EXHIBIT 10.15
GENERAL SECURITY AGREEMENT
GENERAL SECURITY AGREEMENT dated as of May 5, 1998, made by SPEAKEASY
GAMING OF LAS VEGAS, INC., a Nevada corporation (the "Grantor"), in favor of
MADELEINE LLC, as lender (the "Lender").
W I T N E S S E T H :
WHEREAS, the Grantor, Speakeasy Gaming of Reno, Inc., a Nevada
corporation ("Speakeasy Reno"), Mountaineer Park, Inc., a West Virginia
corporation ("Mountaineer" and together with the Grantor and Speakeasy Reno,
collectively, the "Borrowers"), MTR Gaming Group, Inc., a Delaware corporation,
(the "Guarantor" and together with the Grantor, Speakeasy Reno and Mountaineer,
collectively, the "Loan Parties"), and the Lender are entering into a Third
Amended and Restated Loan Agreement, dated as of July 2, 1996, as amended and
restated as of December 10, 1996, as further amended and restated as of July 2,
1997, and as further amended and restated as of the date hereof, (such
agreement, as further amended or otherwise modified from time to time, being
hereinafter referred to as the "Loan Agreement");
WHEREAS, pursuant to the Loan Agreement, the Lender has agreed to make
(and has from time to time made) (i) certain term loans (collectively the "Term
Loans") to the Borrowers in an aggregate principal amount not to exceed the Term
Commitment (as defined in the Loan Agreement), and (ii) a line of credit
available for loans to the Borrowers (the "Line Loans" and, collectively with
the Term Loan, the "Loans") in an aggregate principal amount not to exceed the
Line Commitment (as defined in the Loan Agreement);
WHEREAS, the Grantor, Mountaineer, the Guarantor, Speakeasy Reno and
the Lender are entering into the third amendment and restatement of the Loan
Agreement for the purposes of making increases to the Term Commitment and the
Line Commitment and for the purpose of adding the Grantor and Speakeasy Reno as
Borrowers under the Loan Agreement to be bound by the terms of such agreement as
Borrowers; and
WHEREAS, it is a condition precedent to the making and continuing (as
applicable) of the Loans by the Lender pursuant to the Loan Agreement that the
Grantor shall have executed and delivered to the Lender a security agreement
providing for the grant to the Lender of a security interest in all personal
property and fixtures of the Grantor;
NOW, THEREFORE, in consideration of the premises and the agreements
herein and in order to induce the Lender to make and maintain the Loans pursuant
to the Loan Agreement, the Grantor hereby agrees with the Lender as follows:
SECTION 1. DEFINITIONS. Reference is hereby made to the Loan
Agreement for a statement of the terms thereof. All terms used in this
Agreement which are defined in the Loan Agreement or in Article 9 of the Uniform
Commercial Code (the "Code") currently in effect in the State of New York and
which are not otherwise defined herein shall have the same meanings herein as
set forth therein.
