EXHIBIT 4.8(h)
SECURITY AGREEMENT AND PLEDGE OF STOCK
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(Indiana)
THIS SECURITY AGREEMENT AND PLEDGE OF STOCK ("Agreement") is made and
entered into this 17th day of June, 1998, by and between EMPRESS ENTERTAINMENT,
INC., a Delaware corporation, hereinafter referred to as "Debtor", and WELLS
FARGO BANK, National Association, as Agent Bank on behalf of itself and each of
the Banks described hereinbelow, hereinafter referred to as "Secured Party".
R E C I T A L S:
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A. Reference is made to that certain Credit Agreement, dated as of
June 17, 1998 (as amended, supplemented or otherwise modified from time to time,
the "Credit Agreement"), by and among EMPRESS ENTERTAINMENT, INC., a Delaware
corporation, EMPRESS CASINO JOLIET CORPORATION, an Illinois corporation and
EMPRESS CASINO HAMMOND CORPORATION, an Indiana corporation (collectively the
"Borrowers"), the Lenders therein named (each, together with their respective
successors and assigns, individually being referred to as a "Lender" and
collectively as the "Lenders"), WELLS FARGO BANK, National Association, as the
swingline lender (herein in such capacity, together with its successors and
assigns, the "Swingline Lender"), WELLS FARGO BANK, National Association, as the
issuer of letters of credit thereunder (herein in such capacity, together with
its successors and assigns, the "L/C Issuer"), and WELLS FARGO BANK, National
Association, as administrative and collateral agent for the Lenders, Swingline
Lender and L/C Issuer (herein, in such capacity, called the "Agent Bank" and,
together with the Lenders, Swingline Lender and L/C Issuer, collectively
referred to as the "Banks").
B. In this Agreement, all capitalized words and terms not otherwise
defined herein shall have the respective meanings and be construed herein as
provided in Section 1.01 of the Credit Agreement and any reference to a
provision of the Credit Agreement shall be deemed to incorporate that
provision as a part hereof in the same manner and with the same effect as if the
same were fully set forth herein.
C. Debtor is the owner of all of the outstanding stock (collectively
the "Pledged Stock") of the following Subsidiary (collectively the "Pledged
Subsidiary"):
(i) Empress Casino Hammond Corporation, an Indiana corporation
("ECHC") represented by Stock Certificate No. 27, dated June 11, 1998,
for one thousand (1,000) shares of the common voting capital stock of
ECHC.
D. This Agreement is governed by the Indiana Gambling Act and the
regulations promulgated ("Indiana Gaming Laws") as enforced by the Indiana
Gaming Commission ("Indiana Gaming Authority") as to the Pledged Stock of ECHC.
AGREEMENTS:
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In consideration of the terms and conditions set forth herein and the
making of the Bank Facilities by Banks, the parties agree as follows:
1. As security for the performance by Borrowers of each and every
term and provision contained in the Credit Agreement and the due and punctual
payment of the Revolving Credit Note, the Swingline Note and all other amounts
owing under any of the Loan Documents (collectively the "Secured Obligations"),
and, subject to the receipt of all necessary approvals under the Indiana Gaming
Laws, Debtor hereby pledges, assigns, and transfers as security the Pledged
Stock to Secured Party, and grants to Secured Party a security interest in the
Pledged Stock, together with all rights, products, proceeds, dividends,
redemption payments, liquidation payments, instruments and any other securities
derived therefrom, substituted therefor or otherwise subject to the lien hereof
pursuant to the provisions hereof, all of which shall be treated as part of the
Pledged Stock and collateral hereunder.
