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EXHIBIT 10.8
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this "Agreement"), dated
as of December 31, 1998, is entered into by LAKES GAMING, INC. (formerly known
as GCI LAKES, INC.), a Minnesota corporation ("Debtor"), and FIRST UNION
NATIONAL BANK, a national banking association, as Trustee under the Trust
Agreement described below ("Trustee"), in favor of Grand Casinos, Inc., a
Minnesota corporation ("Secured Party").
RECITALS
A. Debtor and Secured Party are parties to a Distribution
Agreement, dated as of the date hereof, and certain ancillary agreements thereto
(collectively, the "Distribution Agreement").
B. Debtor, Secured Party, Hilton Hotels Corporation, a
Delaware corporation, Park Place Entertainment Corporation (formerly known as
Gaming Co., Inc.), a Delaware corporation, and Gaming Acquisition Corporation, a
Minnesota corporation, are parties to an Agreement and Plan of Merger, dated as
of June 30, 1998 (the "Merger Agreement" and, together with the Distribution
Agreement, the "Agreements").
C. The Agreements provide that Debtor shall indemnify, save
and hold harmless Secured Party and certain of its related parties, with respect
to certain matters upon the terms and subject to the conditions provided in the
respective Agreements and that as security therefor (and not in lieu thereof) a
trust estate shall be established for the protection of Secured Party, its
affiliates and subsidiaries.
D. Pursuant to, and as a condition of, the Merger Agreement,
(i) Debtor and Secured Party have entered into a Trust Agreement with Trustee,
as Trustee, dated as of (the date hereof as from time to time amended, the
"Trust Agreement"), under which Trustee owns and holds in trust, as set forth in
the Trust Agreement, the Trust Estate (as defined in the Trust Agreement), and
(ii) Debtor and Trustee are executing and delivering to Secured Party this
Agreement.
AGREEMENT
In consideration of the foregoing and the mutual promises
contained herein and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, Secured Party and Debtor, intending
to be legally bound, hereby agree as follows:
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ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1. Trust Agreement Definitions. The following terms
shall have the meanings assigned to them in the Trust Agreement:
"Cash Equivalents"
"Initial Trust Estate"
"Trust Estate"
Section 1.2. U.C.C. Definitions. Where applicable and except
as otherwise expressly provided herein, terms used herein (whether or not
capitalized) shall have the respective meanings assigned to them in the Uniform
Commercial Code as in effect in the State of New York on the date of the Merger
Agreement (the "UCC").
Section 1.3. Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings:
"Agreement to Pay" means the agreement to pay an amount of
$30,000,000 executed by Debtor in favor of Trustee, which agreement to pay
comprises part of the Trust Estate.
The "Agreements" is defined in Recital B of this Agreement.
This "Agreement" means this Pledge and Security Agreement.
"Cash Collateral Account" means the bank or other account into
which cash portions of the Trust Estate are to be deposited pursuant to and in
accordance with the terms of the Trust Agreement.
"Collateral" is defined in Section 2.1 of this Agreement.
"Collateral Agreement" is defined in Recital B of this
Agreement.
"Trust Agreement" is defined in Recital C of this Agreement.
"Debtor" is defined in the Preamble of this Agreement.
"Debtor Collateral" is defined in Section 2.1 of this
Agreement.
"Distribution Agreement" is defined in Recital A of this
Agreement.
