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EXHIBIT 10.5
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement"), dated as of October 29,
1998, is entered into between FITZGERALDS SOUTH, INC., a Nevada corporation,
FITZGERALDS MISSISSIPPI, INC., a Mississippi corporation, FITZGERALDS LAS VEGAS,
INC., a Nevada corporation, FITZGERALDS FREMONT EXPERIENCE CORPORATION, a Nevada
corporation, FITZGERALDS RENO, INC., a Nevada corporation, FITZGERALDS
INCORPORATED, a Nevada corporation, FITZGERALDS BLACK HAWK, INC., a Nevada
corporation, FITZGERALDS BLACK HAWK II, INC., a Colorado corporation, and 000
XXXX XXXXXX LIMITED LIABILITY COMPANY, a Colorado limited liability company
(each a "Pledgor" and collectively, "Pledgors"), on the one hand and, on the
other hand, FOOTHILL CAPITAL CORPORATION, a California corporation ("Secured
Party"), with reference to the following:
WHEREAS, each Pledgor beneficially owns the specified number of
shares identified as Pledged Shares or the percentage interest identified as
Pledged Member Interest, in the Persons identified as Issuers on Schedule A
attached hereto (or any addendum thereto);
WHEREAS, Borrower and Secured Party are parties to that certain
Loan and Security Agreement (the "Loan Agreement"), of even date herewith,
pursuant to which Secured Party has agreed to make certain financial
accommodations to Borrower;
WHEREAS, to induce Secured Party to make the financial
accommodations provided to Borrower pursuant to the Loan Agreement, each Pledgor
desires to pledge, grant, transfer, and assign to Secured Party a security
interest in the Collateral (as hereinafter defined) to secure the Secured
Obligations (as hereinafter defined), as provided herein.
NOW, THEREFORE, in consideration of the mutual promises,
covenants, representations, and warranties set forth herein and for other good
and valuable consideration, the parties hereto agree as follows:
1. Definitions and Construction.
(a) Definitions. All initially capitalized terms used
herein and not otherwise defined herein shall have the meaning ascribed thereto
in the Loan Agreement. As used in this Agreement:
"Agreement" shall mean this Pledge Agreement.
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"Borrower" shall mean Fitzgeralds Gaming
Corporation, a Nevada corporation.
"Chief Executive Office" shall mean where a Pledgor
is deemed located pursuant to Section 9-103(3)(d) of the Code.
"Collateral" shall mean the Pledged Shares, the
Pledged Member Interests, the Future Rights, and the Proceeds, collectively, but
excluding any Excluded Assets.
"FLVI" shall mean Fitzgeralds Las Vegas, Inc., a
Nevada corporation.
"Future Rights" shall mean: (a) all shares of stock
or member interests (other than Pledged Shares or Pledged Member Interests) of
the Issuers, and all securities convertible or exchangeable into, and all
warrants, options, or other rights to purchase, shares of stock of, or member
interests in, the Issuers; (b) to the extent of any Pledgor's interest therein,
all shares of stock of or member interests in, all securities convertible or
exchangeable into, and all warrants, options, or other rights to purchase shares
of stock of or member interests in, any Person in which such Pledgor, after the
date of this Agreement, acquires a direct equity interest, irrespective of
whether such Person is or becomes a Subsidiary of such Pledgor; and (c) the
certificates or instruments representing such additional shares or member
interests, convertible or exchangeable securities, warrants, and other rights
and all dividends, cash, options, warrants, rights, instruments, and other
property or proceeds from time to time received, receivable, or otherwise
distributed in respect of or in exchange for any or all of such shares or member
interests.
"Gaming Laws" shall mean all gaming laws, rules,
and regulations enacted by any Gaming Authority or other governmental authority.
"Holder" and "Holders" shall have the meanings
ascribed thereto in Section 3 of this Agreement.
"Issuers" shall mean each of the Persons identified
as an Issuer on Schedule A attached hereto (or any addendum thereto), and any
successors thereto, whether by merger or otherwise.
"Lien" shall mean any lien, mortgage, pledge,
assignment (including any assignment of rights to receive payments of money),
security interest, charge, or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature thereof, or any
agreement to give any security interest).
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"Loan Agreement" shall have the meaning ascribed
thereto in the recitals to this Agreement.