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2. Debtor represents and warrants that: (a) the Pledged Stock
represents all of the issued and outstanding shares of the common voting capital
stock of the Pledged Subsidiary and the Pledged Subsidiary has not issued any
shares of non-voting capital stock, (b) the Pledged Subsidiary has not
authorized or issued any class of stock other than common voting and non-voting
stock, (c) it is the legal, record and beneficial owner of, has good and
marketable title to and has the right to pledge and create a security interest
in the Pledged Stock, subject to Indiana Gaming Authority approval, (d) the
Pledged Stock is validly issued, fully paid and non-assessable and is not
subject to any lien, pledge, charge, encumbrance or security interest (other
than the security interest hereby created in favor of Secured Party) or right or
option on the part of any third Person to purchase or otherwise acquire the
Pledged Stock or any part thereof nor is the Pledged Stock subject to any
restriction relating to the voting or other rights attaching thereto, other than
those imposed by and under the Indiana Gaming Laws and under the EEI
Stockholders Agreement, (e) this Agreement and the delivery of the Pledged
Stock to Secured Party creates a valid and enforceable perfected lien on all of
the Pledged Stock in favor of the Secured Party for the benefit of the Banks,
(f) except for the required consents and approvals under the Indiana Gaming Laws
specified herein, no consent, filing, recording or registration is required to
perfect the lien purported to be created by this Agreement, and (g) each of the
representations and warranties contained in Article IV of the Credit Agreement
is true and correct. Debtor covenants and agrees that it will defend Secured
Party's right, title and lien in and to the Pledged Stock against the claims and
demands of all Persons and that it will have like title to and right to pledge
any other property at any time hereafter pledged to the Secured Party as Pledged
Stock.
3. Concurrently herewith, Debtor shall cause to be delivered to
Secured Party the certificate or certificates evidencing the Pledged Stock (each
individually a "Certificate" and collectively the "Certificates") together with
an Irrevocable Stock Power with respect to each of the
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Certificates in the form of Exhibit A, affixed hereto and by this reference
incorporated herein and made a part hereof (the "Stock Power"). Each Certificate
evidencing the Pledged Stock shall be delivered to Secured Party in suitable
form for transfer by delivery and shall be accompanied by a duly executed Stock
Power, all in form and substance reasonably satisfactory to Secured Party.
Secured Party agrees to hold all Certificates evidencing the Pledged Stock
within the State of Nevada (or such other location or locations as may be
required by the Indiana Gaming Authority) at all times during the life of this
Agreement, and to make such certificates available for inspection by the Indiana
Gaming Authorities or its agents or representatives.
4. Upon the full and complete satisfaction of the Revolving Credit
Note, the Swingline Note and all other amounts owing under any of the Loan
Documents and termination of the Bank Facilities, Secured Party shall release
its security interest hereunder, and will deliver to Debtor the Certificates
evidencing the Pledged Stock, together with all Stock Powers, and Secured Party
shall, at the request and expense of Debtor, file such documents and take such
action as may be required by law or as Debtor may reasonably request, at
Debtor's expense, to release Secured Party's security interest in the Pledged
Stock.
5. Secured Party shall have with respect to the Pledged Stock the
rights and obligations of a secured party under the Nevada Uniform Commercial
Code, Chapter 104 of the Nevada Revised Statutes (the "Code"). Such rights
shall include, without limitation:
a. The right, subject to the approval of the Indiana Gaming
Authority, upon the occurrence of an Event of Default, to have the Pledged Stock
or any part thereof transferred to its own name or to the name of its nominee;
or, if any Pledged Stock has been sold by Secured Party in foreclosure after the
occurrence of an Event of Default, to have such Pledged Stock transferred to and
issued in the name of the purchaser.
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b. The right, subject to the approval of the Indiana Gaming
Authority, upon the occurrence of an Event of Default, to sell, assign or
deliver as many shares of the Pledged Stock as is reasonably necessary to repay
the defaulted Secured Obligations owing the Banks, together with expenses,
including, but not limited to, reasonable selling expenses, broker's fees and
attorneys' fees attendant upon such sale and repayment, at public or private
sale, as Secured Party, in its sole option, may elect, either for cash or on
credit, without assumption of any credit risk and without demand or
advertisement, unless otherwise required by law.