SECTION 2. GRANT OF SECURITY INTEREST. As collateral security for
all of the Obligations (as defined in Section 3 hereof), the Grantor hereby
pledges and assigns to the Lender, and grants to the Lender a continuing
security interest in, all personal property and fixtures of the Grantor,
wherever located and whether now or hereafter existing and whether now owned or
hereafter acquired, of every kind and description, tangible or intangible (the
"Collateral"), including, without limitation, the following:
(a) all equipment of any kind including, without limitation, the
equipment described in Schedule I hereto, all furniture, fixtures, machinery and
all motor vehicles, tractors and other like property, whether or not the title
thereto is governed by a certificate of title or ownership (hereinafter
collectively referred to as the "Motor Vehicles"), wherever located and whether
now or hereafter existing and whether now owned or hereafter acquired, together
with all substitutes, replacements, accessions and additions thereto, and all
tools, parts, accessories and attachments used in connection therewith
(hereinafter collectively referred to as the "Equipment");
(b) all of the Grantor's right, title and interest in and to all
inventory of any kind, wherever located and whether now or hereafter existing
and whether now owned or hereafter acquired, and all accessions thereto and
products thereof (any and all such inventory, accessions and products being
hereinafter referred to as the "Inventory");
(c) all of the Grantor's right, title and interest in and to (i) all
accounts, contract rights, chattel paper, instruments, documents, general
intangibles and other rights or obligations of any kind, whether now or
hereafter existing and whether now owned or hereafter acquired, arising out of
or in connection with the sale or lease of goods or the rendering of services or
otherwise and (ii) all rights now or hereafter existing in and to all security
agreements, leases and other contracts, now or hereafter existing and securing
or otherwise relating to any such accounts, contract rights, chattel paper,
instruments, general intangibles or obligations (including without limitation,
the contracts described in Schedule II hereto) (any and all such accounts,
contract rights, chattel paper, instruments, general intangibles and obligations
being hereinafter referred to as the "Receivables", and any and all such
security agreements, leases and other contracts being hereinafter referred to as
the "Related Contracts"); and
(d) all proceeds of any and all of the foregoing Collateral and, to
the extent not otherwise included, all payments under insurance (whether or not
the Lender is the loss payee thereof) (subject, however, to those provisions in
that certain Deed of Trust, Assignment of Leases and Rents, Security Agreement
and Fixture Filing dated of even date herewith, between the Grantor and the
Lender, for the Cheyenne Hotel Property (as defined in the Loan Agreement) with
respect to making insurance proceeds available for restorations), or any
indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral; in each case,
howsoever the Grantor's interest therein may arise or appear (whether by
ownership, security interest, claim or otherwise).
SECTION 3. SECURITY FOR OBLIGATIONS. The security interest created
hereby in the Collateral constitutes continuing collateral security for all of
the following obligations, whether now existing or hereafter incurred (the
"Obligations"):
(a) the prompt payment by the Grantor, as and when due and payable,
of all amounts from time to time owing by it in respect of the Loan Agreement,
the Notes and the other Loan Documents; and
(b) the due performance and observance by the Grantor of all of its
other obligations from time to time existing in respect of the Loan Documents.
SECTION 4. REPRESENTATIONS AND WARRANTIES. The Grantor represents
and warrants as follows:
(a) The Grantor (i) is a corporation duly organized, validly existing
and in good standing under the laws of the state of its incorporation as set
forth on the first page hereof, and (ii) has all requisite power and authority
to execute, deliver and perform this Agreement.
(b) The execution, delivery and performance by the Grantor of this
Agreement (i) have been duly authorized by all necessary corporate action, (ii)
do not and will not contravene its charter or by-laws, law or any contractual
restriction binding on or affecting the Grantor or any of its properties, and
(iii) do not and will not result in or require the creation of any lien,
security interest or other charge or encumbrance upon or with respect to any of
its properties, except as contemplated by the Loan Documents.
(c) This Agreement is a legal, valid and binding obligation of the
Grantor, enforceable against the Grantor in accordance with its terms.
(d) All Equipment and Inventory now existing is, and all Equipment
and Inventory hereafter existing will be, located at the address(es) specified
therefor in Schedule III hereto. The Grantor's chief place of business and
chief executive office, the place where the Grantor keeps its records concerning
Receivables and all originals of all chattel paper which constitute Receivables
are located at the address specified therefor in Schedule III. None of the
Receivables is evidenced by a promissory note or other instrument. Set forth as
Schedule IV hereto is a complete and correct list of each trade name used by the
Grantor.
(e) The Grantor has delivered to the Lender complete and correct
copies of each Related Contract in its possession described in Schedule II
hereto, including all schedules and exhibits thereto. To the best of the
Grantor's knowledge, each such Related Contract sets forth the entire agreement
and understanding of the parties thereto relating to the subject matter thereof,
and there are no other agreements, arrangements or understandings, written or
oral, relating to the matters covered thereby or the rights of the Grantor or
any of its Affiliates in respect thereof. Other than those Related Contracts
which the Grantor acquired in connection with its acquisition of the Cheyenne
Hotel Property and to which the Grantor is not a signatory, each Related
Contract now existing is, and each other Related Contract will be the legal,
valid and binding obligation of the parties thereto, enforceable against such
parties in accordance with its terms. To the best of Grantor's knowledge,
without independent inquiry, all Related Contracts which have been assigned to
Grantor are legal, valid and binding obligations of the Grantor.