"Event of Default" means any of the following events: (i)
Debtor's failure to pay any Secured Obligation (other than any obligations under
the Agreement to Pay) when due, and such failure continues for five calendar
days after either (A) it is acknowledged in writing by Debtor or (B) such
Secured Obligation is determined to be due and payable in arbitration
proceedings conducted in accordance with Section 21 of the Trust Agreement or by
order of a
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court of competent jurisdiction; (ii) Debtor's failure to pay any
obligation under the Agreement to Pay when due (iii) any representation or
warranty made by Debtor in this Agreement proves to have been inaccurate in any
material respect when made, and such inaccuracy continues for 10 calendar days
after written notice thereof is given to Debtor by Secured Party; (iv) Debtor
and/or Trustee fails to perform or observe any term, covenant or agreement
contained in the Trust Agreement or this Agreement, and such failure continues
for 10 calendar days after either (A) it is acknowledged in writing by Debtor or
Trustee or (B) such failure is determined to have occurred and such term,
covenant or agreement is determined to be enforceable in arbitration proceedings
conducted in accordance with Section 21 of the Trust Agreement or by order of a
court of competent jurisdiction; (v) Debtor admits in writing its inability to
pay its debts generally or makes a general assignment for the benefit of
creditors; (vi) any proceeding is instituted by or against Debtor seeking an
order for relief under the United States Bankruptcy Code or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part of its
property under any law relating to bankruptcy, insolvency, liquidation or
reorganization or relief of debtors and either (A) any such relief in any such
proceeding is sought or consented to by Debtor or an order for any such relief
is entered against Debtor, or (B) any such proceeding instituted against Debtor
remains undismissed and unstayed for a period of 60 calendar days; (vii) Debtor
takes any corporate action to authorize any of the actions described in clause
(vi) above; (viii) any provision of the Trust Agreement or this Agreement for
any reason ceases to be valid and binding on Debtor and/or Trustee in any
respect materially adverse to Secured Party or the holders of Secured
Obligations, and a valid and binding reasonably equivalent substitute is not
offered to Secured Party, to be held in trust as part of the Trust Estate,
within 10 calendar days after written notice thereof is given by Secured Party;
(ix) Debtor repudiates or purports to revoke or terminate, in any material
respect, any of its obligations under the Trust Agreement or this Agreement, and
such event continues for 10 calendar days after written notice thereof is given
to Debtor by Secured Party; or (x) this Agreement for any reason does not create
or this Agreement ceases to create a valid and perfected first priority security
interest in any property described herein as part of the Collateral, and such
event continues for 10 calendar days after written notice thereof is given to
Debtor and Trustee by Secured Party.
"Lien" means any mortgage, deed of trust, lien, pledge,
charge, security interest, hypothecation, assignment, deposit arrangement or
encumbrance of any kind in respect of any asset, whether or not filed, recorded
or otherwise perfected or effective under applicable law, as well as the
interest of a vendor or lessor under any conditional sale agreement, capital or
finance lease or other title retention agreement relating to such asset.
"Merger Agreement" is defined in Recital B of this Agreement.
"Proceeds" includes (i) any and all payments, dividends, cash,
options, warrants, rights, instruments and other property of any type or nature
at any time received, receivable or otherwise distributed, voluntarily or
involuntarily, on account of, in respect of or in replacement, substitution or
exchange for any item of Collateral or upon the collection, sale, or other
disposition of any item of Collateral; (ii) any and all insurance or payments
under any indemnity,
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warranty or guaranty now or hereafter payable in respect of
any item of Collateral or any proceeds thereof or any loss relating thereto;
(iii) any and all claims against any person or entity based on or in any respect
relating to or arising from any item of Collateral; (iv) any and all "proceeds"
of any Collateral, as the term "proceeds" is used in the UCC; and (v) any and
all property and interests in property acquired with or in exchange for any of
the foregoing.
"Secured Obligations" means (i) each and all present and
future indemnities, liabilities and obligations of every type and description of
Debtor at any time arising under, pursuant to or in respect of (A) the Merger
Agreement, (B) the Distribution Agreement; (C) this Agreement, or (D) the Trust
Agreement (in each case whether now outstanding or hereafter arising or
incurred, whether sole, joint, several, or joint and several) and (ii) each and
all present and future indemnities, liabilities and obligations of every type
and description of Trustee at any time arising under, pursuant to or in respect
of the Trust Agreement (in each case whether now outstanding or hereafter
arising or incurred, whether sole, joint, several, or joint and several) and, in
each case, all costs and expenses incurred by Secured Party in asserting,
collecting, enforcing or protecting its security interest in any Collateral in
any bankruptcy case or insolvency proceeding to which Debtor may be party and
all collection costs and enforcement expenses incurred by Secured Party in
retaking, holding, preparing for sale, selling or otherwise disposing of or
realizing on any Collateral or otherwise exercising or enforcing any of its
rights or remedies hereunder, together with Secured Party's reasonable
attorneys' fees and disbursements and court costs related thereto.
"Secured Party" means the person identified as such in the
preamble of this Agreement and any of its successors or assigns.
"Securities Act" is defined in Section 6.5 of this Agreement.
"Trustee" means the person identified as such in the preamble
of this Agreement, acting as Trustee under the Trust Agreement, and any
successor Trustee thereunder.
"Trustee Collateral" is defined in Section 2.1 of this
Agreement.
ARTICLE II.
SECURITY INTEREST AND COLLATERAL
Section 2.1. Creation of Security Interest.
