Item 1.01 Entry into a Material Definitive Agreement.
Securities Purchase Agreement
As previously announced,
on September 18, 2018, Nevada Gold & Casinos, Inc., a Nevada corporation (the “Company”), entered into an Agreement
and Plan of Merger with Maverick Casinos LLC, a Nevada limited liability company (“Parent”), and Maverick Casinos Merger
Sub, Inc., a Nevada corporation and a wholly-owned subsidiary of Parent (the “Merger Sub”), dated as of that date (the
“Merger Agreement”). Upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will
be merged (the “Merger”) with and into the Company, as a result of which the Company will continue as the surviving
corporation and a wholly-owned subsidiary of Parent.
On November 29, 2018, in
order to facilitate and avoid delays associated with obtaining the approvals of the Washington State Gambling Commission required
in order to consummate the Merger, the Company entered into a Securities Purchase Agreement dated as of that date (the “Securities
Purchase Agreement”) with Parent. Pursuant to the Securities Purchase Agreement, on November 29, 2018, the Company issued
and sold to Parent 890,390 shares of its common stock, par value $0.12 per share (the “Shares”), representing 5.0%
of the outstanding shares of common stock of the Company (based on the number of outstanding shares of common stock of the Company
on November 29, 2018, after giving effect to the issuance and sale of the Shares), in a private placement, for $2.42 per share,
the closing market price for shares of the Company’s common stock on the last trading day prior to the issuance and sale
of the Shares to Parent (and for an aggregate purchase price of $2,154,743.80 (the “Purchase Price”)).
Pursuant to the terms of
the Securities Purchase Agreement, Parent has agreed not to sell, assign, dispose of, exchange, pledge, encumber, or otherwise
transfer any of the Shares, or any interest therein, except to the Company as described below, and with respect to all matters
presented to the Company’s stockholders, Parent has agreed to vote all of the Shares held by Parent in the same manner and
in the same proportion (rounded to the nearest whole share) as shares of common stock of the Company that are not held by Parent
are voted. The Securities Purchase Agreement also contains representations, warranties, and other provisions customary for transactions
of this nature.
A portion of the Purchase
Price for the Shares was funded by the release of all funds held in escrow ($2,001,085.03) pursuant to the Escrow Agreement dated
as of September 18, 2018 (the “Initial Escrow Agreement”), by and among the Company, Parent, and Fidelity National
Title Agency of Nevada, Inc., a Nevada corporation dba Fidelity National Title Group, as escrow agent, which was entered into in
connection with the Merger Agreement, to secure Parent’s obligation to pay a termination fee of $2 million (the “Parent
Termination Fee”) to the Company if the Merger Agreement is terminated under certain circumstances prior to the consummation
of the Merger. The remaining portion of the Purchase Price ($153,658.77) was paid in cash by Parent (the “Cash Payment”).
All of the Shares acquired
by Parent pursuant to the Securities Purchase Agreement were deposited with Mutual of Omaha Bank (the “Escrow Agent”)
into a segregated escrow account, to be held, released, and disposed of by the Escrow Agent pursuant to the Securities Escrow Agreement
(as defined below), to secure Parent’s obligations to pay the Parent Termination Fee to the Company if the Merger Agreement
is terminated under certain circumstances prior to the consummation of the Merger. Such obligation was formerly secured by the
funds held in escrow under the Initial Escrow Agreement that were used to pay portion of the Purchase Price for the Shares as described
above.
If the Merger is consummated,
the Shares will be released to Parent and, like any other shares of the Company’s common stock owned by Parent, will be cancelled
and will cease to exist, without any conversion thereof, and no payment or distribution will be made with respect thereto pursuant
to the Merger Agreement. In the event that the Merger Agreement is terminated prior to the consummation of the Merger under circumstances
in which Parent is required to pay the Parent Termination Fee to the Company, as promptly as practicable (and in any event within
two business days) following the date giving rise to the obligation of Parent to pay such fee, (i) Parent will forfeit all of the
Shares and they will be released from escrow and delivered to the Company in satisfaction of such fee, and (ii) the Company will
pay to Parent an amount equal to the Cash Payment. In the event the Merger Agreement is terminated prior to the consummation of
the Merger under circumstances in which Parent is not required to pay the Parent Termination Fee to the Company, as promptly as
practicable (and in any event within two business days) following such termination of the Merger Agreement, the Company will be
required to purchase all of the Shares from Parent for an amount equal to the Purchase Price and the Shares will be released from
escrow and delivered to the Company.
The Shares were issued
and sold by the Company in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended
(the “Securities Act”), in reliance on Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated
by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act. Accordingly, the Shares
are subject to certain restrictions and may not be offered or sold in the United States absent registration or an applicable exemption
from the registration requirements of the Securities Act and other applicable securities laws.
