EXHIBIT 4.6A
PLEDGE AND SECURITY AGREEMENT
DATED AS OF APRIL 16, 2004
AMONG
DIAMOND JO, LLC,
THE OLD EVANGELINE DOWNS CAPITAL CORP.,
OED ACQUISITION, LLC,
PENINSULA GAMING CORPORATION,
AND
THE OLD EVANGELINE DOWNS, L.L.C.,
AND
U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE,
AS SECURED PARTY.
TABLE OF CONTENTS
1. DEFINITIONS...............................................................2
1.1 GENERAL DEFINITIONS........................................2
1.2 DEFINITIONS; INTERPRETATION................................9
2. GRANT OF SECURITY.........................................................9
2.1 GRANT OF SECURITY..........................................9
2.2 CERTAIN LIMITED EXCLUSIONS................................10
2.3 INTERCREDITOR AGREEMENT...................................11
3. SECURITY FOR OBLIGATIONS.................................................11
3.1 SECURITY FOR OBLIGATIONS..................................11
3.2 OBLIGATIONS REMAIN........................................11
4. REPRESENTATIONS AND WARRANTIES AND COVENANTS.............................12
4.1 GENERALLY.................................................12
4.2 EQUIPMENT AND INVENTORY...................................15
4.3 RECEIVABLES CONTRACTS.....................................16
4.4 INVESTMENT RELATED PROPERTY...............................19
4.5 INTELLECTUAL PROPERTY.....................................20
4.6 COMMERCIAL TORT CLAIMS....................................21
4.7 JUDGMENTS.................................................21
5. FURTHER ASSURANCES; ADDITIONAL DEBTORS...................................21
5.1 FURTHER ASSURANCES........................................21
5.2 ADDITIONAL DEBTORS........................................23
6. ATTORNEY-IN-FACT.........................................................23
6.1 POWER OF ATTORNEY.........................................23
6.2 NO DUTY ON THE PART OF SECURED PARTY......................24
7. REMEDIES.................................................................24
7.1 GENERALLY.................................................24
7.2 LOUISIANA REMEDIES........................................26
7.3 APPLICATION OF PROCEEDS...................................27
7.4 INVESTMENT RELATED PROPERTY...............................27
7.5 INTELLECTUAL PROPERTY.....................................27
7.6 CASH PROCEEDS.............................................29
7.7 REGULATORY MATTERS........................................29
8. CONTINUING SECURITY INTEREST; TRANSFER OF NOTES..........................29
9. STANDARD OF CARE; SECURED PARTY MAY PERFORM..............................30
10. INDEMNITY................................................................30
11. MISCELLANEOUS............................................................30
11.1 NOTICES................................................30
11.2 EXPENSES...............................................30
11.3 SUBROGATION............................................31
11.4 DEBTOR WAIVERS.........................................31
11.5 AMENDMENTS AND WAIVERS.................................32
11.6 SUCCESSORS AND ASSIGNS.................................32
11.7 INDEPENDENCE OF COVENANTS..............................32
11.8 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS.............................................32
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11.9 NO WAIVER; REMEDIES CUMULATIVE.........................32
11.10 SEVERABILITY...........................................33
11.11 HEADINGS...............................................33
11.12 APPLICABLE LAW.........................................33
11.13 SUBMISSION TO JURISDICTION.............................33
11.14 COUNTERPARTS...........................................33
11.15 GAMING LAWS............................................33
11.16 EFFECTIVENESS..........................................34
11.17 ENTIRE AGREEMENT.......................................34
11.18 THE MORTGAGES..........................................34
11.19 INDENTURE CONTROLS.....................................35
11.20 TRUST INDENTURE ACT CONTROLS...........................35
SCHEDULE I -- DILIGENCE CERTIFICATE
Exhibit A Supplement to Security Agreement
Exhibit B Control Agreement (Securities Accounts)
Exhibit C Control Agreement (Deposit Accounts)
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This PLEDGE AND SECURITY AGREEMENT, dated as of April 16, 2004 (this
"AGREEMENT"), among Diamond Jo, LLC, a Delaware limited liability company
("DJL"), The Old Evangeline Downs Capital Corp., a Delaware corporation
("CAPITAL" and, together with DJL, the "ISSUERS"), OED Acquisition, LLC, a
Delaware limited liability company ("OEDA"), Peninsula Gaming Corporation, a
Delaware corporation ("PG CORP."), The Old Evangeline Downs, L.L.C., a Louisiana
limited liability company ("OED"), and each additional Guarantor (as defined in
the Indenture referred to below) and Issuer (as defined in the Indenture) from
time to time party hereto pursuant to Section 5.2 (the Issuers, OEDA, PG Corp.,
OED and each such additional Guarantor and Issuer, each a "DEBTOR" and
collectively, the "DEBTORS"), and U.S. Bank National Association, as Trustee
(together with any successor Trustee pursuant to the terms of the Indenture, the
"SECURED PARTY"), acting in the capacity of collateral agent for the benefit of
itself and the Holders.
R E C I T A L S:
WHEREAS, the Debtors and the Secured Party, have entered into an Indenture,
dated as of April 16, 2004 (as amended, restated, supplemented or otherwise
modified from time to time, the "INDENTURE"), pursuant to which the Issuers
incurred indebtedness for certain notes (such notes, together with all
additional notes and all other notes issued thereunder in exchange for such
notes and additional notes, the "NOTES") and the other Debtors have guaranteed
the payment of the Notes and the other Obligations thereunder;
WHEREAS, each Issuer desires to secure the Notes and its other Obligations
under the Indenture and each other Debtor desires to secure its guarantee under
the Indenture by granting to the Secured Party, for the benefit of itself and
the Holders, security interests in the Collateral as set forth herein;
WHEREAS, certain of the Debtors, Wells Fargo Foothill, Inc. and certain
other financial institutions have entered into those certain Loan and Security
Agreements dated as of February 23, 2001, June 24, 2003 and September 22, 2003
(in each case, as amended, restated, supplemented, replaced or otherwise
modified from time to time, collectively, the "CREDIT AGREEMENT");
WHEREAS, the Secured Party, the Credit Facility Secured Party and Debtors
have entered into that certain Intercreditor Agreement, dated as of April 16,
2004 (as amended, restated, supplemented, replaced or otherwise modified from
time to time, the "INTERCREDITOR AGREEMENT"), which agreement, among other
things, sets forth, as between the Secured Party and the Credit Facility Secured
Party, the relative priority of their respective Liens in the Collateral and
their rights with respect thereto;
WHEREAS, each Debtor (other than Company) is a Subsidiary of the Company
and will benefit from the proceeds of the Notes; and
WHEREAS, to induce the Initial Purchaser to purchase the Notes, each Holder
to hold the Notes to be held by it and U.S. Bank National Association to act in
its capacity as the Secured Party, each Debtor desires to pledge, grant,
transfer, and assign to the Secured Party, for its benefit and the benefit of
the Holders, a security interest in the Collateral to secure the Secured
Obligations of such Debtor, as provided herein.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, each Debtor and the Secured Party
agree as follows:
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1. DEFINITIONS
1.1 GENERAL DEFINITIONS. In this Agreement, the following terms shall have
the following meanings:
"ACCOUNT DEBTOR" shall mean each Person who is obligated on a
Receivables Contract or any Supporting Obligation related thereto.
"ACCOUNTS" shall mean all "accounts" as defined in Article 9 of the
UCC.
"AGREEMENT" shall have the meaning set forth in the preamble.
"BANKRUPTCY CODE" shall mean Title 11 of the United States Code
entitled "Bankruptcy", as now and hereafter in effect, or any successor statute.
"CASH PROCEEDS" shall mean all proceeds of any Collateral received by
any Debtor consisting of cash, checks and other near-cash items.
"CHATTEL PAPER" shall mean all "chattel paper" as defined in Article 9
of the UCC, including, without limitation, "electronic chattel paper" or
"tangible chattel paper", as each term is defined in Revised Article 9 of the
UCC.
"COLLATERAL" shall have the meaning set forth in Section 2.1 hereof.
"COLLATERAL RECORDS" shall mean books, records, ledger cards, files,
correspondence, customer lists, blueprints, technical specifications, manuals,
computer software, computer printouts, tapes, disks and related data processing
software and similar items that at any time evidence or contain information
relating to any of the Collateral or are otherwise necessary or helpful in the
collection thereof or realization thereupon.
"COLLATERAL SUPPORT" shall mean all property (real or personal)
assigned, hypothecated or otherwise securing any Collateral and shall include
any security agreement or other agreement granting a lien or security interest
in such real or personal property.
"COMMERCIAL TORT CLAIMS" shall mean all "commercial tort claims" as
defined in the UCC, including, without limitation, all commercial tort claims
listed and described with specification on Schedule E of the Diligence
Certificate (as such schedule may be amended or supplemented from time to time).
"COMMODITIES ACCOUNTS" (i) shall mean all "commodity accounts" as
defined in Article 9 of the UCC and (ii) shall include, without limitation, all
of the accounts listed on Schedule A of the Diligence Certificate under the
heading "Commodities Accounts" (as such schedule may be amended or supplemented
from time to time).
"COMPANY" shall mean (i) until Peninsula Gaming, LLC, a Delaware
limited liability company ("PGLLC"), shall become a party hereto pursuant to
Section 5.2, DJL and (ii) thereafter, PGLLC.
"CONTROLLED FOREIGN CORPORATION" shall mean "controlled foreign
corporation" as defined in the Tax Code.
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"COPYRIGHT LICENSES" shall mean any and all agreements providing for
the granting of any right in or to Copyrights (whether such Debtor is licensee
or licensor thereunder) including, without limitation, each agreement referred
to in Schedule B of the Diligence Certificate (as such schedule may be amended
or supplemented from time to time).
"COPYRIGHTS" shall mean all United States, state and foreign
copyrights, including but not limited to copyrights in software and databases,
and all Mask Works (as defined under 17 U.S.C. 901 of the U.S. Copyright Act),
whether registered or unregistered, and, with respect to any and all of the
foregoing: (i) all registrations and applications therefor including, without
limitation, the applications referred to in Schedule B of the Diligence
Certificate (as such schedule may be amended or supplemented from time to time),
(ii) all extensions and renewals thereof, (iii) all rights corresponding thereto
throughout the world, (iv) all rights to sue for past, present and future
infringements thereof, (v) all licenses, claims, damages and proceeds of suit
arising therefrom, and (vi) all payments and rights to payments arising out of
the sale, lease, license, assignment, or other disposition thereof.
"CREDIT FACILITY SECURED PARTY" shall mean, as the context may
require, all or any of the Senior Lien Creditor Representatives (as defined in
the Intercreditor Agreement).
"DEPOSIT ACCOUNTS" shall mean all (i) "deposit accounts" as defined in
Article 9 of the UCC and (ii) shall include, without limitation, all other
accounts listed on Schedule A under the heading "Deposit Accounts" (as such
schedule may be amended or supplemented from time to time).
"DILIGENCE CERTIFICATE" shall mean the Pre-Closing UCC Diligence
Certificate dated as of the date of this Agreement and executed by each Debtor.
"DOCUMENTS" shall mean all "documents" as defined in Article 9 of the
UCC.
"EQUIPMENT" shall mean: (i) all "equipment" as defined in the UCC,
(ii) all machinery, manufacturing equipment, data processing equipment,
computers, office equipment, furnishings, furniture, appliances, fixtures and
tools (in each case, regardless of whether characterized as equipment under the
UCC), (iii) slot machines, electronic gaming devices and related equipment and
(iv) all accessions or additions thereto, all parts thereof, whether or not at
any time of determination incorporated or installed therein or attached thereto,
and all replacements therefor, wherever located, now or hereafter existing,
including any fixtures.
"GAMING AUTHORITY" shall mean any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States of America or foreign government, any state, province or any
city or other political subdivision, whether now or hereafter existing, or any
officer or official thereof, including without limitation, the Louisiana Gaming
Control Board and any other agency with authority to regulate any gaming
operation (or proposed gaming operation) owned, managed or operated by the
Company or any of its Subsidiaries.
"GAMING LAWS" shall mean the gaming laws of any jurisdiction or
jurisdictions to which the Company, any of its Subsidiaries or any of the
Guarantors is, or may at any time after the date hereof, be subject.
"GAMING LICENSE" shall mean every license, franchise, permit or other
authorization required to own, lease, operate or otherwise conduct gaming
activities of the Company or any of its Subsidiaries, including without
limitation, all such licenses granted under the Louisiana Video Draw Poker
Devices Control Act or the Louisiana Pari-Mutuel Live Racing Facility Economic
Redevelopment
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and Gaming Control Act (Slots at the Track) and regulated under the Louisiana
Gaming Control Law, the regulations promulgated pursuant to each such law, and
other applicable federal, state, foreign or local laws.