(a) Debtor Collateral. As security for the due and punctual
payment and performance of each and all of the Secured Obligations, Debtor
hereby irrevocably grants Secured Party a security interest in all right, title
and interest of Debtor, to the extent Debtor has any such right, title or
interest, in, to, under or derived from the following property (collectively,
the "Debtor Collateral"), in each case whether now owned or hereafter acquired
by Debtor and wherever located:
(1) CASH, CASH EQUIVALENTS AND OTHER ASSETS OF THE TRUST
ESTATE: All cash, Cash Equivalents and other property of every
type
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and description now or at any time hereafter constituting part
of the Trust Estate or required by the terms of the Trust
Agreement to constitute part of the Trust Estate;
(2) INTEREST IN THE TRUST ESTATE OR UNDER THE TRUST AGREEMENT:
All rights and interests of every type and description,
whenever and however arising, in or to the Trust Estate or in,
to or under the Trust Agreement (including, without
limitation, the Agreement to Pay); and
(3) PROCEEDS: All Proceeds, except Proceeds that have been
released from the Trust Estate and delivered to Debtor
pursuant to the Trust Agreement.
(b) Trustee Collateral. As security for the due and punctual
payment and performance of each and all of the Secured Obligations, Trustee
hereby irrevocably grants Secured Party a security interest in all right, title
and interest of Trustee, in, to, under or derived from the following property
(collectively, the "Trustee Collateral" and, together with the Debtor
Collateral, the "Collateral"), in each case whether now owned or hereafter
acquired by Debtor and wherever located:
(4) CASH, CASH EQUIVALENTS AND OTHER ASSETS OF THE TRUST
ESTATE: All cash, Cash Equivalents and other property of every
type and description now or at any time hereafter constituting
part of the Trust Estate or required by the terms of the Trust
Agreement to constitute part of the Trust Estate;
(5) INTEREST IN THE TRUST ESTATE OR UNDER THE TRUST AGREEMENT:
All rights and interests of every type and description,
whenever and however arising, in or to the Trust Estate or in,
to or under the Trust Agreement (including, without
limitation, the Agreement to Pay); and
(6) PROCEEDS: All Proceeds, except Proceeds that have been
released from the Trust Estate and delivered to Debtor
pursuant to the Trust Agreement.
Section 2.2. Delivery of Instruments; Deposit of Funds. All
stock certificates, notes, bonds, debentures and other instruments, if any,
constituting Collateral shall be delivered to and held by Secured Party, without
any notice from or demand by Secured Party, in each case in suitable form for
transfer by delivery or accompanied by duly executed instruments of transfer or
assignments in blank or with appropriate endorsements, in form and substance
satisfactory to Secured Party. All cash (including Proceeds in the form of cash)
constituting Collateral shall be deposited (in a manner acceptable to Secured
Party) in the Cash Collateral Account, to be held by Secured Party, without
notice from or demand, by Secured Party.
Section 2.3. Further Assurances. Each of Debtor and Trustee
will promptly (and in no event later than five days after request by Secured
Party) execute and deliver, and use its reasonable best efforts to obtain from
others, any and all instruments, certificated securities and documents
(including, without limitation, assignments, transfer documents and transfer
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notices, financing statements and other lien notices), in form and substance
satisfactory to Secured Party, and take all other actions (including, without
limitation, the deposit of funds) which are necessary or, in the good faith
judgment of Secured Party, desirable or appropriate to create, perfect, protect,
or enforce Secured Party's security interests in the Collateral, to enable
Secured Party to exercise and enforce its rights and remedies hereunder with
respect to any Collateral, to protect the Collateral against the rights, claims
or interests of third persons, or to effect or to assure further the purposes
and provisions of this Agreement, and Debtor will pay all costs related thereto
and all reasonable expenses incurred by Secured Party and the Trustee in
connection therewith.
Section 2.4. Survival of Security Interest. Except as
otherwise required by law, the security interest granted hereby shall, except as
to property released from the Trust Estate and delivered to or for account of
Debtor by Trustee pursuant to, and in accordance with, the Trust Agreement, (i)
remain enforceable as security for any and all Secured Obligations, whether now
outstanding or created or incurred at any future time, until all of the Secured
Obligations have been indefeasibly paid, retired and discharged in full, and
(ii) survive any sale, exchange or other disposition by Debtor or Trustee of its
interest in any Collateral and remain enforceable against each transferee and
subsequent owner of such interest (to the fullest extent permitted under
applicable law), even if such sale, exchange or other disposition is permitted
at the time under the Trust Agreement.