(f) Except as otherwise provided in the Loan Agreement, the Grantor
is and will be at all times the owner of the Collateral free and clear of any
lien, security interest or other charge or encumbrance except for (i) the
security interest created by this Agreement and (ii) the security interests and
other encumbrances described in Schedule V hereto. No effective financing
statement or other instrument similar in effect covering all or any part of the
Collateral is on file in any recording or filing office except (i) such as may
have been filed in favor of the Lender relating to this Agreement and (ii) such
as may have been filed to perfect or protect any security interest or
encumbrance described in Schedule V hereto.
(g) The exercise by the Lender of its rights and remedies hereunder
will not contravene any law or contractual restriction binding on or affecting
the Grantor or any of its properties and will not result in or require the
creation of any lien, security interest or other charge or encumbrance upon or
with respect to any of its properties.
(h) Except as otherwise provided in the Loan Agreement, no
authorization or approval or other action by, and no notice to or filing with,
any Governmental Authority or other regulatory body is required for (i) the due
execution, delivery and performance by the Grantor of this Agreement, (ii) the
grant by the Grantor, or the perfection, of the security interest purported to
be created hereby in the Collateral or (iii) the exercise by the Lender of any
of its rights and remedies hereunder, except for the filing under the Code of
the financing statement(s) required to be filed pursuant to the Loan Agreement,
all of which financing statements have been duly filed and are in full force and
effect.
(i) This Agreement creates a valid security interest in favor of the
Lender in the Collateral as security for the Obligations. The Lender's having
possession of all instruments and cash constituting Collateral from time to time
and the filing of the financing statements required to be filed pursuant to the
Loan Agreement results in the perfection of such security interest. Such
security interest is, or in the case of Collateral in which the Grantor obtains
rights after the date hereof, will be, a perfected, first priority security
interest, subject only to the security interests and other encumbrances
described in Schedule V hereto. Such filings and all other action necessary or
desirable to perfect and protect such security interest have been duly taken,
except for the Lender's having possession of instruments and cash constituting
Collateral after the date hereof.
SECTION 5. COVENANTS AS TO THE COLLATERAL. So long as any of the
Obligations (as such term is defined in clause (i) of Section 1.01 of the Loan
Agreement) shall remain outstanding, unless the Lender shall otherwise consent
in writing:
(a) FURTHER ASSURANCES. The Grantor will at its expense, at any time
and from time to time, promptly execute and deliver all further instruments and
documents and take all further action that may be necessary or desirable or that
the Lender may request in order (i) to perfect and protect the security interest
purported to be created hereby, (ii) to enable the Lender to exercise and
enforce its rights and remedies hereunder in respect of the Collateral or (iii)
to otherwise effect the purposes of this Agreement, including, without
limitation: (A) marking conspicuously each chattel paper included in the
Receivables and each Related Contract and, at the request of the Lender, each of
its records pertaining to the Collateral with a legend, in form and
substance satisfactory to the Lender, indicating that such chattel paper,
Related Contract or Collateral is subject to the security interest created
hereby, (B) if any Receivable shall be evidenced by a promissory note or
other instrument or chattel paper, delivering and pledging to the Lender
hereunder such note, instrument or chattel paper duly indorsed and
accompanied by executed instruments of transfer or assignment, all in form
and substance satisfactory to the Lender, (C) executing and filing such
financing or continuation statements, or amendments thereto, as may be
necessary or desirable or that the Lender may request in order to perfect and
preserve the security interest purported to be created hereby, (D) furnishing
to the Lender from time to time statements and schedules further identifying
and describing the Collateral and such other reports in connection with the
Collateral as the Lender may reasonably request, all in reasonable detail,
and (E) upon the acquisition after the date hereof by the Grantor of any
Equipment covered by a certificate of title or ownership, cause the Lender to
be listed as the lienholder (or, in the event such Equipment is subject to a
purchase money security interest (a "Permitted Lien"), as a junior
lienholder) on such certificate of title and within 60 days of the
acquisition thereof and deliver evidence of the same to the Lender.
