EXHIBIT 10.8
WHEREVER CONFIDENTIAL INFORMATION IS
OMITTED HEREIN (SUCH OMISSIONS ARE DENOTED
BY AN ASTERISK), SUCH CONFIDENTIAL
INFORMATION HAS BEEN SUBMITTED SEPARATELY TO
THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.
AMENDED AND RESTATED SECURED PROMISSORY NOTE
--------------------------------------------
FOR VALUE
RECEIVED, Nevada Gold & Casinos, Inc., a Nevada corporation
("NGC"), as maker, whose principal place of
business is 3040 Post Oak Blvd.,
Suite 675, Houston, Texas, 77056-6588,
promises to pay to the order of [*], an
individual, as her separate property (*
name changed to the defined term
"Lender" throughout the Agreement), the
principal sum of $13,000,000.00 (reduced
as set forth in Section 2 below), together
with interest on the unpaid principal
balance as set forth below. All sums due under this Note are
payable to Lender
at [*], or at any other place that Lender
may designate in writing.
1.
RESTATEMENT OF PRIOR LOAN DOCUMENTS. This Amended and Restated
------------------------------------
Promissory Note ("Note") is entered into as
of June 28, 2004, and is expressly
intended to completely modify and restate
the obligations of NGC and Lender
under the Continuing Loan Agreement and the
Term Note in the original principal
sum of $7,000,000.00 entered into between
NGC and Lender and both dated December
23, 1999; the Amendment to Continuing Loan
Agreement and Term Note adding the
additional principal amount of
$6,000,000.00 dated March 31, 2001; and any and
all side agreements, letters, and other
documents between the parties to this
Note related to any of the loan documents
identified above.
However, this Note
does not modify, amend, or replace the
original Security Agreement entered into
---
between NGC and Lender as of December 23,
1999. The original
Security Agreement
is amended and restated by the Amended and
Restated Security Agreement dated
June 28, 2004, between Lender, NGC, and
Blackhawk Gold, Ltd., a wholly-owned
subsidiary of NGC ("BHG"), and entered into
concurrently with this Note (the
"ARSA"). Capitalized terms not otherwise
defined in this Note have the same
definitions as the ARSA, including Appendix
I to the ARSA.
2.
PARTIAL CONVERSION EFFECTED; PARTIAL PREPAYMENT EFFECTED.
On
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November 14, 2003, Lender converted
$1,766,829.77 in principal and $15,671.23 in
accrued and outstanding interest into a
total of 594,167 shares of common stock
in NGC, leaving a principal balance due and
owing of $11,233,170.23 as of
November 14, 2003. As of June 28, 2004, the date of
this Note, NGC shall have
prepaid the amount of $7,915,671.23 in
principal, leaving a principal balance
due and owing of $3,317,499.00, plus any
accrued, unpaid interest, as of the
date of this Note.
3.
PAYMENT TERMS. NGC
agrees to pay the sums under this Note as
--------------
follows:
1.
payment of interest only through December 31, 2005, payable
monthly on or
before the last day of each month by check made payable to
"Lender,
Separate Property," and accompanied by a letter setting forth
the
principal amount
outstanding, the method of calculating interest, and the
amount of
interest paid, with copies of the check and all other
correspondence
included with Lender's check sent contemporaneously by
facsimile to
Lender's attorney/counsel, [*], at her facsimile number set
forth below;
AMENDED AND RESTATED
SECURED PROMISSORY NOTE
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NGC-BHG/LENDER/JUNE 2004
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2.
all payments must be received by Lender on or before the due
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--------------------
date in order
for the payment to be timely, and they must be received by
----
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Lender on or
before the fifth day after Lender gives notice to NGC of the
late payment to
avoid a Default by NGC; and
3.
the entire principal amount outstanding, plus any outstanding
interest, less any amounts
converted by Lender into NGC Stock per Section 5
below, shall be
due and payable to Lender in full on December 31, 2005.
4.
INTEREST RATE; DEFAULT INTEREST RATE. The unpaid principal balance
-------------------------------------
under this Note shall bear interest at the
rate of eleven percent (11%) per
annum prior to the date of this Note, and
at the rate of seven and one-half
percent (7 %) per annum from the date of
this Note until paid.
Any matured,
unpaid amount of principal shall bear
interest at the rate of eleven percent
(11%) per annum until paid. If any payment of interest is not
made on or before
its due date, then the interest rate on
that payment shall increase to 11% from
the date on which that interest payment
began accruing through the date on which
the late interest payment is paid in full
(this provision shall not apply if the
late payment is caused solely by a third
party carrier in delivering the payment
to Lender if NGC has sent the payment for
delivery in a properly addressed
Federal Express, Airborne Express, United
Parcel Service, or Lone Star Overnight
package with delivery charges prepaid or
charged to NGC's account and the
package is sent via next day overnight
delivery at least one business day in
advance of the due date, or two business
days if the due date is not a business
day - NGC shall not use United States
Postal Service overnight or next day
delivery service for any payments).
