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EXHIBIT 4.4
EXECUTION COPY
SECURITY AGREEMENT
DATED AS OF MAY 22, 1996
between
THE MAJESTIC STAR CASINO, LLC
AND
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
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TABLE OF CONTENTS
SECTION 1. Defined Terms.................................................. 1
SECTION 2. Grant of Security.............................................. 2
SECTION 3. Authorization.................................................. 4
SECTION 4. Grantor Remains Liable......................................... 5
SECTION 5. Representations and Warranties................................. 5
SECTION 6. Perfection and Maintenance of Security Interest and Lien....... 6
SECTION 7. Financing Statements........................................... 8
SECTION 8. Filing Costs................................................... 8
SECTION 9. Schedule of Collateral......................................... 8
SECTION 10. Equipment and Inventory........................................ 8
SECTION 11. Partial Release of Collateral.................................. 9
SECTION 12. Intentionally Omitted.......................................... 9
SECTION 13. General Covenants.............................................. 9
SECTION 14. Trustee Appointed Attorney-in-Fact............................. 10
SECTION 15. Trustee May Perform............................................ 11
SECTION 16. Trustee's Duties............................................... 11
SECTION 17. Remedies....................................................... 11
SECTION 18. Exercise of Remedies........................................... 12
SECTION 19. License........................................................ 12
SECTION 20. Injunctive Relief.............................................. 13
SECTION 21. Interpretation and Inconsistencies; Merger..................... 13
SECTION 22. Expenses....................................................... 13
SECTION 23. Amendments, Etc................................................ 13
SECTION 24. Notices........................................................ 13
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SECTION 25. Continuing Security Interest; Termination...................... 13
SECTION 26. Severability................................................... 14
SECTION 27. GOVERNING LAW.................................................. 14
SECTION 28. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL........ 14
(A) NON-EXCLUSIVE JURISDICTION............................. 14
(B) OTHER JURISDICTIONS.................................... 15
(D) WAIVER OF JURY TRIAL................................... 15
(E) WAIVER OF BOND......................................... 16
(F) ADVICE OF COUNSEL...................................... 16
SECTION 29. Gaming Laws.................................................... 16
SECTION 30. Interaction with Indenture..................................... 16
SECTION 31. Trust Indenture Act............................................ 17
SECTION 32. Appointment of Collateral Agent................................ 17
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SECURITY AGREEMENT
This SECURITY AGREEMENT ("Agreement"), dated as of May 22, 1996 is
made by The Majestic Star Casino, LLC, an Indiana limited liability company
("Grantor"), in favor of IBJ SCHRODER BANK & TRUST COMPANY, as trustee (the
"Trustee"), for its benefit and for the benefit of the "Holders" (as defined
below) who are, or may hereafter become, parties to the "Indenture" referred to
below.
PRELIMINARY STATEMENT
Grantor has entered into a certain Indenture of even date herewith
between Grantor and the Trustee (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Indenture"), pursuant
to which Grantor and the Trustee have agreed to certain terms for the benefit of
Grantor and the Holders. It is a condition precedent to the Indenture that
Grantor shall have granted the security interest contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises set forth herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Defined Terms. Unless otherwise defined herein, terms
defined in the Indenture are used herein as therein defined, and the following
terms shall have the following meanings (such meanings being equally applicable
to both the singular and the plural forms of the terms defined):
"Accounts" shall mean "accounts" as such term is defined in Section
9-106 of the UCC, whether now owned or hereafter acquired or arising.
"Agreement" shall mean this Security Agreement, as the same may from
time to time be amended, restated, modified or supplemented, and shall refer to
this Agreement as the same may be in effect at the time such reference becomes
operative.
"Collateral" shall mean all property and rights in property now owned
or hereafter at any time acquired by Grantor in or upon which a Lien is granted
in favor of the Trustee by Grantor or a Subsidiary of Grantor under this
Agreement, including, without limitation, the property described in Section 2.
"Governmental Authority" shall mean any nation or government, or any
federal, state, local or political subdivision
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thereof, or any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government.
"Holders" shall mean the holders of the Secured Obligations from time
to time and shall include their respective successors, transferees and assigns.
"Secured Obligations" shall mean the Obligations under the Indenture.
"UCC" shall mean the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of Indiana; provided, however, in the
event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of the Trustee's and the Holders' security
interest in any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of Indiana, the term "UCC" shall
mean the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such attachment, perfection or
priority and for purposes of definitions related to such provisions.