(b) LOCATION OF EQUIPMENT AND INVENTORY. The Grantor will keep the
Equipment and Inventory (other than Inventory and used Equipment sold in the
ordinary course of business) at the location[s] specified therefor in Section
4(d) hereof.
(c) CONDITION OF EQUIPMENT. The Grantor will cause the Equipment to
be maintained and preserved in the same condition, repair and working order as
when acquired, ordinary wear and tear excepted, and in accordance with any
manufacturer's manual, and will forthwith, or in the case of any loss or damage
to any Equipment as quickly as practicable after the occurrence thereof, make or
cause to be made all repairs, replacements, and other improvements in connection
therewith which are necessary or desirable or that the Lender may request to
such end. The Grantor will promptly furnish to the Lender a statement
respecting any loss or damage in excess of $10,000 to any Equipment.
(d) TAXES. The Grantor will pay promptly when due all property and
other taxes, assessments and governmental charges or levies imposed upon, and
all claims (including claims for labor, materials and supplies) against, the
Equipment and Inventory, except to the extent the validity thereof is being
contested in good faith by proper proceedings which stay the imposition of any
penalty, fine or lien resulting from the non-payment thereof and with respect to
which adequate reserves have been set aside for the payment thereof.
(e) INSURANCE.
(i) The Grantor will, at its own expense, maintain insurance
with respect to the Equipment and Inventory in such amounts, against such risks,
in such form and with such insurers, as shall be satisfactory to the Lender from
time to time. Each policy for liability insurance shall provide for all losses
to be paid on behalf of the Lender and the Grantor as their respective interests
may appear, and each policy for property damage insurance shall provide for all
losses to be adjusted with, and paid directly to, the Lender; PROVIDED, HOWEVER,
that with respect to Equipment subject to a Permitted Lien, the Lender's rights
may be subject to the rights of the holder
of such Permitted Lien. Except as required by any agreement which creates a
Permitted Lien, or as otherwise provided in the Loan Documents, each such
policy shall in addition (A) name the Grantor and the Lender as insured
parties thereunder (without any representation or warranty by or obligation
upon the Lender) as their interests may appear, (B) contain the agreement by
the insurer that any loss thereunder shall be payable to the Lender
notwithstanding any action, inaction or breach of representation or warranty
by the Grantor, (C) provide that there shall be no recourse against the
Lender for payment of premiums or other amounts with respect thereto and (D)
provide that at least 30 days' prior written notice of cancellation or of
lapse shall be given to the Lender by the insurer. The Grantor will, if so
requested by the Lender, deliver to the Lender original or duplicate policies
of such insurance and, as often as the Lender may reasonably request, a
report of a reputable insurance broker with respect to such insurance. The
Grantor will also, at the request of the Lender, duly execute and deliver
instruments of assignment of such insurance policies and cause the respective
insurers to acknowledge notice of such assignment.
(ii) Reimbursement under any liability insurance maintained by
the Grantor pursuant to this Section 5(e) may be paid directly to the Person who
shall have incurred liability covered by such insurance. In the case of any
loss involving damage to Equipment or Inventory as to which paragraph (iii) of
this Section 5(e) is not applicable, the Grantor will make or cause to be made
the necessary repairs to or replacements of such Equipment or Inventory, and any
proceeds of insurance maintained by the Grantor pursuant to this Section 5(e)
shall be paid to the Grantor as reimbursement for the costs of such repairs or
replacements.
(iii) Except as otherwise provided in the Loan Documents,
upon the occurrence and during the continuance of an Event of Default or the
actual or constructive total loss (in excess of $10,000 per occurrence) of any
Equipment or Inventory, all insurance payments in respect of such Equipment or
Inventory shall be paid to the Lender and applied as specified in Section 7(b)
hereof.
(f) PROVISIONS CONCERNING THE RECEIVABLES AND THE RELATED CONTRACTS.
(i) The Grantor will (A) give the Lender prompt notice of any
change in the Grantor's name, identity or corporate structure, (B) keep its
chief place of business and chief executive office and all originals of all
chattel paper which constitute Receivables at the location[s] specified therefor
in Section 4(d) hereof, and (C) keep adequate records concerning the Receivables
and such chattel paper and permit representatives of the Lender at any time
during normal business hours to inspect and make abstracts from such records and
chattel paper.