Section 2.5. Reinstatement. If at any time any payment on any
Secured Obligation is set aside, avoided, or rescinded or must otherwise be
restored or returned, this Agreement and the security interest created hereby
shall remain in full force and effect and, if previously released or terminated,
shall be automatically and fully reinstated, without any necessity for any act,
consent or agreement of Debtor, as fully as if such payment had never been made
and as fully as if any such release or termination had never become effective.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties. Each of Debtor,
Trustee and Secured Party represents and warrants, severally and not jointly,
that with respect to itself only:
(a) Debtor's chief executive office is located in Hennepin
County, Minnesota. Trustee's chief executive office is located in Charlotte,
North Carolina.
(b) It at all times is (or, as to any item of Collateral
acquired after the date hereof, will be) the sole legal and beneficial owner of
all Collateral reflected on its books and records as belonging to it and has
exclusive possession and control thereof free and clear of any and all Liens,
subject to the Trust Agreement and this Agreement and the interests, possession
and control granted thereunder. No financing statement, notice of lien,
mortgage, deed of trust or instrument similar in effect covering the Collateral,
any portion thereof, or any proceeds thereof, exists or is on file in any public
office, except as may have been filed in favor of Secured Party.
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(c) Except for the UCC, neither it nor any Collateral
purported to be granted by it is subject to any requirement of law or
contractual obligation which prohibits, restricts, or limits the execution,
delivery or performance of this Agreement or the creation, perfection or
enforcement of the security interest purported to be created hereby.
(d) Debtor's United States federal taxpayer identification
number is: 41-1913991. Trustee's United States federal taxpayer identification
number is: 56-0900030.
(e) It is a corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction in which it is organized
and is duly qualified to do business and in good standing in each jurisdiction
where its assets are located or its operations are conducted, except where the
failure to be so qualified could not reasonably be expected to cause a change
that would be material and adverse to it or to Secured Party's rights under this
Agreement.
(f) It has the corporate power to execute, deliver and perform
its obligations under the Trust Agreement and this Agreement.
(g) Its execution, delivery and performance of each of the
Trust Agreement and this Agreement (i) have been duly authorized by all
necessary action of its board of directors, (ii) do not contravene its
certificate or articles of incorporation or by-laws or any other governing
document, and (iii) do not and will not result in or require the creation of any
Lien (other than pursuant to the Trust Agreement and this Agreement) upon any of
its property or assets.
(h) No authorization or approval or other action by, and no
notice to or filing with, any governmental officer, department, agency or
authority is required for the due execution, delivery and performance by it of
each of the Trust Agreement and this Agreement, except the filing of required
financing statements, if any, to perfect Secured Party's security interest which
have been duly filed.
(i) Each of the Trust Agreement and this Agreement is a legal,
valid and binding obligation of it, enforceable against it in accordance with
its respective terms, subject to applicable laws generally affecting the
enforcement of creditors' rights.
(j) Its execution, delivery and performance of each of the
Trust Agreement and this Agreement (i) does and will comply with all applicable
laws, (ii) does and will comply with, and does not and will not conflict with,
constitute a breach of or give rise to any Lien, default, event of default or
other adverse consequence under, any note, indenture, undertaking, agreement or
other contractual obligation that is binding upon Debtor or secured by or
enforceable against any property of Debtor, except for such conflicts, breaches,
Liens, defaults, events of default or other adverse consequences that could not,
individually or in the aggregate, have a material adverse effect on Debtor or,
with respect to the Secured Party, on Secured Party's rights under this
Agreement.
(k) Secured Party holds an enforceable and perfected first
Lien in the Collateral. No other Liens are outstanding against the Collateral.
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ARTICLE IV.
COVENANTS
Section 4.1. Covenants. Each of Debtor and Trustee covenants
and agrees that so long as the security interest created hereby remains
outstanding and/or so long as required by the Trust Agreement:
(a) As and when required by the Trust Agreement, it will (i)
deliver to Secured Party each instrument and certificated security included in
the Collateral as set forth in Article II and (ii) deposit in the Cash
Collateral Account all cash (including Proceeds in the form of cash)
constituting Collateral included in the Collateral as set forth in Article II or
required to be deposited or otherwise delivered to the Secured Party pursuant to
the terms of this Agreement or the Trust Agreement.
(b) It will (i) notify, in a reasonably prompt manner, the
Secured Party of any change in its name, identity or corporate structure, or in
the location of its chief executive office, or (ii) not keep any tangible
Collateral or any records relating to any Claim owned by it, or permit or suffer
any such Collateral or records to be moved, to any other location unless (in
each case) an appropriate financing statement has been filed in the proper
office and in the proper form, and all other requisite actions have been taken,
to perfect or continue the perfection (without loss of priority) of Secured
Party's security interest in the Collateral.