In the event of a
Default by NGC, the
interest rate on the entire outstanding
principal amount shall increase to
eleven percent (11%) per annum as of the
date through which the last interest
payment was duly made and shall continue at
that rate until the entire
outstanding amount of principal and
interest is paid in full.
5.
CONVERSION RIGHTS.
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1.
CONVERSION RIGHTS IRREVOCABLE. NGC agrees that Lender shall
------------------------------
continue to have
the IRREVOCABLE RIGHT to convert any outstanding principal
-----------------
and interest
remaining due and owing under this Note into shares of NGC's
Stock [as
defined in Section 6(a) below] at the rate of $3.00 per share
or
85% of the per
share price of the closing market price of NGC's Stock as of
the date of
Lender's conversion notice (whichever is less). Lender agrees
that she is
entitled to exercise these conversion rights as follows: Lender
may convert on
or at any time during the ten-month period beginning
November 14,
2004, up to 650,000 shares; and again any time on or after
September 14,
2005, until December 30, 2005, for the balance due under the
Note. However,
at no time during any conversion period shall Lender convert
an amount under
this Note that would result in her owning, at the time of
each conversion,
an interest in NGC greater than 4.99% of NGC's total
outstanding
Stock.
2.
NOTICE REQUIREMENTS.
NGC acknowledges and agrees that, under
--------------------
the "tacking"
provisions of Rule 144 of the General Rules and Regulations
of the
Securities Act of 1933, Lender's holding period began on
December
23, 1999. Lender
agrees to provide in each of her future conversion notices
written
confirmation that she is not a 5% or more beneficial shareholder
or
a control person
of NGC and that she has not been one of these during the
ninety days
preceding the date of the conversion notice. Upon receipt of
her conversion
notice with this representation, NGC shall issue to Lender
her converted
Stock without any restrictive legend and they shall not be
restricted in
any other way by NGC. Lender may give notice of conversion to
NGC in writing
by facsimile, by mail, or by overnight delivery, and she may
do so through
her attorney/counsel (*) or her financial
AMENDED AND RESTATED
SECURED PROMISSORY NOTE
_______
NGC-BHG/LENDER/JUNE 2004
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advisor (*), and
notice from either of these two agents shall constitute
notice by
Lender. NGC shall promptly comply with all of Lender's and/or
her
agent's
conversion notices and shall deliver the Stock to [*] (or to
any
other person
designated by Lender in writing), with a copy faxed
contemporaneously to Lender and to her attorney/counsel, no later
than four
business days
after NGC's receipt of the conversion notice. NGC MAY NOT IN
ANY WAY DENY,
REVOKE, AMEND, DEPLETE, DELAY, OR INTERFERE WITH LENDER'S
CONVERSION
RIGHTS OR INTERFERE WITH ANY TRANSFER OF THE STOCK DONE IN
COMPLIANCE WITH
SECURITIES LAWS.
3.
APPLICATION OF CONVERSION AMOUNTS. All conversion amounts
----------------------------------
shall be applied
first to accrued, unpaid interest, then to principal,
unless otherwise
instructed by Lender or her agent. NGC shall provide to
Lender or her
agent, within two business days of the request, NGC's
then-current
figure for all outstanding stock in NGC. All Stock issued to
Lender under
this Note shall be issued in the name of [*], as her Separate
Property" unless
instructed otherwise.
6.
ADJUSTMENT AND OTHER EVENTS.
----------------------------
1.
DEFINITION OF "STOCK."
As used in this Note, the capitalized
----------------------
term "Stock"
shall mean shares of NGC's common stock of any class, whether
now or
subsequently authorized, that has the right to participate in
the
distribution of
earnings and assets of NGC without limit as to amount or
percentage. On
the date of this Note, Stock consists of 20,000,000
authorized
shares of NGC's common stock at $.12 par value per share. NGC
warrants and
represents that it has no shares of convertible preferred
stock issued or
outstanding, and that during the term of this Note, it will
not issue any
convertible preferred stock to any third party without first
giving Lender
formal written notice of its intent to issue preferred stock
along with the
specific terms of the preferred stock offering (including
but not limited
to the closing date, interest rate, and conversion rate)
and then giving
Lender the right of first refusal to purchase the preferred
stock. Lender
shall have seven business days from the date of her receipt
of the formal
written notice to purchase the preferred stock. If Lender
does not respond
within seven business days, Lender shall be presumed to
have declined to
purchase the preferred stock. NGC shall give Lender
informal notice
of its intent or desire to issue the preferred stock as far
in advance as is
practicable, which is presumed to be approximately thirty
days before the
contemplated closing date of the transaction. NGC is not
required to
resubmit to Lender any preferred stock offering if the closing
date, interest
rate, and/or conversion rate on the final transaction are
equal or less
favorable to Lender than the original terms proposed by NGC.
2.