(ii) The Grantor will duly perform and observe all of its
obligations under each Related Contract and, except as otherwise provided in
this Subsection (f), continue to collect, at its own expense, all amounts due or
to become due under the Receivables. In connection with such collections, the
Grantor may (and, at the Lender's direction, will) take such action as the
Grantor or the Lender may deem necessary or advisable to enforce collection or
performance of the Receivables; PROVIDED, HOWEVER, that the Lender shall have
the right at any time, upon the occurrence and during the continuance of an
Event of Default or an event which, with the giving of notice or the lapse of
time or both, would constitute an Event of Default, and upon written notice to
the Grantor of its intention to do so, to notify the account debtors or obligors
under any Receivables of the assignment of such Receivables to the Lender and to
direct such account debtors or obligors to make payment of all amounts due or to
become due to the Grantor thereunder directly to the Lender and, upon such
notification and at the expense of the Grantor and to the extent permitted by
law, to enforce collection of any such Receivables and to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the same
extent as the Grantor might have done. After receipt by the Grantor of the
notice from the Lender referred to in the proviso to the immediately preceding
sentence, (A) all amounts and proceeds (including instruments) received by the
Grantor in respect of the Receivables shall be received in trust for the benefit
of the Lender hereunder, shall be segregated from other funds of the Grantor and
shall be forthwith paid over to the Lender in the same form as so received (with
any necessary indorsement) to be held as cash collateral and either (1) released
to the Grantor so long as no Event of Default shall have occurred and be
continuing or (2) if any Event of Default shall have occurred and be continuing,
applied as specified in Section 7(b) hereof, and (B) the Grantor will not
adjust, settle or compromise the amount or payment of any Receivable or release
wholly or partly any account debtor or obligor thereof or allow any credit or
discount thereon.
(iii) Upon the occurrence and during the continuance of any
breach or default under any Related Contract referred to in Schedule II hereto
or otherwise specified by the Lender from time to time by any party thereto
other than the Grantor, (A) the Grantor will, promptly after obtaining knowledge
thereof, give the Lender written notice of the nature and duration thereof,
specifying what action, if any, it has taken and proposes to take with respect
thereto, (B) the Grantor will not, without the prior written consent of the
Lender, declare or waive any such breach or default or affirmatively consent to
the cure thereof or exercise any of its remedies in respect thereof, and (C) the
Grantor will, upon written instructions from the Lender and at the Grantor's
expense, take such action as the Lender may deem necessary or advisable in
respect thereof.
(iv) The Grantor will, at its expense, promptly deliver to the
Lender a copy of each notice or other communication received by it by which any
other party to any Related Contract referred to in Schedule II hereto or
otherwise specified by the Lender from time to time purports to exercise any of
its rights or affect any of its obligations thereunder, together with a copy of
any reply by the Grantor thereto.
(v) Except as otherwise permitted in the Loan Agreement, the
Grantor will not, without the prior written consent of the Lender, cancel,
terminate, amend, modify, or waive any provision of, any Related Contract
referred to in Schedule II hereto or otherwise specified by the Lender from time
to time.
(g) MOTOR VEHICLES.
(i) Within 60 days of the date hereof, the Grantor shall
deliver to the Lender photocopies of the certificates of title or ownership
for the Motor Vehicles owned by it with the Lender listed as lienholder.
(ii) Upon the acquisition after the date hereof by the
Grantor of any Motor Vehicle, the Grantor shall deliver to the Lender
photocopies of the certificates of title or ownership for such Motor Vehicle,
together with the manufacturer's statement of origin, with the Lender listed
as lienholder.
(iii) The Grantor hereby appoints the Lender as its
attorney-in-fact, exercisable upon the occurrence of an Event of Default,
effective the date hereof and terminating upon the termination of this
Agreement, for the purpose of (i) executing on behalf of the Grantor title or
ownership applications for filing with appropriate Governmental Authorities
to enable Motor Vehicles now owned or hereafter acquired by the Grantor to be
retitled and the Lender listed as lienholder thereof, (ii) filing such
applications with such state agencies and (iii) executing such other
documents and instruments on behalf of, and taking such other action in the
name of, the Grantor as the Lender may deem necessary or advisable to
accomplish the purposes hereof (including, without limitation, for the
purpose of creating in favor of the Lender a perfected lien on the Motor
Vehicles and exercising the rights and remedies of the Lender hereunder).