(c) It will defend, at Debtor's expense, the Collateral
against all claims and demands of all persons at any time claiming the same or
any interest therein.
(d) It will not encumber, sell, exchange or otherwise dispose
of any item of Collateral or any interest therein, or permit or suffer any such
item to be encumbered, sold, exchanged or otherwise disposed of, unless (i) such
action is permitted at the time under the Trust Agreement and (ii) it makes all
payments on account of the Secured Obligations required to be made therefrom, or
in exchange or substitution therefor, and it takes all other actions required to
be taken in connection therewith, under the Trust Agreement.
(e) Secured Party is hereby authorized to file one or more
financing statements or fixture filings, and continuations thereof and
amendments thereto, relative to all or any part of the Collateral, without the
signature of Debtor or Trustee where permitted by law. A copy of this Agreement
may be filed as a financing statement wherever permitted by law.
(f) Secured Party may at any time (but shall not be obligated
to) (i) perform any of the obligations of Debtor or Trustee under this Agreement
if Debtor or Trustee fails to perform such obligation within five calendar days
after written demand by Secured Party and (ii) make any payments and do any
other acts Secured Party may deem necessary or desirable to protect its security
interest in the Collateral, including, without limitation, the right to pay,
purchase, contest or compromise any Lien that attaches or is asserted against
any Collateral and to appear in and defend any action or proceeding relating to
the Collateral, and Debtor will promptly reimburse Secured Party for all
payments made by Secured Party in doing so, together
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with interest thereon at the judgment rate and all costs and expenses related
thereto as set forth in Section 9.10.
ARTICLE V.
INTEREST AND DISTRIBUTIONS
Section 5.1. Distributions and Payments. Trustee shall be
entitled to hold as part of the Trust Estate, subject to the Trust Agreement,
all income, interest or distributions from cash, Cash Equivalents and all
Proceeds, provided that such income, interest or distributions shall be pledged
as Collateral hereunder.
ARTICLE VI.
DEFAULTS AND REMEDIES
Section 6.1. Remedies. Upon and at any time after the
occurrence of any Event of Default, and from time to time on each occasion when
an Event of Default has occurred and is continuing, Secured Party may exercise
and enforce each and all of the rights and remedies available to a secured party
upon default under the UCC or other applicable law.
(a) Secured Party may cause any or all instruments or
investment securities, if any, constituting part of the Trust Estate to be
transferred into Secured Party's name and exercise and enforce any or all of the
rights, interests, privileges and remedies of a holder against the issuer
thereof, as freely and fully as if Secured Party were the absolute owner but as
a secured party and as part of the Trust Estate.
(b) Secured Party may sell or otherwise dispose of any or all
of the Collateral or any part thereof in one or more parcels and from time to
time in any quantity or portion and on any number of occasions, at a public sale
or in a private sale or transaction, on any exchange or market or at Secured
Party's offices or at any other location, for cash, on credit or for future
delivery, and may enter into all contracts necessary or appropriate in
connection therewith, without any notice whatsoever unless required by law.
(c) Debtor agrees that at least 10 calendar days' written
notice to Debtor of the time and place of any public sale or the time after
which any private sale is to be made shall be commercially reasonable. The
giving of notice of any such sale or other disposition shall not obligate
Secured Party to proceed with the sale or disposition, and any such sale or
disposition may be postponed or adjourned from time to time, without further
notice.
Section 6.2. Remedies Cumulative. Secured Party may exercise
and enforce each right and remedy available to it upon the occurrence of an
Event of Default either before or concurrently with or after, and independently
of, any exercise or enforcement of any other right or remedy of Secured Party or
any holder of any Secured Obligation against any person, entity or property. All
such rights and remedies shall be cumulative, and no one of them shall exclude
or preclude any other.
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Section 6.3. Surplus: Deficiency. Any surplus proceeds of any
sale or other disposition of Collateral by Secured Party remaining after all the
Secured Obligations are indefeasibly paid in full and discharged shall be paid
over to Debtor or to whomever may be lawfully entitled to receive such surplus
or as a court of competent jurisdiction may direct, except that if any
contingent, unliquidated or unmatured Secured Obligation then remains
outstanding, such surplus proceeds may be retained by Secured Party and held as
Collateral until such time as all outstanding Secured Obligations have been
determined, liquidated and indefeasibly paid in full and discharged. Debtor
shall be and remain liable for any deficiency.
