EXHIBIT 10.20
GUARANTOR SECURITY AGREEMENT
This GUARANTOR SECURITY AGREEMENT (this "Agreement") is as of June 16,
2004, by each of the parties listed on the signature page hereof, and those
additional entities that hereafter become parties hereto by executing the form
of Supplement attached hereto as Annex 1, as Pledgors (each a "Pledgor", and
collectively, the "Pledgors"), and Wells Fargo Foothill, Inc., a California
corporation, as agent for the Lenders (as defined in the hereinafter defined
Loan Agreement) ("Agent").
W I T N E S S E T H:
WHEREAS, The Old Evangeline Downs, L.L.C., a Louisiana limited liability
company, and Diamond Jo, LLC (formerly known as Peninsula Gaming Company, LLC),
a Delaware limited liability company, as borrowers (each, a "Borrower" and
collectively, the "Borrowers"), Agent, and the Lenders are parties to that
certain Loan and Security Agreement dated as of even date herewith (as the same
may be amended, restated, supplemented or otherwise modified from time to time,
the "Loan Agreement"; capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to such terms in the Loan Agreement), pursuant
to which the Lender Group has agreed to extend credit to the Borrowers from time
to time pursuant to the terms and conditions thereof; and
WHEREAS, Pledgors are Affiliates of the Borrowers, and each Pledgor has
determined that it will realize substantial direct and indirect benefits as a
result of the extension of credit to the Borrowers pursuant to the Loan
Agreement, and such Pledgor's execution, delivery and performance of this
Agreement are within such Pledgor's corporate or other purposes and are in the
best interests of such Pledgor; and
WHEREAS, it is a condition precedent to the execution and delivery of the
Loan Agreement by the Lender Group and the extension of credit to the Borrowers
thereunder that each Pledgor execute and deliver this Agreement to Agent and
grant a security interest to Agent, for the benefit of the Lender Group, in
order to ensure and secure the prompt performance of all covenants, agreements
and liabilities of the Borrowers and the Guarantors (each, a "Loan Party", and
collectively, the "Loan Parties") under the Loan Documents and the prompt
repayment of any and all now existing or hereafter arising Obligations and other
obligations of the Loan Parties under the Loan Documents (including, without
limitation, any interest, fees or other charges in respect of the Loan Agreement
and the other Loan Documents that would accrue but for the filing of an
Insolvency Proceeding with respect to any Borrower, whether or not such claim is
allowed in such Insolvency Proceeding) (other than the FF&E Obligations);
NOW, THEREFORE, for and in consideration of the recitals made above and
other good and valuable consideration, the receipt, sufficiency and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:
1. Defined Terms. As used in this Agreement, "Books" means all of
Pledgors' now owned or hereafter acquired books and records (including all of
its Records indicating, summarizing, or evidencing its assets (including the
Collateral) or liabilities, all of each
Pledgor's Records relating to its or their business operations or financial
condition, and all of its or their goods or General Intangibles related to such
information).
2. Grant of Security. Each Pledgor hereby unconditionally grants, assigns
and pledges to Agent, for the benefit of the Lender Group, a continuing first
priority security interest in and security title to (together with a right of
setoff) all personal property of such Pledgor (hereinafter referred to as the
"Security Interest"), including, without limitation, all of such Pledgor's
right, title and interest in and to each of the following, whether now owned or
hereafter acquired (collectively, the "Collateral"):
(a) all of its Accounts;
(b) all of its Books;
(c) all of its commercial tort claims described on Schedule 1;
(d) all of its deposit accounts, including all DDAs;
(e) all of its Equipment;
(f) all of its General Intangibles;
(g) all of its Inventory;
(h) all of its Investment Property;
(i) all of its judgments;
(j) all of its Negotiable Collateral;
(k) all of such Pledgor's money or other assets that now or
hereafter come into the possession, custody, or control of Agent or any other
member of the Lender Group; and
(l) all of the proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance covering
any or all of the foregoing, and any and all Accounts, Books, Equipment, General
Intangibles, Inventory, Investment Property, Negotiable Collateral, Real
Property, money, deposit accounts, or other tangible or intangible property
resulting from the sale, exchange, collection, or other disposition of any of
the foregoing, or any portion thereof or interest therein, and the proceeds
thereof.
Notwithstanding the foregoing, "Collateral" shall not include any of the
Excluded Assets.
This Agreement and the Security Interest created hereby secure the full
and prompt payment, performance and satisfaction of (a) all covenants,
agreements and liabilities of the Borrowers under the Loan Documents and all now
existing or hereafter arising Obligations (including, without limitation, any
interest, fees and other charges in respect of the Loan Agreement and the other
Loan Documents that would accrue but for the filing of an Insolvency Proceeding
with respect to any Borrower, regardless of whether such claim is allowed in
such
2
Insolvency Proceeding but excluding the FF&E Obligations), and (b) the
obligations of each Guarantor arising from the Loan Documents to which such
Guarantor is a party, whether direct or indirect, absolute or contingent, now or
hereafter existing, joint or several, due or to become due, primary or
secondary, liquidated or unliquidated, or secured or unsecured, and however
acquired by Agent or any other member of the Lender Group, together with all
other now existing or hereafter arising Guaranteed Obligations (as that term is
defined in the Guaranties) (all of the foregoing now existing or hereafter
arising obligations being referred to, collectively, as the "Secured
Obligations"). Agent's Liens in and to the Collateral shall attach to all
Collateral without further act on the part of Agent or Pledgors.
3. Uniform Commercial Code Financing Statements; Further Assurances.
(a) Each Pledgor authorizes Agent to file, transmit, or communicate,
as applicable, Uniform Commercial Code financing statements, original financing
statements in-lieu of continuation statements and amendments describing the
Collateral as "all personal property of debtor" or "all assets of debtor" or
words of similar effect in order to perfect Agent's Security Interest in the
Collateral without such Pledgor's signature, to the extent permitted by
applicable law; provided, however, that Agent shall, in each case, clearly
identify Excluded Assets as excepted items, as applicable.