"Pledged Member Interests" shall mean all of the
percentage interests identified as Pledged Member Interest on Schedule A
attached hereto (or any addendum thereto).
"Pledged Shares" shall mean all of the shares
identified as Pledged Shares on Schedule A attached hereto (or any addendum
thereto).
"Pledgor" shall have the meaning ascribed thereto
in the preamble to this Agreement.
"Proceeds" shall mean all proceeds (including
proceeds of proceeds) of the Pledged Shares, Pledged Member Interests, and
Future Rights including all: (a) rights, benefits, distributions, premiums,
profits, dividends, interest, cash, instruments, documents of title, accounts,
contract rights, inventory, equipment, general intangibles, deposit accounts,
chattel paper, and other property from time to time received, receivable, or
otherwise distributed in respect of or in exchange for, or as a replacement of
or a substitution for, any of the Pledged Shares, Pledged Member Interests,
Future Rights, or proceeds thereof (including any cash, stock, member interests,
or other securities or instruments issued after any recapitalization,
readjustment, reclassification, merger or consolidation with respect to the
Issuers and any claims against financial intermediaries under Section 8-313(2)
of the Code or otherwise); (b) "proceeds," as such term is used in Section 9-306
of the Code; (c) proceeds of any insurance, indemnity, warranty, or guaranty
(including guaranties of delivery) payable from time to time with respect to any
of the Pledged Shares, Pledged Member Interests, Future Rights, or proceeds
thereof; (d) payments (in any form whatsoever) made or due and payable to any
Pledgor from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Pledged Shares,
Pledged Member Interests, Future Rights, or proceeds thereof; and (e) other
amounts from time to time paid or payable under or in connection with any of the
Pledged Shares, Pledged Member Interests, Future Rights, or proceeds thereof.
"Secured Obligations" shall mean all liabilities,
obligations, or undertakings owing by Pledgor to Secured Party of any kind or
description arising out of or outstanding under, advanced or issued pursuant to,
or evidenced by the Loan Agreement, the other Loan Documents, or this Agreement,
irrespective of whether for the payment of money, whether direct or indirect,
absolute or contingent, due or to become due, voluntary or involuntary, whether
now existing or hereafter arising, and including all interest (including
interest that accrues after the filing of a case under the Bankruptcy Code) and
any and all costs, fees (including attorneys fees), and expenses which Pledgor
is required to pay pursuant to any of the foregoing, by law, or otherwise.
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"Secured Party" shall have the meaning ascribed
thereto in the preamble to this Agreement, together with its successors or
assigns.
"Securities Act" shall have the meaning ascribed
thereto in Section 9(c) of this Agreement.
(b) Construction.
(i) Unless the context of this Agreement
clearly requires otherwise, references to the plural include the singular and to
the singular include the plural, the part includes the whole, the term
"including" is not limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder," and other similar terms in this
Agreement refer to this Agreement as a whole and not exclusively to any
particular provision of this Agreement. Article, section, subsection, exhibit,
and schedule references are to this Agreement unless otherwise specified. All of
the exhibits or schedules attached to this Agreement shall be deemed
incorporated herein by reference. Any reference to any of the following
documents includes any and all alterations, amendments, restatements,
extensions, modifications, renewals, or supplements thereto or thereof, as
applicable: this Agreement, the Loan Agreement, or any of the other Loan
Documents.
(ii) Neither this Agreement nor any uncertainty
or ambiguity herein shall be construed or resolved against Secured Party or
Pledgors, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties hereto and their respective
counsel and shall be construed and interpreted according to the ordinary meaning
of the words used so as to fairly accomplish the purposes and intentions of the
parties hereto.
(iii) In the event of any direct conflict
between the express terms and provisions of this Agreement and of the Loan
Agreement, the terms and provisions of the Loan Agreement shall control.
2. Pledge.
(a) As security for the prompt payment and
performance of the Secured Obligations in full by Pledgor when due, whether at
stated maturity, by acceleration or otherwise (including amounts that would
become due but for the operation of the provisions of the Bankruptcy Code), each
Pledgor hereby pledges, grants, transfers, and assigns to Secured Party a
security interest in all of such Pledgor's right, title, and interest in and to
the Collateral.