"GENERAL INTANGIBLES" (i) shall mean all "general intangibles" as
defined in Article 9 of the UCC and (ii) shall include, without limitation, all
interest rate or currency protection or hedging arrangements, all tax refunds,
all licenses, permits, concessions and authorizations, and all Intellectual
Property (in each case, regardless of whether characterized as general
intangibles under the UCC) and exclude all Gaming Licenses held by a Debtor.
"GOODS" (i) shall mean all "goods" as defined in Article 9 of the UCC
and (ii) shall include, without limitation, all Inventory and Equipment (in each
case, regardless of whether characterized as goods under the UCC).
"GOVERNMENTAL AUTHORITY" shall mean any agency, authority, board,
bureau, commission, department, office, public entity, or instrumentality of any
nature whatsoever of the United State federal or foreign government, any state,
province or any city or other political subdivision or otherwise, whether now or
hereafter in existence, or any officer or official thereof, including, without
limitation, any Racing Authority or Gaming Authority.
"INDEMNITEE" shall mean the Secured Party, and its and its Affiliates'
officers, directors, employees and agents, and including, if the Secured Party
or its agent is a partnership, its partners, and if the Secured Party or its
agent is a trust, its trustee.
"INDENTURE" shall have the meaning set forth in the preamble.
"INDENTURE DOCUMENTS" shall mean the Indenture, the Notes, the
Security Documents and the Registration Rights Agreement, and such other
agreements, instruments and certificates executed and delivered (or issued) by
the Debtors pursuant to the Indenture or any of the foregoing, as any or all of
the same may be amended, restated, supplemented or otherwise modified from time
to time.
"INSTRUMENTS" shall mean all "instruments" as defined in Article 9 of
the UCC.
"INSURANCE" shall mean: (i) all insurance policies covering any or all
of the Collateral (regardless of whether the Secured Party is the loss payee
thereof) and (ii) any key man life insurance policies.
"INTELLECTUAL PROPERTY" shall mean, collectively, the Copyrights, the
Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, the
Trademark Licenses, the Trade Secrets, and the Trade Secret Licenses.
"INVENTORY" shall mean: (i) all "inventory" as defined in the UCC and
(ii) all goods held for sale or lease or to be furnished under contracts of
service or so leased or furnished, all raw materials, work in process, finished
goods, and materials used or consumed in the manufacture, packing, shipping,
advertising, selling, leasing, furnishing or production of such inventory or
otherwise used or consumed in any Debtor's business; all goods in which any
Debtor has an interest in mass or a joint or other interest or right of any
kind; and all goods which are returned to or repossessed by any Debtor, all
computer programs embedded in any goods and all accessions thereto and products
thereof (in each case, regardless of whether characterized as inventory under
the UCC).
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"INVESTMENT RELATED PROPERTY" shall mean: (i) all "investment
property" (as such term is defined in Article 9 of the UCC); (ii) all of the
following (regardless of whether classified as investment property under the
UCC): all Pledged Equity Interests, Pledged Debt, the Deposit Accounts,
Securities Accounts, Commodities Accounts and certificates of deposit.
"LEGAL REQUIREMENTS" means all applicable restrictive covenants,
applicable zoning and subdivision ordinances and building codes, all applicable
health and environmental laws and regulations, all applicable Racing Laws,
Gaming Laws and applicable regulations, and all other applicable laws,
ordinances, rules, regulations, judicial decisions, administrative orders and
other requirements of any Governmental Authority having jurisdiction over any
Debtor, the Collateral and/or any Affiliate of such Debtor, in effect either at
the time of execution of this Agreement or at any time during the term hereof.
"LETTER OF CREDIT RIGHT" shall mean "letter-of-credit right" as
defined in the UCC.
"MATERIAL COLLATERAL CONTRACT" shall mean any contract or other
arrangement to which any Debtor is a party for which breach, nonperformance,
cancellation or failure to renew could reasonably be expected to have a Material
Adverse Effect.
"MONEY" shall mean "money" as defined in the UCC.
"PATENT LICENSES" shall mean all agreements providing for the granting
of any right in or to Patents (whether such Debtor is licensee or licensor
thereunder) including, without limitation, each agreement referred to in
Schedule B of the Diligence Certificate (as such schedule may be amended or
supplemented from time to time).
"PATENTS" shall mean all United States and foreign patents and
certificates of invention, or similar industrial property rights, including, but
not limited to each patent referred to in Schedule B of the Diligence
Certificate (as such schedule may be amended or supplemented from time to time),
and with respect to any and all of the foregoing, (i) all applications therefore
including, without limitation, the patent applications referred to in Schedule B
of the Diligence Certificate (as such schedule may be amended or supplemented
from time to time), (ii) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals, and reexaminations thereof, (ii)
all rights corresponding thereto throughout the world, (ii) all inventions and
improvements described therein, (iv) all rights to sue for past, present and
future infringements thereof, (v) all licenses, claims, damages, and proceeds of
suit arising therefrom, and (vi) all payments and rights to payments arising out
of the sale, lease, license, assignment, or other disposition thereof.
"PAYMENT INTANGIBLE" shall have the meaning specified in the UCC.
"PLEDGED DEBT" shall mean all Indebtedness owed to such Debtor,
including, without limitation, all Indebtedness described on Schedule A of the
Diligence Certificate under the heading "Pledged Debt and Instruments" (as such
schedule may be amended or supplemented from time to time), issued by the
obligors named therein, the instruments evidencing such Indebtedness, and all
interest, cash, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such Indebtedness.
"PLEDGED EQUITY INTERESTS" shall mean all Pledged Stock, Pledged LLC
Interests, Pledged Partnership Interests and Pledged Trust Interests.
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"PLEDGED LLC INTERESTS" shall mean all interests in any limited
liability company including, without limitation, all limited liability company
interests listed on Schedule A of the Diligence Certificate (as such schedule
may be amended or supplemented from time to time) and the certificates, if any,
representing such limited liability company interests and any interest of such
Debtor on the books and records of such limited liability company or on the
books and records of any securities intermediary pertaining to such interest and
all dividends, distributions, cash, warrants, rights, options, instruments,
securities and other property or proceeds from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of such
limited liability company interests.
"PLEDGED PARTNERSHIP INTERESTS" shall mean all interests in any
general partnership, limited partnership, limited liability partnership or other
partnership including, without limitation, all partnership interests listed on
Schedule A of the Diligence Certificate (as such schedule may be amended or
supplemented from time to time) and the certificates, if any, representing such
partnership interests and any interest of such Debtor on the books and records
of such partnership or on the books and records of any securities intermediary
pertaining to such interest and all dividends, distributions, cash, warrants,
rights, options, instruments, securities and other property or proceeds from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such partnership interests.
"PLEDGED TRUST INTERESTS" shall mean all interests in a Delaware
business trust or other trust including, without limitation, all trust interests
listed on Schedule A of the Diligence Certificate (as such schedule may be
amended or supplemented from time to time) and the certificates, if any,
representing such trust interests and any interest of such Debtor on the books
and records of such trust or on the books and records of any securities
intermediary pertaining to such interest and all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such trust interests.
"PLEDGED STOCK" shall mean all shares of capital stock owned by such
Debtor, including, without limitation, all shares of capital stock described on
Schedule A of the Diligence Certificate (as such schedule may be amended or
supplemented from time to time), and the certificates, if any, representing such
shares and any interest of such Debtor in the entries on the books of the issuer
of such shares or on the books of any securities intermediary pertaining to such
shares, and all dividends, distributions, cash, warrants, rights, options,
instruments, securities and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such shares.
"PROCEEDS" shall mean: (i) all "proceeds" as defined in Article 9 of
the UCC, (ii) payments or distributions made with respect to any Investment
Related Property and (iii) whatever is receivable or received when Collateral or
proceeds are sold, exchanged, collected or otherwise disposed of, whether such
disposition is voluntary or involuntary.
"RACING AUTHORITY" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States of America or foreign government, any state, province or any
city or other political subdivision, whether now or hereafter existing, or any
officer or official thereof, including without limitation, the Louisiana State
Racing Commission and any other agency with authority to regulate any
pari-mutuel wagering operation (or proposed pari-mutuel wagering operation),
including operations at live horse racing and off-track betting facilities,
owned, managed or operated by the Company or any of its Subsidiaries.
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"RACING LAW" means the pari-mutuel wagering laws, including those
governing operations at live horse racing and off-track betting facilities, of
any jurisdiction or jurisdictions to which the Company, any of its Subsidiaries
or any of the Guarantors is, or may at any time after the date hereof, be
subject.
"RACING LICENSE" means any license, permit, franchise or other
authorization required to own, lease, or operate or otherwise conduct racing
activities, including pari-mutuel wagering activities, of the Company and its
Subsidiaries, including, without limitation, all such licenses granted under the
Louisiana horse racing and off-track betting statutes and regulated by the
regulations promulgated pursuant to such statutes, and other Legal Requirements,
including all applicable liquor and tobacco permits.
"RECEIVABLES CONTRACTS" shall mean all (i) Accounts, (ii) Chattel
Paper, (iii) Payment Intangibles, (iv) Instruments and (v) to the extent not
otherwise covered above, all other rights to payment, whether or not earned by
performance, for goods or other property sold, leased, licensed, assigned or
otherwise disposed of, or services rendered or to be rendered, regardless of how
classified under the UCC; together with all of such Debtors' rights, if any, in
any goods or other property giving rise to such right to payment and all
Collateral Support and Supporting Obligations related thereto and all
Receivables Records; provided, however, that Receivables Contracts shall not
include any Investment Related Property.
"RECEIVABLES RECORDS" shall mean (i) all original copies of all
documents, instruments or other writings or electronic records or other Records
evidencing the Receivables Contracts, (ii) all books, correspondence, credit or
other files, Records, ledger sheets or cards, invoices, and other papers
relating to Receivables Contracts, including, without limitation, all tapes,
cards, computer tapes, computer discs, computer runs, record keeping systems and
other papers and documents relating to the Receivables Contracts, whether in the
possession or under the control of Debtor or any computer bureau or agent from
time to time acting for Debtor or otherwise, (iii) all evidences of the filing
of UCC financing statements and the registration of other instruments in
connection therewith, and amendments, supplements or other modifications
thereto, notices to other creditors or secured parties, and certificates,
acknowledgments, or other writings, including, without limitation, lien search
reports, from filing or other registration officers, (iv) all credit
information, reports and memoranda relating thereto and (v) all other written or
non-written forms of information related in any way to the foregoing or any
Receivable.
"RECORD" shall have the meaning specified in Article 9 of the UCC.
"SECURED OBLIGATIONS" shall have the meaning set forth in Section 3.1
hereof.
"SECURED PARTY" has the meaning set forth in the preamble.
"SECURITIES" shall mean any stock, shares, partnership interests,
voting trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds, debentures,
notes, or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"SECURITIES ACCOUNTS" (i) shall mean all "securities accounts" as
defined in Article 8 of the UCC and (ii) shall include, without limitation, all
of the accounts listed on Schedule A under the heading "Securities Accounts" (as
such schedule may be amended or supplemented from time to time).
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"SOFTWARE EMBEDDED IN GOODS" means, with respect to any Goods, any
computer program embedded in Goods and any supporting information provided in
connection with a transaction relating to the program if (i) the program is
associated with the Goods in such a manner that it customarily is considered
part of the Goods or (ii) by becoming the owner of the Goods a person acquires a
right to use the program in connection with the Goods.
"SUPPLEMENT TO SECURITY AGREEMENT" shall mean any supplement to this
agreement in substantially the form of Exhibit A.
"SUPPORTING OBLIGATION" shall mean all "supporting obligations" as
defined in the UCC.
"TAX CODE" shall mean the United States Internal Revenue Code of 1986,
as amended from time to time.
"TRADEMARK LICENSES" shall mean any and all agreements providing for
the granting of any right in or to Trademarks (whether such Debtor is licensee
or licensor thereunder) including, without limitation, each agreement referred
to in Schedule B of the Diligence Certificate (as such schedule may be amended
or supplemented from time to time).
"TRADEMARKS" shall mean all United States, state and foreign
trademarks, trade names, corporate names, company names, business names,
fictitious business names, Internet domain names, service marks, certification
marks, collective marks, logos, other source or business identifiers, designs
and general intangibles of a like nature, all registrations and applications for
any of the foregoing including, but not limited to the registrations and
applications referred to in Schedule B of the Diligence Certificate (as such
schedule may be amended or supplemented from time to time), all extensions or
renewals of any of the foregoing, all of the goodwill of the business connected
with the use of and symbolized by the foregoing, the right to sue for past,
present and future infringement or dilution of any of the foregoing or for any
injury to goodwill, and all proceeds of the foregoing, including, without
limitation, licenses, royalties, income, payments, claims, damages, and proceeds
of suit.
