of perfection of all
Security Interests granted under this ARSA in any applicable or desirous
jurisdiction as necessary to protect Xxxxxx, and, in addition, as may be
directed by Xxxxxx or her attorney in her sole and exclusive
discretion. NGC shall be the guarantor of the perfection of Security
Interests under this ARSA and no failure on the part of Xxxxxx 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. The NGC Parties shall execute any and all documents
reasonably necessary to carry out the provisions of all of the Loan Documents
and/or any Note or Security Instrument executed pursuant to the Loan
Documents. NGC shall pay all costs and all actual attorneys’ fees
incurred by Xxxxxx in connection with any of Xxxxxx’ loans to NGC, the Loan
Documents, 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. The NGC Parties also agree that they will use their best
efforts to protect their respective items of Collateral; to prevent any loss,
theft, substantial damage, destruction, sale, or encumbrance to or of any of
their respective items of Collateral; and to defend against any actual or
attempted levy, seizure, or attachment of or on any of their respective items of
Collateral.
In the event Xxxxxx finds it necessary
to take action to protect the Collateral against the actions of third parties or
against any wrongful conduct of any of the NGC Parties, or in the event that
Xxxxxx finds any failure by any of the NGC Parties to use their best efforts to
protect their respective Collateral, the NGC Parties all agree that they shall
indemnify Xxxxxx for any and all actual 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 ensure
payment to Xxxxxx 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
Xxxxxx 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. Submission of fee statements by Xxxxxx to NGC for any provision
under this ARSA constitutes submission to all of the NGC Parties.
IV.
Effects of and Remedies for
an Event of Default
A. Notice of
Default. Xxxxxx is not required to provide any of the NGC
Parties 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 Xxxxxx must
give notice to NGC only of a late
interest payment before that late payment is deemed a Default as described in
the Loan Documents or in any other applicable loan document. However,
failure by Xxxxxx 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 Loan Documents.
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 Xxxxxx 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 any of the NGC Parties as a result of that party’s
rights in the Collateral, all of that property, money, and other proceeds are
part of the Collateral. After an Event of Default, the NGC Parties
will immediately pay and deliver all property, money, and other proceeds of
Collateral that they have or have received to Xxxxxx, and the NGC Parties shall
take all other steps necessary to ensure Xxxxxx has control over the
Collateral. In this event, and if Xxxxxx so requests, the NGC Parties
will promptly endorse or assign all other property and proceeds that are
included in the Collateral to Xxxxxx and deliver to Xxxxxx all proceeds that
require perfection by possession under the UCC and that Xxxxxx 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 Xxxxxx, the NGC Parties shall promptly execute and deliver
or cause to be executed and delivered to Xxxxxx any document or instrument
Xxxxxx deems is reasonably necessary or proper for those
purposes. Xxxxxx shall not be liable for any error, omission, or
delay occurring in the settlement, collection, or payment related to the
Collateral or of any property or instrument received pursuant to this
ARSA.
C. Remedies. If
an Event of Default occurs and continues, in addition to any other rights and
remedies that Xxxxxx may have under this ARSA, under the UCC, or otherwise,
Xxxxxx may, to the extent permitted by applicable law and at her discretion, and
without notice to any of the NGC Parties 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 all of the NGC Parties agree that it is
commercially reasonable for Xxxxxx, in her sole discretion, to do any of the
following:
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1. 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
Xxxxxx;
2. 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 Xxxxxx may
determine;
3. in
her name, or in the name of the respective NGC Party, 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 the respective NGC Party, as
applicable;
4. 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;
5. make
any compromise or settlement deemed advisable with respect to any of the
Collateral;
6. renew,
extend, or otherwise change the terms and conditions of any of the Collateral or
the Obligations;
7. take
or release any other collateral as security for any of the Collateral or the
Obligations;
8. add
or release any guarantor, endorser, surety, or other party to any of the
Collateral or the Obligations;
9. without
demanding performance or making any other demand, advertisement, or notice of
any kind (except the notice specified in the Loan Documents 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 the NGC Parties, 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 Xxxxxx’ 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 the NGC Parties, and the right of equity of redemption
is expressly waived and released by the NGC Parties;
10. request
an appropriate court to appoint a receiver for the Collateral, or any part of
it, and the NGC Parties, by their execution of this ARSA, all consent to the
appointment of a receiver; and
11. exercise
any other rights she may have under this ARSA, 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
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, Xxxxxx may sell, issue entitlement
orders, or otherwise dispose of the Collateral without notification,
advertisement, or other notice of any kind. The NGC Parties all 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 Xxxxxx’ power of disposition of any of the remaining
Collateral. Xxxxxx is under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges, or options expressly or
implicitly granted to Xxxxxx in this ARSA, and Xxxxxx is not responsible for any
failure to do so or delay in so doing.