(b) Notwithstanding anything to the contrary
contained herein, Secured Party expressly acknowledges and agrees that the
pledge of the Pledged
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Shares of FLVI, and any restrictions on the transfer of and agreements not to
encumber such Pledged Shares set forth herein, will require the approval of the
Nevada Gaming Commission upon the recommendation of the Nevada State Gaming
Control Board in order to become effective, and that the exercise by Secured
Party of its rights and remedies hereunder is subject to the mandatory
provisions of the Gaming Laws. Upon obtaining such approval, the foregoing
pledge of such Pledged Securities of FLVI automatically shall become effective
without any further action by any Person.
3. Delivery and Registration of Collateral.
(a) All certificates or instruments representing or
evidencing the Collateral shall be promptly delivered by each Pledgor to Secured
Party or Secured Party's designee pursuant hereto at a location designated by
Secured Party and shall be held by or on behalf of Secured Party pursuant
hereto, and shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance satisfactory to Secured Party. Secured Party hereby
acknowledges that the applicable Gaming Laws of the State of Nevada require that
the stock certificates or other instruments evidencing the Pledged Shares issued
by FLVI be held and maintained at all times at a location within the State of
Nevada designated to the Nevada State Gaming Control Board and be available for
inspection by agents or employees of the Nevada State Gaming Control Board as
promptly as possible upon request during normal business hours.
(b) After the occurrence and during the continuance
of an Event of Default, Secured Party shall have the right, at any time in its
discretion and without notice to the Pledgors, to transfer to or to register on
the books of the Issuers (or of any other Person maintaining records with
respect to the Collateral) in the name of Secured Party or any of its nominees
any or all of the Collateral. In addition, Secured Party shall have the right at
any time to exchange certificates or instruments representing or evidencing
Collateral for certificates or instruments of smaller or larger denominations.
(c) If, at any time and from time to time, any
Collateral (including any certificate or instrument representing or evidencing
any Collateral) is in the possession of a Person other than Secured Party or the
applicable Pledgor (a "Holder"), then such Pledgor shall immediately, at Secured
Party's option, either cause such Collateral to be delivered into Secured
Party's possession, or execute and deliver to such Holder a written
notification/instruction, and take all other steps necessary to perfect the
security interest of Secured Party in such Collateral, including obtaining from
such Holder a written acknowledgement that such Holder holds such Collateral for
Secured Party, all pursuant to Section 9-115 of the Code or other applicable law
governing the perfection of Secured Party's security interest in the Collateral
in the possession of such Holder. Each such notification/instruction and
acknowledgement shall be in form and substance satisfactory to Secured Party.
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(d) Any and all Collateral (including dividends,
interest, and other cash distributions) at any time received or held by any
Pledgor shall be so received or held in trust for Secured Party, shall be
segregated from other funds and property of such Pledgor and shall be forthwith
delivered to Secured Party in the same form as so received or held, with any
necessary endorsements; provided that cash dividends or distributions received
by such Pledgor, if and to the extent they are not prohibited by the Loan
Agreement, may be retained by such Pledgor in accordance with Section 4 and used
in the ordinary course of such Pledgor's business.
(e) If at any time and from time to time any
Collateral consists of an uncertificated security or a security in book entry
form, then the applicable Pledgor shall immediately cause such Collateral to be
registered or entered, as the case may be, in the name of Secured Party, or
otherwise cause Secured Party's security interest thereon to be perfected in
accordance with applicable law.
4. Voting Rights and Dividends.
(a) So long as no Event of Default shall have occurred and
be continuing, each Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Collateral or any part thereof for any
purpose not inconsistent with the terms of the Loan Documents and shall be
entitled to receive and retain any cash dividends or distributions paid in
respect of the Collateral.
(b) Upon the occurrence and during the continuance of an
Event of Default, all rights of each Pledgor to exercise the voting and other
consensual rights or receive and retain cash dividends or distributions that it
would otherwise be entitled to exercise or receive and retain, as applicable
pursuant to Section 4(a), shall cease, and all such rights shall thereupon
become vested in Secured Party, who shall thereupon have the sole right to
exercise such voting or other consensual rights and to receive and retain such
cash dividends and distributions. Each Pledgor shall execute and deliver (or
cause to be executed and delivered) to Secured Party all such proxies and other
instruments as Secured Party may reasonably request for the purpose of enabling
Secured Party to exercise the voting and other rights which it is entitled to
exercise and to receive the dividends and distributions that it is entitled to
receive and retain pursuant to the preceding sentence.