(b) At any time upon the request of Agent, Pledgors shall execute
and deliver, or cause other Persons (including, without limitation, those in
possession of any Collateral) to execute and deliver, all further instruments
and documents, and take all further action, (i) to perfect and continue
perfection of Agent's Security Interest in the Collateral (whether now owned or
hereafter arising or acquired or tangible or intangible), (ii) to create,
perfect and insure Liens in favor of Agent in any Real Property acquired after
the Closing Date, (iii) in order to consummate fully all of the transactions
contemplated hereby and under the other Loan Documents and (iv) to enable Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, each Pledgor
shall:
(i) execute and deliver, or cause other Persons (including,
without limitation, those in possession of any Collateral) to execute and
deliver, any and all financing statements, original financing statements in lieu
of continuation statements, fixture filings, security agreements, pledges, real
property security instruments, assignments, Collateral Access Agreements,
instruments, powers of attorney, endorsements of certificates of title, and all
other documents (collectively, the "Additional Documents") that Agent may
request in its Permitted Discretion, in form and substance reasonably
satisfactory to Agent;
(ii) at any reasonable time, upon request by Agent, exhibit
the Collateral for, and allow inspection of the Collateral by, Agent, or persons
designated by Agent; and
(iii) at Agent's reasonable request, appear in and defend any
action or proceeding that may affect Agent's security interest in all or any
part of the Collateral.
3
(c) To the maximum extent permitted by applicable law, each Pledgor
authorizes Agent to execute any such Additional Documents in the applicable
Pledgor's name and authorizes Agent to file such executed Additional Documents
in any appropriate filing office. Each Pledgor also hereby ratifies its
authorization for Agent to have filed in any jurisdiction any financing
statements or amendments thereto filed prior to the date hereof. No Pledgor
shall terminate, amend or file a correction statement with respect to any
Uniform Commercial Code financing statement filed pursuant to this Section 3
without Agent's prior written consent, which consent shall not be unreasonably
withheld.
(d) In addition, on such periodic basis as Agent shall require, each
Pledgor shall (i) provide Agent with a report of all new patentable,
copyrightable, or trademarkable materials acquired or generated by such Pledgor
during the prior period, (ii) cause all patents, copyrights, and trademarks
acquired or generated by such Pledgor that are not already the subject of a
registration with the appropriate filing office (or an application therefor
diligently prosecuted) to be registered with such appropriate filing office in a
manner sufficient to impart constructive notice of such Pledgor's ownership
thereof and (iii) cause to be prepared, executed, and delivered to Agent
supplemental schedules to the applicable Loan Documents to identify such
patents, copyrights, and trademarks as being subject to the security interests
created thereunder.
(e) In addition, if any Pledgor acquires any commercial tort claim
or judgment after the date hereof, such Pledgor shall promptly (but in any event
within 3 Business Days after such acquisition) deliver to Agent a written
description of such commercial tort claim or judgment, as applicable, and shall
deliver a written agreement, in form and substance satisfactory to Agent,
pursuant to which such Pledgor shall grant a perfected security interest in all
of its right, title and interest in and to such commercial tort claim or
judgment, as applicable, to Agent, as security for the Secured Obligations.
(f) In addition, each Pledgor shall furnish to Agent from time to
time statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as Agent may reasonably
request, all in reasonable detail.
4. Negotiable Collateral and Chattel Paper. Each Pledgor covenants and
agrees with Agent that from and after the Closing Date and until the date of
termination of this Agreement in accordance with Section 24:
(a) In the event that any Collateral, including proceeds, is
evidenced by or consists of Negotiable Collateral, such Pledgor shall
immediately notify Agent and, if and to the extent that perfection or priority
of Agent's security interest with respect to such Collateral is dependent on or
enhanced by possession, such Pledgor, immediately upon the request of Agent,
shall endorse and deliver physical possession of such Negotiable Collateral to
Agent;
(b) Upon request by Agent, such Pledgor shall take all steps
reasonably necessary to grant Agent control of all electronic Chattel Paper in
accordance with the Code and all "transferable records" as defined in each of
the Uniform Electronic Transactions Act and the Electronic Signatures in Global
and National Commerce Act; and
4
(c) In the event such Pledgor, with Agent's consent, retains
possession of any Chattel Paper or instruments otherwise required to be endorsed
and delivered to Agent pursuant to Section 4(a), all of such Chattel Paper and
instruments shall be marked with the following legend: "This writing and the
obligations evidenced or secured thereby are subject to the security interest of
Wells Fargo Foothill, Inc., as Agent".
5. Right to Inspect. Agent and each Lender (through any of their
respective officers, employees, or agents) shall have the right, from time to
time and during normal business hours hereafter, to inspect the Books and to
check, test, and appraise the Collateral in order to verify Pledgors' financial
condition or the amount, quality, value, condition of, or any other matter
relating to, the Collateral.
6. Control Agreements. Each Pledgor agrees that it will not transfer
assets out of any Securities Accounts other than as permitted under Section 7.19
of the Loan Agreement and, if to another securities intermediary, unless such
Pledgor, Agent, and the substitute securities intermediary have entered into a
Control Agreement. No arrangement contemplated hereby or by any Control
Agreement in respect of any Securities Accounts or other Investment Property
shall be modified by any Pledgor without the prior written consent of Agent.
Upon the occurrence and during the continuance of Event of Default, Agent may
notify any securities intermediary to liquidate the applicable Securities
Account or any related Investment Property maintained or held thereby and remit
the proceeds thereof to the Loan Account.