SECTION 2. Grant of Security. To secure the prompt and complete
payment, observance and performance of the Secured Obligations, Grantor hereby
assigns and pledges to Trustee, for the equal and ratable benefit of the
Holders, and grants to Trustee for the equal and ratable benefit of the Holders
an exclusive first priority security interest in all of Grantor's right, title
and interest in and to the following, whether now owned or existing or hereafter
arising or acquired and wheresoever located:
INVENTORY: All "inventory" as defined in Section 9-109(4) of the UCC, whether
now owned or hereafter acquired or arising; Grantor intends that the term
"inventory", as used herein, be construed in its broadest sense, and such term
shall include, without limitation, all goods now owned or hereafter acquired by
Grantor (wherever located, whether in the possession of Grantor or of a bailee
or other person for sale, storage, transit, processing, use or otherwise and
whether consisting of whole goods, spare parts, components, supplies,
materials, or consigned, returned or repossessed goods) which are held for sale
or lease, which are to be furnished (or have been furnished) under any contract
of service or which are raw materials, work in process or materials used or
consumed in Grantor's business (collectively, "Inventory");
EQUIPMENT: All "equipment" as such term is defined in Section 9-109(2) of the
UCC, whether now owned or hereafter acquired or arising; Grantor intends that
the term "equipment", as used herein, be construed in its broadest sense, and
such term shall
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include, without limitation, all machinery, all manufacturing, distribution,
selling, data processing and office equipment, all furniture, furnishings,
appliances, fixtures and trade fixtures, tools, tooling, molds, dies, vehicles,
vessels, trucks, buses, motor vehicles and all other goods of every type and
description (other than Inventory), in each instance whether now owned or
hereafter acquired by Grantor and wherever located (collectively, "Equipment");
GENERAL INTANGIBLES: All "general intangibles" as defined in Section 9-106 of
the UCC, whether now owned or hereafter acquired or arising; Grantor intends
that the term "general intangibles", as used herein, be construed in its
broadest sense, and such term shall include, without limitation, all rights,
interests, choses in action, causes of actions, claims and all other intangible
property of Grantor of every kind and nature (other than Accounts), in each
instance whether now owned or hereafter acquired by Grantor and however and
whenever arising, including, without limitation, all corporate and other
business records; all loans, royalties, and other obligations receivable;
customer lists, credit files, correspondence, and advertising materials; firm
sale orders, other contracts and contract rights; all tax refunds and tax refund
claims; all right, title and interest under leases, subleases, licenses and
concessions and other agreements relating to real or personal property; all
payments due or made to Grantor in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of any property by any person
or governmental authority; all credits with and other claims against carriers
and shippers; all rights to indemnification; all patents, and patent
applications (including all reissues, divisions, continuations and extensions);
all trade secrets and inventions; all copyrights (including all computer
software and related documentation); all rights and interests in and to
trademarks, trademark registrations and applications therefor, service marks,
service mark registrations and applications therefor, trade names, corporate
names, brand names, slogans, all goodwill associated with the foregoing; all
license agreements and franchise agreements, all reversionary interests in
pension and profit sharing plans and reversionary, beneficial and residual
interest in trusts; all proceeds of insurance of which Grantor is beneficiary;
and all letters of credit, guaranties, liens, security interests and other
security held by or granted to Grantor; and all other intangible property,
whether or not similar to the foregoing;
CONTRACT RIGHTS: All rights and interests in and to any pending or executory
contracts, requests for quotations, invitations for bid, agreements, leases and
arrangements of which Grantor is a party to or in which Grantor has an interest;
CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: All chattel paper, leases, all
instruments, including, without limitation, the notes and debt instruments
described in Schedule 1 (the "Pledged Debt")
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and all payments thereunder and instruments and other property from time to time
delivered in respect thereof or in exchange therefor, and all bills of sale,
bills of lading, warehouse receipts and other documents of title, in each
instance whether now owned or hereafter acquired by Grantor;
OTHER PROPERTY: All property or interests in property now owned or hereafter
acquired by Grantor which now may be owned or hereafter may come into the
possession, custody or control of Trustee or any of the Holders or any agent or
Affiliate of any of them in any way and for any purpose (whether for
safekeeping, deposit, custody, pledge, transmission, collection or otherwise);
and all rights and interests of Grantor, now existing or hereafter arising and
however and wherever arising, in respect of any and all (i) notes, drafts,
letters of credit, stocks, bonds, and debt and equity securities, whether or not
certificated, and warrants, options, puts and calls and other rights to acquire
or otherwise relating to the same; (ii) money; (iii) proceeds of loans,
including, without limitation, loans made under the Indenture; (iv) insurance
proceeds and books and records relating to any of the property covered by this
Agreement; together, in each instance, with all accessions and additions
thereto, substitutions therefor, and replacements, proceeds and products
thereof; and (v) all right, title and interest in the Berthing Agreement dated
as of April 23, 1996 by and between Grantor and Buffington Harbor Riverboats,
L.L.C., as amended, supplemented or modified from time to time (the "Berthing
Agreement").