This appointment as attorney-in-fact is irrevocable and coupled with an
interest.
(iv) Any photocopies of certificates of title or ownership
delivered pursuant to the terms hereof shall be accompanied by odometer
statements for each Motor Vehicle covered thereby.
(v) So long as no Event of Default or event which, with the
giving of notice or the lapse of time or both, would constitute an Event of
Default shall have occurred and be continuing, upon the request of the Grantor,
the Lender shall execute and deliver to the Grantor such instruments as the
Grantor shall reasonably request to remove the notation of the Lender as
lienholder on any certificate of title for any Motor Vehicle; provided that any
such instruments shall be delivered, and the release effective, only upon
receipt by the Lender of a certificate from the Grantor, stating that the Motor
Vehicle the lien on which is to be released is to be sold or has suffered a
casualty loss (with title thereto passing to the casualty insurance company
therefor in settlement of the claim for such loss) and any proceeds of such sale
or casualty loss being paid to the Lender hereunder to be applied to the
Obligations then outstanding in the manner contemplated by Section 7(b) hereof.
(h) INSPECTION AND REPORTING. The Grantor shall permit
representatives of the Lender, upon reasonable notice and at any time during
normal business hours, to inspect and make abstracts from its books and records
pertaining to the Collateral, and permit representatives of the Lender to be
present at the Grantor's place of business to receive copies of all
communications and remittances relating to the Collateral, and to forward copies
of any notices or communications received or made by the Grantor with respect to
the Collateral, all in such manner as the Lender may require.
(i) TRANSFERS AND OTHER LIENS. The Grantor will not (i) sell, assign
(by operation of law or otherwise), exchange or otherwise dispose of any of the
Collateral (except for sales or other dispositions of Inventory and used
Equipment in the ordinary course of business) or (ii) create or suffer to exist
any lien, security interest or other charge or encumbrance upon or with
respect to any of the Collateral except for (A) the security interest created
hereby and (B) the security interests and other encumbrances described in
Schedule V hereto.
SECTION 6. ADDITIONAL PROVISIONS CONCERNING THE COLLATERAL.
(a) The Grantor hereby authorizes the Lender to file, without the
signature of the Grantor where permitted by law, one or more financing or
continuation statements, and amendments thereto, relating to the Collateral.
(b) The Grantor hereby irrevocably appoints the Lender the Grantor's
attorney-in-fact and proxy, with full authority in the place and stead of the
Grantor and in the name of the Grantor or otherwise, from time to time in the
Lender's discretion, and following the occurrence of an Event of Default, to
take any action and to execute any instrument which the Lender may deem
necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation: (i) to obtain and adjust insurance required to be paid to
the Lender pursuant to Section 5(e) hereof, (ii) to ask, demand, collect, sue
for, recover, compound, receive and give acquittance and receipts for moneys due
and to become due under or in respect of any Collateral, (iii) to receive,
indorse, and collect any drafts or other instruments, documents and chattel
paper in connection with clause (i) or (ii) above and (iv) to file any claims or
take any action or institute any proceedings which the Lender may deem necessary
or desirable for the collection of any Collateral or otherwise to enforce the
rights of the Lender with respect to any Collateral.
(c) If the Grantor fails to perform any agreement contained herein
after the expiry of any applicable grace period, the Lender may itself perform,
or cause performance of, such agreement or obligation, and the expenses of the
Lender incurred in connection therewith shall be payable by the Grantor pursuant
to Section 8 hereof.
(d) The powers conferred on the Lender 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 moneys actually received by it hereunder, the
Lender shall have no duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.