6. Debtor hereby covenants, agrees and acknowledges that an "Event
of Default" shall exist under this Agreement upon the occurrence of any of the
following events or conditions, and without the necessity of any demand or
notice except as may be expressly required herein or under the Credit Agreement
or under applicable law:
a. the occurrence of any "Event of Default" as defined and
described in the Credit Agreement; and/or
b. any default hereunder not cured within thirty (30) days
after written notice from Agent Bank.
7. Subject to the Indiana Gaming Laws, at any private or public sale
of the Pledged Stock or any part thereof, Secured Party may purchase and pay for
the same by cancellation of a principal amount of the Credit Facility and Notes
or other amounts owing under the Credit Agreement and Loan Documents equal to
the purchase price and free of any right of redemption on the part of Debtor.
For the purpose of this Paragraph, the "Purchase Price" where the Pledged Stock
is listed on any publicly traded stock exchange ("Exchange"), shall be deemed to
be the mean of the high and low selling prices in that Exchange on the date of
sale. Secured Party may, in its sole and absolute discretion, sell all or any
part of the Pledged Stock at private sale in such manner and under such
circumstances as Secured Party may deem necessary or advisable in order that the
sale may be lawfully conducted.
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Without limiting the foregoing, Secured Party may (i) approach and negotiate
with a limited number of potential purchasers; and (ii) restrict the prospective
bidders or purchasers to persons who will represent and agree that they are
purchasing the Pledged Stock for their own account for investment and not with a
view to the distribution or resale thereof. In the event that the Pledged Stock
is sold at private sale, Debtor agrees that if the Pledged Stock is sold for a
price which Secured Party in good faith believes to be reasonable under the
circumstances then existing, then: (aa) the sale shall be deemed to be
commercially reasonable in all respects; (bb) the credit against the Secured
Obligations, to which Debtor may be entitled, shall not exceed the purchase
price; and (cc) Secured Party shall not incur any liability or responsibility to
Debtor in connection therewith, notwithstanding the possibility that a
substantially higher price might have been realized at a public sale. Debtor
recognizes that a ready market may not exist for the Pledged Stock if it is not
regularly traded on a recognized securities exchange, and that a sale by Secured
Party of the Pledged Stock for an amount substantially less than a pro rata
share of the fair market value of the issuer's assets minus liabilities may be
commercially reasonable in view of the difficulties that may be encountered in
attempting to sell the Pledged Stock. Secured Party agrees, however, that the
Debtor shall have all rights, including rights of notice, provided by the Code.
In any case where notice is required, thirty (30) days notice shall be deemed to
be reasonable notice. In the event of any sale hereunder, Secured Party shall
apply the proceeds in the order set forth in Section 7.03 of the Credit
Agreement. Secured Party may resort to the Pledged Stock or any portion thereof
with no requirement on the part of Secured Party to proceed first against any
other Person or Collateral or under any other Security Documentation.
Additionally, (a) Debtor hereby waives and releases to the fullest extent
permitted by law any right or equity of redemption with respect to the Pledged
Stock, whether before or after sale hereunder and all rights, if any, of
marshalling of the Pledged Stock and any other security for the obligations of
the Borrowers under the Credit Agreement or otherwise;
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(b) neither Secured Party nor any of the Banks shall be liable for failure to
collect or realize upon any or all of the Pledged Stock or for any delay in so
doing nor shall any of them be under any obligation to take any action
whatsoever with regard thereto; (c) Debtor agrees it will not sell or otherwise
dispose of or create any lien on any portion of the Pledged Stock (except as
permitted by the Credit Agreement); and (d) Debtor agrees to promptly take all
actions required under applicable law to maintain the perfection of the security
interest in the Pledged Stock in the event that such stock is or becomes
uncertificated and to take such actions as the Secured Party reasonably deems
necessary or desirable to effect the foregoing and to permit the Secured Party
to exercise any of its rights and remedies hereunder.