"TRADE SECRET LICENSES" shall mean any and all agreements providing
for the granting of any right in or to Trade Secrets (whether such Debtor is
licensee or licensor thereunder) including, without limitation, each agreement
referred to in Schedule B of the Diligence Certificate (as such schedule may be
amended or supplemented from time to time).
"TRADE SECRETS" shall mean all trade secrets and all other
confidential or proprietary information and know-how now or hereafter owned by
or used in, the business of such Debtor (all of the foregoing being collectively
called a "Trade Secret"), whether or not such Trade Secret has been reduced to a
writing or other tangible form, including all documents and things embodying,
incorporating, or referring in any way to such Trade Secret, the right to sue
for past, present and future infringement of any Trade Secret, and all proceeds
of the foregoing, including, without limitation, licenses, royalties, income,
payments, claims, damages, and proceeds of suit.
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the State of New York; provided, if by reason of mandatory provisions of
law, the perfection or the effect of perfection or non-perfection of the
security interests in any Collateral or the priority of security interests in
any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than New York, "UCC" shall mean the Uniform Commercial Code
as in effect in such other jurisdiction for purposes of the provisions hereof
relating to such perfection or effect of perfection or non-perfection or
priority.
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1.2 DEFINITIONS; INTERPRETATION. All capitalized terms used herein
(including the preamble and recitals hereto) and not otherwise defined herein
shall have the meanings ascribed thereto in the Indenture or, if not defined
therein, in the UCC. References to "Sections," "Exhibits" and "Schedules" shall
be to Sections, Exhibits and Schedules, as the case may be, of this Agreement
unless otherwise specifically provided. Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
Any of the terms defined herein may, unless the context otherwise requires, be
used in the singular or the plural, depending on the reference. The use herein
of the word "include" or "including", when following any general statement, term
or matter, shall not be construed to limit such statement, term or matter to the
specific items or matters set forth immediately following such word or to
similar items or matters, whether or not nonlimiting language (such as "without
limitation" or "but not limited to" or words of similar import) is used with
reference thereto, but rather shall be deemed to refer to all other items or
matters that fall within the broadest possible scope of such general statement,
term or matter. If any conflict or inconsistency exists between this Agreement
and the Indenture, the Indenture shall govern. All references herein to
provisions of the UCC shall include all successor provisions under any
subsequent version or amendment to any Article of the UCC.
2. GRANT OF SECURITY
2.1 GRANT OF SECURITY. Subject to applicable Gaming Laws, each Debtor
hereby grants to the Secured Party a security interest and continuing lien on
all of such Debtor's right, title and interest in, to and under all property of
such Debtor including, but not limited to the following, in each case whether
now owned or existing or hereafter acquired or arising and wherever located
(such Debtor's "COLLATERAL"):
(i) Accounts;
(ii) Chattel Paper, together with all returned, rejected or
repossessed goods, the sale or lease of which shall have given
or shall give rise to chattel paper, and all property and
goods both now owned and hereafter acquired by the Debtors
which are sold, leased, secured, or the subject of or
otherwise covered by, the Debtors' Chattel Paper, together
with all reversionary rights embodied therein and all other
rights incident to such property and goods;
(iii) Documents;
(iv) Goods (including Documents Representing Goods and Software
Embedded in Goods);
(v) Instruments;
(vi) Insurance;
(vii) Intellectual Property;
(viii) Investment Related Property;
(ix) judgments;
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(x) Letter of Credit Rights;
(xi) Money;
(xii) Receivables Contracts and Receivable Records;
(xiii) Commercial Tort Claims;
(xiv) to the extent not otherwise included above, all General
Intangibles, Material Collateral Contracts and other personal
property of any kind;
(xv) to the extent not otherwise included above, all Collateral
Records, Collateral Support and Supporting Obligations
relating to any of the foregoing; and
(xvi) to the extent not otherwise included above, all Proceeds,
products, accessions, rents and profits of or in respect of
any of the foregoing.
2.2 CERTAIN LIMITED EXCLUSIONS. (a) Notwithstanding anything herein to the
contrary, in no event shall the Collateral include, and no Debtor shall be
deemed to have granted a security interest in, any of such Debtor's right, title
or interest in: (i) any Intellectual Property if the grant of such security
interest shall constitute or result in the abandonment, invalidation or
rendering unenforceable any right, title or interest of any Debtor therein or if
such a grant, under the terms of such Intellectual Property license, contract or
agreement results in a breach or termination of the terms of, or constitutes a
default under or termination of any such Intellectual Property license, contract
or agreement (other than to the extent that the terms under such Intellectual
Property license, contract or agreement that restricts such grant would be
rendered ineffective pursuant to Section 9-406 or 9-408 of the UCC (or any
successor provision or provisions) of any relevant jurisdiction or any other
applicable law (including the Bankruptcy Code) or principles of equity); (ii)
any license, contract, agreement, lease, Permit or other assets or property to
which such Debtor is a party or any of its rights or interests thereunder,
including, without limitation, with respect to any Pledged Partnership Interests
or any Pledged LLC Interests, to the extent, but only to the extent, that such a
grant, under the terms of such license, contract, agreement, lease, Permit or
other assets or property (including, without limitation, any partnership
agreements or any limited liability company agreements), or otherwise, results
in a breach or termination of the terms of, or constitutes a default under or
termination of any such license, contract, agreement, lease, Permit or other
assets or property, without the consent of third parties that has not been
obtained (including applicable Gaming Authorities, Racing Authorities, liquor
agencies and authorities and other Governmental Authorities) (other than to the
extent that any such term would be rendered ineffective pursuant to Section
9-406 or 9-408 of the UCC (or any successor provision or provisions) of any
relevant jurisdiction or any other applicable law (including the Bankruptcy
Code) or principles of equity); provided, that each Debtor agrees to use all
commercially reasonable efforts (which shall not require the payment of cash to,
or the reimbursement of fees and expenses of, the consenting party or the making
of any material concessions under any such license, contract, agreement, lease,
Permit or other assets or property (including, without limitation, any
partnership agreements, any limited liability company agreements or any of the
parcels of the Warner Land that are subject to the mortgage granted by OED to
the seller of such land)) to obtain all requisite consent to enable such Debtor
to provide a security interest in such asset and, in any event, immediately upon
the ineffectiveness, lapse or termination of any such provision of any such
license, contract, agreement, lease, Permit or other assets or property, the
Collateral shall include, and such Debtor shall be deemed to have granted a
security interest in, all such rights and interests in, under or with respect to
such license, contract, agreement, lease, Permit or other assets or property as
if such provision
10
had never been in effect; (iii) in any of the outstanding capital stock of any
Controlled Foreign Corporation in excess of 65% of the total combined voting
power of all classes of capital stock of such Controlled Foreign Corporation
entitled to vote; provided, however, that if the Company is able to receive an
opinion of counsel nationally recognized in tax matters to the effect that the
pledge of such excess will not result in an income inclusion under section 951
et. seq. of the Code, the Collateral shall include, and the applicable Debtor
shall be deemed to have granted a security interest in, such greater percentage
of capital stock of such Controlled Foreign Corporation; (iv) any assets
securing FF&E Financing, Purchase Money Obligations or Capital Lease Obligations
permitted to be incurred under the Indenture to the extent acquired or
refinanced with the proceeds of such FF&E Financing, Purchase Money Obligations
and Capital Lease Obligations; (v) any Gaming License or Racing License; (vi)
the lease for the Company's off-track betting operations at New Iberia,
Louisiana or any other leases of off-track betting parlors operated by the
Company in any other location in the future; (vii) FF&E to the extent securing
FF&E Financing permitted under the Indenture; (viii) any motor vehicles; (ix)
any cash (other than cash deposited in deposit accounts); or (x) OEDA's rights
under or in respect of the Management Services Agreement and proceeds thereof
(including fees paid to OEDA pursuant thereto).
2.3 INTERCREDITOR AGREEMENT. Notwithstanding anything herein to the
contrary, the relative rights and remedies of the Secured Party hereunder and
the Credit Facility Secured Party shall be subject to and governed by the terms
of the Intercreditor Agreement at any time the Intercreditor Agreement is in
effect, and in the event of any inconsistency between the terms hereof and the
Intercreditor Agreement, the Intercreditor Agreement shall control at any time
the Intercreditor Agreement is in effect.
3. SECURITY FOR OBLIGATIONS
3.1 SECURITY FOR OBLIGATIONS. This Agreement secures, and the Collateral is
collateral security for, the prompt and complete payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. ss.362(a) (and any successor provision thereof)),
of all obligations and liabilities of every nature of each Debtor now or
hereafter existing under the Indenture Documents to which such Debtor is a party
(all such obligations and liabilities being the "SECURED OBLIGATIONS").
3.2 OBLIGATIONS REMAIN. Notwithstanding anything herein to the contrary,
(a) each Debtor shall remain liable under any partnership agreement or
limited liability company agreement relating to any Pledged Partnership Interest
or Pledged LLC Interest and/or any other contracts and agreements included in
the Collateral, to the extent set forth therein, to perform all of its duties
and obligations thereunder to the same extent as if this Agreement had not been
executed;
(b) the exercise by the Secured Party of any of its rights hereunder
shall not release any Debtor from any of its duties or obligations under the
contracts and agreements included in the Collateral until title or all rights
thereto has been transferred from such Debtor in accordance with such contracts
or agreements; and
(c) the Secured Party shall not have any obligation or liability under
any partnership agreement or limited liability company agreement relating to any
Pledged Partnership Interests or Pledged LLC Interests or any other contracts
and agreements included in the Collateral by reason of this Agreement or any
other Security Document, nor shall the Secured Party be obligated to assume or
perform any of the obligations or duties of any Debtor thereunder or to take any
action to collect or
11
enforce any claim for payment assigned hereunder by reason of this Agreement or
any other Security Document.
4. REPRESENTATIONS AND WARRANTIES AND COVENANTS
4.1 GENERALLY.
(a) Representations and Warranties. Each Debtor hereby represents and
warrants, on the Issue Date, that:
(i) it owns the Collateral purported to be owned by it or
otherwise has the rights it purports to have in each item of
Collateral and, as to all Collateral whether now existing or
hereafter acquired, will continue to own or have such rights
in each item of the Collateral, in each case free and clear of
any and all Liens, rights or claims of all other Persons other
than Permitted Liens, including, without limitation, liens
arising as a result of such Debtor becoming bound (as a result
of merger or otherwise) as debtor under a security agreement
entered into by another Person;
(ii) it has indicated in Section I of the Diligence Certificate (as
such schedule may be amended or supplemented from time to
time): (w) the taxpayer identification number of such Debtor
and the organization identification number of such Debtor, if
any, provided by the Secretary of State of such Debtor's state
of organization, (x) the type of organization of such Debtor,
(y) the jurisdiction of organization of such Debtor and (z)
the jurisdiction where the chief executive office or its sole
place of business, as the case may be, is, and for the five
(5)-year period preceding the date hereof has been, located.
(iii) the full legal name of such Debtor is as set forth in Section
I of the Diligence Certificate and it has not done in the last
five (5) years, and does not do, business under any other name
(including any trade-name or fictitious business name) except
for those names set forth in Section I of the Diligence
Certificate (as such schedule may be amended or supplemented
from time to time);
(iv) the names of all companies with which such Debtor has merged
or consolidated in the last five (5) years, together with the
dates of such mergers or consolidations are set forth in
Section I of the Diligence Certificate;
(v) the location(s) at which such Debtor has kept or maintained
Equipment or Inventory in the last five (5) years that is
Collateral under this Agreement is set forth in Section II of
the Diligence Certificate;
(vi) such Debtor has not within the last five (5) years become
bound (whether as a result of merger or otherwise) as debtor
under a security agreement entered into by another Person,
which has not heretofore or concurrently with the delivery
hereof been terminated;
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(vii) the security interests granted by each Debtor in the
Collateral of such Debtor to Secured Party hereunder
constitute valid security interests in such Collateral
securing the payment of the Secured Obligations of such
Debtor, and upon the filing of all UCC financing statements
naming such Debtor as "debtor" and the Secured Party as
"secured party" and describing such Collateral in the filing
offices set forth opposite such Debtor's name in Section I of
the Diligence Certificate (as such section may be amended or
supplemented from time to time) and, to the extent not subject
to Article 9 of the UCC, upon the recordation of the security
interest granted hereunder in Patents, Trademarks and
Copyrights in the applicable patent, trademark and copyright
registries (including the United States Patent and Trademark
Office and the United States Copyright Office), and the
registration of all unregistered Copyrights and other filings
delivered by such Debtor, the security interests granted to
the Secured Party hereunder constitute perfected Liens
(subject in the case of priority only to Permitted Liens) on
all such Collateral (other than Collateral constituting goods
covered by certificates of title, Money, deposit accounts,
Letter of Credit Rights and insurance policies);
(viii)all actions, consents and approvals, including all filings,
notices, registrations and recordings necessary for the
exercise by the Secured Party of the voting or other rights
provided for in this Agreement or the exercise of remedies in
respect of the Collateral have been made or obtained except to
the extent any actions, consents or approvals are required (A)
in the case of any action, to be performed by the Secured
Party or (B) under applicable Gaming Laws, the Intercreditor
Agreement or any Intellectual Property license, contract or
agreement;
(ix) other than the UCC financing statements filed in favor of the
Secured Party, no effective UCC financing statement, fixture
filing or other instrument similar in effect under any
applicable law covering all or any part of the Collateral is
on file in any filing or recording office except for (x) UCC
financing statements for which proper termination statements
have been delivered to the Secured Party for filing and (y)
UCC financing statements filed in connection with Permitted
Liens;
(x) no authorization, approval or other action by, and no notice
to or filing with, any Governmental Authority is required for
either (i) the pledge or grant by any Debtor of the Liens
purported to be created in favor of the Secured Party
hereunder or (ii) the exercise by Secured Party of any rights
or remedies in respect of any Collateral (whether specifically
granted or created hereunder or created or provided for by
applicable law), except (A) for the filings contemplated by
clause (vii) above, (B) as may be required, in connection with
the disposition of any Investment Related Property, by laws
generally affecting the offering and sale of Securities, (C)
to the extent any authorizations, consents or approvals are
required under applicable Gaming Laws, the Intercreditor
Agreement or any Intellectual Property license, contract or
agreement and (D) to the extent any actions are required to be
performed by the Secured Party;
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(xi) all written information supplied by any Debtor with respect to
any of the Collateral (in each case taken as a whole with
respect to any particular Collateral) is accurate and complete
in all material respects; and
(xii) none of the Collateral constitutes, or is the Proceeds of,
"farm products" (as defined in the UCC).
