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 50 Briar Hollow Lane,
Suite 500W, Houston, Texas, 77027-9304; 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 Louise H. Rogers ,
an individual who resides in Tyler, Smith County, Texas, as her
separate property (“Rogers”). NGC, GMD, CGC, CGE,
NGBVR, and Rogers 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
A. Rogers
has previously and from time to time loaned NGC funds in exchange
for NGC granting to Rogers a security interest in certain
collateral and NGC causing its subsidiaries and affiliates GMD,
CGC, CGE, and NGBVR to also grant Rogers a security interest in
certain collateral. Currently, the total principal
amount owed by NGC to Rogers 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 Rogers as security for the repayment of the amounts owed
by NGC to Rogers 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
Rogers for prior loans made by Rogers 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 Rogers 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 Rogers 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;
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.
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 Rogers to NGC pursuant to the Loan Documents (or any
other loan agreements between Rogers 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 Rogers all amounts advanced by Rogers to or on behalf of
NGC under the Loan Documents or under any prior loan agreements
between Rogers and NGC;
c. to
comply with and to perform fully all of the terms and provisions of
the Loan Documents;
d. to
reimburse Rogers for all of Rogers’ 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 Rogers 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
Rogers 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. Rogers
agrees to file a UCC-3 terminating any security interest Rogers
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 Rogers 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 Rogers or
that may at her option be filed, Rogers 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
Rogers 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 Rogers as follows:
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
Rogers 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 Rogers
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 Rogers 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
Rogers, to obtain consent from each entity requiring consent that a
security interest has been granted to Rogers, 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;
2. from
time to time promptly execute and deliver to Rogers all other
assignments, certificates, proxies, entitlement orders,
supplemental writings, and financing statements, and do all other
acts and things that Rogers may reasonably request in order to
evidence the assignment and perfect and enforce the Security
Interest granted in this ARSA;
3. promptly
furnish to Rogers or her attorney or agent with any and all
information or writings that Rogers or her attorney or agent may
reasonably request concerning the Collateral;
4. promptly
notify Rogers and her attorney of any claim, action, or proceeding
affecting the Collateral or any part of the Collateral, and at the
request of Rogers, appear in and defend, at their own expense, the
action or proceeding;
5. notify
Rogers 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 Rogers the amount of all court costs,
actual attorneys’ fees, and expenses of litigation incurred
by Rogers in enforcing the Loan Documents;
7. if
an Event of Default occurs and continues, promptly deliver all
proceeds constituting part of the Collateral to Rogers 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 Rogers’ 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
Rogers’ first lien and that the second and any other
lienholder clearly acknowledges Rogers’ 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 Rogers.
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 tha
