[EXECUTION COPY]
THIRD PREFERRED MORTGAGE
ON THE WHOLE OF THE
[NAME OF REDOCUMENTED VESSEL]
(Official Number )
BL DEVELOPMENT CORP.
13705 FIRST AVENUE NORTH
PLYMOUTH, MINNESOTA 55441-5451
as Owner and Mortgagor
In Favor Of
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION
79 MAIN STREET
SALT LAKE CITY, UTAH 84111
as Trustee and Mortgagee
For
BA LEASING & CAPITAL CORPORATION
FOUR EMBARCADERO CENTER, SUITE 1200
SAN FRANCISCO, CALIFORNIA 94111
as Agent
Dated as of May 10, 1996
Discharge Amount: $120,001,000.00 Together
With Interest and Performance
of Mortgage Covenants
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.1. Definition of Terms. . . . . . . . . . . . . 5
SECTION 1.2. Rules of Construction. . . . . . . . . . . . 6
ARTICLE II
GENERAL MORTGAGE PROVISIONS
SECTION 2.1. General. . . . . . . . . . . . . . . . . . . 6
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MORTGAGOR
SECTION 3.1. Corporate Status of Mortgagor. . . . . . . . 7
SECTION 3.2. Liens. . . . . . . . . . . . . . . . . . . . 7
SECTION 3.3. Compliance With Law. . . . . . . . . . . . . 7
SECTION 3.4. Operation of Vessel. . . . . . . . . . . . . 8
SECTION 3.5. Payment of Taxes, etc. . . . . . . . . . . . 8
SECTION 3.6. Notice of Mortgage . . . . . . . . . . . . . 8
SECTION 3.7. Release From Arrest. . . . . . . . . . . . . 9
SECTION 3.8. Maintenance of Vessel. . . . . . . . . . . . 9
SECTION 3.9. Access to Vessel . . . . . . . . . . . . . . 9
SECTION 3.10. Documentation of Vessel. . . . . . . . . . . 9
SECTION 3.11. Sale, Charter or Mortgage of Vessel. . . . . 9
SECTION 3.12. Insurance. . . . . . . . . . . . . . . . . . 9
SECTION 3.13. Requisition of Title to Vessel . . . . . . . 10
SECTION 3.14. Requisition of Vessel but not Title. . . . . 10
SECTION 3.15. Execution of Additional Documents. . . . . . 11
ARTICLE IV
EVENTS OF DEFAULT AND REMEDIES
SECTION 4.1.A. Events of Default . . . . . . . . . . . . .11
B Remedies . . . . . . . . . . . . . . . . . 12
SECTION 4.2. Sale of Vessel by Mortgagee. . . . . . . . 14
SECTION 4.3. Mortgagee to Sign for
Mortgagor. . . . . . . . . . . . . . . . . 14
SECTION 4.4. Mortgagee to Collect Hire, etc. . . . . . .14
SECTION 4.5. Mortgagee's Right to
Possession. . . . . . . . . . . . . . . . .15
SECTION 4.6. Appearance by Mortgagee on
Behalf of Mortgagor . . . . . . . . . . . .15
SECTION 4.7. Acceleration of Indebtedness
Secured Hereby. . . . . . . . . . . . . . .15
SECTION 4.8. Right of Mortgagee. . . . . . . . . . . . .16
SECTION 4.9. Cure of Defaults. . . . . . . . . . . . . .16
SECTION 4.10. Restoration of Position . . . . . . . . . .16
SECTION 4.11. Proceeds of Sale. . . . . . . . . . . . . .17
SECTION 4.12. Repairs to Vessel and Sale of
Equipment. . . . . . . . . . . . . . . . . 17
SECTION 4.13. Advances by Mortgagee . . . . . . . . . . .18
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1. Addresses . . . . . . . . . . . . . . . . 18
SECTION 5.2. Counterparts. . . . . . . . . . . . . . . 20
SECTION 5.3. Interest of Mortgagor . . . . . . . . . . 20
SECTION 5.4. Survivorship of Covenants . . . . . . . . 20
SECTION 5.5. Amendments. . . . . . . . . . . . . . . . 20
SECTION 5.6. Discharge of Lien . . . . . . . . . . . . 20
SECTION 5.7. Incorporation into Mortgage . . . . . . . 20
SECTION 5.8. Governing Law . . . . . . . . . . . . . . 20
SCHEDULE I - - Equipment
EXHIBIT A - - Master Vessel Trust Agreement
EXHIBIT B - - Participation Agreement and Appendix 1
EXHIBIT C - - Loan Agreement
EXHIBIT D - - Notes
EXHIBIT E - - Lease
EXHIBIT F - - Intercreditor Agreement
THIRD PREFERRED MORTGAGE
THIS THIRD PREFERRED MORTGAGE dated as of _______, 1996, is granted by:
BL DEVELOPMENT CORP.
13705 First Avenue North
Plymouth, Minnesota 55441-5451
a corporation organized and existing under and by virtue of the laws of the
State of Minnesota (the "Mortgagor") in favor of:
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION
79 South Main Street
Salt Lake City, Utah 84111
a national banking association organized and existing under and by virtue of the
laws of the United States, not in its individual capacity but solely as trustee
(the "Mortgagee") pursuant to a Master Vessel Trust Agreement, dated as of May
10, 1996 (the "Master Vessel Trust Agreement") with and for:
BA LEASING & CAPITAL CORPORATION Four Embarcadero Center, Suite 1200 San
Francisco, California 94111
a corporation organized and existing under and by virtue of the laws of the
State of California (the "Agent") for the Lenders party to the Participation
Agreement referred to below.
WHEREAS:
A. The Mortgagor is the sole owner of the whole of the
vessel identified and described in the Granting Clause of this
Third Preferred Mortgage (this "Mortgage").