STOCK DIVIDEND OR DISTRIBUTION. In case NGC declares any
-------------------------------
dividend or
other distribution upon any of its Stock payable in Stock, or
subdivides any
of its outstanding shares of Stock into a greater number of
shares, then the
number of shares of Stock that may subsequently be
obtained upon
Lender's exercise of her conversion rights shall be increased
in proportion to
the increase through the dividend, distribution, or
subdivision, and
the conversion price per share shall be decreased in
proportion. In
case NGC at any time combines the outstanding shares of its
Stock into a
smaller number of shares, the number of shares that may
subsequently be
obtained by Lender upon her exercise of her conversion
rights
represented by this Note shall be decreased proportionately to
the
decrease through
the combination, and the conversion price per share shall
be increased
proportionately.
3.
EFFECT OF RECLASSIFICATION, REORGANIZATION, CONSOLIDATION,
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MERGER, OR SALE
OF ASSETS. In case of any (1) reclassification, capital
-------------------------
reorganization,
or other change of
AMENDED AND RESTATED
SECURED PROMISSORY NOTE
_______
NGC-BHG/LENDER/JUNE 2004
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outstanding
Stock of NGC, (2) consolidation or merger of NGC with or into
another
corporation (other than a consolidation or merger in which NGC
is
the continuing
corporation and that does not result in any
reclassification, capital reorganization, or other change in the
kind or
number of shares
of common stock issuable upon Lender' exercise of her
conversion
rights), or (3) sale or conveyance to another corporation of
all
or substantially
all of NGC's assets as an entirety, NGC shall take
appropriate
steps necessary to provide that Lender shall have the right
after the event,
by exercising her conversion rights, to purchase the kind
and amount of
shares of stock and other securities and property, if any,
receivable upon
the reclassification, capital reorganization, or other
change,
consolidation, merger, sale, or conveyance that Lender would
have
received had her
conversion rights been fully exercised immediately prior
to the
event.
4.
OBLIGATION OF SUCCESSORS OR TRANSFEREE CORPORATION. NGC
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shall not effect
any consolidation, merger, sale, or conveyance of assets
within the
meaning of Subsection 6(c)(1)-(3) above unless, prior to or
simultaneously
with the consummation of the event, the successor
corporation
resulting from the consolidation or merger or the corporation
purchasing the
assets assumes by written instrument executed and mailed or
delivered to
Lender the obligation to deliver to Lender the shares of
Stock,
securities, or assets that, in accordance with the above
provisions,
Lender may be
entitled to receive upon exercise of her conversion rights.
In no event
shall the securities received pursuant to this Subsection be
registerable or
transferable other than pursuant and subject to the terms
of this Note.
NGC may change its name without prior notice to or consent by
Lender, and it
shall continue to remain obligated to honor this Note under
its new company
name.
5.
NOTICE OF ADJUSTMENT AND OTHER EVENTS. If (1) an
event
--------------------------------------
requiring an
adjustment as provided in Subsections 6(b) or (c) occurs; (2)
NGC makes a
distribution of assets or rights to acquire assets to a
shareholder; (3)
NGC offers for subscription pro rata to the holders of its
Stock any
additional shares of stock of any class, or other rights; or
(4)
NGC suffers a
voluntary or involuntary dissolution, liquidation, or winding
up of NGC; then,
in any one or more of these cases, NGC shall give to
Lender (i) at
least twenty days prior written notice of the date on which
the books of NGC
shall close or a record shall be taken for the dividend,
distribution, or
subscription rights, or for determining rights to vote
regarding any
reorganization, reclassification, consolidation, merger,
sale,
dissolution, liquidation, or winding up, and (ii) in the case of
any
reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation, or
winding up, at least twenty days' prior written notice of
the date when
the event shall take place. The notice given pursuant to this
provision and to
the extent applicable shall specify (i) in the case of any
dividend,
distribution, or subscription rights, the date on which the
holders of Stock
shall be entitled to receive the dividend, distribution,
or subscription
rights; and (ii) when the holders of Stock shall be
entitled to
exchange their Stock for securities or other property
deliverable upon
reorganization, liquidation, or winding up, as the case
may be. Upon the
happening of an event requiring adjustment of the
conversion price
per share or the kind or amount of securities or property
issuable upon
conversion of any portion of this Note, NGC shall promptly
give notice to
Lender, and the notice shall be accompanied by a certificate
of NGC's
independent public accountants stating the adjusted conversion
price per share
and the adjusted number of shares of Stock issuable or the
kind and amount
of the securities or property issuable upon Lender's
exercise of her
conversion rights, as the case may be, and setting forth in
reasonable
detail the method of calculation and the facts upon which the
calculation is
based.
AMENDED AND RESTATED
SECURED PROMISSORY NOTE
_______
NGC-BHG/LENDER/JUNE 2004
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6.
COMPANY-HELD STOCK. The number of
shares of Stock of any
-------------------
class at any
time outstanding shall include all shares of Stock of that
class then
issued and owned or held by or for the account of NGC.
7.
DEFAULT. NGC will be in
default if any of the following happens
--------
("Default" or "Event of Default"):
(a) NGC fails to
timely make the principal
payment at maturity; (b) Lender does not
receive an interest payment on or
before the fifth day after Lender gives
notice to NGC of the late payment; (c)
NGC defaults under any loan, extension of
credit, security agreement, purchase
or sales agreement, contractual