(b) Covenants and Agreements. Each Debtor hereby covenants and agrees
that until the Secured Obligations have been paid in full:
(i) except for the security interest created by this Agreement, it
shall not create or suffer to exist any Lien upon or with
respect to any of the Collateral, except Permitted Liens;
(ii) it shall not produce, use or permit any Collateral to be used
unlawfully or in violation of any provision of this Agreement
or any applicable statute, regulation or ordinance or any
policy of insurance covering the Collateral;
(iii) it shall (A) not change such Debtor's name, identity,
corporate structure, sole place of business or chief executive
office, as the case may be, or jurisdiction of organization
unless it shall have (1) notified the Secured Party in
writing, by executing and delivering to the Secured Party a
completed Supplement to Security Agreement, substantially in
the form of Exhibit A attached hereto, together with all
Supplements to Schedules thereto, at least thirty (30) days
prior to any such change, identifying such new proposed name,
identity, corporate structure, sole place of business or chief
executive office, as the case may be, or jurisdiction of
organization and providing such other information in
connection therewith as the Secured Party may reasonably
request or (2) taken all actions necessary or advisable to
maintain the continuous validity and perfection of the Secured
Party's security interest in the Collateral intended to be
granted and agreed to hereby and (B) notify the Secured Party
of any tradename established by such Debtor within thirty (30)
days following such establishment;
(iv) upon such Debtor or any officer of such Debtor obtaining
knowledge of any event not generally known to the public at
large, it shall promptly notify the Secured Party in writing
of any such event that could reasonably be expected to have a
material adverse effect on (A) the value of a significant
portion of the Collateral, (B) the ability of any Debtor or
the Secured Party to dispose of the Collateral or any
significant portion thereof pursuant to applicable law or
agreements that could reasonably be expected to affect such
ability or (C) the rights and remedies of the Secured Party in
relation to the Collateral or any significant portion thereof,
including, without limitation, the levy of any legal process
against the Collateral or any significant portion thereof;
(v) it shall use commercially reasonable efforts (which shall not
require the payment of cash to, or the reimbursement of fees
and expenses of, such
14
landlord or the making of any material concessions under any
such lease) to deliver to the Secured Party landlord consents,
to the extent it occupies and has business activities on any
premises as a lessee under a lease, executed by the landlord
in respect of such lease the effect of which would subordinate
the claims of such landlord to the Liens created under this
Agreement and enable the Secured Party to access such premises
without delay for the purpose of enforcing such Liens; and
(vi) it shall, on request of the Secured Party, cause other Persons
(including without limitation those in possession of any
Collateral) to execute and deliver in favor of the Secured
Party acknowledgments, consents and control agreements
necessary, or desirable and commercially reasonable in
furtherance of the purposes of this Agreement. All matters
shall be in form and substance reasonably acceptable to the
Secured Party and shall be at such Debtor's cost.
4.2 EQUIPMENT AND INVENTORY.
(a) Representations and Warranties. Each Debtor represents and
warrants, on the Issue Date, that:
(i) all of the Equipment and Inventory included in the Collateral
is kept only at the locations specified in Schedule C of the
Diligence Certificate; and
(ii) any Goods now or hereafter produced by any Debtor included in
the Collateral have been and will be produced in compliance
with the requirements of the Fair Labor Standards Act, as
amended.
(b) Covenants and Agreements. Each Debtor covenants and agrees that:
(i) it shall not deliver any Document evidencing any Equipment and
Inventory to any Person other than the issuer of such Document
to claim the Goods evidenced therefor or the Secured Party or
the Credit Facility Secured Party or any other holder or
representative of a holder of a Permitted Lien; and
(ii) if any Equipment or Inventory is in possession or control of
any third party (other than the Credit Facility Secured
Party), it shall join with the Secured Party in notifying the
third party of the Secured Party's security interest and use
its commercially reasonable efforts (which shall not require
the payment of cash to, or the reimbursement of fees and
expenses of, such third party or the making of any material
concessions under any contract or agreement relating to such
Equipment or Inventory) in obtaining an acknowledgment from
the third party that it is holding the Equipment and Inventory
for the benefit of the Secured Party and other holders of
Permitted Liens.
15
4.3 RECEIVABLES CONTRACTS. Covenants and Agreements: Each Debtor hereby
covenants and agrees that until the Secured Obligations have been paid in full,
it shall keep and maintain at its own cost and expense satisfactory and complete
records of the Receivables Contracts.
4.4 INVESTMENT RELATED PROPERTY.
(a) Representations and Warranties. Each Debtor hereby represents and
warrants, on the Issue Date, that:
(i) Schedule A of the Diligence Certificate (as such schedule may
be amended or supplemented from time to time) sets forth all
of the Pledged Stock, Pledged LLC Interests, Pledged
Partnership Interests and Pledged Trust Interests owned by any
Debtor and such Pledged Equity Interests constitute the
percentage of issued and outstanding shares of stock,
percentage of membership interests, percentage of partnership
interests or percentage of beneficial interest of the
respective issuers thereof indicated on such Schedule;
(ii) it is the record and beneficial owner of the Pledged Equity
Interests free of all Liens, rights or claims of other Persons
other than Permitted Liens;
(iii) without limiting the generality of Section 4.1(a)(v), no
consent of any Person including any other general or limited
partner, any other member of a limited liability company, any
other shareholder or any other trust beneficiary is necessary
in connection with the creation or perfection of the security
interest of the Secured Party in any Pledged Equity Interests
or the exercise by the Secured Party of the voting or other
rights provided for in this Agreement or the exercise of
remedies in respect thereof;
(iv) none of the Pledged LLC Interests nor Pledged Partnership
Interests are or represent interests in issuers that are: (a)
registered as investment companies, (b) are dealt in or traded
on securities exchanges or markets or (c) have opted to be
treated as securities under the UCC of any jurisdiction;
(v) Schedule A of the Diligence Certificate (as such schedule may
be amended or supplemented from time to time) sets forth under
the heading "Pledged Debt" all of the Pledged Debt owned by
any Debtor and all of such Pledged Debt has been duly
authorized, authenticated or issued, and delivered and is the
legal, valid and binding obligation of the issuers thereof and
is not in default and constitutes all of the issued and
outstanding inter-company Indebtedness evidenced by an
instrument or certificated security of the respective issuers
thereof owing to such Debtor;
(vi) Schedule A of the Diligence Certificate sets forth under the
headings "Securities Accounts," "Deposit Accounts," and
"Commodities Accounts," respectively, all of the Securities
Accounts, Deposit Accounts and Commodities Accounts in which
the each Debtor has an
16
interest. Each Debtor is the sole entitlement holder of each
such Securities Account, Deposit Account and Commodities
Account, and such Debtor has not consented to, and is not
otherwise aware of, any Person having "control" (as defined in
the UCC) over, or any other interest in, any such Securities
Account, Deposit Account or Commodity Account, or any
securities or other property credited thereto; and
(vii) The Secured Party has valid and enforceable control agreements
with all Persons with whom each Debtor has Deposit Accounts or
with all securities intermediaries maintaining any Securities
Accounts of, or on behalf of, such Debtor. As to other
Collateral in which perfection of a security interest may be
obtained by control, all actions have been taken so as to
ensure that the Secured Party has control of such Collateral,
other than as permitted hereby in the absence of an Event of
Default.
(b) Covenants and Agreements. Each Debtor hereby covenants and agrees
that until the Secured Obligations have been paid in full:
(i) in the event it acquires rights in any Investment Related
Property after the date hereof, it shall deliver to the
Secured Party a completed Supplement to Security Agreement,
substantially in the form of Exhibit A attached hereto,
together with all Supplements to Schedules thereto, reflecting
such new Investment Related Property and all other Investment
Related Property. Notwithstanding the foregoing, it is
understood and agreed that the security interest of the
Secured Party shall attach to all Investment Related Property
immediately upon any Debtor's acquisition of rights therein
and shall not be affected by the failure of any Debtor to
deliver a supplement to Schedule A of the Diligence
Certificate as required hereby;
(ii) except as provided in the next sentence, in the event such
Debtor receives any dividends, interest or distributions on
any Investment Related Property, or any securities or other
property upon the merger, consolidation, liquidation or
dissolution of any issuer of any Investment Related Property,
then (a) such dividends, interest or distributions and
securities or other property shall be included in the
definition of Collateral without further action and (b) such
Debtor shall immediately take all steps, if any, necessary, or
advisable and commercially reasonable to ensure the validity
and perfection of the Secured Party over such Investment
Related Property (including, without limitation, delivery
thereof to the Secured Party);
(iii) it shall comply with all of its obligations under any
partnership or limited liability company agreement or limited
liability company agreement relating to Pledged Partnership
Interests or Pledged LLC Interests and shall enforce all of
its rights with respect to any Investment Related Property
related to Persons that are not Guarantors;
(iv) each Debtor consents to the grant by each other Debtor of a
security interest in all Investment Related Property to the
Secured Party and,
17
without limiting the foregoing, consents to the transfer of
any Pledged Partnership Interest and any Pledged LLC Interest
to the Secured Party or its nominee following an Event of
Default and to the substitution of the Secured Party or its
nominee as a partner in any partnership or as a member in any
limited liability company with all the rights and powers
related thereto;
(v) with respect to any Investment Related Property consisting of
Securities Accounts or Securities Entitlements, it shall cause
the securities intermediary maintaining such Securities
Account or Securities Entitlement to enter into an agreement
substantially in the form of Exhibit B hereto pursuant to
which the securities intermediary shall agree to comply with
the Secured Party's "entitlement orders" without further
consent by such Debtor. With respect to any Investment Related
Property that is a "Deposit Account", it shall cause the
depositary institution maintaining such account to enter into
an agreement substantially in the form of Exhibit C hereto,
pursuant to which the Secured Party shall have both sole
dominion and control over such Deposit Account and "control"
(within the meaning of Section 9-104 of the UCC) over such
Deposit Account. Such Debtor shall have entered into such
control agreement or agreements with respect to: (i) any
Securities Accounts, Securities Entitlements or Deposit
Accounts that exist on the Issue Date and (ii) any Securities
Accounts, Securities Entitlements or Deposit Accounts that are
created or acquired after the Issue Date, as of or prior to
the deposit or transfer of any such Securities Entitlements or
funds, whether constituting moneys or investments, into such
Securities Accounts or Deposit Accounts; and
(vi) with respect to any Investment Related Property in which it
currently has rights, it shall have complied with the
provisions of this Section on or before the Closing Date and
with respect to any Investment Related Property hereafter
acquired by such Debtor it shall comply with the provisions of
this Section immediately upon acquiring rights therein, in
each case in form and substance satisfactory to the Secured
Party. With respect to any Investment Related Property that is
represented by a certificate or that is an "instrument" (other
than any Investment Related Property credited to a Securities
Account) it shall cause such certificate or instrument to be
delivered to the Secured Party, indorsed in blank by an
"effective indorsement" (as defined in Section 8-107 of the
UCC), regardless of whether such certificate constitutes a
"certificated security" for purposes of the UCC. With respect
to any Investment Related Property that is an "uncertificated
security" for purposes of the UCC (other than any
"uncertificated securities" credited to a Securities Account),
it shall cause the issuer of such uncertificated security to
register the Secured Party as the registered owner thereof on
the books and records of the issuer.