B. The Mortgagor has directly and indirectly granted first priority mortgage
liens on such vessel in favor of American Bank National Association, as
indenture trustee (the "Indenture Trustee") under that certain Indenture, dated
as of November 30, 1995 (the "Indenture") to secure the payment of principal and
interest on the 10 1/8% First Mortgage Notes due November 30, 2003 in the
aggregate principal amount of $450,000,000 issued by Grand Casinos, Inc., a
Minnesota corporation ("GCI") pursuant to the Indenture (the "Indenture
Obligations").
C. The Mortgagor and GCI and certain of its subsidiaries have entered into
that certain Participation Agreement, dated as of May 10, 1996 (as amended,
modified or supplemented from time to time, the "Participation Agreement"), with
the Borrower, the Agent, and the Co-Agents, the Lead Manager and the Lenders
named therein.
D. The Mortgagor has entered into a grantor Trust with Hancock Bank as
Trustee pursuant to the terms of a Trust Agreement, dated as of May 10, 1996. In
its capacity as Trustee under said Trust Agreement, Hancock Bank is herein
referred to as the "Borrower". The Borrower, the Agent, the Co-Agents, the Lead
Manager and the Lenders named therein have entered into a Loan Agreement as
contemplated by the Participation Agreement.
E. Pursuant to the Participation Agreement and the Loan Agreement, the
Lenders have committed to lend to the Borrower a maximum principal amount not to
exceed $120,001,000. Such loans are evidenced by promissory notes (as amended,
modified, supplemented, renewed or extended from time to time, the "Notes")
executed by the Borrower in favor of each Lender. The proceeds of said loans
evidenced by the Notes have been and will be used to finance the purchase and
installation of certain equipment on such Vessel.
F. The Borrower, as lessor, has entered into a Lease Agreement, dated as of
May 10, 1996 (as amended, modified or supplemented from time to time, the
"Lease"), with the Mortgagor, as lessee, respecting the equipment described
above in Paragraph E.
G. Forms of each of the Master Vessel Trust Agreement, Participation
Agreement, Loan Agreement, Notes, and Lease are attached hereto respectively as
Exhibits A, B, C, D, and E and are hereby made a part hereof.
H. The Indenture Trustee, Bank of America National Trust and Savings
Association, the Agent, the Mortgagor, Grand Casinos, Inc. and certain of its
subsidiaries have entered into an Intercreditor Agreement, dated May 10, 1996
(as amended, modified or supplemented from time to time, the "Intercreditor
Agreement"), the form of which is attached hereto as Exhibit F and hereby made a
part hereof.
I. In order to secure the performance of Mortgagor's obligations under the
Lease, the Participation Agreement and the Borrower's obligations under the
Participation Agreement, the Notes, and the Loan Agreement, the Mortgagor has
agreed to execute and deliver and does hereby execute and deliver this Mortgage
as follows:
GRANTING CLAUSE
NOW, THEREFORE, THIS MORTGAGE WITNESSETH:
THAT, in consideration of the premises and of the additional covenants
herein contained and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and for the purpose of securing as a
second priority lien in favor of the Mortgagee (1) the payment and performance
of all obligations, undertakings and liabilities of Mortgagor and the Borrower,
now existing or hereafter incurred, under, arising out of, or in connection with
the Lease and the other Operative Documents (as defined below) to which
Mortgagor or the Borrower is a party, (2) the satisfaction of those terms and
conditions contained herein applicable to the Mortgagor, (3) the payment of any
and all future advances to the Mortgagor made for the improvement, protection or
preservation of such vessel, together with interest at the Overdue Rate (as
defined below), and (4) the payment of all sums expended or advanced by the
Mortgagee under or pursuant to the terms hereof or to protect the security
hereof (including under Sections 4.7 and 4.13), together with interest thereon
as herein provided, whether any of the foregoing obligations now exist or are
hereafter created or incurred, and whether they are or may be direct or
indirect, due or to become due, absolute or contingent, primary or secondary,
liquidated or unliquidated, or sole, joint, several or joint and several
(collectively, the "Obligations"), THE MORTGAGOR HAS granted, conveyed,
mortgaged, pledged, hypothecated, set over and confirmed AND THE MORTGAGOR DOES
BY THESE PRESENTS grant, convey, mortgage, pledge, hypothecate, set over and
confirm UNTO AND IN FAVOR OF THE MORTGAGEE FOR THE AGENT, the whole of the
following named and described vessel including the Equipment defined below
(collectively, the "Vessel") to wit:
OFFICIAL HOME
NAME NUMBER PORT
TOGETHER WITH all equipment, parts and accessories integral to the operation of
or otherwise now or from time to time installed on the Vessel or substitutions
thereof, including, but not limited to, all of its boilers, engines, machinery,
masts, spars, boats, cables, motors, tools, anchors, chains, booms, cranes,
rigs, pumps, pipe, tanks, tackle, apparel, furniture, fixtures, rigging,
supplies, fittings, communication systems, visual and electronic surveillance
systems all gaming machinery, equipment, devices, accessories and several
improvements listed on Schedule I hereto (the "Equipment") relating to the
gaming operations and the conduct of Mortgagor's gaming business and games of
chance on the Vessel, and transportation systems, tools, utensils, food and
beverage, liquor, uniforms, linens, housekeeping and maintenance supplies, fuel,
computer equipment, calculators, adding machines, video game and slot machines,
and any other electronic equipment of every nature used in connection with the
operation of the Vessel, all machinery, equipment, engines, appliances and
fixtures for generating or distributing air, water, heat, electricity, light,
fuel or refrigeration, or for ventilating or sanitary purposes, or for the
exclusion of vermin or insects, or for the removal of dust, refuse or garbage,
all wall-beds, wall-- safes, built-in furniture and installations, shelving,
lockers, partitions, doorstops, vaults, motors, elevators, dumb-waiters,
awnings, window shades, venetian blinds, light fixtures, fire hoses and brackets