5. Representations and Warranties. Each Pledgor represents,
warrants, and covenants as follows:
(a) Such Pledgor has taken all steps it deems necessary or
appropriate to be informed on a continuing basis of changes or potential changes
affecting the Collateral (including rights of conversion and exchange, rights to
subscribe, payment of dividends, reorganizations or recapitalization, tender
offers and voting rights), and such Pledgor agrees that Secured Party shall have
no responsibility or liability for informing
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such Pledgor of any such changes or potential changes or for taking any action
or omitting to take any action with respect thereto;
(b) All information herein or hereafter supplied to
Secured Party by or on behalf of such Pledgor in writing with respect to the
Collateral is, or in the case of information hereafter supplied will be,
accurate and complete in all material respects;
(c) With regard to the Collateral owned by such Pledgor,
such Pledgor is and will be the sole legal and beneficial owner of the
Collateral (including the Pledged Shares, the Pledged Member Interests, and all
other Collateral acquired by such Pledgor after the date hereof) free and clear
of any adverse claim, Lien, or other right, title, or interest of any party
other than Liens in favor of the Indenture Trustee relative to the Senior Note
Documents and Liens in favor of Secured Party, so long as and to the extent such
Liens remain the subject of the Intercreditor Agreement;
(d) This Agreement, and the delivery to Secured Party, or
its designee, of the Pledged Shares or Pledged Member Interests representing
Collateral (or the delivery to all Holders of the Pledged Shares or Pledged
Member Interests representing Collateral of the notification/instruction
referred to in Section 3 of this Agreement), creates a valid, perfected, and
first priority security interest in one hundred percent (100%) of the Pledged
Shares and Pledged Member Interests in favor of Secured Party securing payment
of the Secured Obligations, and all actions necessary to achieve such perfection
have been duly taken;
(e) With respect to such Pledgor, Schedule A to this
Agreement is true and correct and complete in all material respects; without
limiting the generality of the foregoing: (i) all the Pledged Shares and Pledged
Member Interests are in certificated form, and, except to the extent registered
in the name of Secured Party or its nominee pursuant to the provisions of this
Agreement, are registered in the name of such Pledgor; (ii) the Pledged Shares
as to each of the Issuers of Pledged Shares constitute at least the percentage
of all the fully diluted issued and outstanding shares of stock of such Issuer
as set forth in Schedule A to this Agreement; and (iii) the Pledged Member
Interests as to each of the Issuers of Pledged Member Interests constitute at
least the percentage of all fully diluted issued and outstanding member
interests in such Issuer as set forth in Schedule A to this Agreement;
(f) There are no presently existing Future Rights or
Proceeds owned by such Pledgor, except as set forth in Schedule C hereto;
(g) The Pledged Shares and Pledged Member Interests have
been duly authorized and validly issued and are fully paid and nonassessable;
and
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(h) Neither the pledge of the Collateral pursuant to this
Agreement nor the extensions of credit represented by the Secured Obligations
violates Regulation T, U or X of the Board of Governors of the Federal Reserve
System.
6. Further Assurances.
(a) Each Pledgor agrees that from time to time, at the
expense of such Pledgor, such Pledgor will promptly execute and deliver all
further instruments and documents, and take all further action that may be
necessary or reasonably desirable, or that Secured Party may request, in order
to perfect and protect any security interest granted or purported to be granted
hereby or to enable Secured Party to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, each Pledgor will: (i) at the request of Secured
Party, xxxx conspicuously each of its records pertaining to the Collateral with
a legend, in form and substance reasonably satisfactory to Secured Party,
indicating that such Collateral is subject to the security interest granted
hereby; (ii) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary
or reasonably desirable, or as Secured Party may request, in order to perfect
and preserve the security interests granted or purported to be granted hereby;
(iii) allow inspection of the Collateral by Secured Party or Persons designated
by Secured Party; and (iv) appear in and defend any action or proceeding that
may affect such Pledgor's title to or Secured Party's security interest in the
Collateral.