(e) Anything herein to the contrary notwithstanding, (i) the Grantor
shall remain liable under the Related Contracts to the extent set forth therein
to perform all of its obligations thereunder to the same extent as if this
Agreement had not been executed, (ii) the exercise by the Lender of any of its
rights hereunder shall not release the Grantor from any of its obligations under
the Related Contracts and (iii) the Lender shall not have any obligation or
liability by reason of this Agreement under the Related Contracts nor shall the
Lender be obligated to perform any of the obligations or duties of the Grantor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.
SECTION 7. REMEDIES UPON DEFAULT. If an Event of Default shall have
occurred and be continuing:
(a) The Lender may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise available to it,
all of the rights and remedies of a secured party on default under the Code
(whether or not the Code applies to the affected Collateral), and also may (i)
require the Grantor to, and the Grantor hereby agrees that it will at its
expense and upon request of the Lender forthwith, assemble all or part of the
Collateral as directed by the Lender and make it available to the Lender at a
place to be designated by the Lender which is reasonably convenient to both
parties and (ii) without notice except as specified below, sell the Collateral
or any part thereof in one or more parcels at public or private sale, at any of
the Lender's offices or elsewhere, for cash, on credit or for future delivery,
and at such price or prices and upon such other terms as the Lender may deem
commercially reasonable. The Grantor agrees that, to the extent notice of sale
shall be required by law, at least 10 days' notice to the 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. The Lender shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Lender 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. The
Grantor hereby waives any claims against the Lender arising by reason of the
fact that the price at which the Collateral may have been sold at a private sale
was less than the price which might have been obtained at a public sale or was
less than the aggregate amount of the Obligations, even if the Lender accepts
the first offer received and does not offer the Collateral to more than one
offeree.
(b) Any cash held by the Lender as Collateral and all cash proceeds
received by the Lender in respect of any sale of, collection from, or other
realization upon, all or any part of the Collateral shall be applied as follows:
(i) First, to the payment of the reasonable costs and expenses,
including reasonable attorneys' fees and legal expenses, incurred by the Lender
in connection with (A) the administration of this Agreement, (B) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any Collateral, (C) the exercise or enforcement of any of the
rights of the Lender hereunder or (D) the failure of the Grantor to perform or
observe any of the provisions hereof;
(ii) Second, at the option of the Lender, to the payment or
other satisfaction of any liens and other encumbrances upon any of the
Collateral;
(iii) Third, ratably to the payment of the Obligations, first
in respect of any fees not covered by clause (i) above, second, in respect of
accrued but unpaid interest on the Loans, and third, in respect of unpaid
principal of the Loans;
(iv) Fourth, to the payment of any other amounts required by
applicable law (including, without limitation, Section 9-504(1)(c) of the Code
or any successor or similar, applicable statutory provision); and
(v) Fifth, the surplus proceeds, if any, to the Grantor or to
whomsoever shall be lawfully entitled to receive the same or as a court of
competent jurisdiction shall direct.
(c) In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the Lender is legally
entitled, the Grantor shall be liable for the deficiency, together with interest
thereon at the highest rate specified in any Note for interest on overdue
principal thereof or such other rate as shall be fixed by applicable law,
together with the costs of collection and the reasonable fees of any attorneys
employed by the Lender to collect such deficiency.
SECTION 8. INDEMNITY AND EXPENSES.
(a) The Grantor agrees to indemnify the Lender from and against any
and all claims, losses and liabilities growing out of or resulting from this
Agreement (including, without limitation, enforcement of this Agreement), except
claims, losses or liabilities resulting solely and directly from the Lender's
gross negligence or willful misconduct.
(b) The Grantor will upon demand pay to the Lender the amount of any
and all costs and expenses, including the reasonable fees and disbursements of
the Lender's counsel and of any experts and Lenders, which the Lender may incur
in connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any Collateral, (iii) the exercise or enforcement of any of
the rights of the Lender hereunder, or (iv) the failure by the Grantor to
perform or observe any of the provisions hereof.
SECTION 9. NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing and shall be mailed, telegraphed or
delivered, if to the Grantor, to it at its address specified in the Loan
Agreement; if to the Lender, to it at its address specified in the Loan
Agreement; or as to either such Person at such other address as shall be
designated by such Person in a written notice to such other Persons complying as
to delivery with the terms of this Section 9. All such notices and other
communications shall be effective (i) if mailed, when deposited in the mails,
(ii) if telegraphed, when delivered to the telegraph company, or (iii) if
delivered, upon delivery.