and boxes for the same, fire sprinklers, alarm, surveillance and security
systems, computers, drapes, drapery rods and brackets, mirrors, mantels,
screens, linoleum, carpets and carpeting, plumbing, bathtubs, sinks, basins,
pipes, faucets, water closets, laundry equipment, washers, dryers, ice-boxes and
heating units, all kitchen and restaurant equipment, including but not limited
to silverware, dishes, menus, cooking utensils, stoves, refrigerators, ovens,
ranges, dishwashers, disposals, water heaters, incinerators, furniture, fixtures
and furnishings, all cocktail lounge supplies, including but not limited to
bars, glassware, bottles and tables used in connection with the Vessel, all
chaise lounges, hot tubs, swimming pool heaters and equipment, and all other
recreational equipment (computerized and otherwise), beauty and barber
equipment, and maintenance supplies used in connection with the Vessel, all
specifically designed installations and furnishings, and all furniture,
furnishings and personal property of every nature whatsoever now or hereafter
owned or leased by Mortgagor or in which Mortgagor has any rights or interest
and located in or on, or attached to, or used or intended to be used or which
are now or may hereafter be appropriated for use on or in connection with the
operation of the Vessel, or in connection with any construction being conducted
or which may be conducted thereon, and all extensions, additions, accessions,
improvements, betterments, renewals, substitutions, and replacements to any of
the foregoing, all of which (to the fullest extent permitted by law) shall be
conclusively deemed appurtenances to the Vessel, and all other appurtenances to
the Vessel appertaining or belonging thereto, whether now owned or hereafter
acquired, whether on board or not, and all additions, improvements and
replacements hereafter made in or to the Vessel. Mortgagor and Mortgagee
acknowledge that significant structures, improvements, additions, equipment and
other appurtenances may be added to the Vessel after the execution of this
Mortgage, and the Mortgagor specifically affirms and agrees that all such
appurtenances to the Vessel shall be subject to this Mortgage.
TO HAVE AND HOLD the same unto Mortgagee, its successors and assigns,
forever upon the terms herein set forth to secure the performance and observance
of and compliance with the covenants, terms and conditions in the and the other
obligations secured hereby.
PROVIDED, only, and the condition of these presents is such, that the
mortgage lien on the Vessel shall be subject, subordinate and junior to the
Indenture Trustee Mortgages and any Pari Passu Secured Mortgages (as such terms
are defined in the Intercreditor Agreement) to secure the Indenture Obligations
until such time as all Indenture Obligations shall have been paid in full.
AND NOW, THE PARTIES HEREBY FURTHER AGREE, COVENANT AND DECLARE that the
Vessel is to be held subject to the following covenants, conditions, provisions,
terms and uses:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
For all purposes of this Mortgage, unless the context otherwise requires:
SECTION 1.1. Definition of Terms.
(a) Act shall mean Chapter 313 of Title 46 United States Code.
(b) Office of the Documentation Officer shall mean the Office of the
Documentation Officer of the United States Coast Guard at New Orleans,
Louisiana or the United States Coast Guard National Vessel Documentation
Center.
For all purposes hereof, the capitalized terms used herein and not otherwise
defined shall have the meanings assigned thereto in Appendix 1 to the
Participation Agreement which is attached hereto and incorporated herein.
SECTION 1.2. Rules of Construction. Unless the context otherwise requires:
(a) A term has the meaning assigned to it;
(b) "Or" is not exclusive;
(c) Words in the singular include the plural, and in the plural
include the singular;
(d) All references herein to particular articles or sections, unless
otherwise provided, are references to articles or sections of this
Mortgage;
(e) The headings herein are solely for convenience of reference and
shall not constitute a part of this Mortgage nor shall they affect its
meaning, construction or effect;
(f) References to the Participation Agreement, the Lease and any other
Operative Documents and other instruments shall be deemed to refer to the
Participation Agreement, the Lease, the Operative Documents and any other
related documents as the same may from time to time be amended,
supplemented or modified by the parties hereto in accordance with the terms
thereof.
ARTICLE II
GENERAL MORTGAGE PROVISIONS
SECTION 2.1. General. For purposes of this Mortgage and in order to comply
with Title 46, Section 31321(b)(3), the parties to this Mortgage hereby declare
that the indebtedness which is now or will in the future be owed under the Lease
and the Notes and the other Obligations hereby secured is an amount up to the
sum of $120,001,000.00, as the total of all possible advances that may be made,
together with interest and performance of the covenants of this Mortgage, the
Lease and the other Operative Documents. The discharge amount is the same as the
total amount, together with interest and performance of the covenants of this
Mortgage, the Lease and the other Operative Documents.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MORTGAGOR
The Mortgagor represents, warrants, covenants and agrees with Mortgagee as
follows:
SECTION 3.1. Corporate Status of Mortgagor. The Mortgagor is a corporation
organized and existing under and by virtue of the laws of the State of Minnesota
and is and will remain a citizen of the United States of America within the
meaning of Title 46, Section 802, of the United States Code, entitled to own and
document the Vessel to engage in the coastwise trade under the laws of the
United States of America.
SECTION 3.2. Liens. (a) The Mortgagor lawfully owns and is lawfully
possessed of the Vessel free and clear of all liens, mortgages, taxes and
encumbrances, subject to the Indenture Trustee Mortgages and except liens
permitted under the Participation Agreement or under the Indenture in favor of
the Indenture Trustee and the noteholders; and the Mortgagor will and does
hereby warrant and defend the title and possession thereto and to every part
thereof for the benefit of Mortgagee against the claims and demands of all
persons whomsoever.