7. Representations and Warranties. Each Pledgor represents and warrants to
Agent and the other members of the Lender Group as follows:
(a) Such Pledgor is duly organized and existing and in good standing
under the laws of the jurisdiction of its organization and qualified to do
business in any state where the failure to be so qualified reasonably could be
expected to have a Material Adverse Change;
(b) The execution, delivery, and performance by such Pledgor of this
Agreement and the Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of such Pledgor;
(c) The execution, delivery, and performance by such Pledgor of this
Agreement and the Loan Documents to which it is a party do not and will not (i)
violate any provision of federal, state, or local law or regulation applicable
to any Pledgor, the Governing Documents of any Pledgor, or any order, judgment,
or decree of any court or other Governmental Authority binding on any Pledgor,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any material contractual obligation of
any Pledgor (including any of the Senior Note Documents or the OED Note
Documents), (iii) result in or require the creation or imposition of any Lien of
any nature whatsoever upon any properties or assets of any Pledgor, other than
Permitted Liens, or (iv) require any approval of any Pledgor's members or
shareholders or any approval or consent of any Person under any material
contractual obligation of any Pledgor;
(d) (i) The execution, delivery, and performance by each Pledgor of
this Agreement and the Loan Documents to which such Pledgor is a party and the
exercise by Agent
5
of any rights or remedies in respect of any Collateral (whether specifically
granted or created hereunder or created or provided for by applicable law) do
not and will not require any registration with, consent, or approval of, or
notice to, or other action with or by, any Governmental Authority or other
Person, other than (i) the filing of financing statements and the execution and
delivery by the applicable securities intermediary or bank of each Control
Agreement, (ii) any consent or approval that has been obtained and remains in
full force and effect and (iii) with respect to the exercise by Agent of any
rights or remedies in respect of any Collateral, to the extent authorizations,
consents or approvals are required by the applicable Gaming Authority or under
any intellectual property license, contract or agreement and to the extent any
actions are required to be performed by Agent;
(e) This Agreement and the other Loan Documents to which such
Pledgor is a party, and all other documents contemplated hereby and thereby,
when executed and delivered by such Pledgor, will be the legally valid and
binding obligations of such Pledgor, enforceable against such Pledgor, in
accordance with their respective terms, except as enforcement may be limited by
equitable principles or by bankruptcy, insolvency, reorganization, moratorium,
or similar laws relating to or limiting creditors' rights generally;
(f) Each Pledgor has good and indefeasible title to the Collateral,
free and clear of Liens except for Permitted Liens and except for defects in
title that do not interfere in any material respect with its ability to conduct
its business or to utilize such property for its intended purpose;
(g) Upon the filing of Uniform Commercial Code financing statements
in the jurisdictions set forth on Schedule 2 attached hereto, the Security
Interest in the Collateral granted hereunder shall constitute at all times a
valid first priority security interest, perfected with respect to all Collateral
for which the filing of the Uniform Commercial Code financing statements is a
valid method of perfection, and, assuming timely filing of continuation
statements, vested in Agent, in and upon the Collateral, free of any Liens
except for Permitted Liens;
(h) Each Pledgor's (i) legal name as set forth on the public records
of such Pledgor's jurisdiction of organization is as set forth on the signature
page hereof for such Pledgor, (ii) Organizational I.D. Number and FEIN are as
set forth on Schedule 3 for such Pledgor, and (iii) chief executive office and
all other locations of such Pledgor are as set forth on Schedule 4, and (iv) as
of the Closing Date, no Pledgor holds any commercial tort claim, except as
disclosed on Schedule 1;
(i) All written information supplied by any Pledgor 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;
(j) All of the Equipment (other than any that may have become
obsolete or worn-out) is used or held for use in Pledgors' business and is fit
for such purposes;
(k) The Inventory and Equipment are not stored with a bailee,
warehouseman, or similar party and are located only at the locations identified
on Schedule 4;
6
(l) Each Pledgor keeps correct and accurate records itemizing and
describing the type, quality, and quantity of its Inventory and the book value
thereof;
(m) Peninsula Gaming, LLC ("Parent") does not (i) own or lease,
directly or indirectly, any real, personal, intangible or tangible property of
any nature other than the Equity Interests of the Borrowers, (ii) conduct,
transact or otherwise engage in any business or operations other than those
incidental to the ownership of such Equity Interests of the Borrowers or (iii)
have any material obligations or liabilities other than under (1) the Loan
Documents and (2) the Senior Note Documents; and
(n) The Old Evangeline Downs Capital Corp. ("OED Capital") does not
(i) own or lease, directly or indirectly, any real, personal, intangible or
tangible property of any nature, (ii) conduct, transact or otherwise engage in
any business or operations other than in connection with and as required by the
OED Note Documents or (iii) have any material obligations or liabilities other
than under (1) the Loan Documents, (2) the OED Note Documents and (3) the Senior
Note Documents.
The warranties, representations, and agreements set forth in this
Agreement and the other Loan Documents to which each Pledgor is a party shall be
conclusively presumed to have been relied upon by Agent and the other members of
the Lender Group and shall be cumulative and in addition to any and all other
warranties, representations, and agreements which each Pledgor shall now or
hereinafter give, or cause to be given, to Agent. The representations and
warranties herein shall be deemed to have been made by each Pledgor on each date
of each borrowing under the Loan Agreement on and as of such date of borrowing
as though made hereunder on and as of such date.
8. Incorporation of Representations, Warranties and Covenants. Each
Pledgor that is a Subsidiary of a Borrower agrees that, for purposes of this
Agreement, all of the representations, warranties and covenants made by
Borrowers on behalf of or relating to each "Subsidiary" in Sections 4, 5, 6 and
7 of the Loan Agreement shall be deemed incorporated by reference into and made
an express part of this Agreement, as fully and completely as if set forth
expressly herein, and such Pledgor shall comply herewith and be bound thereby.
Each Pledgor ratifies and affirms each representation and warranty made with
respect to it or on its behalf by any Borrower in the Loan Agreement.
9. Agent's Perfected First Priority Security Interest. Each Pledgor shall
take or cause to be taken such acts and actions as shall be necessary or
appropriate to ensure that the Security Interest in the Collateral shall not
become subordinate or junior to the security interests, liens or claims of any
other Person other than Permitted Liens, and that the Collateral shall not
otherwise be or become subject to any Lien, except for Permitted Liens, it being
understood that the foregoing shall not obligate any Pledgor to file any
continuation statement.
10. Parent and OED Capital.
(a) Parent hereby covenants and agrees not to incur any
Indebtedness, grant any Liens or conduct, transact or otherwise engage in any
business or operations other than in
7
connection with and as required by the Loan Documents and the Senior Note
Documents and those incidental to the ownership of the Equity Interests of the
Borrowers.