(b) Each Pledgor hereby authorizes Secured Party to file
one or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Collateral without the signature of such
Pledgor where permitted by law. A carbon, photographic, or other reproduction of
this Agreement or any financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement where permitted by law.
(c) Each Pledgor will furnish to Secured Party, upon the
request of Secured Party: (i) a certificate executed by an authorized officer of
such Pledgor, and dated as of the date of delivery to Secured Party, itemizing
in such detail as Secured Party may request, the Collateral which, as of the
date of such certificate, has been delivered to Secured Party by such Pledgor
pursuant to the provisions of this Agreement; and (ii) such statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as Secured Party may request.
7. Covenants of Pledgors. Each Pledgor shall:
(a) Perform each and every covenant in the Loan Documents
applicable to such Pledgor;
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(b) At all times keep at least one complete set of its
records concerning substantially all of the Collateral at its Chief Executive
Office as set forth in Schedule B hereto, and not change the location of its
Chief Executive Office or such records without giving Secured Party at least
thirty (30) days prior written notice thereof;
(c) To the extent it may lawfully do so, use its best
efforts to prevent the Issuers from issuing Future Rights or Proceeds, except
for cash dividends and other distributions, if any, that are not prohibited by
the terms of the Loan Agreement to be paid by any Issuer to such Pledgor;
(d) Upon receipt by such Pledgor of any material notice,
report, or other communication from any of the Issuers or any Holder relating to
all or any part of the Collateral, deliver such notice, report or other
communication to Secured Party as soon as possible, but in no event later than
five (5) days following the receipt thereof by such Pledgor; and
(e) Use its best efforts to obtain all recommendations of
the Nevada State Gaming Control Board and approvals of the Nevada Gaming
Commission that are required for the pledge of or any negative pledge on the
stock of FLVI; provided, however, that such best efforts need not include the
obligation to expend money, other than in connection with customary procedures
for obtaining such recommendations or approvals.
8. Secured Party as Pledgors' Attorney-in-Fact.
(a) Each Pledgor hereby irrevocably appoints Secured Party
as such Pledgor's attorney-in-fact, with full authority in the place and stead
of such Pledgor and in the name of such Pledgor, Secured Party or otherwise,
from time to time at Secured Party's discretion, to take any action and to
execute any instrument that Secured Party may reasonably deem necessary or
advisable to accomplish the purposes of this Agreement, including: (i) after the
occurrence and during the continuance of an Event of Default, to receive,
endorse, and collect all instruments made payable to such Pledgor representing
any dividend, interest payment or other distribution in respect of the
Collateral or any part thereof to the extent permitted hereunder and to give
full discharge for the same and to execute and file governmental notifications
and reporting forms; (ii) to issue any notifications/instructions Secured Party
deems necessary pursuant to Section 3 of this Agreement; or (iii) to arrange for
the transfer of the Collateral on the books of any of the Issuers or any other
Person to the name of Secured Party or to the name of Secured Party's nominee.
(b) In addition to the designation of Secured Party as
such Pledgor's attorney-in-fact in subsection (a), each Pledgor hereby
irrevocably appoints Secured Party as such Pledgor's agent and attorney-in-fact
to make, execute and deliver any and all documents and writings which may be
necessary or appropriate for approval of, or be required by, any regulatory
authority located in any city, county, state or country where
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such Pledgor or any of the Issuers engage in business, in order to transfer or
to more effectively transfer any of the Pledged Shares or Pledged Member
Interests, or otherwise enforce Secured Party's rights hereunder.
9. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default:
(a) Secured Party may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the Code (irrespective of whether the Code applies to the affected
items of Collateral), and Secured Party may also 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 exchange, broker's board or at any of Secured
Party's offices or elsewhere, for cash, on credit or for future delivery, at
such time or times and at such price or prices and upon such other terms as
Secured Party may deem commercially reasonable, irrespective of the impact of
any such sales on the market price of the Collateral. To the maximum extent
permitted by applicable law, Secured Party may be the purchaser of any or all of
the Collateral at any such sale and shall be entitled, for the purpose of
bidding and making settlement or payment of the purchase price for all or any
portion of the Collateral sold at any such public sale, to use and apply all or
any part of the Secured Obligations as a credit on account of the purchase price
of any Collateral payable at such sale. Each purchaser at any such sale shall
hold the property sold absolutely free from any claim or right on the part of
Pledgors, and each Pledgor hereby waives (to the extent permitted by law) all
rights of redemption, stay, or appraisal that it now has or may at any time in
the future have under any rule of law or statute now existing or hereafter
enacted. Each Pledgor agrees that, to the extent notice of sale shall be
required by law, at least ten (10) calendar days notice to such Pledgor of the
time and place of any public sale or the time after which a private sale is to
be made shall constitute reasonable notification. Secured Party shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. Secured Party 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. To the maximum extent permitted by law, each Pledgor hereby waives
any claims against Secured Party arising because the price at which any
Collateral may have been sold at such a private sale was less than the price
that might have been obtained at a public sale, even if Secured Party accepts
the first offer received and does not offer such Collateral to more than one
offeree.
(b) Each Pledgor hereby agrees that any sale or other
disposition of the Collateral conducted in conformity with reasonable commercial
practices of banks, insurance companies, or other financial institutions in the
City of Los Angeles, California in disposing of property similar to the
Collateral shall be deemed to be commercially reasonable.
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(c) Each Pledgor hereby acknowledges that the sale by
Secured Party of any Collateral pursuant to the terms hereof in compliance with
the Securities Act of 1933 as now in effect or as hereafter amended, or any
similar statute hereafter adopted with similar purpose or effect (the
"Securities Act"), as well as applicable "Blue Sky" or other state securities
laws may require strict limitations as to the manner in which Secured Party or
any subsequent transferee of the Collateral may dispose thereof. Each Pledgor
acknowledges and agrees that in order to protect Secured Party's interest it may
be necessary to sell the Collateral at a price less than the maximum price
attainable if a sale were delayed or were made in another manner, such as a
public offering under the Securities Act. Each Pledgor has no objection to sale
in such a manner and agrees that Secured Party shall have no obligation to
obtain the maximum possible price for the Collateral. Without limiting the
generality of the foregoing, each Pledgor agrees that, upon the occurrence and
during the continuation of an Event of Default, Secured Party may, subject to
applicable law, from time to time attempt to sell all or any part of the
Collateral by a private placement, restricting the bidders and prospective
purchasers to those who will represent and agree that they are purchasing for
investment only and not for distribution. In so doing, Secured Party may solicit
offers to buy the Collateral or any part thereof for cash, from a limited number
of investors deemed by Secured Party, in its reasonable judgment, to be
institutional investors or other responsible parties who might be interested in
purchasing the Collateral. If Secured Party shall solicit such offers, then the
acceptance by Secured Party of one of the offers shall be deemed to be a
commercially reasonable method of disposition of the Collateral.
(d) If Secured Party shall determine to exercise its right
to sell all or any portion of the Collateral pursuant to this Section, each
Pledgor agrees that, upon request of Secured Party, such Pledgor will, at its
own expense:
(i) use its best efforts to execute and
deliver, and cause the Issuers and the directors and officers thereof to execute
and deliver, all such instruments and documents, and to do or cause to be done
all such other acts and things, as may be necessary or, in the opinion of
Secured Party, advisable to register such Collateral under the provisions of the
Securities Act, and to cause the registration statement relating thereto to
become effective and to remain effective for such period as prospectuses are
required by law to be furnished, and to make all amendments and supplements
thereto and to the related prospectuses which, in the opinion of Secured Party,
are necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto;
(ii) use its best efforts to qualify the
Collateral under the state securities laws or "Blue Sky" laws and to obtain all
necessary governmental approvals for the sale of the Collateral, as requested by
Secured Party;
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(iii) cause the Issuers to make available to
their respective security holders, as soon as practicable, an earnings statement
which will satisfy the provisions of Section 11(a) of the Securities Act;
(iv) execute and deliver, or cause the officers
and directors of the Issuers to execute and deliver, to any person, entity or
governmental authority as Secured Party may choose, any and all documents and
writings which, in Secured Party's reasonable judgment, may be necessary or
appropriate for approval, or be required by, any regulatory authority located in
any city, county, state or country where such Pledgor or the Issuers engage in
business, in order to transfer or to more effectively transfer the Pledged
Shares or Pledged Member Interests, or otherwise enforce Secured Party's rights
hereunder; and
(v) do or cause to be done all such other acts
and things as may be necessary to make such sale of the Collateral or any part
thereof valid and binding and in compliance with applicable law.