(b) Neither the Mortgagor nor any Master of the Vessel nor any other
person has or shall have the right, power or authority to create, incur or
permit to be placed or imposed or continued upon the Vessel any lien
whatsoever other than for crew's wages, salvage, any mortgages recorded
prior to the recording of this Mortgage, and this Mortgage.
(c) Except for the lien of any Mortgage recorded prior to this
Mortgage and this Mortgage and except for Permitted Liens (as defined in
Appendix 1 to the Participation Agreement), the Mortgagor will not suffer
to be continued any lien, encumbrance or charge on the Vessel, and in due
course and in any event within thirty (30) days after the same becomes due
and payable will pay or cause to be discharged or make adequate provision
for the satisfaction or discharge of all such liens, encumbrances or
charges or will cause the Vessel to be released or discharged from any such
lien, encumbrance or charge therefor.
SECTION 3.3. Compliance With Law. The Mortgagor will comply with and satisfy
all applicable formalities and provisions of the laws and regulations of the
United States of America in order to perfect, establish and maintain this
Mortgage, any supplement or amendment thereto and any assignment thereof by the
Mortgagee as a second preferred mortgage upon the Vessel and upon all additions,
improvements and replacements made in or to the same. The Mortgagor shall
furnish to Mortgagee, from time to time, such proofs as Mortgagee may reasonably
request with respect to the Mortgagor's compliance with the foregoing covenant.
The Mortgagor shall promptly pay and discharge all United States Coast Guard
fees and expenses in connection with the recordation of this Mortgage, any
supplement or amendment thereto and any assignment thereof by the Mortgagee. In
the event that the Lease, the Notes or the other Operative Documents secured
hereby, or any provisions hereto or thereof, shall be deemed invalidated in
whole or in part by reason of any present or future law or any decision of any
court, the Mortgagor will execute, on its behalf, such other and further
assurances and documents as in the opinion of Mortgagee may be required to more
effectually subject the Vessel to the payment and the performance of the terms
and provisions of the Lease, the Notes and the other Operative Documents. In
addition, the Mortgagor will furnish to Mortgagee such additional information as
Mortgagee may reasonably require.
SECTION 3.4. Operation of Vessel. The Mortgagor will not cause or permit the
Vessel to be operated in any manner contrary to law and the Mortgagor will not
engage in any unlawful trade or violate any law or expose the Vessel to penalty
or forfeiture, and will not do, or suffer or permit to be done, anything which
can or may injuriously affect the registration or flag of the Vessel under the
laws and regulations of the United States of America. Mortgagor will never
operate the Vessel outside the navigation limits of the insurance carried
pursuant to Section 3.12 of Article III of this Mortgage.
SECTION 3.5. Payment of Taxes, etc. The Mortgagor will pay or cause to be
paid prior to delinquency, all taxes, assessments, governmental levies, fines
and penalties lawfully imposed on the Mortgagor or on the Vessel; provided,
however, that the Mortgagor shall not be required to pay or discharge any such
tax, assessment, charge, fine or penalty so long as the legality thereof shall
be contested in good faith and by appropriate proceedings and the failure to pay
would not have a Material Adverse Effect on the Mortgagor unless and until
foreclosure, distraint, sale or other similar proceedings shall have been
commenced with respect to the property which is subject to any such tax,
assessment, charge, fine or penalty.
SECTION 3.6. Notice of Mortgage. The Mortgagor will place, and at all times
will retain, properly certified copies of this Mortgage and a Notice of this
Mortgage with the Certificate of Documentation of the Vessel on board the
Vessel.
SECTION 3.7. Release From Arrest. If a complaint be filed against the
Vessel, or if the Vessel is otherwise attached, arrested, levied upon or taken
into custody by virtue of any legal proceeding in any court, the Mortgagor will
promptly notify Mortgagee thereof by telephone facsimile, confirmed by letter,
and within three (3) days will cause the Vessel to be released by posting
security in the form of a Letter of Undertaking or a Release Bond, and will
promptly notify Mortgagee thereof in the manner aforesaid.
SECTION 3.8. Maintenance of Vessel. The Mortgagor will at its own expense at
all times maintain, preserve and keep the Vessel in good condition, working
order and repair and will from time to time make all necessary and proper
repairs, renewals, replacements, betterments and improvements, including without
limitation those replacements required by Section 4.12 of Article IV. The Vessel
shall, and the Mortgagor covenants that it will, at all times comply with all
applicable laws, treaties and covenants and rules and regulations issued
thereunder.
SECTION 3.9. Access to Vessel. The Mortgagor at all reasonable times will
afford Mortgagee or its authorized representatives full and complete access to
the Vessel for the purpose of inspecting the same and its papers and records.
SECTION 3.10. Documentation of Vessel. The Mortgagor will keep the Vessel
duly documented as a vessel of the United States of America, under the flag of
the United States of America, entitled to engage in the operations conducted by
the Mortgagor and eligible for the trade in which the Vessel is operating.
SECTION 3.11. Sale, Charter or Mortgage of Vessel. Except for the Indenture
Trustee Mortgages, the Mortgagor will not mortgage, transfer, or demise charter
the Vessel without the written consent of Mortgagee first had and obtained; and
any such written consent to any one mortgage, transfer, or demise charter shall
not be construed to be a waiver of this provision in respect of any subsequent
proposed mortgage, transfer, or demise charter. Any such mortgage, transfer, or
demise charter of the Vessel shall be subject to the provisions of this Mortgage
and the lien it creates, unless released therefrom by the Mortgagee.