Section 6.4. No Recourse to Trustee. As to Trustee only
(without in any way affecting Secured Party's rights as to Debtor), upon and
Event of Default, Secured Party shall look solely to the Collateral, and not to
Trustee's other assets or property, for relief and Secured Party shall have no
recourse to any of Trustee's other assets or property.
ARTICLE VII.
THE SECURED PARTY
Section 7.1. No Liability. Secured Party makes no statement,
promise, representation or warranty whatsoever, and shall have no liability
whatsoever, to any holder of any Secured Obligations as to the authorization,
execution, delivery, legality, enforceability or sufficiency of this Agreement
or as to the creation, perfection, priority or enforceability of any security
interest granted hereunder or as to the existence, ownership, quality,
condition, value or sufficiency of any Collateral or as to any other matter
whatsoever.
Section 7.2. Holders Bound. Except where the consent of others
may be required pursuant to the express provisions of the Trust Agreement, any
modification, amendment, waiver, termination or discharge of any security
interest, right, remedy, power or benefit conferred upon Secured Party hereby
that is effectuated in a writing signed by Secured Party shall be binding upon
all holders of Secured Obligations if it is authorized in the Trust Agreement.
Section 7.3. Duty of Care. Neither Secured Party nor any
director, officer, employee, attorney or agent of Secured Party shall be
obligated to care for the Collateral hereunder or to collect, enforce, vote, or
protect the Collateral or any rights or interests of Debtor related thereto or
to preserve or enforce any rights which Debtor or any other Person may have
against any third party, except only that Secured Party shall exercise
reasonable care in physically safekeeping any item of Collateral that was
delivered into Secured Party's possession. Secured Party or Trustee shall be
deemed to have exercised such reasonable care if the Collateral is accorded
treatment substantially equal to that which Secured Party accords to its own
property or if it selects, with reasonable care, a custodian or agent to hold
such Collateral for Secured Party's account.
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ARTICLE VIII.
EXONERATION AND WAIVERS
Section 8.1. Rights and Interests Not Prejudiced, Affected or
Impaired.None of (i) the security interests granted hereby, (ii) the trusts and
interests created under the Trust Agreement, (iii) any power, privilege, right
or remedy of Secured Party relating thereto, or (iv) the beneficial interest of
Secured Party and other holders of Secured Obligations therein and thereunder
shall at any time in any way be prejudiced, affected or impaired by any act or
failure to act on the part of Debtor or by any act or failure to act on the part
of Trustee or Secured Party or any other holder of Secured Obligations or by any
breach or default by any of them in the performance or observance of any
promise, covenant or obligation enforceable by Debtor, regardless of any
knowledge thereof that Trustee or Secured Party or any such other holder may
have or otherwise be charged with.
(a) Without in any way limiting the generality of the
foregoing, Secured Party and each other holder of any Secured Obligations may at
any time and from time to time without incurring any responsibility or liability
to Debtor or Trustee and without in any manner prejudicing, affecting or
impairing any such security interest, trust, interest, power, privilege, right
or remedy or the obligations of Debtor or Trustee to Secured Party and the other
holders of Secured Obligations:
(i) Make loans and advances to Debtor, or
issue, guaranty or obtain letters of credit for account of
Debtor or otherwise extend credit to Debtor, in any amount and
without any limitation or restriction whatsoever, on any
terms, whether pursuant to a commitment or as a discretionary
advance and whether or not any default or Event of Default or
failure of condition is then continuing;
(ii) Change the manner, place or terms of
payment or extend the time of payment of, or renew or alter,
compromise, accelerate, extend, refinance, release or
discharge, any Secured Obligation or any other indebtedness or
liability of Debtor or Trustee or any agreement, guaranty,
lien or obligation of Debtor or Trustee or any other person or
entity in any manner related thereto, or otherwise amend,
supplement or change in any manner any Secured Obligation or
any such indebtedness or liability or any such agreement,
guaranty, lien or obligation;
(iii) In any manner modify, transform,
change, refinance, replace, reclassify, subordinate or
recharacterize any such indebtedness or liability;
(iv) Without the consent of or notice to
Debtor or Trustee, release or discharge any guaranty or any
other Lien, right, remedy or claim against any person or
entity;
(v) Without the consent of or notice to
Debtor or Trustee, take or fail to take any collateral
security for any Secured Obligation or take or fail to
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take any action which may be necessary or appropriate to
ensure that any lien upon any property securing any Secured
Obligation is duly enforceable or perfected or entitled to
priority as against any other Lien or to ensure that any
proceeds of any property subject to any Lien are applied to
the payment of any Secured Obligation;
(vi) Without the consent of or notice to
Debtor or Trustee, release, discharge or permit the lapse of
any or all Liens upon any property at any time securing any
Secured Obligation;
(vii) Without the consent of or notice to
Debtor or Trustee (except as required by applicable law),
exercise or enforce, in any manner, order or sequence, or fail
to exercise or enforce, any right or remedy against Debtor or
Trustee or in respect of the Collateral or the Trust Estate or
any other collateral security or any other person, entity or
property in respect of any Secured Obligation or Lien securing
any Secured Obligation or any right under this Agreement or
the Trust Agreement; or
(viii) Without the consent of or notice to
Debtor or Trustee, sell, exchange, release, foreclose upon or
otherwise deal with any property that may at any time be
subject to any Lien securing any Secured Obligation.