E. Enforcement
of Rights. The NGC Parties all agree that it is commercially
reasonable for Xxxxxx to exercise her rights related to the Collateral in any
manner and in any order Xxxxxx may determine. Nothing contained in
this ARSA requires Xxxxxx 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 Xxxxxx may assert liability and collect the Obligations, nor is Xxxxxx
obligated to attempt to collect the Obligations before selling all or any part
of the Collateral. Xxxxxx may, without foreclosing on the Collateral,
collect and otherwise enforce on the Collateral or any proceeds of any
Collateral all amounts owing under the Loan Documents (and/or under any Note or
Security Instrument issued pursuant to the Loan Documents) or otherwise enforce
any or all of the NGC Parties’ or Xxxxxxx rights under the Loan Documents or in
any of the Collateral and apply those collections as provided in this ARSA, or
she may foreclose on the Collateral. Xxxxxx may hold funds as
additional Collateral or may, at her discretion, apply them to the
Obligations. Xxxxxx may attempt to collect from any person liable to
any of the NGC Parties to deliver any proceeds related to the Collateral, by
suit or otherwise, any sums due and to otherwise to enforce that NGC Party’s
rights regarding those proceeds.
Page
7 of 13
F. Power of
Attorney. The NGC Parties all appoint Xxxxxx (and her
successors and assigns) as their respective attorney-in-fact (without requiring
her to act in that capacity), with full power of substitution, to do any act
that any of the NGC Parties is obligated to do by this ARSA, including but not
limited to the power to do the following: (a) endorse the name of the
respective NGC Party on all checks, drafts, money orders, or other instruments
for the payment of monies that are payable to that NGC Party and constitute
collections of the Collateral; (b) execute in the name of the NGC Parties 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 the NGC Parties in their
respective items of Collateral, save and except the NGC Parties’ voting rights,
which pass to Xxxxxx 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 Xxxxxx’
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 any of the NGC Parties or
otherwise, that Xxxxxx reasonably deems are necessary, proper, and convenient in
connection with the preservation, perfection, and enforcement of her rights
under this ARSA. Xxxxxx is required to execute this Power of Attorney
only for purposes proper under this ARSA, the Loan Documents, and any Notes
executed pursuant to this ARSA for her benefit and she shall owe no other duty
as agent when exercising these powers.
All persons dealing with Xxxxxx shall
be fully protected in treating the powers and authorities conferred by this
Section as continuing in full force and effect until advised by Xxxxxx that all
Obligations are finally paid. The powers and authority granted
pursuant to this ARSA are made for valuable consideration, are coupled with an
interest, are irrevocable and non-terminable so long as any part of the
Obligations is unpaid, and until NGC has 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 any of the NGC Parties or any other person or
entity or by operation of law, including, without limitation, the dissolution,
death, disability, or incompetency of any person or entity. Xxxxxx
agrees she will not exercise her powers as attorney-in-fact until an Event of
Default occurs.
V. Default
A. NGC
will be in default of this ARSA, the Loan Documents, and of each and every Note
and Security Instrument executed pursuant to the Loan Documents if NGC fails in
its performance of any duty imposed on it in the Loan Documents, or if any of
the following happens (“Default” or “Event of Default”):
1. NGC
fails to timely make any principal payment at maturity;
2. any
of the NGC Parties receives any full or partial payment on any loan that is part
of the Collateral and that payment is not delivered to Xxxxxx within five
business days of its receipt;
3. any
of the NGC Parties attempts to sell or transfer or to allow a lien on any
ownership interest that is part of the Collateral without Xxxxxx’ express
written consent or compliance with the provisions of Section III(C)
above;
4. if
GMD, CGC, CGE, or NGBVR sells or transfers any ownership interest in that
particular entity or any right to receive money held by that particular entity
and the proceeds of that sale are not delivered to Xxxxxx within five business
days of the receipt of any part of the proceeds;
5. Xxxxxx
does not receive an interest payment on or before the fifth day after Xxxxxx
gives notice to NGC of the late payment;
6. NGC
defaults under any loan, extension of credit, security agreement, purchase or
sales agreement, contractual obligation, or any agreement in favor of any
creditor or person (as “default” is defined in that instrument and after giving
effect to all applicable cure periods) and that default results in NGC owing,
through default and/or acceleration, an amount in excess of
$500,000.00.