Amendment No. 1 to Merger Agreement
In connection with the
Securities Purchase Agreement, on November 29, 2018, the Company entered into Amendment No. 1 to Agreement and Plan of Merger dated
as of that date (“Amendment No. 1 to the Merger Agreement”), with Parent, and Merger Sub.
Amendment No. 1 to the
Merger Agreement amended certain representations, warranties, and covenants set forth in the Merger Agreement so as to permit the
Company to enter into the Securities Purchase Agreement and consummate the transactions contemplated thereby, including the issuance
and sale of the Shares to Parent, without triggering any violation or breach of such representations, warranties, and covenants.
Amendment No. 1 to the
Merger Agreement also modified the Merger Agreement to conform with the provisions of the Securities Purchase Agreement related
to the disposition of the Shares in the event that the Merger Agreement is terminated prior to the consummation of the Merger and
provide that (i) if following any such termination Parent is required to pay the Parent Termination Fee pursuant to the terms of
the Merger Agreement, Parent will forfeit to the Company all of the Shares and they will be released from escrow and delivered
to the Company in satisfaction of the Parent Termination Fee, and the Company will pay to Parent an amount equal to the Cash Payment,
and (ii) in all other cases, if the Merger Agreement is terminated prior to the consummation of the Merger, the Company will be
required to purchase from Parent all of the Shares for an amount equal to the Purchase Price and the Shares will be released from
escrow and delivered to the Company.
Escrow Agreement
Also on November 29, 2018,
in connection with the Securities Purchase Agreement and Amendment No. 1 to the Merger Agreement, the Company entered into an Escrow
Agreement dated as of that date (the “Securities Escrow Agreement”), with Parent and the Escrow Agent.
Pursuant to the terms of
the Securities Escrow Agreement, the Escrow Agent agreed to establish the escrow account into which the Shares were deposited and
to hold, release, and dispose of the Shares in accordance with the provisions of the Securities Purchase Agreement and the Merger
Agreement, as amended by Amendment No. 1 to the Merger Agreement, described above. The Securities Escrow Agreement contains customary
representations, warranties and covenants from the Company, Parent, and the Escrow Agent, including customary indemnification obligations
of the Company and Parent in favor of the Escrow Agent.
Transaction Documents
The foregoing summaries
of Amendment No. 1 to the Merger Agreement, the Securities Purchase Agreement, the Securities Escrow Agreement, and the transactions
contemplated thereby do not purport to be complete and are subject to, and qualified in their entirety by, the full text of (i)
Amendment No. 1 to the Merger Agreement, a copy of which is attached as Exhibit 2.1 to this report and is incorporated herein by
reference, (ii) the Merger Agreement, which is incorporated by reference to Exhibit 2.1 to the Company’s Current Report on
Form 8-K filed on September 18, 2018, (iii) the Securities Purchase Agreement, a copy of which is attached as Exhibit 10.1 to this
report and is incorporated herein by reference, and (iv) the Securities Escrow Agreement, a copy of which is attached as Exhibit
10.2 to this report and is incorporated herein by reference.
Amendment No. 1 to the
Merger Agreement, the Merger Agreement, the Securities Purchase Agreement, and the Securities Escrow Agreement have been included
to provide investors with information regarding their respective terms. They are not intended to provide any other factual information
about the Company, Parent, Merger Sub, or their respective subsidiaries or affiliates. The representations, warranties, and covenants
contained in each of the Merger Agreement, the Securities Purchase Agreement, and the Securities Escrow Agreement were made only
for the purposes of such agreement and as of the specific dates therein, were solely for the benefit of the parties to such agreement,
and may be subject to limitations agreed upon by such parties, including, in the case of the Merger Agreement, being qualified
by information in confidential disclosure schedules that the parties to the Merger Agreement have exchanged in connection with
signing the Merger Agreement, and were made for the purposes of allocating contractual risk among the parties to such agreement
instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties
that differ from those applicable to investors. Investors are not third-party beneficiaries of the Merger Agreement, the Securities
Purchase Agreement, or the Securities Escrow Agreement and should not rely on the representations, warranties, or covenants or
any description thereof as characterizations of the actual state of facts of conditions of the parties thereto or any of their
respective subsidiaries or affiliates at the time they were made or otherwise. Moreover, information concerning the subject matter
of the representations and warranties may change after the date of the Merger Agreement, the Securities Purchase Agreement, or
the Securities Escrow Agreement, as applicable, which subsequent information may or may not be fully reflected in the Company’s
public disclosures.