EXCLUDED ITEMS: Notwithstanding the foregoing or anything to the contrary
contained in this Agreement, any and all of the following items are hereby
expressly excluded from the Collateral and no security interest is granted
therein:
(v) any certificate of suitability or any owner's license heretofore
or hereafter issued to any person, including Grantor, under any of the Gaming
Laws, including Indiana Code 4-33,
(w) all of the Grantor's right, title and interest in the Charter
Agreement dated as of August 17, 1995 by and among New Yorker Acquisition
Corporation, President Casinos, Inc. and Grantor, as amended, modified or
supplemented from time to time (the "Charter Agreement"),
(x) Accounts,
(y) any property which if pledged, hypothecated or given as
collateral security would require the Trustee or a Holder to be licensed,
qualified or found suitable and
(z) any property to the extent such property is permitted to be
financed by Indebtedness permitted to be incurred pursuant to the covenant in
the Indenture entitled "Limitations
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on Incurrence of Indebtedness and Issuance of Disqualified Capital Stock" and
such Indebtedness is permitted to be secured pursuant to the covenant entitled
"Liens" pursuant to the definition of "Permitted Liens".
SECTION 3. Authorization. Grantor hereby authorizes Trustee to
retain and each Holder, and each Affiliate of Trustee and of each Holder, to pay
or deliver to Trustee, for the benefit of the Holders, without any necessity on
any Holder's part to resort to other security or sources of reimbursement for
the Secured Obligations, at any time following the occurrence and during the
continuance of any Event of Default, and without further notice to Grantor (such
notice being expressly waived), any sums or property held by such Person, for
application against any portion of the Secured Obligations, irrespective of
whether any demand has been made or whether such portion of the Secured
Obligations is mature. Trustee will promptly notify Grantor of Trustee's
receipt of such funds or other property for application against the Secured
Obligations, but failure to do so will not affect the validity or enforceability
thereof. Trustee may give notice of the above grant of security interest and
assignment of the aforesaid sums, and authorization, to, and make any suitable
arrangements with, any such Holder for effectuation thereof, and Grantor hereby
irrevocably appoints Trustee as its attorney to collect, following the
occurrence and during the continuance of an Event of Default, any and all such
sums to the extent any such payment is not made to Trustee by such Holder or
Affiliate thereof.
SECTION 4. Grantor Remains Liable. Anything herein to the contrary
notwithstanding, (a) Grantor shall remain solely liable under the 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 Trustee of any of its
rights hereunder shall not release Grantor from any of its duties or obligations
under the contracts and agreements included in the Collateral, and (c) neither
Trustee nor the Holders shall have any responsibility, obligation or liability
under the contracts and agreements included in the Collateral by reason of this
Agreement, nor shall Trustee or the Holders be required or obligated, in any
manner, to (i) perform or fulfill any of the obligations or duties of Grantor
thereunder, (ii) make any payment, or make any inquiry as to the nature or
sufficiency of any payment received by Grantor or the sufficiency of any
performance by any party under any such contract or agreement or (iii) present
or file any claim, or take any action to collect or enforce any claim for
payment assigned hereunder.
SECTION 5. Representations and Warranties. Grantor represents and
warrants, as of the date of this Agreement and as of each date hereafter (except
for changes permitted or
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contemplated by this Agreement) until termination of this Agreement pursuant to
Section 25:
(a) The correct name of Grantor is set forth in the first paragraph
of this Agreement. The locations listed on Schedule 2 constitute all locations
at which Inventory and/or Equipment is located and Grantor has exclusive
possession and control of such Inventory and Equipment, except for such
Inventory and Equipment which is (i) temporarily in transit between such
locations, or (ii) temporarily stored with third parties or held by third
parties for processing, engineering, evaluation or repairs, and the location of
such Inventory and/or Equipment is set forth in Schedule 2-A. The chief place
of business and chief executive office of Grantor are located at 1 Buffington
Harbor, Gary, Indiana 46406-3000.
(b) This Agreement creates in favor of Trustee a legal, valid and
enforceable security interest in the Collateral. When financing statements have
been filed in the appropriate offices against Grantor in the locations listed on
Schedule 2-B, Trustee will have a fully perfected lien on, and security interest
in, the Collateral in which a security interest may be perfected by such filing,
subject only to Permitted Liens under the Indenture.