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(c) Voting and Distributions.
(i) So long as no Event of Default shall have occurred and be
continuing, and subject to applicable Gaming Laws, each Debtor
shall be entitled to exercise or refrain from exercising any
and all voting and other consensual rights pertaining to the
Investment Related Property or any part thereof for any
purpose not inconsistent with the terms of this Agreement or
the Indenture.
(ii) Upon the occurrence and during the continuation of an Event of
Default subject to Section 7.7:
(A) all rights of each Debtor to exercise or refrain from
exercising the voting and other consensual rights which
it would otherwise be entitled to exercise pursuant
hereto shall cease and all such rights shall thereupon
become vested in the Secured Party who shall thereupon
have the sole right to exercise such voting and other
consensual rights; and
(B) in order to permit the Secured Party to exercise the
voting and other consensual rights which it may be
entitled to exercise pursuant hereto and to receive all
dividends and other distributions which it may be
entitled to receive hereunder: (1) each Debtor shall
promptly execute and deliver (or cause to be executed
and delivered) to the Secured Party all proxies,
dividend payment orders and other instruments as the
Secured Party may from time to time reasonably request
and (2) each Debtor acknowledges that the Secured Party
may utilize the power of attorney set forth in Section
6.
4.5 INTELLECTUAL PROPERTY.
(a) Representations and Warranties. Except as disclosed in Schedule B
of the Diligence Certificate (as such schedule may be amended or supplemented
from time to time), each Debtor hereby represents and warrants, on the Issue
Date, that:
(i) Schedule B of the Diligence Certificate (as such schedule may
be amended or supplemented from time to time) sets forth a
true and complete list of (i) all active United States and
foreign registrations of and applications for Patents,
Trademarks, and Copyrights owned by each Debtor and (ii) all
Patent Licenses, Trademark Licenses and Copyright Licenses
material to the business of such Debtor;
(ii) it is the sole and exclusive owner of the entire right, title,
and interest in and to all Intellectual Property listed as
"owned" by such Debtor on Schedule B of the Diligence
Certificate (as such schedule may be amended or supplemented
from time to time), and owns or has the valid right to use all
other Intellectual Property used in or necessary to conduct
its business, free and clear of all Liens, claims,
encumbrances and licenses, except for Permitted Liens and the
licenses set forth on
19
Schedule B of the Diligence Certificate (as each may be
amended or supplemented from time to time);
(iii) to each Debtor's knowledge, all Intellectual Property is valid
and enforceable; no holding, decision, or judgment has been
rendered in any action or proceeding before any court or
administrative authority challenging the validity of, such
Debtor's right to register, or such Debtor's rights to own or
use, any Intellectual Property and no such action or
proceeding is pending or, to the best of such Debtor's
knowledge, threatened;
(iv) all registrations and applications for Copyrights, Patents and
Trademarks are standing in the name of each Debtor, and none
of the Trademarks, Patents, Copyrights or Trade Secret
Collateral has been licensed by any Debtor to any affiliate or
third party, except as disclosed on Schedule B of the
Diligence Certificate (as each may be amended or supplemented
from time to time); and
(v) there is no effective UCC financing statement or other
document or instrument now executed, or on file or recorded in
any public office that has not been released or terminated,
granting a security interest in or otherwise encumbering any
part of the Intellectual Property, other than in favor of the
Secured Party.
(b) Covenants and Agreements. Each Debtor hereby covenants and agrees
that until the Secured Obligations have been paid in full:
(i) it shall promptly (but in no event more than thirty (30) days
after any Debtor obtains knowledge thereof) report to the
Secured Party (i) the filing of any application to register
any Intellectual Property with the United States Patent and
Trademark Office, the United States Copyright Office, or any
state registry or foreign counterpart of the foregoing
(whether such application is filed by such Debtor or through
any agent, employee, licensee, or designee thereof) and (ii)
the registration of any Intellectual Property by any such
office, in each case by executing and delivering to the
Secured Party a completed Supplement to Security Agreement,
substantially in the form of Exhibit A attached hereto,
together with all Supplements to Schedules thereto;
(ii) it shall, promptly upon the reasonable request of the Secured
Party, execute and deliver to the Secured Party any document
required to acknowledge, confirm, register, record, or perfect
the Secured Party's interest in any part of the Intellectual
Property, whether now owned or hereafter acquired;
(iii) it shall hereafter use commercially reasonable efforts (which
shall not require the payment of cash to, or the reimbursement
of fees and expenses of, the counterparty to any such contract
or the making of any material concessions under any such
contract) so as not to permit the inclusion in any contract to
which it hereafter becomes a party of any
20
provision that could or might in any way materially impair or
prevent the creation of a security interest in, or the
assignment of, such Debtor's rights and interests in any
property included within the definitions of any Intellectual
Property acquired under such contracts;
4.6 COMMERCIAL TORT CLAIMS.
(a) Representations and Warranties. Each Debtor hereby represents and
warrants, on the Issue Date, that Schedule E of the Diligence Certificate (as
such schedule may be amended or supplemented from time to time) sets forth all
Commercial Tort Claims of each Debtor.
(b) Covenants and Agreements. Each Debtor hereby covenants and agrees
that until the Secured Obligations have been paid in full, with respect to any
Commercial Tort Claim hereafter arising it shall deliver to the Secured Party a
completed Supplement to Security Agreement, substantially in the form of Exhibit
A attached hereto, together with all Supplements to Schedules thereto,
identifying such new Commercial Tort Claims.
4.7 JUDGMENTS.
(a) Representations and Warranties. Each Debtor hereby represents and
warrants, on the Issue Date, that Schedule E of the Diligence Certificate (as
such schedule may be amended or supplemented from time to time) sets forth all
judgments in favor of each Debtor.
(b) Covenants and Agreements. Each Debtor hereby covenants and agrees
that until the Secured Obligations have been paid in full, with respect to any
judgment hereafter arising in its favor it shall deliver to the Secured Party a
completed Supplement to Security Agreement, substantially in the form of Exhibit
A attached hereto, together with all Supplements to Schedules thereto,
identifying such new judgments unless such Debtor was incorporated or formed
under the laws of Louisiana, in which case, such Debtor shall deliver to the
Secured Party a completed security agreement having terms consistent with the
terms hereof, together with all Supplements to Schedules thereto, identifying
such new judgments, which new security agreement shall be governed by Louisiana
law.
5. FURTHER ASSURANCES; ADDITIONAL DEBTORS
5.1 FURTHER ASSURANCES.
(a) Each Debtor agrees that from time to time until the Secured
Obligations have been paid in full, at the expense of such Debtor, that it shall
promptly execute and deliver all further instruments and documents, and take all
further action, that may be necessary, or desirable and commercially reasonable,
in order to create and/or maintain the validity, perfection or priority of and
protect any security interest granted or purported to be granted hereby or to
enable the Secured Party to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of the
foregoing, each Debtor shall:
(i) execute and file such financing or continuation statements, or
amendments thereto, and execute and deliver such other
agreements, instruments, endorsements, powers of attorney or
notices, as may be necessary or desirable, in order to perfect
and preserve the security interests granted or purported to be
granted hereby;
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(ii) take all actions necessary to ensure the recordation of
appropriate evidence of the Liens and security interest
granted hereunder in the Intellectual Property with any
intellectual property registry in which said Intellectual
Property is registered or in which an application for
registration is pending including, without limitation, the
United States Patent and Trademark Office, the United States
Copyright Office, the various Secretaries of State, and the
foreign counterparts on any of the foregoing;
(iii) at any reasonable time, upon request by the Secured Party,
exhibit the Collateral to and allow inspection of the
Collateral by the Secured Party, or persons designated by the
Secured Party; and
(iv) at the Secured Party's reasonable request and subject to the
Intercreditor Agreement, appear in and defend any action or
proceeding that may affect the Secured Party's security
interest in all or any part of the Collateral.
(b) Each Debtor hereby authorizes the Secured Party to file, until the
Secured Obligations have been paid in full, a Record or Records, including,
without limitation, UCC financing or continuation statements, and amendments
thereto, in all jurisdictions and with all filing offices as the Secured Party
may determine, in its sole discretion, are necessary or advisable to perfect the
security interest granted to the Secured Party herein. Such UCC financing
statements may describe the Collateral in the same manner as described herein or
may contain an indication or description of collateral that describes such
property in any other manner as the Secured Party may determine, in its sole
discretion, is necessary, advisable or prudent to ensure the perfection of the
security interest in the Collateral granted to the Secured Party herein,
including, without limitation, describing such property as "all assets other
than the excluded assets" or other substantially similar descriptions. Each
Debtor shall furnish to the Secured Party from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Secured Party may reasonably
request, all in reasonable detail.
(c) Each Debtor hereby authorizes the Secured Party to modify this
Agreement after obtaining such Debtor's approval of or signature to such
modification by amending Schedule B of the Diligence Certificate (as such
schedule may be amended or supplemented from time to time) to include reference
to any right, title or interest in any existing Intellectual Property or any
Intellectual Property acquired or developed by any Debtor after the execution
hereof or to delete any reference to any right, title or interest in any
Intellectual Property in which any Debtor no longer has or claims any right,
title or interest
(d) Unless (i) the Secured Party shall have failed to comply with
Section 9-513(c) of the UCC with respect to any Debtor, (ii) otherwise permitted
under Section 4.1(b)(iii)(b) to ensure the continued effectiveness of any UCC
financing statement relating to such Debtor or (iii) otherwise required under
Section 5.1(a) to ensure the continued effectiveness of any UCC financing
statement relating to such Debtor or perfect the security interest of the
Secured Party hereunder in any Collateral of such Debtor, such Debtor agrees not
to file any termination statements, amendments, corrections or supplements
relative to the UCC financing statements filed in connection with this Agreement
without the prior written consent of the Secured Party.
22
5.2 ADDITIONAL DEBTORS. From time to time subsequent to the date hereof,
additional Guarantors and/or Issuers (as defined in the Indenture) may become
additional Debtors pursuant to the terms of the Indenture, by executing a
Supplement to Security Agreement, substantially in the form attached hereto as
Exhibit A. Upon delivery of any such counterpart agreement to the Secured Party,
notice of which is hereby waived by Debtors, (a) each additional Debtor shall be
a Debtor and shall be as fully a party hereto as if additional Debtor were an
original signatory hereto and (b) the supplemental schedules thereto shall be
incorporated into and become a part of and supplement the respective schedules
to this Agreement; and each reference to such Schedules shall mean and be a
reference to such Schedules as supplemented pursuant to each Supplement to
Security Agreement. Each Debtor expressly agrees that its obligations arising
hereunder shall not be affected or diminished by the addition or release of any
other Debtor hereunder, nor by any election of Secured Party not to cause any
Subsidiary of the Company to become an additional Debtor hereunder. This
Agreement shall be fully effective as to any Debtor that is or becomes a party
hereto regardless of whether any other Person becomes or fails to become or
ceases to be a Debtor hereunder.
6. ATTORNEY-IN-FACT
6.1 POWER OF ATTORNEY. Each Debtor hereby irrevocably appoints the Secured
Party (such appointment being coupled with an interest) as such Debtor's
attorney-in-fact, with full authority in the place and stead of such Debtor and
in the name of such Debtor, the Secured Party, from time to time in its
discretion to take any action and to execute any instrument that it may deem
reasonably necessary or advisable to accomplish the purposes of this Agreement
and the Intercreditor Agreement, including, without limitation, the following:
(a) upon the occurrence and during the continuance of any Event of
Default, to obtain and adjust insurance required to be maintained by such Debtor
pursuant to the Indenture;
(b) upon the occurrence and during the continuance of any Event of
Default, to ask for, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(c) upon the occurrence and during the continuance of any Event of
Default, to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (b) above subject in all
respects to the rights of any lender under the Credit Agreement to receive,
endorse and collect the same;
(d) upon the occurrence and during the continuance of any Event of
Default, to file any claims or take any action or institute any proceedings
necessary or desirable for the collection of any of the Collateral or otherwise
to enforce the rights of the Secured Party with respect to any of the
Collateral;
(e) to prepare and file any UCC financing statements against such
Debtor as debtor;
(f) to prepare, sign, and file for recordation in any intellectual
property registry, appropriate evidence of the lien and security interest
granted herein in the Intellectual Property in the name of such Debtor as
assignor;
(g) to take or cause to be taken all actions necessary to perform or
comply or cause performance or compliance with the terms of this Agreement,
including, without limitation, access to pay or discharge taxes or Liens (other
than Permitted Liens) levied or placed upon or threatened against the
23
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same, any such payments made by the Secured Party to become
obligations of such Debtor to the Secured Party, due and payable immediately
without demand;
(h) upon the occurrence and during the continuance of any Event of
Default, generally to sell, transfer, pledge, make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as though
the Secured Party were the absolute owner thereof for all purposes, and to do,
at the Secured Party's option and such Debtor's expense, at any time or from
time to time, all acts and things that the Secured Party deems reasonably
necessary to protect, preserve or realize upon the Collateral and the Secured
Party's security interest therein in order to effect the intent of this
Agreement, all as fully and effectively as such Debtor might do; and
(i) upon the occurrence and during the continuance of any Event of
Default, to enforce all Supporting Obligations with respect to any Collateral.