SECTION 10. MISCELLANEOUS.
(a) No amendment of any provision of this Agreement shall be
effective unless it is in writing and signed by the Grantor and the Lender, and
no waiver of any provision of this Agreement, and no consent to any departure by
the Grantor therefrom, shall be effective unless it is in writing and signed by
the Lender, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
(b) No failure on the part of the Lender to exercise, and no delay in
exercising, any right hereunder or under any other Loan Document shall operate
as a waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right. The rights and remedies of the Lender provided herein and in the other
Loan Documents are cumulative and are in addition to, and not exclusive of, any
rights or remedies provided by law. The rights of the Lender under any Loan
Document against any party thereto are
not conditional or contingent on any attempt by the Lender to exercise any of
its rights under any other Loan Document against such party or against any
other Person.
(c) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or invalidity without invalidating the
remaining portions hereof or thereof or affecting the validity or enforceability
of such provision in any other jurisdiction.
(d) This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the indefeasible
payment in full or release of the Obligations (as such term is defined in clause
(i) of Section 1.01 of the Loan Agreement), (ii) be binding on the Grantor and
its successors and assigns and shall inure, together with all rights and
remedies of the Lender hereunder, to the benefit of the Lender and its
respective successors, transferees and assigns. Without limiting the generality
of the foregoing, the Lender may assign or otherwise transfer any Note or
portion thereof held by it, and the Lender may assign or otherwise transfer its
rights under any other Loan Document to any other Person, and such other Person
shall thereupon become vested with all of the benefits in respect thereof
granted to the Lender, herein or otherwise. None of the rights or obligations
of the Grantor hereunder may be assigned or otherwise transferred without the
prior written consent of the Lender.
(e) Upon the satisfaction in full of the Obligations, (i) this
Agreement and the security interest created hereby shall terminate and all
rights to the Collateral shall revert to the Grantor, and (ii) the Lender will,
upon the Grantor's request and at the Grantor's expense, (A) return to the
Grantor such of the Collateral as shall not have been sold or otherwise disposed
of or applied pursuant to the terms hereof and (B) execute and deliver to the
Grantor such documents as the Grantor shall reasonably request to evidence such
termination.
(f) This Agreement shall be governed by and construed in accordance
with the law of the State of New York, except as required by mandatory
provisions of law and except to the extent that the validity or perfection or
the perfection and the effect of the perfection or non-perfection of the
security interest created hereby, or remedies hereunder, in respect of any
particular Collateral are governed by the law of a jurisdiction other than the
State of New York.
(g) Any legal action or proceeding with respect to this Agreement or
any document related thereto may be brought in the courts of the State of New
York or the United States of America for the Southern District of New York, and,
by execution and delivery of this Agreement, the Grantor hereby accepts for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. The Grantor hereby irrevocably waives any
objection, including, without limitation, any objection to 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 in such respective
jurisdictions and consents to the granting of such legal or equitable relief as
is deemed appropriate by the court.
(h) The Grantor irrevocably consents to the service of process of any
of the aforesaid courts in any such action or proceeding by the mailing of
copies thereof by registered or
certified mail, postage prepaid, to such Grantor at its address provided
herein, such service to become effective 30 days after such mailing.
(i) Nothing contained herein shall affect the right of the Lender to
serve process in any other manner permitted by law or commence legal proceedings
or otherwise proceed against the Grantor or any of the Grantor's property in any
other jurisdiction.
(j) EACH OF THE GRANTOR AND (BY ITS ACCEPTANCE OF THIS AGREEMENT) THE
LENDER WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, VERBAL
OR WRITTEN STATEMENT OR OTHER ACTION OF THE PARTIES HERETO.
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be
executed and delivered by its officer thereunto duly authorized, as of the date
first above written.
SPEAKEASY GAMING OF LAS VEGAS, INC.
By: /s/ Edson R. Arneault
--------------------------------------
Name: Edson R. Arneault
Title: President, Chief Executive Officer