(b) No exercise, delay in exercising or failure to exercise
any right arising under this Agreement or the Trust Agreement, no act or
omission of Secured Party or any other holder of any Secured Obligation in
respect of Debtor or any other person or entity or the Collateral or the Trust
Estate or any other collateral security for any Secured Obligation or any right
arising under this Agreement or the Trust Agreement, no change, impairment, or
suspension of any right or remedy of Secured Party or any other holder of any
Secured Obligation, and no other act, failure to act, circumstance, occurrence
or event which, but for this provision, would or could act as a release or
exoneration of the obligations of Debtor or Trustee shall in any way affect,
decrease, diminish or impair any of the obligations of Debtor or Trustee under
this Agreement or give Debtor or any other person or entity any recourse or
defense against Secured Party or any other holder of Secured Obligations in
respect of any security interest, trust, interest, power, privilege, right or
remedy arising under this Agreement or the Trust Agreement.
ARTICLE IX.
MISCELLANEOUS PROVISIONS
Section 9.1. Notices. All notices, requests, approvals,
consents and other communications required or permitted to be made hereunder
shall, except as otherwise provided, be given in the manner specified and to the
addresses set forth in Section 13 of the Trust Agreement.
Section 9.2. Headings. The various headings in this Agreement
are inserted for convenience only and shall not affect the meaning or
interpretation of this Agreement or any provision hereof.
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Section 9.3. Changes. This Agreement or any provision hereof
may be changed, waived, or terminated only by a statement in writing signed by
the party against which such change, waiver or termination is sought to be
enforced. Any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
Section 9.4. Debtor Remains Liable. Debtor shall remain liable
under all contracts and agreements, if any, 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. The exercise or
enforcement by Secured Party of any of its rights and remedies under this
Agreement or in respect of the Collateral shall not release Debtor from any of
its duties or obligations under any such contracts or agreements. Neither
Secured Party nor Trustee shall be obligated to perform any such duties or
obligations or shall be liable for any breach thereof.
Section 9.5. No Waiver. No failure by Secured Party to
exercise, or delay by Secured Party in exercising, any power, right or remedy
under this Agreement shall operate as a waiver thereof. No waiver by Secured
Party shall be effective unless given in a writing signed by it. No waiver so
given shall operate as a waiver in respect of any other matter or in respect of
the same matter on a future occasion. Acceptance of or acquiescence in a course
of performance in respect of this Agreement shall not waive or affect the
construction or interpretation of the terms of this Agreement even if the
accepting or acquiescing party had knowledge of the nature of the performance
and opportunity for objection.
Section 9.6. Entire Agreement. This Agreement and the Trust
Agreement are intended by the parties as a final expression of their agreement
and a complete and exclusive statement of the terms and conditions related to
the subject matter thereof.
Section 9.7. Severability. If any provision of this Agreement
is invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions hereof, or of such provision in
any other application, shall not be in any way affected or impaired thereby and
such other provisions and applications shall be enforceable to the fullest
extent lawful.
Section 9.8. Power of Attorney. Each of Debtor and Trustee
hereby appoints and constitutes Secured Party or any delegate, nominee or agent
acting for Secured Party as Debtor's and Trustee's attorney-in-fact with the
power and authority (but not the duty), in the name of Debtor or Trustee or in
the name of Secured Party or such delegate, nominee or agent, to (i) execute,
deliver and file such financing statements, agreements, deeds and writings as
Debtor or Trustee is required to execute, deliver or file hereunder, (ii)
endorse, collect or transfer any item of Collateral which Debtor or Trustee is
required to endorse, collect or transfer hereunder or which Secured Party is
permitted to endorse, collect or transfer hereunder, (iii) make any payments or
take any action under Section 2.3 or Section 4.1(f), (iv) take any other action
required of Debtor or Trustee or permitted to Secured Party hereunder, and (v)
take any action reasonably necessary or incidental to any of the foregoing. This
power of attorney is coupled
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with an interest and is irrevocable as to Debtor and Trustee. Secured Party
shall have no duty whatsoever to exercise any power herein granted it.