6.2 NO DUTY ON THE PART OF SECURED PARTY. The powers conferred on the
Secured Party hereunder are solely to protect the interests of the Secured Party
in the Collateral and shall not impose any duty upon the Secured Party to
exercise any such powers. The Secured Party shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither it nor any of its officers, directors, employees or agents shall be
responsible to any Debtor for any act or failure to act hereunder, except for
their own gross negligence or willful misconduct.
7. REMEDIES
7.1 GENERALLY.
(a) If any Event of Default shall have occurred and be continuing, the
Secured Party may exercise in respect of the Collateral, in addition to all
other rights and remedies provided for herein or otherwise available to it at
law or in equity, all the rights and remedies of a secured party on default
under the UCC (whether or not the UCC applies to the affected Collateral) to
collect, enforce or satisfy any Secured Obligations then owing, whether by
acceleration or otherwise, and also may pursue any of the following separately,
successively or simultaneously:
(i) require any Debtor to, and each Debtor hereby agrees that it
shall at its expense and promptly upon request of the Secured
Party forthwith, assemble all or part of the Collateral as
directed by the Secured Party and make it available to the
Secured Party at a place to be designated by the Secured Party
that is reasonably convenient to both parties;
(ii) enter onto the property where any Collateral is located and
take possession thereof with or without judicial process;
(iii) prior to the disposition of the Collateral, store, process,
repair or recondition the Collateral or otherwise prepare the
Collateral for disposition in any manner to the extent the
Secured Party deems appropriate;
(iv) without notice except as specified below or under the UCC,
sell, assign, lease, license (on an exclusive or nonexclusive
basis) or otherwise dispose of the Collateral or any part
thereof in one or more parcels at
24
public or private sale, at any of the Secured Party's offices
or elsewhere, for cash, on credit or for future delivery, at
such time or times and at such price or prices and upon such
other terms as the Secured Party may deem commercially
reasonable; and
(b) The Secured Party may be a purchaser of any or all of the
Collateral at any public or, to the extent permitted under the UCC, private sale
in accordance with the UCC and the Secured Party, as Secured Party for and
representative of the Holders, shall be entitled, for the purpose of bidding and
making settlement or payment of the purchase price for all or any portion of the
Collateral sold at any such sale made in accordance with the UCC, to use and
apply any of the Secured Obligations of such Debtor as a credit on account of
the purchase price for any Collateral payable by the Secured Party at such sale.
To the extent provided under the UCC or other applicable law, each purchaser at
any such sale shall hold the property sold absolutely free from any claim or
right on the part of any Debtor and Debtor hereby waives (to the extent
permitted by applicable law) all rights of redemption stay and/or appraisal
which it now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted until payment in full of the
Obligations. Each Debtor agrees that, to the extent notice of sale shall be
required by law, at least ten (10) days notice to such Debtor of the time and
place of any public or private sale shall constitute reasonable notification.
The Secured Party shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Secured Party may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor and by notice to the Company, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. Each
Debtor hereby waives any claims against the Secured Party arising by reason of
the fact that the price at which any Collateral may have been sold at such a
private sale was less than the price which might have been obtained at a public
sale, even if the Secured Party accepts the first offer received and does not
offer such Collateral to more than one offeree. If the proceeds of any sale or
other disposition of the Collateral of any Debtor are insufficient to pay all
the Secured Obligations of such Debtor, such Debtor shall be liable for the
deficiency and the fees of any attorneys employed by the Secured Party to
collect such deficiency. Each Debtor further agrees that a breach of any of the
covenants contained in this Section will cause irreparable injury to the Secured
Party, that the Secured Party has no adequate remedy at law in respect of such
breach and, as a consequence, that each and every covenant contained in this
Section shall be specifically enforceable against such Debtor, and such Debtor
hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants except for a defense that no default has
occurred giving rise to the Secured Obligations becoming due and payable prior
to their stated maturities. Nothing in this Section shall in any way alter the
rights of the Secured Party hereunder.
(c) The Secured Party may sell the Collateral following the occurrence
and during the continuance of an Event of Default without giving any warranties
as to the Collateral. The Secured Party may specifically disclaim or modify, in
its sole discretion, any warranties of title or the like as to any Collateral.
This procedure will not be considered to adversely affect the commercial
reasonableness of any sale of any of the Collateral. The Secured Party may
comply with any applicable state or federal law requirements in connection with
a disposition of the Collateral and compliance will not be considered to
adversely affect the commercial reasonableness of any sale of the Collateral.
Leasing and licensing of Collateral by the Secured Party to third Persons are
types of sales permitted hereunder.
(d) If the Secured Party sells any of the Collateral of any Debtor on
credit, the Secured Obligations of such Debtor will be credited only with
payments actually made by the purchaser and received by the Secured Party and
applied to the indebtedness of the purchaser. In the event the purchaser fails
to pay for the Collateral, the Secured Party may resell the Collateral.
25
(e) The Secured Party shall have no obligation to marshal any of the
Collateral.
(f) All amounts and proceeds (including checks and other instruments)
received by any Debtor in respect of amounts due to such Debtor in respect of
the Collateral or any portion thereof following the occurrence and during the
continuance of an Event of Default shall be received in trust for the benefit of
the Secured Party hereunder, shall be segregated from other funds of such Debtor
and shall be forthwith paid over or delivered (subject to the Intercreditor
Agreement to the extent then in effect) to the Secured Party in the same form as
so received (with any necessary endorsement) to be held as cash Collateral and
applied as provided by Section 7.6 following the occurrence and during the
continuance of an Event of Default. Upon demand from the Secured Party following
the occurrence and during the continuance of an Event of Default, Debtors shall
not adjust, settle or compromise the amount or payment of any such amount or
release wholly or partly any obligor with respect thereto or allow any credit or
discount thereon.
7.2 LOUISIANA REMEDIES. The Secured Party, instead of exercising the power
of sale herein conferred upon it, may, following the occurrence and during the
continuance of an Event of Default, proceed by a suit or suits to foreclose the
security interest and sell the Collateral or any portion thereof under a
judgment of a court or courts of competent jurisdiction. For purposes of
Louisiana executory process procedures, each Debtor acknowledges its Secured
Obligations and does hereby confess judgment in favor of the Secured Party for
the full amount of such Secured Obligations. Each Debtor agrees that upon the
occurrence of an Event of Default the Secured Party may cause the Collateral to
be seized and sold under executory or ordinary process, at the Secured Party's
sole option, without appraisement, appraisement being hereby expressly waived,
as an entirety or in parcels as the Secured Party may determine, to the highest
bidder for cash, and otherwise exercise the rights, powers and remedies afforded
herein and under applicable Louisiana law. Any and all declarations of fact made
by authentic act before a Notary Public in the presence of two witnesses by a
person declaring that such facts lie within his knowledge shall constitute
authentic evidence of such facts for the purpose of executory process. Each
Debtor hereby waives in favor of the Secured Party: (a) the benefit of
appraisement as provided in Louisiana Code of Civil Procedure Articles 2332,
2336, 2723 and 2724, and all other laws conferring the same; (b) the demand and
three days delay accorded by Louisiana Code of Civil Procedure Articles 2639 and
2721; (c) the notice of seizure required by Louisiana Code of Civil Procedure
Articles 2293 and 2721; (d) the three days delay provided by Louisiana Code of
Civil Procedure Articles 2331 and 2722; and (e) the benefit of the other
provisions of Louisiana Code of Civil Procedure Articles 2331, 2722 and 2723,
not specifically mentioned above. In the event the Collateral or any part
thereof is seized as an incident to an action for the recognition or enforcement
of this Agreement by executory process, ordinary process, sequestration, writ of
fieri facias, or otherwise, each Debtor and the Secured Party agree that the
court issuing any such order shall, if petitioned for by the Secured Party,
direct the applicable sheriff to appoint as a keeper of the Collateral, the
Secured Party or any agent designated by the Secured Party or any person named
by the Secured Party at the time such seizure is effected. This designation is
pursuant to Louisiana Revised Statutes 9:5136-9:5140.2 and the Secured Party
shall be entitled to all the rights and benefits afforded thereunder as the same
may be amended. It is hereby agreed that the keeper shall be entitled to receive
as compensation, in excess of its costs and expenses incurred in the
administration or preservation of the Collateral, an amount equal to $250.00 per
day payable monthly on the first day of each month and shall be included as
Secured Obligations secured by this Agreement. The designation of keeper made
herein shall not be deemed to require the Secured Party to provoke the
appointment of such a keeper. In addition to the normal recourse provisions
noted above, the Secured Party will have to comply with the provisions of the
Louisiana Administrative Code Title 42 Section 2501 et. seq. relating to holders
of gaming licenses. These provisions provide for emergency situations, such as
foreclosures by security interest holders. Louisiana Administrative Code Title
42 Section 2501 et. seq. delineates the process for obtaining emergency
permission to take over and defines how to proceed with the Louisiana
26
Gaming Control Board. Additionally, in accordance with Louisiana Administrative
Code Title 42 Section 2501 et. seq., any transfer of interest, including
security interest, is subject to prior approval by the Louisiana State Racing
Commission and the Louisiana Gaming Control Board.
7.3 APPLICATION OF PROCEEDS. Except as expressly provided elsewhere in
this Agreement, all Proceeds received by the Secured Party in respect of any
sale, any collection from, or other realization upon all or any part of the
Collateral of any Debtor shall be applied in full or in part by the Secured
Party against the Secured Obligations of such Debtor in the order specified in
Section 6.10 of the Indenture.
7.4 INVESTMENT RELATED PROPERTY. Each Debtor recognizes that, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws, the Secured Party may be compelled, with respect to any sale of
all or any part of the Investment Related Property conducted without prior
registration or qualification of such Investment Related Property under the
Securities Act and/or such state securities laws, to limit purchasers to those
who will agree, among other things, to acquire the Investment Related Property
for their own account, for investment and not with a view to the distribution or
resale thereof. Each Debtor acknowledges that any such private sale may be at
prices and on terms less favorable than those obtainable through a public sale
without such restrictions (including a public offering made pursuant to a
registration statement under the Securities Act) and, notwithstanding such
circumstances, each Debtor agrees that any such private sale shall be deemed to
have been made in a commercially reasonable manner and that the Secured Party
shall have no obligation to engage in public sales and no obligation to delay
the sale of any Investment Related Property for the period of time necessary to
permit the issuer thereof to register it for a form of public sale requiring
registration under the Securities Act or under applicable state securities laws,
even if such issuer would, or should, agree to so register it. If the Secured
Party determines to exercise its right to sell any or all of the Investment
Related Property, upon written request, each Debtor shall and shall cause each
issuer of any Pledged Stock to be sold hereunder, each partnership and each
limited liability company from time to time to furnish to the Secured Party all
such information as the Secured Party may reasonably request in order to
determine the number and nature of interest, shares or other instruments
included in the Investment Related Property which may be sold by the Secured
Party in exempt transactions under the Securities Act and the rules and
regulations of the Securities and Exchange Commission thereunder, as the same
are from time to time in effect. Notwithstanding any other provision of this
Agreement to the contrary, with respect to any deposit accounts that constitute
part of the Collateral, the Secured Party may only exercise remedies with
respect to such deposit accounts at the earliest of (i) the date that an Event
of Default shall be continuing for 180 consecutive days after the delivery of
written notice to the Company of such Event of Default under the Indenture, (ii)
the date on which a declaration of acceleration has been made under Section 6.2
of the Indenture or an Event of Default under Section 6.1(a)(xii) or (xiii) of
the Indenture has occurred, and (iii) any other date to the extent permitted
under the Intercreditor Agreement at any time the Intercreditor Agreement is in
effect.