SECTION 3.12. Insurance. Mortgagor shall at its own expense keep the Vessel
insured in accordance with the terms of the Indenture. Mortgagor agrees,
nonetheless, that it will adjust the amounts and nature of coverages if
reasonably requested by the Mortgagee as necessary or advisable in light of the
nature of business conducted thereon. If Mortgagor shall at any time fail to
comply with the foregoing, Mortgagee may, but shall not be obligated to, procure
such insurance and pay any unpaid premiums or calls, the costs and expenses of
said procurement and payment, together with interest at the Overdue Rate from
the date of such expenditure, and which thereby shall become an additional
indebtedness due from Mortgagor to Mortgagee and part of the Obligations secured
by this Mortgage and which shall be paid by Mortgagor on demand. In the case all
insurance monies, awards or other payments shall be paid over to the Mortgagee
and the Mortgagee shall pay such amounts over to the Mortgagor subject to any
applicable conditions set forth in the Intercreditor Agreement.
SECTION 3.13. Requisition of Title to Vessel. In the event that the title or
ownership of the Vessel shall be requisitioned, purchased or taken by the United
States of America or any government of any State of the United States or any
other country or any department, agency or representative thereof, pursuant to
any present or future law, proclamation, decree, order or otherwise, the lien of
this Mortgage shall be deemed to attach to the claim for compensation, and the
compensation, purchase price, reimbursement or award for such requisition,
purchase or other taking of such title or ownership is hereby declared payable
to Mortgagee, who shall be entitled to receive the same and shall apply it as
provided in the Intercreditor Agreement. In the event of any such requisition,
purchase or taking, the Mortgagor shall promptly execute and deliver to
Mortgagee such documents, if any, as in the opinion of counsel for Mortgagee may
be necessary or useful to facilitate or expedite the collection by Mortgagee of
such compensation, purchase price, reimbursement or award.
SECTION 3.14. Requisition of Vessel but not Title. In the event that the
United States of America or any government of any other country or any
department, agency or representative thereof shall not take the title or
ownership of the Vessel but shall requisition, charter, or in any manner take
over the use of the Vessel pursuant to any present or future law, proclamation,
decree, order or otherwise, and in the event Mortgagor is in default of the
terms of this Mortgage, all charter hire and compensation resulting therefrom
shall be payable to Mortgagee, and if, as a result of such requisitioning,
chartering or taking of the use of the Vessel such government, department,
agency or representative thereof shall pay or become liable to pay any sum by
reason of the loss of or injury to or depreciation of the Vessel any such sum is
hereby made payable to Mortgagee, who shall be entitled to receive the same and
shall apply any such sums referred to in this Section as provided in the
Intercreditor Agreement. In the event of any such requisitioning, chartering or
taking of the use of the Vessel, the Mortgagor shall promptly execute and
deliver to Mortgagee such documents, if any, and shall promptly do and perform
such acts, if any, as in the opinion of counsel for Mortgagee may be necessary
or useful to facilitate or expedite the collection by Mortgagee of such claims
arising out of the requisitioning, chartering or taking of the use of the
Vessel.
SECTION 3.15. Execution of Additional Documents. Mortgagor agrees to execute
all additional documents, instruments, UCC Financing Statements and other
agreements that Mortgagee may deem necessary and appropriate, within its sole
discretion, in form and substance satisfactory to Mortgagee, to keep this
Mortgage in effect, to better reflect the true intent of this Mortgage, and to
consummate fully all of the transactions contemplated by the Lease and the other
Operative Documents and hereby.
ARTICLE IV
EVENTS OF DEFAULT AND REMEDIES
SECTION 4.1. A. Events of Default. The term "Event of Default," wherever
used in this Mortgage, shall mean any one or more of the following events
(whether any such event shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulations of any
administrative or governmental body):
(1) The occurrence of an Event of Default (as defined in Appendix 1 to
the Participation Agreement); or
(2) Default in the due observance or performance of any of the other
covenants and conditions herein required to be kept and performed and
continuance of such default for sixty (60) days after notice by Mortgagee
provided, however, that the Mortgagor shall not be deemed to be in default
for failure to keep the Vessel in good condition, working order and repair
pursuant to Section 3.08 of Article III if the Mortgagor shall be
diligently taking steps to comply with the requirements of said Section; or
(3) The Mortgagor shall (i) abandon the Vessel without due cause; or
(ii) cease to be a citizen of the United States of America within the
meaning of Title 46, Section 802 of the United States Code entitled to
engage in the trade in which the Vessel is operating; or
(4) The title or ownership of the Vessel shall be requisitioned,
purchased or taken by the government of any country or by any department,
agency or representative thereof and there shall not have been paid to
Mortgagee an amount in cash in United States dollars equal to the fair
value of the Vessel within ninety (90) days after such event occurs.