(c) Grantor is the legal and beneficial owner of the Collateral free
and clear of all Liens except for Permitted Liens as defined in the Indenture.
Grantor currently conducts business under the name The Majestic Star Casino, LLC
and, in certain areas and for certain operations, the trade names listed on
Schedule 3. The Grantor uses no trade names or fictitious names, except as set
forth on Schedule 3.
(d) No authorization, approval or other action by, notice to or
filing with any Governmental Authority that has not already been taken or made
and which is in full force and effect, or contemplated by this Agreement is
required (i) for the grant by Grantor of the security interest in the Collateral
granted hereby; (ii) the execution, delivery or performance of this Agreement by
Grantor.
(e) The Pledged Debt issued by any Affiliate of Grantor, and to the
best of Grantor's knowledge, all other Pledged Debt, has been duly authorized,
issued and delivered, and is the legal, valid, binding and enforceable
obligation of the respective issuers thereof.
SECTION 6. Perfection and Maintenance of Security Interest and Lien.
Grantor agrees that until all of the Secured Obligations (other than contingent
indemnity obligations) have been fully satisfied and the Indenture has been
terminated, Trustee's security interests in and Liens on and against the
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Collateral and all proceeds and products thereof, shall continue in full force
and effect. Grantor shall perform any and all steps required to perfect,
maintain and protect Trustee's security interests in and Liens on and against
the Collateral granted or purported to be granted hereby or to enable Trustee to
exercise its rights and remedies hereunder with respect to any Collateral,
including, without limitation, (i) executing and filing financing or
continuation statements, or amendments thereof, in form and substance reasonably
satisfactory to Trustee, (ii) delivering to Trustee all certificates, notes and
other instruments (including, without limitation, all letters of credit on which
Grantor is named as a beneficiary) representing or evidencing Collateral, which
certificates, notes and other instruments have been duly endorsed and are
accompanied by duly executed instruments of transfer or assignment, including,
but not limited to, note powers, all in form and substance satisfactory to
Trustee, (iii) delivering to Trustee warehouse receipts covering that portion of
the Collateral, if any, located in warehouses and for which warehouse receipts
are issued, (iv) after the occurrence and during the continuance of an Event of
Default, transferring Inventory and Equipment to warehouses designated by
Trustee or taking such other steps as are deemed reasonably necessary by Trustee
to maintain Trustee's control of the Inventory and Equipment, (v) marking
conspicuously each document, contract, chattel paper and all records pertaining
to the Collateral with a legend, in form and substance satisfactory to Trustee,
indicating that such document, contract, chattel paper, or Collateral is subject
to the security interest granted hereby.
SECTION 7. Financing Statements. To the extent permitted by
applicable law, Grantor hereby authorizes Trustee to file one or more financing
or continuation statements and amendments thereto, disclosing the security
interest granted to Trustee under this Agreement without Grantor's signature
appearing thereon and Trustee agrees to notify Grantor when such a filing has
been made. Grantor agrees that a carbon, photographic, photostatic, or other
reproduction of this Agreement or of a financing statement is sufficient as a
financing statement. If any Inventory or Equipment is in the possession or
control of any warehouseman or Grantor's agents or processors, Grantor shall,
upon Trustee's request, notify such warehouseman, agent or processor of
Trustee's security interest in such Inventory and Equipment and, upon Trustee's
request, instruct them to hold all such Inventory or Equipment for Trustee's
account and subject to Trustee's instructions.
SECTION 8. Filing Costs. Grantor shall pay the costs of, or
incidental to, all recordings or filings of all financing statements, including,
without limitation, any filing expenses incurred by Trustee pursuant to
Section 7.
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SECTION 9. Schedule of Collateral. Grantor shall furnish to Trustee
from time to time statements and schedules further identifying and describing
the Collateral and such other reports in connection with the Collateral as
Trustee may reasonably request, all in reasonable detail.
SECTION 10. Equipment and Inventory. Grantor covenants and agrees
with Trustee that from the date of this Agreement and until termination of this
Agreement pursuant to Section 25, Grantor shall:
(a) Keep the Equipment and Inventory (other than Equipment or
Inventory sold in the ordinary course of business) at the places specified in
Section 5(a), except for Equipment and Inventory (i) temporarily in transit
between such locations or (ii) temporarily stored at locations set forth on
Schedule 2-A, and use its best efforts to deliver written notice to Trustee at
least thirty (30) days prior to establishing any other location at which or
third party with which it reasonably expects to maintain Inventory and/or
Equipment in which location or with which third party all action required by
this Agreement shall have been taken with respect to all such Equipment and
Inventory;
(b) Cause all property used or useful in the conduct of its business
to be maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and shall cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the judgment of Grantor may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section 10(b) shall prevent Grantor from
discontinuing the operation or maintenance of any of such property if such
discontinuance is, in the judgment of Grantor, desirable in the conduct of its
business and not disadvantageous in any material respect to the Trustee or the
Holders;
(c) Comply with the terms of the Indenture with respect to such
Equipment and Inventory, including, without limitation, the maintenance of
insurance provisions set forth in Section 4.22 of the Indenture.