7. NGC
fails to timely comply with the Obligations (other than those Obligations
specifically identified in this Section);
Page
8 of 13
8. Any
of the NGC Parties breaches any covenant, representation, or warranty in the
Loan Documents or in any other Note or Security Instrument executed pursuant to
or incorporated by reference into any of the Loan Documents, and the breaching
party does not cure that breach within thirty days after the breach, and the NGC
Parties agree to give Xxxxxx prompt notice of any breach under this
provision;
9. Any
of the NGC Parties 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 any of the NGC Parties under any bankruptcy or insolvency laws and that
involuntary proceeding is not dismissed within sixty days after it is
filed;
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 $500,000.00; and/or
11. NGC
violates Section II(D) of this Agreement, titled “Restrictions on Use of Certain
Funds.”
B. If
an Event or Default occurs, then Xxxxxx shall have all of the rights and
remedies available to her under the law as well as all of those set forth in
each of the Loan Documents.
VI.
Miscellaneous
Provisions
A. Notices. Any
and all notices or communications related in any way to this Agreement may be
given by certified mail with return receipt requested, by receipted courier, by
overnight delivery service, or by hand delivery and sent to the persons at the
addresses set forth for each party below, or they may be given by facsimile
transmission or by e-mail transmission if the intended recipient has
affirmatively stated that notice may be delivered by facsimile or e-mail and the
intended recipient has provided a valid facsimile number and/or e-mail
address. Any notice delivered by facsimile or e-mail sent or for
which a return receipt is received at any time before 5:00 p.m. on a business
day shall be deemed to be delivered on that date. Any facsimile or
e-mail notice not received by 5:00 p.m. on a business day shall be deemed to be
received on the first following business day.
|
Notices to NGC:
|
with a copy sent contemporaneously
to:
|
|
Xxxxxx
X. Xxxxxxx, CEO
|
Xxxxxx
X. East, General Counsel
|
|
Nevada
Gold & Casinos, Inc.
|
Nevada
Gold & Casinos, Inc.
|
|
00
Xxxxx Xxxxxx Xxxx, Xxxxx 000X
|
00
Xxxxx Xxxxxx Xxxx, Xxxxx 000X
|
|
Xxxxxxx,
Xxxxx 00000-0000
|
Xxxxxxx,
Xxxxx 00000-0000
|
|
Facsimile
number: (000) 000-0000
|
Facsimile
number: (000) 000-0000
|
|
E-mail: XXxxxxxx@XxxxxxXxxx.xxx
|
E-mail:
XXxxx@XxxxxxXxxx.xxx
|
|
Notice
may be delivered by facsimile or
|
Notice
may be delivered by facsimile or
|
|
e-mail
with proof of receipt.
|
e-mail
with proof of receipt.
|
|
Notices to Xxxxxx:
|
|
|
Xxx.
Xxxxxx X. Xxxxxx
|
|
|
0000
Xxxx Xxxx
|
|
|
Xxxxx,
Xxxxx 00000-0000
|
|
|
with copies sent contemporaneously
to:
|
|
|
Xxxxxx
X.
Xxxxxx and
|
W.