(b) OED Capital hereby covenants and agrees not to incur any
Indebtedness, grant any Liens or conduct, transact or otherwise engage in any
business or operations other than in connection with and as required by the Loan
Documents, the Senior Note Documents and the OED Note Documents.
11. Negative Covenants. Each Pledgor covenants and agrees that until
payment in full of the Secured Obligations, it will not do any of the following:
(a) Change its name, FEIN, corporate structure, or identity, or add
any new fictitious name; provided, however, that a Pledgor may change its name
upon at least 30 days' prior written notice by such Pledgor to Agent of such
change and so long as, at the time of such written notification, such Pledgor
provides any financing statements or fixture filings necessary to perfect and
continue perfected Agent's security interests;
(b) Relocate its chief executive office to a new location, in each
case without providing to Agent (i) at least 5 days' prior written notification
thereof and (ii) upon request of Agent, a Collateral Access Agreement with
respect to such new location. The Inventory and Equipment shall not at any time
now or hereafter be stored with a bailee, warehouseman, or similar party without
Agent's prior written consent;
(c) deliver any document evidencing any Equipment or Inventory to
any Person other than the issuer of such document to claim the goods evidenced
therefor, Agent or any other holder or representative of a holder of a Permitted
Lien;
(d) except for Permitted Dispositions, dispose of any item or
portion of the Collateral; or
(e) acquire by purchase or otherwise any Real Property without
providing to Agent, at or prior to the time of such acquisition, such Pledgor
provides such documents as requested by Agent pursuant to Section 3(b),
including, without limitation, mortgagee title insurance policies, legal
descriptions and, as applicable, Collateral Access Agreements with respect to
such Real Property and an opinion from counsel to such Pledgor with respect to
real estate matters in form and substance reasonably satisfactory to Agent.
12. Personal Property. The parties intend that, to the extent permitted by
applicable law, the Collateral shall remain personal property irrespective of
the manner of its attachment or affixation to realty.
13. [Intentionally omitted.]
14. Agent's Rights and Remedies.
(a) Upon the occurrence and during the continuation of an Event of
Default, Agent, at the request of the Required Lenders, is hereby authorized to:
8
(i) Settle or adjust disputes and claims directly with
Pledgors' Account Debtors of Accounts constituting Collateral for amounts and
upon terms which Agent considers advisable, and, in such cases, Agent will
credit the Loan Account with only the net amounts received by Agent in payment
of such disputed Accounts after deducting all Lender Group Expenses incurred or
expended in connection therewith;
(ii) Cause each Pledgor to hold all returned Inventory
constituting Collateral in trust for the Lender Group, segregate all returned
Inventory constituting Collateral from all other assets of such Pledgor or in
such Pledgor's possession and conspicuously label said returned Inventory as the
property of the Lender Group;
(iii) Without notice to or demand upon each Pledgor, make such
payments and do such acts as Agent considers necessary or reasonable to protect
its security interests in the Collateral. Each Pledgor agrees to assemble the
Collateral if Agent so requires, and to make the Collateral available to Agent
at a place that Agent may designate that is reasonably convenient to both
parties. Each Pledgor authorizes Agent to enter the premises where the
Collateral is located, to take and maintain possession of the Collateral, or any
part of it, and to pay, purchase, contest, or compromise any Lien that in
Agent's determination appears to conflict with the Liens of Agent and to pay all
expenses incurred in connection therewith and to charge the Borrowers' Loan
Account therefor. With respect to any of any Pledgor's owned or leased premises,
each Pledgor hereby grants Agent a license to enter into possession of such
premises and to occupy the same, without charge, in order to exercise any of the
Lender Group's rights or remedies provided herein, at law, in equity, or
otherwise;
(iv) Without notice to any Pledgor (such notice being
expressly waived), and without constituting a retention of any collateral in
full or partial satisfaction of an obligation (within the meaning of the Code),
set off and apply to the Secured Obligations any and all (i) balances and
deposits of such Pledgor held by the Lender Group, or (ii) Indebtedness at any
time owing to or for the credit or the account of such Pledgor held by the
Lender Group;
(v) Hold, as cash collateral, any and all balances and
deposits of any Pledgor held by the Lender Group to secure the full and final
repayment of all of the Secured Obligations;
(vi) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Collateral. Each Pledgor hereby grants to Agent a license or other
right to use, without charge, such Pledgor's labels, patents, copyrights, trade
secrets, trade names, trademarks, service marks, and advertising matter, or any
property of a similar nature, as it pertains to the Security Interest, in
completing production of, advertising for sale, and selling any Collateral and
such Pledgor's rights under all licenses and all franchise agreements shall
inure to the Lender Group's benefit;
(vii) Sell the Collateral at either a public or private sale,
or both, by way of one or more contracts or transactions, for cash or on terms,
in such manner and at such places (including each Pledgor's or each Borrower's
premises) as Agent determines is commercially reasonable and it is not necessary
that the Collateral be present at any such sale;
9
(viii) Give notice of the disposition of the Collateral as
follows:
(A) Agent shall give Pledgors (for the benefit of the
applicable Pledgor) a notice in writing of the time and place of public sale,
or, if the sale is a private sale or some other disposition other than a public
sale is to be made of the Collateral, the time on or after which the private
sale or other disposition is to be made; and
(B) the notice shall be personally delivered or mailed,
postage prepaid, to each Pledgor as provided in Section 26, at least 10 days
before the earliest time of disposition set forth in the notice; no notice needs
to be given prior to the disposition of any portion of the Collateral that is
perishable or threatens to decline speedily in value or that is of a type
customarily sold on a recognized market;
(ix) Credit bid and purchase at any public sale;
(x) Seek the appointment of a receiver or keeper to take
possession of all or any portion of the Collateral or to operate same and, to
the maximum extent permitted by law, may seek the appointment of such a receiver
without the requirement of prior notice or a hearing; and
(xi) Have all other rights and remedies available at law or in
equity or pursuant to any other Loan Document.