SECTION 11. Partial Release of Collateral. So long as no Event of
Default has occurred and is continuing under the Indenture, Collateral may be
released from the security interest created by this Agreement at any time or
from time to time upon the request of the Grantor pursuant to an Officers'
Certificate (as defined in the Indenture) certifying that all terms for release
and conditions precedent hereunder and in the Indenture have been met and
specifying: (i) the identity of the Collateral to be released and (ii) the
provision of the Indenture or this Agreement which authorizes such release. The
Trustee shall release (at the sole cost and expense of the Grantor) (i)
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Equipment which may have become obsolete or unfit for use or no longer useful,
necessary or profitable in the conduct of the business of the Grantor, upon
substituting other Equipment not necessarily of the same character but of at
least equal value to the Grantor as the property disposed of, which shall
become Collateral hereunder, subject to the security interest of this
Agreement; (ii) Collateral that is condemned, seized or taken by the power of
eminent domain; (iii) upon Delivery of the Permanent Vessel and the execution
of the First Preferred Ship Mortgage on the Permanent Vessel by the Trustee,
the Collateral which is directly required and used solely in connection with
the Chartered Vessel, provided that the net proceeds thereof are applied as
required by the Indenture; (iv) Collateral which is destroyed or damaged in an
Event of Loss (as defined in the Indenture) provided that the net proceeds
thereof are applied as required by the Indenture or (v) as otherwise permitted
by the Indenture.
SECTION 12. Trademark Licenses. As long as no Event of Default has
occurred and is continuing, nothing set forth herein or in any other Collateral
Document is intended or shall be construed to prevent the Grantor from entering
into license agreements pertaining to the Trademarks (as such term is defined in
the Trademark Security Agreement); provided that Grantor will not, without the
Trustee's prior written consent, enter into any license agreement which is
inconsistent with the Trademark Security Agreement.
SECTION 13. General Covenants. Grantor covenants and agrees with
Trustee that from and after the date of this Agreement and until termination of
this Agreement pursuant to Section 25, Grantor shall:
(a) Keep and maintain at Grantor's own cost and expense satisfactory
and complete records of Grantor's Collateral in a manner consistent with
Grantor's current business practice, including, without limitation, a record of
all payments received and all credits granted with respect to such Collateral.
Grantor shall, for Trustee's further security, at Trustee's request deliver and
turn over to Trustee or Trustee's designated representatives at any time
following the occurrence and during the continuation of an Event of Default, any
such books and records (including, without limitation, any and all computer
tapes, programs and source and object codes relating to such Collateral in which
Grantor has an interest or any part or parts thereof); and
(b) Grantor will not create, permit or suffer to exist, and will
defend the Collateral against, and take such other action as is necessary to
remove, any Lien on such Collateral other than liens permitted by the Indenture,
and will defend the right, title and interest of Trustee in and to Grantor's
rights to such Collateral, including, without limita-
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tion, the proceeds and products thereof, against the claims and demands of all
Persons whatsoever.
SECTION 14. Trustee Appointed Attorney-in-Fact. Grantor hereby
irrevocably appoints Trustee as Grantor's attorney-in-fact, with full authority
in the place and stead of Grantor and in the name of Grantor or otherwise, from
time to time in Trustee's discretion, to take any action and to execute any
instrument which Trustee may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation, (a) following the
occurrence and during the continuance of an Event of Default, to:
(i) obtain and adjust insurance required to be paid to the Trustee or
any Holders pursuant to the Indenture;
(ii) ask, demand, collect, sue for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(iii) receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (i) or (ii) above;
and
(iv) file any claims or take any action or institute any proceedings
which Trustee may deem necessary or desirable for the collection of any of
the Collateral, or otherwise to enforce the rights of Trustee with respect
to any of the Collateral;
and (b) at any time, to:
(i) obtain access to records maintained for Grantor by
computer services companies and other service companies or
bureaus; and
(ii) do all other things reasonably necessary to carry out
this Agreement.