7.5 INTELLECTUAL PROPERTY.
(a) Anything contained herein to the contrary notwithstanding, upon
the occurrence and during the continuation of an Event of Default:
(i) the Secured Party shall have the right (but not the
obligation) to bring suit or otherwise commence any action or
proceeding in the name of any Debtor, the Secured Party or
otherwise, in the Secured Party's sole discretion, to enforce
any Intellectual Property, in which event such Debtor shall,
at the request of the Secured Party, do any and all
reasonable, lawful acts and execute any and all documents
reasonably
27
required by the Secured Party in aid of such enforcement and
such Debtor shall promptly, upon demand, reimburse and
indemnify the Secured Party as provided in Section 10 hereof
in connection with the exercise of its rights under this
Section, and, to the extent that the Secured Party shall elect
not to bring suit to enforce any Intellectual Property as
provided in this Section, each Debtor agrees to use all
reasonable measures, whether by action, suit, proceeding or
otherwise, to prevent the commercially material infringement
of any of the material Intellectual Property by others and for
that purpose agrees to diligently maintain any action, suit or
proceeding against any Person so infringing as shall be
reasonably necessary to prevent such infringement;
(ii) upon reasonable written demand from the Secured Party, each
Debtor shall grant, assign, convey or otherwise transfer to
the Secured Party all of such Debtor's right, title and
interest in and to the Intellectual Property and shall execute
and deliver to the Secured Party such documents as are
necessary or appropriate to carry out the intent and purposes
of this Agreement;
(iii) each Debtor agrees that such an assignment and/or recording
shall be applied to reduce the Secured Obligations of such
Debtor outstanding only to the extent that the Secured Party
receives cash proceeds in respect of the sale of, or other
realization upon, the Intellectual Property of such Debtor;
(iv) within five (5) Business Days after written notice from the
Secured Party, each Debtor shall make available to the Secured
Party, to the extent within such Debtor's power and authority,
such personnel in such Debtor's employ on the date of such
Event of Default as the Secured Party may reasonably
designate, by name, title or job responsibility, to permit
such Debtor to continue, directly or indirectly, to produce,
advertise and sell the products and services sold or delivered
by such Debtor under or in connection with the Intellectual
Property, such persons to be available to perform their prior
functions on the Secured Party's behalf and to be compensated
by the Secured Party at such Debtor's expense on a per diem,
pro-rata basis consistent with the salary and benefit
structure applicable to each as of the date of such Event of
Default; and
(v) the Secured Party shall have the right to notify, or require
each Debtor to notify, any obligors with respect to amounts
due or to become due to such Debtor in respect of the
Intellectual Property, of the existence of the security
interest created herein, to direct such obligors to make
payment of all such amounts directly to the Secured Party,
and, upon such notification and at the expense of such Debtor,
to enforce collection of any such amounts and to adjust,
settle or compromise the amount or payment thereof, in the
same manner and to the same extent as such Debtor might have
done.
28
(b) If (i) an Event of Default shall have occurred and, by reason of
cure, waiver, modification, amendment or otherwise, no longer be continuing,
(ii) no other Event of Default shall have occurred and be continuing, (iii) an
assignment or other transfer to the Secured Party of any rights, title and
interests in and to the Intellectual Property shall have been previously made
and shall have become absolute and effective, and (iv) the Secured Obligations
shall not have become immediately due and payable, upon the written request of
any Debtor, the Secured Party shall promptly execute and deliver to such Debtor,
at such Debtor's sole cost and expense, such assignments or other transfer as
may be necessary to reassign to such Debtor any such rights, title and interests
as may have been assigned to the Secured Party as aforesaid, subject to any
disposition thereof that may have been made by the Secured Party; provided,
after giving effect to such reassignment, the Secured Party's security interest
granted pursuant hereto, as well as all other rights and remedies of the Secured
Party granted hereunder, shall continue to be in full force and effect; and
provided further, the rights, title and interests so reassigned shall be free
and clear of any Liens granted by or on behalf of the Secured Party.
(c) Solely for the purpose of enabling the Secured Party to exercise
rights and remedies under this Section 7 following the occurrence and during the
continuance of an Event of Default, each Debtor hereby grants to the Secured
Party, to the extent it has the right to do so, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation to such
Debtor), subject, in the case of Trademarks, to sufficient rights to quality
control and inspection in favor of such Debtor to avoid the risk of invalidation
of said Trademarks, to use, operate under, license, or sublicense any
Intellectual Property now owned or hereafter acquired by such Debtor, and
wherever the same may be located.
7.6 CASH PROCEEDS. Cash Proceeds shall, following the occurrence and
during the continuance of an Event of Default, be held by such Debtor in trust
for the Secured Party, segregated from other funds of such Debtor, and shall,
forthwith upon receipt by such Debtor, unless otherwise provided pursuant to
Section 4.4, be turned over to the Secured Party in the exact form received by
such Debtor (duly indorsed by such Debtor to the Secured Party, if required).
Any Cash Proceeds received by the Secured Party (whether from a Debtor or
otherwise), following the occurrence and during the continuance of an Event of
Default, shall be applied by the Secured Party in accordance with Section 7.3.
7.7 REGULATORY MATTERS. The Secured Party acknowledges and agrees that the
approval of the applicable Gaming Authorities of this Agreement shall not act or
be construed as the approval, either express or implied, for the Secured Party
to take any actions or steps provided for in this Agreement for which prior
approval of such Gaming Authority is required, without first obtaining such
prior and separate approval to the extent then required by applicable law.
8. CONTINUING SECURITY INTEREST; TRANSFER OF NOTES
This Agreement shall create a continuing security interest in the
Collateral and shall remain in full force and effect until the payment in full
of all Secured Obligations, be binding upon each Debtor, its successors and
assigns (except to the extent otherwise provided in the Indenture), and inure,
together with the rights and remedies of the Secured Party hereunder, to the
benefit of the Secured Party and its successors, transferees and assigns.
Without limiting the generality of the foregoing, but subject to the terms of
the Indenture, any Holder may assign or otherwise transfer any Note held by it
to any other Person to the extent permitted under the Indenture, and such other
Person shall thereupon become vested with all the benefits in respect thereof
granted to the Holders. Upon the payment in full of all Secured Obligations, the
security interest granted hereby shall terminate hereunder and all rights to the
Collateral granted hereunder shall revert to Debtors. Upon any such termination
the Secured Party shall, at Debtors'
29
expense, execute and deliver to Debtors such documents as Debtors shall
reasonably request to evidence such termination.
9. STANDARD OF CARE; SECURED PARTY MAY PERFORM
The powers conferred on the Secured Party hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Secured Party shall have no duty as to
any Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral. The
Secured Party shall be deemed to have exercised reasonable care in the custody
and preservation of Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which the Secured Party accords its own
property. Neither the Secured Party nor any of its directors, officers,
employees or agents shall be liable for failure to demand, collect or realize
upon all or any part of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Debtor or otherwise. If any Debtor fails to perform any agreement
contained herein, the Secured Party may itself perform, or cause performance of,
such agreement, and the expenses of the Secured Party incurred in connection
therewith shall be payable by each Debtor under Section 11.2 hereof.
10. INDEMNITY
(a) Each Debtor agrees to defend (subject to Indemnitees' selection of
counsel), indemnify, pay and hold harmless each Indemnitee, from and against any
and all claims, losses and liabilities in any way relating to, growing out of or
resulting from this Agreement and the transactions contemplated hereby
(including without limitation enforcement of this Agreement), except to the
extent such claims, losses or liabilities result from such Indemnitee's gross
negligence or willful misconduct as finally and unappeallably determined by a
court of competent jurisdiction, and to pay to the Secured Party promptly
following written demand the amount of any and all reasonable costs and
reasonable expenses, including the reasonable fees and expenses of its counsel
and of any experts and agents in accordance with the terms and conditions of the
Indenture.
(b) The obligations of each Debtor in this Section 10 shall survive
the termination of this Agreement and the discharge of such Debtor's other
obligations under this Agreement and the Indenture.
11. MISCELLANEOUS
11.1 NOTICES. Unless otherwise specifically provided herein, any notice or
other communication herein required or permitted to be given to a Debtor or the
Secured Party, shall be sent to such Person's address and in the manner as set
forth in the Indenture.
11.2 EXPENSES. Debtors agree to pay promptly all the actual and reasonable
costs and expenses of preparation of the Indenture Documents and any consents,
amendments, waivers or other modifications thereto; all the costs of furnishing
all opinions by counsel for the Debtors; the reasonable fees, expenses and
disbursements of counsel to Secured Party (in each case including allocated
costs of internal counsel) in connection with the negotiation, preparation,
execution and administration of the Indenture Documents and any consents,
amendments, waivers or other modifications thereto and any other documents or
matters requested by Debtors; all the actual costs and reasonable expenses of
creating and perfecting Liens in favor of Secured Party, for the benefit of the
Holders, including filing and
30
recording fees, expenses and taxes, stamp or documentary taxes, search fees,
title insurance premiums and reasonable fees, expenses and disbursements of
counsel to Secured Party and of counsel providing any opinions that Secured
Party may reasonably request in respect of the Collateral or the Liens created
pursuant to the Indenture Documents; all the actual costs and reasonable fees,
expenses and disbursements of any auditors, accountants, consultants or
appraisers; all the actual costs and reasonable expenses (including the
reasonable fees, expenses and disbursements of any appraisers, consultants,
advisors and agents employed or retained by Secured Party and its counsel) in
connection with the custody or preservation of any of the Collateral; and after
the occurrence of an Event of Default, all costs and expenses, including
reasonable attorneys' fees (including allocated costs of internal counsel),
keeper's fees and costs of settlement, incurred by Secured Party in enforcing
any Secured Obligations of or in collecting any payments due from any Debtor
hereunder or under the other Indenture Documents by reason of an Event of
Default (including in connection with the sale of, collection from, or other
realization upon any of the Collateral) or in connection with any refinancing or
restructuring of the credit arrangements provided hereunder in the nature of a
"work-out" or pursuant to any insolvency or bankruptcy cases or proceedings.
11.3 SUBROGATION. Each Debtor further agrees to waive any and all rights
of subrogation it may have against any other Debtor upon the sale or disposition
of all or any portion of the Collateral by Secured Party pursuant to the terms
of this Agreement until all of the Secured Obligations have been paid in full,
and following the payment in full of all Secured Obligations, the Secured Party
agrees that, at such Debtor's reasonable request, the Secured Party will execute
and deliver to such Debtor appropriate documents necessary to evidence the
transfer by subrogation to such Debtor of an interest in the Secured Obligations
resulting from such payment by such Debtor.
11.4 DEBTOR WAIVERS. Each Debtor hereby waives to the fullest extent
permitted by applicable law, for the benefit of Secured Party: (i) any right to
require Secured Party, as a condition of payment or performance by such Debtor,
to (A) proceed against any other Debtor or any other Person, (B) proceed against
or exhaust any other security held from any other Debtor or any other Person,
(C) proceed against or have resort to any balance of any deposit account or
credit on the books of Secured Party attributable to any other Debtor or any
other Person, or (D) pursue any other remedy in the power of Secured Party
whatsoever, (ii) any defense arising by reason of the incapacity, lack of
authority or any disability or other defense of any other Debtor including,
without limitation, any defense based on or arising out of the lack of validity
or the unenforceability of any of the Indenture Documents or any agreement or
instrument relating thereto or by reason of the cessation of the liability of
any other Debtor from any cause other than indefeasible payment in full of the
Secured Obligations; (iii) any defense based upon any statute or rule of law
which provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than that of the principal; (iv) any
defense based upon Secured Party's errors or omissions in the administration of
the Indenture Documents, except as a result of the gross negligence, bad faith
or willful misconduct of the Secured Party, (v) (A) any principles or provisions
of law, statutory or otherwise, which are or might be in conflict with the terms
of this Agreement and any legal or equitable discharge of such Debtor's
obligations hereunder, (B) the benefit of any statute of limitations affecting
such Debtor's liability hereunder or the enforcement hereof, (C) any rights to
set-offs, recoupments and counterclaims, and (D) promptness, diligence and any
requirement that Secured Party protect, secure, perfect or insure any other
security interest or lien or any property subject thereto; (vi) notices,
demands, presentments, protests, notices of dishonor and notices of any action
or inaction, notices of default under the Indenture Documents or any agreement
or instrument related thereto, notices of any renewal, extension or modification
of the Indenture Documents or any agreement related thereto, notices of any
extension of credit to any other Debtor and notices of any of the matters
referred to in this paragraph and any right to consent to any thereof, and (vii)
any defenses or benefits that
31
may be derived from or afforded by law which limit the liability of or exonerate
guarantors or sureties, or which may conflict with the terms of this Agreement.