(b) Pledgors hereby acknowledge and agree that the notice described
in Section 14(a)(viii)(B), when given, shall constitute a reasonable
"authenticated notification of disposition" within the meaning of Section 9-611
of the Uniform Commercial Code, as in effect from time to time in any applicable
jurisdiction.
(c) Agent or any other member of the Lender Group may be a purchaser
of any or all of the Collateral at any public or, to the extent permitted under
the Code, private sale in accordance with the Code and Agent, as secured party
for and representative of the Lender Group, 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
Code, to use and apply any of the Secured Obligations of such Pledgor as a
credit on account of the purchase price for any Collateral payable by Agent at
such sale. To the extent provided under the Code 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 Pledgor and Pledgor 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
Secured Obligations. Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. Agent 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 applicable Pledgor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. Each
Pledgor hereby waives any claims against Agent 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
Agent accepts the first offer received and does not offer such Collateral to
10
more than one offeree. Each Pledgor further agrees that a breach of any of the
covenants contained in this Section 14 will cause irreparable injury to Agent,
that Agent has no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section 14 shall be
specifically enforceable against such Pledgor, and such Pledgor 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 14 shall in any way alter the rights of
Agent under this Agreement.
(d) Agent may sell the Collateral following the occurrence and
during the continuance of an Event of Default without giving any warranties as
to the Collateral. Agent 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. Agent 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 Agent to third Persons are types of sales permitted hereunder.
(e) If Agent sells any of the Collateral of any Pledgor on credit,
the Secured Obligations of such Pledgor will be credited only with payments
actually made by the purchaser and received by Agent and applied to the
indebtedness of the purchaser. In the event the purchaser fails to pay for the
Collateral, Agent may resell the Collateral.
(f) Agent shall have no obligation to marshal any of the Collateral.
(g) All amounts and proceeds (including checks and other
instruments) received by any Pledgor in respect of amounts due to such Pledgor
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 Agent hereunder, shall be segregated from other funds of such Pledgor
and shall be forthwith paid over or delivered to Agent in the same form as so
received (with any necessary endorsement) to be held as cash Collateral and
applied as provided by Section 19 following the occurrence and during the
continuance of an Event of Default. Upon demand from Agent following the
occurrence and during the continuance of an Event of Default, Pledgors 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.
(h) Each Pledgor agrees that, upon the occurrence of and during the
continuance of an Event of Default and at Agent's request, such Pledgor will
immediately file such applications for approval and shall take all other and
further actions required by Agent to obtain such approvals or consents of
regulatory authorities as are necessary to transfer ownership and control to
Agent of the Gaming Licenses held by it, or its interest in any Person holding
any such Gaming License. To enforce the provisions of this Section 14(h), Agent
is empowered to request the appointment of a receiver from any court of
competent jurisdiction. Such receiver shall be instructed to seek from the
applicable Gaming Authority an involuntary transfer of control of any Gaming
License for the purpose of seeking a bona fide purchaser to whom control
11
will ultimately be transferred. Each Pledgor hereby agrees to authorize such an
involuntary transfer of control upon the request of the receiver so appointed
and, if any Pledgor or any such Restricted Subsidiary shall refuse to authorize
the transfer, its approval may be required by the court. Upon the occurrence and
continuance of an Event of Default, each Pledgor shall further use its
reasonable best efforts to assist in obtaining approval of the applicable Gaming
Authority, if required, for any action or transactions contemplated by this
Agreement or the Loan Documents, including, without limitation, preparation,
execution, and filing with the applicable Gaming Authority of the assignor's or
transferor's portion of any application or applications for consent to the
assignment of any Gaming License or transfer of control necessary or appropriate
under the applicable Gaming Authority's rules and regulations for approval of
the transfer or assignment of any portion of the Collateral, together with any
Gaming License or other authorization. Each Pledgor acknowledges that the
assignment or transfer of Gaming Licenses is integral to Agent's realization of
the value of the Collateral, that there is no adequate remedy at law for failure
by any Pledgor to comply with the provisions of this Section 14(h) and that such
failure would not be adequately compensable in damages, and therefore agrees
that the agreements contained in this Section 14(h) may be specifically
enforced.
(i) Any deficiency that exists after disposition of the Collateral
as provided above will be paid immediately by Pledgors. Any excess that exists
after disposition of the Collateral will be returned, without interest and
subject to the rights of third Persons, by Agent to Pledgors.
(j) In the event Agent elects to commence foreclosure proceeding
under Louisiana law, Agent may cause such Collateral, or any part or parts
thereof, to be immediately seized and sold, whether in term of court or in
vacation, under ordinary or executory process, in accordance with applicable
Louisiana law, to the highest bidder for cash, with or without appraisement, and
without the necessity of making additional demand upon or notifying Pledgors or
any Person or placing Pledgors or any Person in default, all of which are
expressly waived. For purposes of foreclosure under Louisiana executory process
procedures, each Pledgor confesses judgment and acknowledges to be indebted unto
and in favor of Agent up to the full amount of the Secured Obligations, in
principal, interest, costs, expenses, attorneys' fees and other fees and
charges. To the extent permitted under applicable Louisiana law, each Pledgor
additionally waives: (i) the benefit of appraisal as provided in Articles 2332,
2336, 2723 and 2724 of the Louisiana Code of Civil Procedure, and all other laws
with regard to appraisal upon judicial sale; (ii) the demand and 3 days' delay
as provided under Articles 2639 and 2721 of the Louisiana Code of Civil
Procedure; (iii) the notice of seizure as provided under Articles 2293 and 2721
of the Louisiana Code of Civil Procedure; (iv) the 3 days' delay provided under
Articles 2331 and 2722 of the Louisiana Code of Civil Procedure; and (v) all
other benefits provided under Articles 2331, 2722 and 2723 of the Louisiana Code
of Civil Procedure and all other articles not specifically mentioned above.
Should it become necessary for Agent to foreclose under this Agreement, all
declarations of fact, which are made under an authentic act before a Notary
Public in the presence of 2 witnesses, by a Person declaring such facts to lie
within his or her knowledge, shall constitute authentic evidence for purposes of
executory process and also for purposes of La. R.S. 9:3509.1, La. R.S.