8. While the Pledged Stock shall continue to be held by Secured
Party pursuant to this Agreement, so long as no Event of Default has occurred
and remains continuing and until written notice from Secured Party: (a) Debtor
shall be entitled to exercise any rights or subscription privileges accruing to
it as the owner of the Pledged Stock which are not inconsistent with the terms
of this Agreement or the Credit Agreement or any other Loan Document or any
other instrument or agreement referred to herein or therein, or which would have
the effect of impairing the position or interest of Secured Party, any Bank or
holder of the Revolving Credit Note or Swingline Note, provided, however, that
any additional shares of stock purchased or otherwise received on account of any
such rights or subscription privileges shall be delivered to Secured Party,
together with an appropriate Stock Power, and shall be treated as part of the
Pledged Stock; and (b) Debtor shall be entitled to receive and to retain and use
any dividends or distributions paid in respect of the Pledged Stock. The
Secured Party shall also be entitled to receive directly, and retain as part of
the Collateral:
a. all other or additional stock or securities or property
(other than cash) paid or distributed by way of dividend in respect of the
Pledged Stock;
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b. all other or additional stock or securities or property
(other than cash) paid or distributed in respect of the Pledged Stock by way of
stock-split, spin-off, split-up, reclassification, combination of shares or
similar rearrangement; and
c. all other or additional stock or other securities or
property (other than cash) which may be paid in respect of the Pledged Stock by
reason of any consolidation, merger, exchange of stock, conveyance of assets,
liquidation or similar corporate reorganization.
9. Notwithstanding anything to the contrary herein, the parties
hereto will at all times comply with all Securities and Exchange Commission,
Indiana Gaming Authority and other regulatory requirements with respect to its
ownership and pledge of the Pledged Stock.
10. Upon any Event of Default hereunder, subject to applicable law
and the requirements of the Indiana Gaming Authority: (a) Secured Party shall
have the right, upon written notice to Debtor, but shall not be required, to
vote or give its consent with respect to the voting of any or all of the Pledged
Stock, and in such event and for such purpose Debtor hereby irrevocably
constitutes and appoints Secured Party the proxy and attorney-in-fact of the
Debtor, with full power of substitution to do so, and (b) Secured Party shall be
entitled to receive all dividends and distributions (other than Tax
Distributions) and apply the same toward payment of the Secured Obligations
owing under the Bank Facilities in the manner and sequence set forth in Section
7.03 of the Credit Agreement.
11. The Debtor represents to Secured Party that the Debtor has made
its own arrangements for keeping informed of changes or potential changes
affecting the Pledged Stock including, but not limited to, rights to convert,
rights to subscribe, payment of dividends, reorganization or other exchanges,
tender offers and voting rights, and the Debtor agrees that Secured Party shall
have no responsibility or
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liability for informing the Debtor of any such changes or potential changes or
for taking any action or omitting to take any action with respect thereto.
12. No renewal, extension or modification of the Credit Agreement,
Revolving Credit Note, Swingline Note or any other Loan Document, no release or
surrender of any Pledged Stock as security hereunder, no invalidity,
irregularity or unenforceability of all or any part of this Agreement or any
other Loan Document and no delay in exercising any right or power with respect
thereto or hereunder shall affect the rights of Secured Party with respect to
the Pledged Stock or any part thereof. Secured Party's rights, liens and
security interests hereunder shall continue unimpaired and Debtor shall be and
remain obligated in accordance with the terms hereof notwithstanding any
compromise or other indulgence granted by Secured Party. The Debtor hereby
waives notice of acceptance of this Agreement and of extensions of credit,
loans, advances, or other financial assistance made by Banks to Borrowers. The
Debtor further waives presentment and demand for payment on the Notes, protest
and notice of dishonor or default with respect to the Notes or any other Loan
Document, and all other notices to which the Debtor might otherwise be entitled
except as herein otherwise expressly provided or as otherwise provided in the
Credit Agreement or Notes.
13. All notices and other communications provided to any party hereto
under this Agreement shall be in writing or by facsimile and addressed,
delivered or transmitted to such party at its address or facsimile number set
forth in the Credit Agreement or at such other address or facsimile number as
may be designated by such party in a notice to the other parties. Any notice,
if mailed and properly addressed with postage prepaid, shall be deemed given
when received; any notice, if transmitted by facsimile, shall be deemed given
when transmitted.