11.5 AMENDMENTS AND WAIVERS
(a) Secured Party's Consent. Subject to Section 11.5(b) and 11.5(c)
and the terms of the Indenture, no amendment, modification, termination or
waiver of any provision of this Agreement, or consent to any departure by any
Debtor therefrom, shall in any event be effective without the written
concurrence of the Secured Party and, in the case of any such amendment or
modification, by each of the Debtors; provided, that this Agreement may be
modified by the execution of a Supplement to Security Agreement by (i)
additional Guarantors and Issuers (as defined in the Indenture) to become
parties hereto as Debtors in accordance with Section 5.2 this Agreement and (ii)
existing Debtors pursuant to Section 4.1(b)(iii), 4.4(b)(i), 4.5(b)(i), 4.6(b)
or 4.7(b), and each other Debtor hereby waives any requirement of notice of or
consent to any such amendment. Any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it was
given.
(b) Other Consents. No amendment, modification, termination or waiver
of any provision of this Agreement, or consent to any departure by any Debtor
therefrom, shall amend, modify, terminate or waive any provision herein as the
same applies to Secured Party without the consent of the Secured Party except as
provided in accordance with the Indenture.
(c) Waiver. Any waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given. No notice
to or demand on any Debtor in any case shall entitle any Debtor to any other or
further notice or demand in similar or other circumstances.
11.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns including all persons
who become bound as debtor to this Agreement. No Debtor shall, except as
permitted under the Indenture, assign any right, duty or obligation hereunder.
This Agreement is for the benefit of the Secured Party and for such other Person
or Persons as may from time to time become or be Holders, and this Agreement
shall be transferrable with the same force and effect and to the same extent as
the Secured Obligations may be transferrable, and the Collateral shall secure
any and all of the then existing and thereafter arising Secured Obligations in
favor of such a transferee that has effectuated such transfer in accordance with
the terms of the Indenture, with retroactive rank.
11.7 INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or would otherwise be within the limitations of, another covenant shall not
avoid the occurrence of a Default or an Event of Default if such action is taken
or condition exists.
11.8 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties and agreements made herein shall survive the
execution and delivery hereof. Notwithstanding anything herein or implied by law
to the contrary, the agreements of each Debtor set forth in Sections 10 and 11.2
shall survive the payment of the Secured Obligations and the termination hereof.
11.9 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of
the Secured Party in the exercise of any power, right or privilege hereunder or
under any other Indenture Document shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other power, right or privilege. All
rights, powers and remedies existing
32
under this Agreement and the other Indenture Documents are cumulative, and not
exclusive of, any rights or remedies otherwise available. Any forbearance or
failure to exercise, and any delay in exercising, any right, power or remedy
hereunder shall not impair any such right, power or remedy or be construed to be
a waiver thereof, nor shall it preclude the further exercise of any such right,
power or remedy. Without limiting the generality of the foregoing, each Debtor
waives any right such Debtor may have to require the Secured Party and the
Holders to pursue any third Person for any of the Secured Obligations.
11.10 SEVERABILITY. In case any provision in or obligation hereunder shall
be invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
11.11 HEADINGS. Section headings herein are included herein for
convenience of reference only and shall not constitute a part hereof for any
other purpose or be given any substantive effect.
11.12 APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION
SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW), EXCEPT TO
THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER,
OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY
THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
11.13 SUBMISSION TO JURISDICTION. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST
ANY DEBTOR ARISING OUT OF OR RELATING HERETO OR ANY OTHER INDENTURE DOCUMENT, OR
ANY OF THE OBLIGATIONS, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING
AND DELIVERING THIS AGREEMENT, EACH DEBTOR, FOR ITSELF AND IN CONNECTION WITH
ITS PROPERTIES, IRREVOCABLY SUBMITS TO AND ACCEPTS GENERALLY AND UNCONDITIONALLY
THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS; AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING
IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO THE APPLICABLE DEBTOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH
SECTION 11.1; AGREES THAT SERVICE AS PROVIDED ABOVE IS SUFFICIENT TO CONFER
PERSONAL JURISDICTION OVER THE APPLICABLE DEBTOR IN ANY SUCH PROCEEDING IN ANY
SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT; AND AGREES SECURED PARTY RETAINS THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY DEBTOR IN THE
COURTS OF ANY OTHER JURISDICTION HAVING JURISDICTION OVER SUCH DEBTOR.
11.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
11.15 GAMING LAWS. The Secured Party acknowledges, understands and agrees
that the Gaming Laws may impose certain licensing or transaction approval
requirements prior to the exercise of
33
the rights and remedies granted to it under this Agreement with respect to the
Collateral subject to the Gaming Laws.
(a) If any consent under the Gaming Laws is required in connection
with the taking of any of the actions which may be taken by the Secured Party in
the exercise of its rights hereunder, then each Debtor agrees to use its
commercially reasonable best efforts to secure such consent and to cooperate
with the Secured Party in obtaining any such consent. Upon the occurrence and
during the continuation of any Event of Default, each Debtor shall promptly
execute and/or cause the execution of all applications, certificates,
instruments, and other documents and papers that the Secured Party may be
required to file in order to obtain any necessary approvals under the Gaming
Laws, and if such Debtor fails or refuses to execute such documents, the Secured
Party or the court with jurisdiction may execute such documents on behalf of
such Debtor.
(b) Notwithstanding any other provision of this Agreement to the
contrary other than as set forth in Section 7.6, nothing in this Agreement shall
(i) effect any transfer of any ownership interest in a Debtor or (ii) effect any
transfer, sale, purchase, lease or hypothecation of, or any borrowing or loaning
of money against, or any establishment of any voting trust agreement or other
similar agreement with respect to any certificate of suitability or any owner's
license heretofore issued to any person, including any Debtor, under any of the
Gaming Laws.
(c) Debtors and Secured Party each acknowledge that, to the extent
required under applicable law, the consummation of the transactions contemplated
hereby and the exercise of remedies hereunder are subject to the Louisiana horse
racing and off-track betting statutes, La. R.S. 4:141 et seq. and 4:211 et seq.,
the Video Draw Poker Devices Control Law, La. R.S. 27:301 et seq., the Louisiana
Pari-Mutuel Live Racing Facility Economic Redevelopment and Gaming Control Act
(Slots at the Track), La. R.S. 27:351 et seq., the Louisiana Gaming Control Law,
La. R.S. 27:1 et seq. and the regulations promulgated pursuant to such laws and
statutes, all as amended from time to time. Debtors and Secured Party each
further acknowledge that the Racing Licenses and the Gaming Licenses held by the
Company are not part of the Collateral of this Agreement and that, under the
above described legislation and rules promulgated thereunder, Secured Party may
be precluded from or otherwise limited in taking possession of or selling the
Collateral of this Agreement under the Defaults and Remedies provisions of this
Agreement. Debtors and Secured Party each also acknowledge that due to various
legal restrictions, including, without limitation, licensing of operators of
pari-mutuel wagering facilities and prior approval of the sale or disposition of
assets of a licensed pari-mutuel wagering operation, the sale of Collateral may
be denied by Racing Authorities or Gaming Authorities or delayed pending Racing
Authority or Gaming Authority action or approval.
11.16 EFFECTIVENESS. Agreement shall become effective upon the execution
of a counterpart hereof by each of the parties hereto and receipt by the Secured
Party of written or telephonic notification of such execution and authorization
of delivery thereof.
11.17 ENTIRE AGREEMENT. This Agreement, the other Indenture Documents and
the Intercreditor Agreement embody the entire agreement and understanding
between the Debtors and the Secured Party and supersede all prior agreements and
understandings between such parties relating to the subject matter hereof and
thereof. Accordingly, the Indenture Documents and the Intercreditor Agreement
may not be contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties. There are no unwritten oral agreements between the
parties.
11.18 THE MORTGAGES. In the event that any of the Collateral hereunder is
also subject to a valid and enforceable Lien under the terms of any Mortgage and
the terms of such Mortgage are
34
inconsistent with the terms of this Agreement, then with respect to such
Collateral, the terms of such Mortgage shall be controlling in the case of
fixtures and leases, letting and licenses of, and contracts and agreements
relating to real property or leases of real property and vessels registered with
the U.S. Coast Guard, and the terms of this Agreement shall be controlling in
the case of all other Collateral.
11.19 INDENTURE CONTROLS. All terms, covenants, conditions, provisions and
requirements of the Indenture are incorporated by reference in this Agreement.
In the event of any conflict or inconsistency between the provisions of this
Agreement and those of the Indenture, including, without limitation, any
conflicts or inconsistencies in any definitions herein or therein, the
provisions or definitions of the Indenture shall govern.
11.20 TRUST INDENTURE ACT CONTROLS. If any provision of this Agreement
limits, qualifies or conflicts with the duties imposed by the Trust Indenture
Act of 1939 as in effect on the date of this Agreement, the imposed duties shall
control.
35
IN WITNESS WHEREOF, each Debtor and the Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
DEBTORS:
DIAMOND JO, LLC
By: /s/M. BRENT STEVENS
----------------------------
Name: M. Brent Stevens
Title: Chief Executive Officer
THE OLD EVANGELINE DOWNS CAPITAL CORP.
By: /s/M. BRENT STEVENS
----------------------------
Name: M. Brent Stevens
Title: Chief Executive Officer
OED ACQUISITION, LLC
By: /s/M. BRENT STEVENS
----------------------------
Name: M. Brent Stevens
Title: Chief Executive Officer
PENINSULA GAMING CORPORATION
By: /s/M. BRENT STEVENS
----------------------------
Name: M. Brent Stevens
Title: Chief Executive Officer
THE OLD EVANGELINE DOWNS, L.L.C.
By: /s/M. BRENT STEVENS
----------------------------
Name: M. Brent Stevens
Title: Chief Executive Officer
SECURED PARTY:
U.S. BANK NATIONAL ASSOCIATION, as
Trustee, as Secured Party
By: /s/FRANK P. LESLIE, II
-------------------------------
Name: Frank P. Leslie, II
Title: Vice President
EXHIBIT A
TO PLEDGE AND SECURITY AGREEMENT
FORM OF SUPPLEMENT TO SECURITY AGREEMENT
This SUPPLEMENT TO SECURITY AGREEMENT, dated [________ __, 20__], is
delivered by the undersigned in favor of U.S. Bank National Association, as
Trustee (together with any successor Trustee pursuant to the terms of the
Indenture, the "SECURED PARTY"), acting in the capacity of collateral agent for
the benefit of itself and the Holders, pursuant to the Pledge and Security
Agreement, dated as of April 16, 2004 (as it may be from time to time amended,
restated, modified or supplemented, the "SECURITY AGREEMENT"), among Diamond Jo,
LLC, a Delaware limited liability company ("DJL"), The Old Evangeline Downs
Capital Corp., a Delaware corporation ("CAPITAL" and, together with DJL, the
"ISSUERS"), OED Acquisition, LLC, a Delaware limited liability company ("OEDA"),
Peninsula Gaming Corporation, a Delaware corporation ("PG CORP."), The Old
Evangeline Downs, L.L.C., a Louisiana limited liability company ("OED"), and
each additional Guarantor (as defined in the Indenture referred to therein) and
Issuer (as defined in the Indenture) from time to time party thereto pursuant to
Section 5.2 thereof, and the Secured Party. Capitalized terms used herein not
otherwise defined herein shall have the meanings ascribed thereto in the
Security Agreement.
The undersigned [hereby confirms, as of the date first written above, the
grant to the Secured Party set forth in the Security Agreement](1) [does hereby
grant to the Secured Party a security interest in, all of the undersigned's
right, title and interest in and to all Collateral to secure the Secured
Obligations of the undersigned, in each case whether now or hereafter existing
or in which the undersigned now has or hereafter acquires an interest and
wherever the same may be located](2). The undersigned hereby further agrees, as
of the date first written above, to [continue to] be bound by all of the terms
and provisions of the Security Agreement, as supplemented by this Supplement to
Security Agreement. The undersigned hereby makes all of the representations and
warranties set forth in the Security Agreement, and hereby represents and
warrants that the attached supplements to Schedules accurately and completely
set forth all [additional] information required pursuant to the Security
Agreement and hereby agrees that such Supplements to Schedules shall constitute
part of the schedules to the Security Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Supplement to Security
Agreement to be duly executed and delivered by its duly authorized officer.
[NAME OF DEBTOR]
By:_____________________________
Name:
Title:
ACCEPTED AND AGREED TO BY:
U.S. BANK NATIONAL ASSOCIATION,
as Trustee, as Secured Party
By:_____________________________
Name:
Title:
- -----------
(1) Use bracketed language for existing Debtor.
(2) Use bracketed language for new Debtor.
A-1
EXHIBIT B
TO PLEDGE AND SECURITY AGREEMENT
FORM OF CONTROL AGREEMENT (SECURITIES ACCOUNTS)
[ATTACH SECURITIES CONTROL AGREEMENT]
B-1
EXHIBIT C
TO PLEDGE AND SECURITY AGREEMENT
FORM OF CONTROL AGREEMENT (DEPOSIT ACCOUNTS)
[ATTACH DEPOSIT ACCOUNT CONTROL AGREEMENT]
C-1