9:3504(D)(6) and La. R.S. 10:9-629, as applicable. In addition to the foregoing
rights and remedies, Agent may elect to effect the seizure and disposition of
the Collateral pursuant to any procedures as may be authorized by Louisiana law
from time to time.
12
(k) All rights, remedies, and powers provided in this Agreement
relative to the Collateral may be exercised only to the extent that the exercise
thereof does not violate any applicable mandatory provision of the Applicable
Gaming Laws and all provisions of this Agreement relative to the Collateral are
intended to be subject to all applicable mandatory provisions of the Applicable
Gaming Laws and to be limited solely to the extent necessary to not render the
provisions of this Agreement invalid or unenforceable, in whole or in part.
Agent will timely apply for and receive all required approvals of the applicable
Gaming Authority for the sale or other disposition of Gaming Equipment regulated
by Applicable Gaming Laws (including any such sale or disposition of Gaming
Equipment consisting of slot machines, gaming tables, cards, dice, gaming chips,
player tracking systems, and all other "gaming devices" (as such term or words
of like import referring thereto are defined in the Applicable Gaming Laws), and
"associated equipment" (as such term or words of like import referring thereto
are defined in the Applicable Gaming Laws).
15. Remedies Cumulative. Each Pledgor agrees that the rights and remedies
of the Lender Group under this Agreement, the other Loan Documents, and all
other agreements shall be cumulative. Agent and the other members of the Lender
Group shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. Each Pledgor further expressly
agrees that Agent shall in no event be under any obligation to resort to any
Collateral secured hereby prior to exercising any other rights that Agent may
have against such Pledgor or its property, nor shall Agent be obliged to resort
to any other collateral or security for the Secured Obligations prior to any
exercise of Agent's rights against such Pledgor and its property hereunder. No
exercise by Agent of one right or remedy shall be deemed an election, and no
waiver by Agent of any Event of Default shall be deemed a continuing waiver. No
delay by Agent shall constitute a waiver, election, or acquiescence by it.
16. Agent's Right to Perform Contracts. Upon the occurrence and during the
continuation of an Event of Default, Agent (or its designee) may proceed to
perform any and all of the obligations of any Pledgor contained in any contract,
lease or other agreement and exercise any and all rights of any Pledgor therein
contained as fully as such Pledgor itself could.
17. Collection of Accounts, General Intangibles, and Negotiable
Collateral. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's designee may (a) notify Account Debtors of
Accounts constituting Collateral of any and all Pledgors that the Accounts,
Chattel Paper, or General Intangibles (other than the Excluded Assets) have been
assigned to Agent or that Agent has a security interest therein, or (b) collect
the Accounts, Chattel Paper, or General Intangibles (other than the Excluded
Assets) directly and charge the collection costs and expenses to the Loan
Account. Each Pledgor agrees that it will hold in trust for the Lender Group, as
the Lender Group's trustee, any Collections constituting Collateral that it
receives and immediately will deliver said Collections to Agent in their
original form as received by the applicable Pledgor.
18. Power of Attorney. Each Pledgor hereby irrevocably makes, constitutes,
and appoints Agent (and any of Agent's officers, employees, or agents designated
by Agent) as such Pledgor's true and lawful attorney, with power to, from time
to time in its discretion, take any action and to execute any instrument that it
may deem reasonably necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation, the following: (a) if
13
such Pledgor refuses to, or fails timely to execute and deliver any of the
documents described in Section 3, sign the name of such Pledgor on any of the
documents described in Section 3; and (b) at any time that an Event of Default
has occurred and is continuing, (i) sign such Pledgor's name on any invoice or
bill of lading relating to the Collateral, drafts against Account Debtors of
Accounts constituting Collateral, or notices to Account Debtors of Accounts
constituting Collateral, (ii) send requests for verification of Accounts to the
applicable Account Debtors, (iii) endorse such Pledgor's name on any Collection
item that may come into the Lender Group's possession, (iv) make, settle, and
adjust all claims under such Pledgor's policies of insurance and make all
determinations and decisions with respect to such policies of insurance and (v)
settle and adjust disputes and claims respecting Accounts, Chattel Paper or
General Intangibles (other than the Excluded Assets) directly with Account
Debtors or other applicable third parties, for amounts and upon terms that Agent
determines to be reasonable, and Agent may cause to be executed and delivered
any documents and releases that Agent determines to be necessary. The
appointment of Agent as each Pledgor's attorney, and each and every one of its
rights and powers, being coupled with an interest, is irrevocable until the date
of termination of this Agreement in accordance with Section 24.
19. Application of Proceeds. After deducting all reasonable expenses and
charges (including Agent's attorneys' fees) of retaking, keeping, storing and
selling the Collateral, Agent shall apply the proceeds in payment of any of the
Secured Obligations in the order of application set forth in the Loan Agreement.
Each Pledgor agrees that if steps are taken by Agent to enforce its rights
hereunder, or to realize upon any of the Collateral, such Pledgor shall pay to
Agent the amount of Agent's costs, including reasonable attorneys' fees, and
each Pledgor's obligation to pay such amounts shall be deemed to be a part of
the Secured Obligations secured hereunder.
20. The Lender Group's Liability for Collateral. Each Pledgor hereby
agrees that: (a) so long as Agent complies with its obligations, if any, under
the Code, the Lender Group shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person; and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by such Pledgor
and any loss, damage or destruction of the Collateral shall not release any
Pledgor from its obligations hereunder.
21. Indemnification. Each Pledgor shall indemnify and hold harmless Agent
and each other member of the Lender Group and any other Person acting hereunder
for all losses, costs, damages, fees and expenses whatsoever associated with the
exercise of the powers of attorney granted herein and shall release Agent, each
other member of the Lender Group and any other Person acting hereunder from all
liability whatsoever for the exercise of the foregoing powers of attorney and
all actions taken pursuant thereto, except, in either event, in the case of
gross negligence or willful misconduct by the Person seeking indemnification.
This provision shall survive the termination of this Agreement and the Loan
Agreement and the repayment of the Secured Obligations.