B. Remedies. Then and in each and every such case Mortgagee
shall have the right to:
(1) Declare all the Obligations, with the interest accrued thereon,
and all other indebtedness or sums secured hereby, to be due and payable
immediately, and upon such declaration such principal with interest and
other sums shall immediately become due and payable without demand,
presentment, notice or other requirements of any kind (all of which the
Mortgagor waives) notwithstanding anything in this Mortgage or any
Operative Document or applicable law to the contrary;
(2) (a) Exercise all the rights and remedies in foreclosure and
otherwise given to Mortgagee by the laws and regulations of the United
States of America or of the country wherein the Vessel shall then be found
or of any country wherein the Vessel may thereafter be found or of any
other applicable jurisdiction and (b) exercise all the rights and remedies
given to the Mortgagee by the laws and regulations of the state in which
the Vessel is located or any other relevant state;
(3) Bring suit at law, in equity or in admiralty, as it may be
advised, to recover judgment for any and all amounts due under this
Mortgage, or otherwise hereunder, and collect the same from the Mortgagor
and/or out of any and all property of the Mortgagor whether covered by this
Mortgage or otherwise;
(4) Take the Vessel without legal process wherever the same may be;
and the Mortgagor or other person in possession, forthwith upon demand of
Mortgagee shall surrender to Mortgagee possession of the Vessel and
Mortgagee may, without being responsible for loss or damage, hold, lay up,
lease, charter, operate or otherwise use the Vessel for such time and upon
such terms as it may deem to be for its best advantage, accounting only for
the net profits, if any, arising from such use of the Vessel and charging
upon all receipts from the use of the Vessel or from the sale thereof by
court proceedings or pursuant to Subsection (5) of Section 4.01 next
following, all costs, expenses, charges, damages or losses by reason of
such use; and if at any time Mortgagee shall avail itself of the right
herein given it to take the Vessel, Mortgagee shall have the right to dock
the Vessel for any length of time at any dock, pier, or other premises of
the Mortgagor or leased by the Mortgagor without charge, or to dock it at
any other place at the cost and expense of the Mortgagor;
(5) Without being responsible for loss or damage, sell the Vessel at
any place and at such time as Mortgagee may specify and in such manner as
Mortgagee may deem advisable free from any claim by the Mortgagor in
admiralty, in equity, at law or by statute, after first giving notice of
the time and place of sale with a general description of the property in
the following manner:
(a) By publishing such notice for three (3) times a week for two
consecutive weeks, with the last date of publication not more than
twenty (20) nor less than five (5) days immediately preceding the
sale, in a daily newspaper of general circulation published within the
jurisdiction encompassed by the Northern District of Mississippi,
Delta Division and in the Journal of Commerce;
(b) If the place of sale should not be Tunica County,
Mississippi, then also by publication of a similar notice in a daily
newspaper, if any, published at the place of sale; and
(c) By mailing a similar notice to the Mortgagor on the day of
first publication.
Mortgagee may adjourn any such sale from time to time by announcement at the
time and place appointed for such sale or for such adjourned sale, and without
further notice or publication Mortgagee may make any such sale at the time and
place to which the same shall be so adjourned. Any such sale may be conducted
without bringing the Vessel to be sold to the place designated for such sale and
in such manner as Mortgagee may deem to be for its best advantage. Any sale made
by the Mortgagee in accordance with the terms of this Section 4.1(5) shall be
deemed made in a commercially reasonable manner insofar as the Mortgagor is
concerned.
(6) Mortgagor hereby consents to the appointment of a consent keeper
or substitute custodian by Mortgagee with the costs thereof to be a cost of
the sale to be paid from the proceeds of the sale or by Mortgagor.
SECTION 4.2. Sale of Vessel by Mortgagee. Any sale of the Vessel made in
pursuance of this Mortgage, whether under the power of sale hereby granted or
any judicial proceedings, shall operate to divest all right, title and interest
of any nature whatsoever of the Mortgagor therein and thereto, and shall bar the
Mortgagor, its successors and assigns, and all persons claiming by, through or
under them. At any such sale Mortgagee may bid for and purchase the Vessel and
upon compliance with the terms of sale may hold, retain and dispose of such
property without further accountability therefor. In case of any such sale the
Mortgagee shall be entitled, for the purpose of making settlement or payment for
the property purchased, to use and apply the Notes or any portion thereof in
order that there may be credited against the amount remaining due and unpaid
thereon the sums payable to the Mortgagee out of the net proceeds of such sale
after allowing for the costs and expense of sale and other charges; and
thereupon the Mortgagee shall be credited, on account of such purchase price,
with the net proceeds that shall have been so credited upon the Notes. No
purchaser shall be bound to inquire whether notice has been given, or whether
any default has occurred, or as to the propriety of the sale or as to the
application of the proceeds thereof.
SECTION 4.3. Mortgagee to Sign for Mortgagor. For purposes of any sale of
the Vessel made in pursuance of this Mortgage, whether under the power of sale
hereby granted or any judicial proceedings, Mortgagee is hereby appointed
attorney-in-fact of the Mortgagor to execute and deliver to any purchaser
aforesaid and is hereby vested with full power and authority to make, in the
name and in behalf of the Mortgagor, a good conveyance of the title to the
Vessel so sold. In the event of any sale of the Vessel, under any power herein
contained, the Mortgagor will, if and when required by Mortgagee, execute such
form of conveyance of the Vessel as Mortgagee may direct or approve.
SECTION 4.4. Mortgagee to Collect Hire, etc. Mortgagee is hereby appointed
attorney-in-fact of the Mortgagor upon the happening of any Event of Default, in
the name of the Mortgagor to demand, collect, receive, compromise and sue for,
so far as may be permitted by law, all earnings, tolls, rents, issues, revenues,
income and profits of the Vessel and all amounts due from underwriters under any
insurance thereon as payment of losses or as return premiums or otherwise, and
all other sums, due or to become due at the time of the happening of any Event
of Default in respect of the Vessel, or in respect of any insurance thereof from
any person whomsoever, and to make, give and execute in the name of the
Mortgagor acquittances, receipts, releases, or other discharges for the same,
whether under seal or otherwise, and to endorse and accept in the name of the
Mortgagor all checks, notes, drafts, warrants, agreements and all other
instruments in writing with respect to the foregoing. All amounts so received
shall first be applied to operating expenses and then to unpaid Obligations
pursuant to the Intercreditor Agreement.