Each Pledgor acknowledges that there is no adequate remedy at law for failure by
it to comply with the provisions of this Section and that such failure would not
be adequately compensable in damages, and therefore agrees that its agreements
contained in this Section may be specifically enforced.
(e) EACH PLEDGOR EXPRESSLY WAIVES TO THE MAXIMUM EXTENT
PERMITTED BY LAW: (i) ANY CONSTITUTIONAL OR OTHER RIGHT TO A JUDICIAL HEARING
PRIOR TO THE TIME SECURED PARTY DISPOSES OF ALL OR ANY PART OF THE COLLATERAL AS
PROVIDED IN THIS SECTION; (ii) ALL RIGHTS OF REDEMPTION, STAY, OR APPRAISAL THAT
IT NOW HAS OR MAY AT ANY TIME IN THE FUTURE HAVE UNDER ANY RULE OF LAW OR
STATUTE NOW EXISTING OR HEREAFTER ENACTED; AND (iii) EXCEPT AS SET FORTH IN
SUBSECTION (a) OF THIS SECTION, ANY REQUIREMENT OF NOTICE, DEMAND, OR
ADVERTISEMENT FOR SALE.
10. Application of Proceeds. After the occurrence and during the
continuance of an Event of Default, any cash held by Secured Party as Collateral
and all cash proceeds received by Secured Party in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
pursuant to the exercise by Secured Party of its remedies as a secured creditor
as provided in Section 9 shall be applied from time to time by Secured Party as
provided in the Loan Agreement.
11. Duties of Secured Party. The powers conferred on Secured
Party hereunder are solely to protect its interests in the Collateral and shall
not impose on it any duty to exercise such powers. Except as provided in Section
9-207 of the Code, Secured
12
13
Party shall have no duty with respect to the Collateral or any responsibility
for taking any necessary steps to preserve rights against any Persons with
respect to any Collateral.
12. CHOICE OF LAW AND VENUE. THE VALIDITY OF THIS AGREEMENT, ITS
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF THE PARTIES
HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA. THE PARTIES AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA OR, AT THE SOLE OPTION OF SECURED PARTY, IN ANY
OTHER JURISDICTION IN WHICH THE COLLATERAL IS LOCATED IN CONNECTION WITH THE
EXERCISE OF SECURED PARTY'S RIGHTS AND REMEDIES AS A SECURED CREDITOR WITH
RESPECT TO SUCH COLLATERAL. EACH PLEDGOR AND SECURED PARTY WAIVES, TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE
OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS
BROUGHT IN ACCORDANCE WITH THIS SECTION 12.
13. Amendments; Etc. No amendment or waiver of any provision of
this Agreement nor consent to any departure by Pledgors herefrom shall in any
event be effective unless the same shall be in writing and signed by Secured
Party, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No failure on the part of
Secured Party to exercise, and no delay in exercising any right under this
Agreement, any other Loan Document, or otherwise with respect to any of the
Secured Obligations, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under this Agreement, any other Loan Document, or
otherwise with respect to any of the Secured Obligations preclude any other or
further exercise thereof or the exercise of any other right. The remedies
provided for in this Agreement or otherwise with respect to any of the Secured
Obligations are cumulative and not exclusive of any remedies provided by law.
14. Notices. Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be given shall be
in writing and shall be delivered in the manner set forth in the Loan Agreement.
15. Continuing Security Interest. 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 of the Secured
Obligations, including the cash collateralization, expiration, or cancellation
of all Secured Obligations, if any, consisting of letters of credit, and the
full and final termination of any commitment to extend any financial
accommodations under the Loan Agreement; (ii) be binding upon each Pledgor and
its
13
14
successors and assigns; and (iii) inure to the benefit of Secured Party and its
successors, transferees, and assigns. Upon the indefeasible payment in full of
the Secured Obligations, including the cash collateralization, expiration, or
cancellation of all Secured Obligations, if any, consisting of letters of
credit, and the full and final termination of any commitment to extend any
financial accommodations under the Loan Agreement, the security interests
granted herein shall automatically terminate and all rights to the Collateral
shall revert to the applicable Pledgor. Upon any such termination, Secured Party
will, at the applicable Pledgor's expense, execute and deliver to such Pledgor
such documents as such Pledgor shall reasonably request to evidence such
termination. Such documents shall be prepared by such Pledgor and shall be in
form and substance reasonably satisfactory to Secured Party.