Xxxxxxx Xxxxxxxxx
|
|
Attorney
at Law
|
0000
Xxxx Xxxxxxx, Xxxxx 000
|
|
0000
Xxxx Xxxxxxx, Xxxxx 000
|
Xxxxxxx,
Xxxxx 00000-0000
|
|
The
Xxxxxxxxx, Xxxxx 00000-0000
|
Facsimile
number: (000) 000-0000
|
|
Facsimile
number: (000) 000-0000
|
Notice
may be delivered by facsimile
|
|
E-mail
address: XXxxxxx@XXxxxxxXxx.xxx
|
with
proof of receipt.
|
|
Notice
may be delivered by facsimile or
|
|
|
e-mail
with proof of receipt.
|
Page
9 of 13
NGC
understands and agrees that any notice given or attempted to be given by it to
Xxxxxx is not effective unless the notice was contemporaneously
provided to all other persons identified above or subsequently identified to NGC
by Xxxxxx and shall be deemed to have been given to Xxxxxx upon providing notice
to Xx. Xxxxxx and Xx. Xxxxxxxxx as set forth above. Any of the above
contact information or designated representatives for the purpose of notice may
be changed by a party or an authorized representative of a party providing
written notice in the manner set forth above to the other party, and the new
contact information or representative will then become effective. For
all purposes under this Agreement, any notice given by Xx. Xxxxxx or Xx.
Xxxxxxxxx (or other any other legal counsel or financial advisor designated by
Xxxxxx) on behalf of Xxxxxx shall constitute notice by Xxxxxx.
B. Duties of
Xxxxxx. Xxxxxx’ 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. Xxxxxx 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 Xxxxxx accords her own
property. Xxxxxx 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 any of the NGC Parties of these
matters regardless of whether Xxxxxx has or is deemed to have any knowledge of
these matters. Xxxxxx 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. Xxxxxx 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
of default in the payment of the Obligations, or in the payment of or upon any
security, whether pledged under this ARSA or otherwise, nor for a decline in the
market value of the Collateral.
C. Indemnification. The
NGC Parties all agree to indemnify and to hold Xxxxxx harmless, in the absence
of Xxxxxx’ xxxxx negligence or willful misconduct, from and against any loss,
claim, demand, or expense (including attorneys’ fees) by reason of, 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 any claim that may arise because of any alleged breach of warranty
concerning the Collateral.
D. Expenses. If
an Event of Default under the Loan Documents or any Note or Security Instrument
issued pursuant to or incorporated by reference into the Loan Documents occurs,
NGC shall promptly pay, upon demand, any and all actual attorney’s fees and
out-of-pocket expenses incurred by Xxxxxx related to the Event of Default to the
extent permitted by applicable law, but in no event shall these attorney’s fees
and expenses be paid later than thirty days after the date on which they are
submitted to NGC. Additionally, NGC 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 Xxxxxx that relate in any way to her loans to NGC,
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 Loan Documents) from the date paid or incurred
by Xxxxxx or her attorney until paid by NGC.
E. Financing
Statement. The NGC Parties all authorize Xxxxxx to file
financing statements (and, if necessary or appropriate, sign the respective NGC
Party’s name on financing statements to authenticate them) describing the
Collateral. Xxxxxx shall be entitled, but not required, to file
financing statements describing the assets as set forth above and to attach a
copy of the Schedule to the financing statement. A carbon,
photographic, or other reproduction of this ARSA 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.
Page
10 of 13
F.
Further
Assurances. The NGC Parties all agree to execute all other documents and
instruments reasonably requested by Xxxxxx or her attorney to effectuate the
intent of this ARSA upon written request by Xxxxxx or her attorney after the
date of this ARSA.
G.
Amendment
and Written Waiver. No waiver, modification, or alteration of any
provision of this ARSA, nor consent to any departure from the terms of it or
from the terms of any other document, shall be effective unless it is in writing
and signed by the respective NGC Party(ies) intended to be bound and Xxxxxx, and
any executed waiver shall be effective only for the specific purpose and in the
specific instance set forth in that document. Any document purporting to amend
or modify this ARSA shall be of no force or effect unless the document expressly
states that it is intended to amend or modify the ARSA and it is signed by
Xxxxxx and the respective NGC Party(ies) intended to be bound by the
modification. No waiver by Xxxxxx of any Event of Default shall be deemed to be
a waiver of any other or subsequent Event of Default nor shall the waiver be
deemed to be a continuing waiver.
H. Benefit. This
ARSA is binding upon and inures to the benefit of the NGC Parties as indicated
and of Xxxxxx, and their respective heirs, legal representatives, successors,
and assigns, provided that none of the NGC Parties may assign any rights,
powers, duties, or obligations under this ARSA without the prior written consent
of Xxxxxx.