22. Agent's Right to Immediate Possession of Collateral. Each Pledgor
hereby acknowledges that the Secured Obligations arise out of a commercial
transaction and agrees that if an Event of Default shall occur, Agent shall have
the right to immediate possession without
14
notice or a hearing, and hereby knowingly and intelligently waives any and all
rights it may have to any notice and posting of a bond by Agent, prior to
seizure by Agent, or any of its transferees, assigns or successors in interest,
of the Collateral or any portion thereof.
23. No Release or Waiver. No transfer or renewal, extension, assignment or
termination of this Agreement or of the Loan Agreement or of any other Loan
Document, or of any instrument or document executed and delivered by any Pledgor
or any other obligor to Agent, nor additional advances made by the Lenders to
the Borrowers, nor the taking of further security, nor the retaking or
re-delivery of the Collateral to any Pledgor by Agent nor any other act of Agent
or any other member of the Lender Group shall release any Pledgor from any
Secured Obligation, except a release or discharge executed in writing by Agent
in accordance with the Loan Agreement with respect to such Secured Obligation or
upon full payment and satisfaction of all Secured Obligations as described in
Section 24 and termination of the Loan Agreement and the Commitments. Agent
shall not, by any act, delay, omission or otherwise, be deemed to have waived
any of its rights or remedies hereunder, unless such waiver is in writing and
signed by Agent in accordance with the Loan Agreement and then only to the
extent therein set forth. A waiver by Agent of any right or remedy on any
occasion shall not be construed as a bar to the exercise of any such right or
remedy that it would otherwise have had on any other occasion.
24. Termination. This Agreement shall create a continuing security
interest in the Collateral and shall terminate only upon the final payment in
full in cash of the Secured Obligations (including either (a) providing cash
collateral to be held by Agent for the benefit of the Lenders with a Revolver
Commitment in an amount equal to 105% of the then extant Letter of Credit Usage,
or (b) causing the original Letters of Credit to be returned to Agent),
termination of the Loan Agreement and termination of the Commitments.
25. Successors. (a) This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties hereto including,
without limitation, any receiver or trustee of a Pledgor; provided, however,
that no Pledgor may assign this Agreement or any rights or duties hereunder
without Agent's prior written consent and any prohibited assignment shall be
absolutely void ab initio. No consent to assignment by Agent shall release any
Pledgor from its obligations to the Lender Group.
(b) Agent and the other members of the Lender Group may, to the
extent permitted under the Loan Agreement or any other Loan Documents, and
pursuant to the notice provisions, as applicable, thereunder, sell, assign or
transfer all or any part of the Secured Obligations, and in such event each and
every permitted assignee, transferee, or holder of all or any of the Secured
Obligations shall have the right to enforce this Agreement, by suit or
otherwise, for the benefit of such permitted assignee, transferee or holder as
fully as if such assignee, transferee or holder were herein by name specifically
given such rights, powers and benefits. In the event this Agreement or the
rights hereunder are so assigned by Agent, the term "Agent", wherever used
herein, shall be deemed to refer to and include any such assignee.
26. Notices. Any notice, demand or other communication that Agent may wish
to give shall be served upon any Pledgor in the fashion prescribed for notices
and at the address for such Pledgor in Section 14 of the Guaranty to which such
Pledgor is a party and the notice so
15
sent shall be deemed to be served as set forth in the Loan Agreement. All
notices or other communication to Agent shall be served upon Agent at its
address set forth in Section 12 of the Loan Agreement and in the fashion
prescribed under Section 12 of the Loan Agreement.
27. New Subsidiaries. Pursuant to, and subject to the terms of, Section
6.19 of the Loan Agreement, the Borrowers may form any new Subsidiary or acquire
any direct or indirect Subsidiary after the Closing Date so long as at the time
of such formation or acquisition, such new Subsidiary (other than any CFC)
enters into this Agreement by executing and delivering in favor of Agent an
instrument in the form of Annex 1 attached hereto. Upon the execution and
delivery of Annex 1 by such new Subsidiary, such new Subsidiary shall become a
Pledgor hereunder with the same force and effect as if originally named as a
Pledgor herein. The execution and delivery of any instrument adding an
additional Pledgor as a party to this Agreement shall not require the consent of
any Pledgor hereunder. The rights and obligations of each Pledgor hereunder
shall remain in full force and effect notwithstanding the addition of any new
Pledgor hereunder.
28. Governing Law. The validity of this Agreement, the construction,
interpretation, and enforcement hereof and the rights of the parties hereto and
the beneficiaries hereof with respect to all matters arising hereunder or
related hereto shall be determined under, governed by, and construed in
accordance with the laws of the State of New York.
29. Rights to Collateral; Change in Law. The parties acknowledge their
intent that, upon the occurrence and during the continuance of an Event of
Default, Agent shall receive, to the fullest extent permitted by applicable law
and governmental policy, all rights necessary or desirable to access, obtain,
use or sell the Collateral, and to exercise all remedies available to it under
this Agreement, the Code, or other applicable law. The parties further
acknowledge and agree that, in the event of changes in law or governmental
policy occurring subsequent to the date hereof that affect in any manner Agent's
rights of access to, or use or sale of, the Collateral, or the procedures
necessary to enable Agent to obtain such rights of access, use or sale, Agent
and Pledgors shall amend this Agreement in such manner as Agent shall request in
order to provide Agent such rights to the greatest extent possible consistent
with applicable law and governmental policy.
30. Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
31. Counterparts; Telefacsimile Execution. This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement.
32. Modification. Neither this Agreement nor any of its terms, provisions
or conditions may be altered, amended or modified in any way, except as
specifically provided in a written instrument signed by an authorized officer of
Agent and Pledgors.
16
33. Survival of Provisions. All representations, warranties and covenants
of each Pledgor contained herein shall survive the execution and delivery of
this Agreement.
34. Integration. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
35. Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.