SECTION 4.5. Mortgagee's Right to Possession. Whenever any right to enter
and take possession of the Vessel accrues to Mortgagee, it may require the
Mortgagor to deliver, and the Mortgagor shall on demand, at its own cost and
expense, deliver the Vessel to Mortgagee as demanded. If any legal proceedings
shall be taken to enforce any right under this Mortgage, Mortgagee shall be
entitled as a matter of right to the appointment of a receiver of the Vessel and
the earnings, tolls, rents, issues, revenues, income and profits due or to
become due and arising from the operation thereof.
SECTION 4.6. Appearance by Mortgagee on Behalf of Mortgagor. The Mortgagor
authorizes and empowers Mortgagee or its appointees or any of them to appear in
the name of the Mortgagor, its successors and assigns, in any court where a suit
is pending against the Vessel because of or on account of any alleged lien
against the Vessel from which the Vessel has not been released and to take such
proceedings as to them or any of them may seem proper towards the defense of
such suit and the discharge of such lien, in the event that the Mortgagor shall
not be taking proceedings reasonably satisfactory to Mortgagee, and in such case
all expenditures made or incurred by Mortgagee or his appointees for the purpose
of such defense or discharge shall be a debt due from the Mortgagor, its
successors and assigns, to Mortgagee, and shall be secured by the lien of this
Mortgage in like manner and extent as if the amount and description thereof were
written herein.
SECTION 4.7. Acceleration of Indebtedness Secured Hereby. The Mortgagor
covenants that upon the happening of any one or more of the Events of Default,
then upon written demand of Mortgagee, each of the Borrower and the Mortgagor
will perform its respective obligations to Mortgagee, the Agent or the Lenders
under the Lease and the other Operative Documents and this Mortgage, and in case
the Mortgagor shall fail to pay the same forthwith upon such demand, Mortgagee
shall be entitled to recover judgment for the whole amount so due and unpaid,
together with such further amounts as shall be sufficient to cover the
reasonable costs and expenses of collection, including a reasonable compensation
to Mortgagee's agents, attorneys and counsel and any necessary advances,
expenses and liabilities made or incurred by them hereunder. All moneys
collected by Mortgagee under this Section shall be applied by Mortgagee in
accordance with the provisions of Section 4.11 of this Article.
SECTION 4.8. Right of Mortgagee. Each and every power and remedy herein
given to Mortgagee shall be cumulative and shall be in addition to every other
power and remedy herein given or now or hereafter existing at law, in equity, in
admiralty or by statute, and each and every power and remedy whether herein
given or otherwise existing may be exercised from time to time and as often and
in such order as may be deemed expedient by Mortgagee, and the exercise or the
beginning of the exercise of any power or remedy shall not be construed to be a
waiver of the right to exercise at the same time or thereafter any other power
or remedy. No delay or omission by Mortgagee in the exercise of any right or
power or in the pursuance of any remedy accruing upon any default as above
defined shall impair any such right, power or remedy or construed to be a waiver
of any such Event of Default or to be any acquiescence therein; nor shall the
acceptance by Mortgagee of any security or of any payment of or on account of
any Operative Document after any Event of Default or of any payment on account
of any past default be construed to be a waiver of any right to take advantage
of any future Event of Default or of any past Event of Default not completely
cured thereby.
SECTION 4.9. Cure of Defaults. If at any time after an Event of Default and
prior to the actual sale of the Vessel or the Equipment by Mortgagee or prior to
any foreclosure proceedings, Events of Default and any accelerations of the
maturity of the Notes may be rescinded as provided in the Intercreditor
Agreement.
SECTION 4.10. Restoration of Position. In case Mortgagee shall have
proceeded to enforce any right, power or remedy under this Mortgage by
foreclosure, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to Mortgagee, then and in every such case the Mortgagor and Mortgagee shall be
restored to their former positions and rights hereunder with respect to the
property subject or intended to be subject to this Mortgage, and all rights,
remedies and powers of Mortgagee shall continue as if no such proceedings had
been taken.
SECTION 4.11. Proceeds of Sale. The proceeds of any sale of the Vessel or
the Equipment and the net earnings from the hire or from any operation or use of
the Vessel by Mortgagee under any of the powers herein specified and any and all
other money received by Mortgagee pursuant to or under the terms of this
Mortgage or in any proceedings hereunder, the application of which has not
elsewhere herein been specifically provided, shall be applied at the discretion
of Mortgagee with Mortgagee having the right to impute payments as it may desire
among the following:
FIRST: To the payment of all reasonable expenses and charges,
including the expenses of any sale, and expenses of any retaking,
attorneys' fees, court costs, keepers' fees, necessary repairs and any
other expenses or advances made or incurred by Mortgagee in the protection
of its rights or the pursuance of its remedies hereunder, and to provide
adequate indemnity against liens claiming priority over or equality with
the lien of this Mortgage;
SECOND: To the payment in full of any amounts then due and unpaid in
accordance with the Intercreditor Agreement.
THIRD: To the payment of any surplus thereafter remaining to
whomsoever may be entitled thereto.
SECTION 4.12. Repairs to Vessel and Sale of Equipment. Until one or more of
the Events of Default hereinabove described shall happen, the Mortgagor (a)
shall be suffered and permitted to retain actual possession and use of the
Vessel; (b) may at any time alter, repair, change or re-equip the Vessel,
subject, however, to the provisions of Section 3.8 of Article III; and (c) shall
have the right, from time to time in its discretion and without obtaining a
release thereof by Mortgagee, to dispose of, free from the lien hereof, (1)
equipment or other appurtenances, including any gaming machinery or equipment
and accessories relating to the gaming operations of the Vessel that may become
worn out or obsolete or otherwise are no longer useful, necessary, profitable or
advantageous in the operation of the Vessel, provided that such does not
materially affect the value of the Vessel or (2) any other equipment or
accessories provided that the provisions of the Lease are complied with. Either
prior to or promptly following such removal any replacement property that shall
be free of any security interest of any other person (subject to Permitted
Liens), which shall forthwith become subject to the lien of this Mortgage as a
preferred mortgage thereon.