I. Remedies
Cumulative. All rights and remedies of Xxxxxx under this ARSA
are cumulative of each other and of every other right or remedy that Xxxxxx 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 or
any other party liable regarding the Obligations. The exercise by
Xxxxxx of one or more rights or remedies shall not in any way affect her right
to exercise any of her other rights or remedies, or to subsequently exercise the
same rights or remedies in the future.
J. Course of
Dealing. No course of dealing between NGC and Xxxxxx, nor any
failure or delay by Xxxxxx in exercising any of her rights, powers, or
privileges under the Loan Documents shall operate as a waiver of any of Xxxxxx’
rights, powers, or privileges; nor shall any single or partial exercise of any
right, power, or privilege under the Loan Documents preclude any other or
further exercise of that right, power, or privilege or the exercise of any other
right, power or privilege.
K. Severability. The
invalidity of any one or more phrases, sentences, clauses, paragraphs, or
sections of this ARSA shall not affect the remaining portions of this
ARSA. If any one or more of the phrases, sentences, clauses,
paragraphs, or sections contained in this ARSA are invalid, or operate to render
this ARSA invalid, then this ARSA shall be construed as if the invalid phrase or
phrases, sentence or sentences, clause or clauses, paragraph or paragraphs, or
section or sections had not been inserted.
L. Satisfaction
of Obligations. Upon the full and final satisfaction of all of
the Obligations, as determined by Xxxxxx, this ARSA shall terminate, and Xxxxxx
shall deliver to NGC, at NGC’s expense, the Collateral remaining in her
possession that has not been sold or otherwise applied pursuant to this ARSA,
and Xxxxxx shall provide any other termination statements reasonably required by
the respective NGC Party, also at its expense.
M. Governing
Law. The substantive laws of the State of Texas govern the
validity, construction, enforcement, and interpretation of this ARSA unless the
laws of the State of Texas require the application of the laws of another
state. This ARSA is performable in Xxxxxxxxxx County,
Texas.
N. Controlling
Document. To the extent that this ARSA conflicts with or is in
any way incompatible with any of the other Loan Documents or any other loan
document or instrument concerning the Obligations that involves any loan of
funds by Xxxxxx to NGC, this ARSA shall control over any other document, and if
this ARSA does not address an issue, then each other loan document executed by
Xxxxxx shall control to the extent that it deals most specifically with an
issue.
Page
11 of 13
O. Incorporation
of Other Documents. The Parties agree that the Loan Documents
are all incorporated by reference in this ARSA for all purposes as if fully set
forth at length.
The parties have executed this
instrument to be effective as of July 7, 2009.
Maker:
|
Nevada
Gold & Casinos, Inc.
|
|
|
By:
|
/s/
Xxxxxx X. Xxxxxxx
|
|
Xxxxxx
X. Xxxxxxx, Chief Executive
Officer
|
|
|
Other Pledging Parties:
|
|||
|
Gold
Mountain Development, L.L.C.
|
CGC
Holdings, L.L.C.
|
||
|
By:
|
/s/
Xxxxxx X. Xxxxxxx
|
By:
|
/s/
Xxxxxx X. Xxxxxxx
|
|
Xxxxxx
X. Xxxxxxx, Manager
|
Xxxxxx
X. Xxxxxxx, Manager
|
||
|
Date
of
Signature: 7-7-09
|
Date
of
Signature: 7-7-09
|
||
[Additional
signatures follow on next page.]
Page
12 of 13
Other Pledging Parties,
continued:
|
Colorado
Grande Enterprises, Inc.
|
Nevada
Gold BVR, L.L.C.
|
||
|
By:
|
/s/
Xxxxxx X. Xxxxxxx
|
By:
|
/s/
Xxxxxx X. Xxxxxxx
|
|
Xxxxxx
X. Xxxxxxx, President
|
Xxxxxx
X. Xxxxxxx, Manager
|
||
|
Date
of
Signature: 7-7-09
|
Date
of
Signature: 7-7-09
|
||
|
Secured Party:
|
|||
|
/s/
Xxxxxx X. Xxxxxx
|
Date
of
Signature: 7-7-09
|
||
|
Xxxxxx
X. Xxxxxx, as her Separate Property
|
|||
|
0000
Xxxx Xxxx
|
|||
|
Xxxxx,
Xxxxx 00000-0000
|
|||
Page
13 of 13