36. Agent. The powers conferred on Agent hereunder are solely to protect
its interest in the Collateral and shall not impose any duty upon Agent to
exercise any such powers. Except for the safe custody of any Collateral in its
actual possession and the accounting for moneys actually received by Agent
pursuant hereto, Agent shall have no duty with respect to the Collateral or as
to the taking of any necessary steps to preserve rights against prior parties or
any other rights pertaining to any of the Collateral. Each reference herein to
any right granted to, benefit conferred upon or power exercisable, exercised, or
action taken by Agent shall be deemed to be a reference to, or be deemed to have
been so taken, as the case may be, by Agent in its capacity as Agent pursuant to
the Loan Agreement for the benefit of the Lender Group, all as more fully set
forth in the Loan Agreement.
[Remainder of this page intentionally left blank.]
17
IN WITNESS WHEREOF, the undersigned parties hereto have executed this
Agreement by and through their duly authorized officers, as of the day and year
first above written.
PLEDGOR: PENINSULA GAMING, LLC, a Delaware
limited liability company
By: /s/ Natalie A. Schramm
--------------------------------------
Name: Natalie A. Schramm
Title: Chief Financial Officer
THE OLD EVANGELINE DOWNS CAPITAL
CORP., a Delaware corporation
By: /s/ Natalie A. Schramm
--------------------------------------
Name: Natalie A. Schramm
Title: Chief Financial Officer
AGENT: WELLS FARGO FOOTHILL, INC.,
a California corporation, as agent
By: /s/ Todd R. Nakamoto
--------------------------------------
Name: Todd R. Nakamoto
Title: Vice President
ANNEX 1
to
GUARANTOR SECURITY AGREEMENT
FORM OF SUPPLEMENT
THIS SUPPLEMENT NO. __ (this "Supplement") dated as of __________ to the
Guarantor Security Agreement dated as of June ___, 2004 (as amended, restated,
supplemented or otherwise modified from time to time, the "Security Agreement"),
by each of the parties listed on the signature pages thereto and those
additional entities that thereafter become parties thereto (each a "Pledgor" and
collectively, the "Pledgors") and Wells Fargo Foothill, Inc., a California
corporation, as agent for the Lenders (as defined below) ("Agent").
WITNESSETH:
WHEREAS, pursuant to that certain Loan and Security Agreement dated as of
June __, 2004 (as the same may be amended, restated, supplemented or otherwise
modified from time to time, the "Loan Agreement"), among Agent, the lenders from
time to time party thereto (the "Lenders") and The Old Evangeline Downs, L.L.C.,
a Louisiana limited liability company, and Diamond Jo, LLC (formerly known as
Peninsula Gaming Company, LLC), a Delaware limited liability company (each, a
"Borrower" and collectively, the "Borrowers"), the Lenders have agreed to extend
credit to the Borrowers from time to time pursuant to the terms and conditions
thereof; and
WHEREAS, capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Security Agreement, and if
not defined therein, in the Loan Agreement; and
WHEREAS, Pledgors have entered into the Security Agreement in order to
induce the Lenders to make the Loans and other financial accommodations
contained in the Loan Agreement and the other Loan Documents; and
WHEREAS, pursuant to Section 27 of the Security Agreement, each new
Subsidiary of a Borrower (whether by acquisition or creation) (other than any
CFC) must execute and deliver the Security Agreement, and the execution of the
Security Agreement by the undersigned new Pledgor or Pledgors (collectively, the
"New Pledgor") may be accomplished by the execution of this Supplement in favor
of Agent; and
WHEREAS, New Pledgor is a direct or indirect Subsidiary of a Borrower, and
New Pledgor has determined that it will realize substantial direct and indirect
benefits as a result of the loans and other financial accommodations extended to
Borrowers pursuant to the Loan Agreement, and New Pledgor's execution, delivery
and performance of this Guaranty is within New Pledgor's corporate or other
purposes;
NOW, THEREFORE, for and in consideration of the foregoing and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the New Pledgor hereby agrees as follows:
SECTION 1. In accordance with Section 27 of the Security Agreement, the
New Pledgor, by its signature below, becomes a "Pledgor" under the Security
Agreement with the same force and effect as if originally named therein as a
"Pledgor" and the New Pledgor hereby (a) agrees to all of the terms and
provisions of the Security Agreement applicable to it as a "Pledgor" thereunder
and (b) represents and warrants that the representations and warranties made by
it as a "Pledgor" thereunder are true and correct on and as of the date hereof.
In furtherance of the foregoing, the New Pledgor, as security for the payment
and performance in full of the Guaranteed Obligations, does hereby grant,
assign, and pledge to Agent, for the benefit of the Lender Group, a security
interest in all Collateral of New Pledgor, and all additions thereto and
replacements thereof and all other property of New Pledgor whether now or
hereafter created, acquired or reacquired, to secure the full and prompt payment
of the Secured Obligations, including, without limitation, any interest thereon,
plus attorneys' fees and expenses if the Secured Obligations represented by the
Security Agreement are collected by law, through an attorney-at-law, or under
advice therefrom. Each reference to a "Pledgor" in the Security Agreement shall
be deemed to include the New Pledgor. The Security Agreement is incorporated
herein by reference.
SECTION 2. The New Pledgor represents and warrants to Agent that this
Supplement has been duly executed and delivered by the New Pledgor and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms, except as enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other
similar laws affecting creditors' rights generally and general principles of
equity (regardless of whether such enforceability is considered in a proceeding
at law or in equity).
SECTION 3. This Supplement may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed
and delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same agreement. Delivery of an
executed counterpart of this Supplement by telefacsimile shall be equally as
effective as delivery of an original executed counterpart of this Supplement.
Any party delivering an executed counterpart of this Supplement by telefacsimile
also shall deliver an original executed counterpart of this Supplement but the
failure to deliver an original executed counterpart shall not affect the
validity, enforceability, and binding effect of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the Security Agreement
shall remain in full force and effect.
SECTION 5. The validity of this Supplement, the construction,
interpretation, and enforcement hereof and the rights of the parties hereto and
the beneficiaries hereof with respect to all matters arising hereunder or
related hereto shall be determined under, governed by, and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the New Pledgor has duly executed this Supplement to
the Security Agreement as of the day and year first above written.
NEW PLEDGOR: [Name of New Pledgor]
Address: ________________________ By:_____________________________
________________________ Name:___________________________
________________________ Title:__________________________