14. Whether or not the transactions contemplated hereunder are
completed, the Debtor will pay all expenses relating to this Agreement,
including, but not limited to:
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a. All reasonable costs, outlays, attorneys' fees and expenses
of any kind and character had or incurred in the enforcement or defense of any
of the provisions of this Agreement, the preparation for, negotiations
regarding, consultations concerning, or the defense of legal proceedings
involving any claim or claims made or threatened against Secured Party or any
Bank arising out of this transaction or the protection of the Pledged Stock
securing the Bank Facilities or advances made hereunder;
b. All taxes levied against or paid by Secured Party (other
than taxes on, or measured by, the income of Secured Party) and all filing and
recording fees, costs, expenses which may be incurred by Secured Party in
respect of the filing and/or recording of any document or instrument relating to
the transactions described in this Agreement.
15. Debtor agrees that it will duly execute and deliver to Secured
Party any additional documents which may be reasonably required by Secured Party
to give full effect to, perfect or protect the pledge and security interest
granted to Secured Party hereunder or to enable Secured Party to exercise and
enforce its rights and remedies hereunder with respect to the Pledged Stock and
to preserve, protect and maintain the Pledged Stock, including, without
limitation, payment of all taxes, assessments and other charges imposed on or
relating to the Pledged Stock. Debtor hereby consents and agrees that the
issuers of the Pledged Stock, or any registrar or transfer agent or trustee for
any of the Pledged Stock, shall be entitled to accept the provisions of this
Agreement as conclusive evidence of the right of Secured Party to effect any
transfer or exercise any right hereunder, notwithstanding any other notice or
direction to the contrary heretofore or hereafter given by Debtor or any other
Person to such issuers or to any such registrar or transfer agent or trustee.
16. Debtor agrees to assist Secured Party in obtaining all approvals
of the Indiana Gaming Authority or any other Governmental Authority that are
required by law for or in connection with any action or transaction contemplated
by
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this Agreement or by the Code and, at Secured Party's request after and during
the continuance of an Event of Default, to prepare, sign and file with the
Indiana Gaming Authority the transferor's portion of any application or
applications for consent to the transfer of control thereof necessary or
appropriate under applicable Indiana Gaming Laws for approval of any sale or
transfer of the Pledged Stock pursuant to the exercise of Secured Party's
remedies hereunder and under the Loan Documents.
17. This Agreement shall be binding upon and inure to the benefit of
the Debtor, Secured Party and their respective legal representatives, heirs,
successors and assigns, and the authorized transferees and holders of the
Revolving Credit Note and the Swingline Note; provided, however, that Debtor may
not assign or transfer any of its rights or obligations hereunder without the
prior written consent of Secured Party.
18. This Agreement, including the exhibits and other agreements
referred to herein, constitutes the entire agreement between the parties
relating to the subject matter hereof and cannot be changed or terminated
orally, and shall be deemed effective as of the date it is accepted by Secured
Party.
19. Other than with respect to compliance with the Indiana Gaming
Laws and the requirements of the Indiana Gaming Authorities, this Agreement
shall be governed and construed under the laws of the State of Nevada in all
respects, including, but not limited to, matters of perfection, construction,
validity, performance and discharge. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
said laws. However, if any provision of this Agreement shall be held to be
prohibited or invalid under applicable law, such provision shall be ineffective
only to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
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20. Time is of the essence of this Agreement.