SECTION 15. Trustee May Perform. If Grantor fails to perform any
agreement contained herein or in the Indenture, Trustee may, upon three days
prior notice to the Grantor, perform, or cause performance of, such agreement,
and the expenses of Trustee incurred in connection therewith shall be payable by
Grantor under Section 22.
SECTION 16. Trustee's Duties. The powers conferred on Trustee 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 safe custody of any
Collateral in its possession and the accounting for monies actually received by
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it hereunder, Trustee shall not have any duty as to any Collateral. Trustee
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which Trustee accords its own property,
it being understood that Trustee shall be under no obligation to take any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral, but may do so at its option, and all reasonable
expenses incurred in connection therewith shall be for the sole account of
Grantor and shall be added to the Secured Obligations.
SECTION 17. Remedies. (a) If any Event of Default shall have
occurred and be continuing:
(i) Trustee shall have, in addition to other rights and remedies provided
for herein or otherwise available to it, all the rights and remedies of a
secured party upon default under the UCC (whether or not the UCC applies to the
affected Collateral) and further, Trustee may, without notice, demand or legal
process of any kind (except as may be required by law), all of which Grantor
waives, at any time or times, (x) enter Grantor's owned or leased premises and
take physical possession of the Collateral and maintain such possession on
Grantor's owned or leased premises, at no cost to Trustee or any of the Holders,
or remove the Collateral, or any part thereof, to such other place(s) as Trustee
may desire, (y) require Grantor to, and Grantor hereby agrees that it will at
its expense and upon request of Trustee forthwith, assemble all or any part of
the Collateral as directed by Trustee and make it available to Trustee at a
place to be designated by Trustee which is reasonably convenient to Trustee and
(z) without notice except as specified below, sell, lease, assign, grant an
option or options to purchase or otherwise dispose of the Collateral or any part
thereof at public or private sale, at any exchange, broker's board or at any of
the offices of Trustee or elsewhere, for cash, on credit or for future delivery,
and upon such other terms as Trustee may deem commercially reasonable. Grantor
agrees that, to the extent notice of sale shall be required by law, at least ten
(10) days' notice to Grantor of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable
notification. Trustee shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. Trustee may adjourn any public
or private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned;
(ii) Trustee shall apply all cash proceeds received by Trustee in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral (after payment of any amounts payable to Trustee pursuant
to Section 22), for the benefit of the Holders, against all or any part of the
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Secured Obligations in such order as may be required by the Indenture. Any
surplus of such cash or cash proceeds held by Trustee and remaining after
payment in full of all the Secured Obligations shall be paid over to Grantor or
to whomsoever may be lawfully entitled to receive such surplus;
(b) The rights and remedies provided under this Agreement are
cumulative and may be exercised singly or concurrently and are not exclusive of
any rights and remedies provided by law or equity.
SECTION 18. Exercise of Remedies. In connection with the exercise
of its remedies pursuant to Section 17, Trustee may, (i) exchange, enforce,
waive or release any portion of the Collateral and any other security for the
Secured Obligations; (ii) apply such Collateral or security and direct the order
or manner of sale thereof as Trustee may, from time to time, determine; and
(iii) settle, compromise, collect or otherwise liquidate any such Collateral or
security in any manner following the occurrence of an Event of Default, without
affecting or impairing Trustee's right to take any other further action with
respect to any Collateral or security or any part thereof.
SECTION 19. License. Trustee is hereby granted a license or other
right to use, following the occurrence and during the continuance of an Event of
Default, without charge, (a) Grantor's labels, patents, copyrights, trade
secrets, trade names, trademarks, service marks, customer lists and advertising
matter, or any property of a similar nature, as it pertains to the Collateral,
in completing production of, advertising for sale, and selling any Collateral,
provided that Trustee uses quality standards at least substantially equivalent
to those of Grantor for the manufacture, advertising, sale and distribution of
Grantor's products and services and (b) Grantor's rights under all licenses and
all franchise agreements shall inure to Trustee's benefit.
SECTION 20. Injunctive Relief. Grantor recognizes that in the event
Grantor fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy of law may prove to be inadequate
relief to the Holders; therefore, Grantor agrees that the Holders, if Trustee so
determines and requests, shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages.
SECTION 21. Interpretation and Inconsistencies; Merger.
(a) The rights and duties created by this Agreement shall, in all
cases, be interpreted consistently with, and shall be in addition to (and not in
lieu of), the rights and duties created by the Indenture and the other
Collateral Documents. In
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16
the event that any provision of this Agreement shall be inconsistent with any
provision of any other Collateral Document, such provision of the other
Collateral Document shall govern.