Section 9.9. Counterparts. This Agreement and any amendments,
waivers, consents or supplements may be executed in any number of counterparts,
each of which when so executed and delivered shall be deemed an original, but
all of which shall together constitute one and the same agreement.
Section 9.10. Costs and Expenses; Indemnification. Debtor
hereby agrees (i) to pay or reimburse Secured Party and Trustee for all
reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees and disbursements and court costs) incurred in connection with
or as a result of the exercise or enforcement by Secured Party and Trustee of
any right or remedy available to it or the protection or enforcement of Secured
Party's interest in the Collateral in any bankruptcy case or insolvency
proceeding and (ii) to indemnify Secured Party and Trustee for, and defend and
hold it harmless against, any loss, liability or expense incurred by it in
connection with its entering into this Agreement or carrying out any of its
duties or exercising any of its rights hereunder, on the terms and subject to
the limitations set forth in Section 11 of the Trust Agreement.
Section 9.11. GOVERNING LAW; ARBITRATION; LIMITATION OF
LIABILITY; WAIVER OF BOND.
(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT
THE PERFECTION OF THE SECURITY INTERESTS HEREUNDER IN RESPECT OF ANY PARTICULAR
COLLATERAL IS GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW
YORK.
(b) ARBITRATION. THE PARTIES HERETO AGREE THAT ANY DISPUTE,
CONTROVERSY OR DISAGREEMENT BETWEEN THE PARTIES RELATED TO THE OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT IN RESPECT OF WHICH RESOLUTION CANNOT BE
REACHED SHALL BE SUBMITTED FOR MEDIATION AND FINAL AND BINDING ARBITRATION IN
ACCORDANCE WITH SECTION 9.14 OF THE DISTRIBUTION AGREEMENT, INCLUDING SECTION
9.14(C) THEREOF REGARDING THE PARTIES' ABILITY TO SEEK SPECIFIC PERFORMANCE OR
INJUNCTIVE RELIEF THEREOF.
(c) LIMITATION OF LIABILITY. NO CLAIM MAY BE MADE BY DEBTOR OR
TRUSTEE AGAINST SECURED PARTY OR THE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES,
ATTORNEYS OR AGENTS OF SECURED PARTY FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR
PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM (WHETHER BASED UPON BREACH OF CONTRACT,
TORT, BREACH OF STATUTORY DUTY OR ANY OTHER THEORY OF LIABILITY) ARISING OUT OF
OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, OR ANY ACT,
OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, AND DEBTOR HEREBY WAIVES,
RELEASES AND AGREES NOT TO
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SUE UPON ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT NOW ACCRUED AND WHETHER
OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
(d) WAIVER OF BOND. EACH OF DEBTOR AND TRUSTEE WAIVES THE
POSTING OF ANY BOND OTHERWISE REQUIRED OF SECURED PARTY IN CONNECTION WITH THE
ENFORCEMENT OF ANY OF ITS REMEDIES HEREUNDER, INCLUDING, WITHOUT LIMITATION, ANY
ORDER OR WRIT FOR REPLEVIN OR DELIVERY OF POSSESSION OF ANY COLLATERAL.
Section 9.12. Successors and Assigns. This Agreement is
binding upon and enforceable against Debtor and its successors and assigns. This
Agreement is binding upon and enforceable against Trustee and its successors and
assigns. This Agreement shall inure to the benefit of and may be enforced by
Secured Party and its successors and assigns and each and every other person or
entity which at any time holds or is entitled to enforce any of the Secured
Obligations and each of their respective heirs, representatives, successors and
assigns. Trustee reserves the right to resign as Trustee under the Trust
Agreement, in the manner and with the effect set forth in Section 10(f) and
10(g) thereof.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
"DEBTOR"
LAKES GAMING, INC.,
a Minnesota corporation
By: /s/ TIMOTHY COPE
--------------------------
Name: Timothy Cope
Title: Chief Financial Officer
"SECURED PARTY"
GRAND CASINOS, INC.,
a Minnesota corporation
By: /s/ TIMOTHY COPE
---------------------------
Name: Timothy Cope
Title: Chief Financial Officer
"TRUSTEE"
FIRST UNION NATIONAL BANK,
a national banking association
By: /s/ DONNA J. FLANAGAN
--------------------------
Name: Donna J. Flanagan
Title: Vice President
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