21. Debtor and Secured Party further agree that:
(a) This Agreement shall not be effective until it is approved
by the Indiana Gaming Authority. In this regard, Debtor represents to Secured
Party that it has obtained all necessary consents from the Indiana Gaming
Authority for the execution of this Agreement, delivery to Secured Party of the
Pledged Stock and execution and delivery of the Stock Powers; and
(b) Notwithstanding approval by the Indiana Gaming Authority
pursuant to paragraph (a), other approvals may be required before certain
transactions relating to this Agreement may occur, including, but not limited
to, the following:
(1) Any re-registration or action similar to re-
registration of the Pledged Stock must be approved in advance by the
Indiana Gaming Authority;
(2) Any foreclosure, sale, transfer, or other disposition
of the Pledged Stock must be approved in advance by the Indiana Gaming
Authority, and shall not be effective unless so approved; and
(3) The payment or receipt of any money or other thing of
value constituting any part of the consideration for the transfer or
acquisition of the Pledged Stock must be approved in advance by the
Indiana Gaming Authority, except that such consideration may be placed
in escrow pending the necessary approvals.
22. Debtor agrees to indemnify and hold harmless Secured Party in
accordance with the provisions of
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Section 5.14 of the Credit Agreement which is incorporated by this reference as
though fully set forth herein.
23. This Security Agreement and Pledge of Stock may be executed in
any number of separate counterparts with the same effect as if the signatures
hereto and hereby were upon the same instrument. All such counterparts shall
together constitute one and the same document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first hereinabove written.
DEBTOR: SECURED PARTY:
EMPRESS ENTERTAINMENT, INC., WELLS FARGO BANK,
a Delaware corporation National Association,
Agent Bank
By /s/ John Costello
-----------------------------
By /s/ Joseph Brady
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Joseph Brady
Senior Vice President
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STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
Before me, a Notary Public in and for the State of Illinois,
personally appeared John Castello, the Vice President - CFO of EMPRESS
ENTERTAINMENT, INC., who being first duly sworn, acknowledged the execution of
the foregoing Security Agreement and Pledge of Stock for and on behalf of said
EMPRESS ENTERTAINMENT, INC.
WITNESS my hand and Notarial Seal this 17th day of June, 1998.
[OFFICIAL SEAL] /s/ Joanne Bruen
-------------------------------
Printed Name JOANNE BRUEN
-------------------
I am a resident of Cook County, Illinois.
My commission expires: 10/14/00
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
This instrument was acknowledged before me on June 17, 1998, by
JOSEPH BRADY as Senior Vice President of/for WELLS FARGO BANK, National
Association.
/s/ Joanne Bruen [OFFICIAL SEAL]
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Notary Public
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IRREVOCABLE STOCK POWER
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KNOW ALL MEN BY THESE PRESENTS:
That EMPRESS ENTERTAINMENT, INC., a Delaware corporation, for value
received has bargained, sold, assigned and transferred and by these presents
does bargain, sell, assign and transfer unto ___________________, one thousand
(1,000) shares of the common voting stock of Empress Casino Hammond Corporation,
an Indiana corporation, standing in its name on the books of said corporation
represented by Certificate No. ________ herewith and does hereby constitute and
appoint Wells Fargo Bank, National Association, Agent Bank, as its true and
lawful attorney, IRREVOCABLY, for it and in its name and stead to sell, assign,
transfer, hypothecate, pledge and make over all or any part of the said stock
and for that purpose to make and execute all necessary acts of assignment and
transfer thereof, and to substitute one or more persons with like full power,
hereby ratifying and confirming all that said Attorney shall lawfully do by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand on this ______ day of
__________, 1998.
EMPRESS ENTERTAINMENT, INC.,
a Delaware corporation
By _________________________
Name _______________________
Title ______________________
EXHIBIT A
TO FORM OF SECURITY AGREEMENT
AND PLEDGE OF STOCK
STATE OF ____________ )
) SS
COUNTY OF ___________ )
Before me, a Notary Public in and for the State of ______________,
personally appeared ________________, the ________________ of EMPRESS
ENTERTAINMENT, INC., who being first duly sworn, acknowledged the execution of
the foregoing Irrevocable Stock Power for and on behalf of said EMPRESS
ENTERTAINMENT, INC.
WITNESS my hand and Notarial Seal this ______ day of ______________,
1998.
_____________________
Printed Name ________
I am a resident of _____________ County, ____________.
My commission expires: _____________________
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