SECTION 4.13. Advances by Mortgagee. The Mortgagor authorizes the Mortgagee
in the Mortgagee's discretion to advance any sums necessary for the purpose of
paying (i) insurance premiums, (ii) any and all excise, property, sales, use and
other taxes, forced contributions, service charges, local assessments and
governmental charges on any of the Vessel, (iii) any Liens affecting the Vessel
(whether superior or subordinate to the lien of this Mortgage) not permitted by
the Participation Agreement, (iv) necessary repairs and maintenance expenses of
the Vessel, or (v) any other amounts which the Mortgagee deems necessary and
appropriate to preserve the validity and ranking of this Mortgage, to cure any
Default or Event of Default, to protect or preserve the Vessel or to prevent the
occurrence of any Default or Event of Default (collectively, the "Credit
Extensions") of whatever kind; provided, however, that nothing herein contained
shall be construed as making such Credit Extensions obligatory upon the
Mortgagee, or as making the Mortgagee liable for any loss, damage, or injury
resulting from the nonpayment thereof. The Mortgagor covenants and agrees that
within five (5) Business Days after written demand therefor by the Mortgagee,
the Mortgagor will repay the Credit Extensions to the Mortgagee, together with
interest thereon at the Overdue Rate, and in addition will repay any other
reasonable costs, attorneys' fees and expenses, charges and expenses of any and
every kind incurred by the Mortgagee in connection with the expenditures under
items (i) through (v) above, including payments required in respect to any Lien
affecting the Vessel, together with interest thereon at the Overdue Rate. All
such Advances and amounts (including interest) shall be included in the
Obligations secured hereby.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1. Addresses. Any notice to be given under this Mortgage shall,
except as otherwise expressly provided herein, be served by registered or
certified mail or hand delivered, addressed as follows:
(a) To Mortgagor:
BL Development Corp.
13705 First Avenue North
Plymouth, Minnesota 55441-5451
Attention: Chief Financial Officer
with a copy to:
Russell F. Lederman, Esq.
Maslon Edelman Borman & Brand
3330 Norwest Center
Minneapolis, Minnesota 55401
and
Grand Casinos, Inc.
13705 First Avenue North
Plymouth, Minnesota 55441-5444
Attention: Chief Financial Officer
(b) To Mortgagee:
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attention: Corporate Trust Service
with a copy to:
Barry K. Gassman, Esq.
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
(c) To Agent:
BA Leasing & Capital Corporation
Four Embarcadero Center, Suite 1200
San Francisco, California 94111
Attention:
with a copy to:
Barry K. Gassman, Esq.
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
unless another address shall be furnished in writing by the party to receive
such notice to the party giving such notice, and any such notice shall be deemed
made as of the date of mailing or hand delivery.
SECTION 5.2. Counterparts. This Mortgage may be executed in
any number of counterparts and all such counterparts executed and
delivered each as an original shall constitute but one and the
same instrument.
SECTION 5.3. Interest of Mortgagor. The interest of the Mortgagor in the
Vessel and the interest mortgaged by this Mortgage is that of one hundred
percent (100%) absolute and sole ownership.
SECTION 5.4. Survivorship of Covenants. All the covenants, promises,
stipulations and agreements of the Mortgagor and the Obligations secured hereby
shall bind the Mortgagor and its successors and assigns and shall inure to the
benefit of Mortgagee and its successors and assigns.
SECTION 5.5. Amendments. The Lease, the Operative Documents and this
Mortgage may not be modified, supplemented or amended in any respect, or any
waiver given in regard to any of the provisions hereof, in any case which might
affect the rights of Mortgagee or Agent hereunder, except with the written
consent of Mortgagee or Agent, as the case may be, and so long as Mortgagor
shall do all acts and things necessary to maintain the preferred status of this
Mortgage.
SECTION 5.6. Discharge of Lien. When the Mortgagor's and Borrower's
obligations to the Mortgagee and the Lenders arising under the Lease and the
other Operative Documents have been satisfied in full, Mortgagee shall, at the
Mortgagor's expense, execute and deliver to the Mortgagor such documents as the
Mortgagor shall reasonably request to evidence the surrender and discharge of
the lien hereof upon the Vessel.
SECTION 5.7. Incorporation into Mortgage. The Whereas
Clauses and the Granting Clause of this Mortgage are incorporated
in and are made a part of this Mortgage.
SECTION 5.8. Governing Law. This Mortgage shall be governed by and construed
according to the provisions of the Act, and where silent, by the General
Maritime Law of the United States; provided, however, that the exercise of
certain rights hereunder or under the Operative Documents may require compliance
with the Gaming Laws.
[The remainder of this page has been
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IN WITNESS WHEREOF, the undersigned has caused this instrument to be duly
executed as of the date first above written.
BL DEVELOPMENT CORP.
BY: /s/ TIMOTHY J. COPE
Name: Timothy J. Cope
Title: Chief Financial Officer
STATE OF MINNESOTA)
) ss:
COUNTY OF HENNEPIN)
Personally appeared before me, the undersigned authority in and for the
said county and state, on this 16th day of May, 1996, the within named Timothy
J. Cope who upon being duly sworn did confirm and acknowledge to me that he is
Chief Financial Officer of BL Development Corp., a Minnesota corporation, and
that for and on behalf of the said corporation, and as its free act and deed he
executed the above and foregoing instrument, after first having been duly
authorized by said corporation so to do.
/s/ PATRICIA L. BUFFHAM
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NOTARY PUBLIC
My Commission expires: ______________