(b) Except as provided in subsection (a) above, this Agreement
represents the final agreement of the Grantor and the Trustee with respect to
the matters contained herein and may not be contradicted by evidence of prior or
contemporaneous agreements, or subsequent oral agreements, between the Grantor
and the Trustee or any other Holder.
SECTION 22. Expenses. Grantor will upon demand pay to Trustee and/or
the Holders the amount of any and all reasonable fees and expenses, including
the reasonable fees and expenses of their counsel and agents, as provided in
Section 7.07 of the Indenture.
SECTION 23. Amendments, Etc. Except as otherwise provided by the
Indenture, the consent of the Holders of at least a majority in principal amount
of the Notes then outstanding (including consents obtained in connection with a
tender offer or exchange offer for Notes) shall be required to amend, modify,
supplement, or waive any provision of this Agreement. Any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION 24. Notices. All notices and other communications provided
for hereunder shall be delivered in the manner set forth in Section 11.02 of the
Indenture.
SECTION 25. Continuing Security Interest; Termination. (a) Except as
provided in Section 25(b), this Agreement shall create a continuing security
interest in the Collateral and shall (i) remain in full force and effect until
the later of the payment or satisfaction in full of the Secured Obligations
(other than contingent indemnity obligations) and the termination of the
Indenture, (ii) be binding upon Grantor, its successors and assigns and (iii)
except to the extent that the rights of any transferor, or assignor are limited
by the terms of the Indenture, inure, together with the rights and remedies of
Trustee hereunder, to the benefit of Trustee and any of the Holders. Nothing
set forth herein or in any other Collateral Document is intended or shall be
construed to give any other Person any right, remedy or claim under, to or in
respect of this Agreement or any other Collateral Document or any Collateral.
Grantor's successors and assigns shall include, without limitation, a receiver,
trustee or debtor-in-possession thereof or therefor.
(b) Upon the payment in full in cash of the Secured Obligations
(other than contingent indemnity obligations) and the termination of the
Indenture, this Agreement and the security interest granted hereby shall
terminate and all rights to the
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Collateral shall revert to Grantor. Upon any such termination of security
interest, Grantor shall be entitled to the return, upon its request and at its
expense, of such of the Collateral held by Trustee as shall not have been sold
or otherwise applied pursuant to the terms hereof and Trustee will, at Grantor's
expense, execute and deliver to Grantor such other documents as Grantor shall
reasonably request to evidence such termination. In connection with any sales
of assets permitted under the Indenture, the Trustee will release and terminate
the liens and security interests granted under this Agreement with respect to
such assets.
SECTION 26. Severability. It is the parties' inten tion that this
Agreement be interpreted in such a way that it is valid and effective under
applicable law. However, if one or more of the provisions of this Agreement
shall for any reason be found to be invalid or unenforceable, the remaining
provisions of this Agreement shall be unimpaired.
SECTION 27. GOVERNING LAW. ANY DISPUTE BETWEEN THE GRANTOR AND THE
TRUSTEE OR ANY HOLDER ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL
TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT,
AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED
IN ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICTS OF LAWS
PROVISIONS) OF THE STATE OF INDIANA.
SECTION 28. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.
(A) NON-EXCLUSIVE JURISDICTION. THE GRANTOR HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW
YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE GRANTOR HEREBY IRREVOCABLY
AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM, BUT THE GRANTOR
ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE OF NEW YORK, NEW YORK.
(B) OTHER JURISDICTIONS. GRANTOR AGREES THAT THE TRUSTEE OR ANY
HOLDER SHALL HAVE THE RIGHT TO PROCEED AGAINST GRANTOR OR ITS PROPERTY IN A
COURT IN ANY LOCATION TO ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL JURISDICTION
OVER THE GRANTOR OR (2) REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
SECURED OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN
FAVOR OF SUCH PERSON. GRANTOR AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE
COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY SUCH PERSON TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE SECURED OBLIGATIONS OR TO ENFORCE A
JUDGMENT OR OTHER
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COURT ORDER IN FAVOR OF SUCH PERSON. GRANTOR WAIVES ANY OBJECTION THAT IT MAY
HAVE TO THE LOCATION OF THE COURT IN WHICH SUCH PERSON HAS COMMENCED A
PROCEEDING DESCRIBED IN THIS SUBSECTION.
(C) SERVICE OF PROCESS; INCONVENIENT FORUM. THE GRANTOR WAIVES
PERSONAL SERVICE OF PROCESS UPON IT AND AS ADDITIONAL SECURITY FOR THE SECURED
OBLIGATIONS, IRREVOCABLY APPOINTS CT CORPORATION SYSTEM, WHOSE ADDRESS IS ONE
NORTH CAPITOL AVENUE, INDIANAPOLIS, INDIANA 46204, AS GRANTOR'S AGENT FOR THE
PURPOSE OF ACCEPTING SERVICE OF PROCESS ISSUED BY ANY COURT. THE GRANTOR
IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH IN NEW YORK, NEW YORK.
(D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH,
RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO AGREES
AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
(E) WAIVER OF BOND. GRANTOR WAIVES THE POSTING OF ANY BOND OTHERWISE
REQUIRED OF ANY PARTY HERETO IN CONNECTION WITH ANY JUDICIAL PROCESS OR
PROCEEDING TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE SECURED
OBLIGATIONS OR TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
SUCH PARTY, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER,
PRELIMINARY OR PERMANENT INJUNCTION, THIS AGREEMENT.
(F) ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO EACH OTHER
PARTY HERETO THAT IT HAS DISCUSSED THIS AGREEMENT AND, SPECIFICALLY, THE
PROVISIONS OF THIS SECTION 28, WITH ITS COUNSEL.
SECTION 29. Gaming Laws. (a) Each of the provisions of this
Agreement is subject to, and shall be enforced in compliance with, the
provisions of any applicable laws, including, without limitation, the rules and
regulations of the Indiana Gaming Commission (together with the Indiana
Riverboat Gambling Act, the "Gaming Laws").
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19
(b) The Trustee acknowledges, understands and agrees that the Gaming
Laws may impose certain licensing or transaction approval requirements prior to
the exercise of the rights and remedies granted to it under the Agreement with
respect to the Collateral subject to the Gaming Laws.
(c) 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 Trustee in the
exercise of its rights hereunder, then Grantor agrees to use its reasonable best
efforts to secure such consent and to cooperate with the Trustee in obtaining
any such consent. Upon the occurrence and during the continuation of any Event
of Default, Grantor shall promptly execute and/or cause the execution of all
applications, certificates, instruments, and other documents and papers that the
Trustee may be required to file in order to obtain any necessary approvals under
the Gaming Laws, and if Grantor fails or refuses to execute such documents, the
Trustee or the clerk of the court with jurisdiction may execute such documents
on behalf of Grantor.
(d) Notwithstanding any other provision of this Agreement to the
contrary, nothing in this Agreement shall (i) effect any transfer of any
ownership interest (within the meaning of 68 Indiana Administrative Code 5) in
Grantor 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 (all within the
meaning of Indiana Code 4-33-4-21), any certificate of suitability or any
owner's license heretofore or hereafter issued to any person, including Grantor,
under any of the Gaming Laws, including Indiana Code 4-33.
SECTION 30. Interaction with Indenture. All terms, covenants,
conditions, provisions and requirements of the Indenture are incorporated by
reference in this Security Agreement. In the event of any conflict or
inconsistency between the provisions of this Security 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.
SECTION 31. Trust Indenture Act. If any provision of this Agreement
conflicts with any provision of the Trust Indenture Act, the provisions of the
Trust Indenture Act shall control.
SECTION 32. Appointment of Collateral Agent. The Trustee may, solely
at its discretion, appoint a collateral agent to enforce the rights and remedies
available to the Trustee under this Agreement.
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IN WITNESS WHEREOF, Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
THE MAJESTIC STAR CASINO, LLC
as the GRANTOR
By: Barden Development, Inc.
By: Kenneth L. Kramer
-------------------------------
Name: Kenneth L. Kramer
Title: Vice President
IBJ SCHRODER BANK & TRUST COMPANY,
as TRUSTEE
By: Nancy R. Besse
-------------------------------
Name: Nancy R. Besse
Title: Vice President
21
SCHEDULE 1
TO
SECURITY AGREEMENT
Pledged Debt:
None.
22
SCHEDULE 2
TO
SECURITY AGREEMENT
Locations of Collateral:
One Buffington Drive
Gary, Indiana 46406
504 Broadway
Gary, Indiana 46402
23
SCHEDULE 2-A
TO
SECURITY AGREEMENT
Third Party Locations:
Corporate Name of Description Maximum
Third Party Address of Relationship Amount
None.
24
SCHEDULE 2-B
TO
SECURITY AGREEMENT
Financing Statement Filing Locations:
None, except:
Office of Secretary of State of Indiana
25
SCHEDULE 3
TO
SECURITY AGREEMENT
Trade Names:
Majestic Star
Majestic Star Casino
Club M-Star