16. Security Interest Absolute. To the maximum extent permitted
by law, all rights of Secured Party, all security interests hereunder, and all
obligations of Pledgors hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of any of the
Secured Obligations or any other agreement or instrument relating thereto,
including any of the Loan Documents;
(b) any change in the time, manner, or place of payment
of, or in any other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from any of the Loan
Documents, or any other agreement or instrument relating thereto;
(c) any exchange, release, or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to departure
from any guaranty for all or any of the Secured Obligations; or
(d) any other circumstances that might otherwise
constitute a defense available to, or a discharge of, any Pledgor.
To the maximum extent permitted by law, each Pledgor hereby waives any right to
require Secured Party to: (A) proceed against or exhaust any security held from
such Pledgor; or (B) pursue any other remedy in Secured Party's power
whatsoever.
17. Headings. Section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement or be given any substantive effect.
18. Severability. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
14
15
19. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same Agreement. Delivery of an executed
counterpart of this Agreement by telefacsimile shall be equally effective as
delivery of an executed original counterpart of this Agreement. Any party
delivering an executed counterpart of this Agreement by telefacsimile also shall
deliver an original executed counterpart but the failure to deliver an original
executed counterpart shall not affect the validity, enforceability, and binding
effect of this Agreement. This Agreement shall become effective as to each
Obligor upon the execution and delivery of a counterpart hereof by such Obligor
(whether or not a counterpart hereof shall have been executed and delivered by
any other Obligor).
20. Waiver of Marshaling. Each Pledgor and Secured Party
acknowledges and agrees that in exercising any rights under or with respect to
the Collateral: (i) Secured Party is under no obligation to marshal any
Collateral; (ii) may, in its absolute discretion, realize upon the Collateral in
any order and in any manner it so elects; and (iii) may, in its absolute
discretion, apply the proceeds of any or all of the Collateral to the Secured
Obligations in any order and in any manner it so elects. Each Pledgor and
Secured Party waive any right to require the marshaling of any of the
Collateral.
21. WAIVER OF JURY TRIAL. EACH PLEDGOR AND SECURED PARTY HEREBY
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PLEDGOR AND SECURED
PARTY REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
22. Waivers.
(a) To the maximum extent permitted by law, each Pledgor hereby
waives: (i) notice of acceptance hereof; (ii) notice of any loans or other
financial accommodations made or extended under the Loan Agreement, or the
creation or existence of any Obligations; (iii) notice of the amount of the
Obligations, subject, however, to such Pledgor's right to make inquiry of
Secured Party to ascertain the amount of the Obligations at any reasonable time;
(iv) notice of any adverse change in the financial condition of Borrower or of
any other fact that might increase such Pledgor's risk hereunder; (v) notice of
presentment for payment, demand, protest, and notice thereof as to any
instrument among the Loan Documents; (vi) notice of any unmatured Event of
Default or Event of Default under the Loan Agreement; and (vii) all other
notices (except if such notice is
15
16
specifically required to be given to such Pledgor under this Agreement) and
demands to which such Pledgor might otherwise be entitled.
(b) To the fullest extent permitted by applicable law, each
Pledgor waives the right by statute or otherwise to require Secured Party to
institute suit against Borrower or to exhaust any rights and remedies which
Secured Party has or may have against Borrower. Each Pledgor further waives any
defense arising by reason of any disability or other defense (other than the
defense that the Obligations shall have been fully and finally indefeasibly
paid) of Borrower or by reason of the cessation from any cause (other than that
the Obligations shall have been fully and finally indefeasibly paid) whatsoever
of the liability of Borrower in respect thereof.
(c) To the maximum extent permitted by law, each Pledgor hereby
waives: (i) any rights to assert against Secured Party any defense (legal or
equitable), set-off, counterclaim, or claim which such Pledgor may now or at any
time hereafter have against Borrower or any other party liable to Secured Party
on account of or with respect to the Obligations; (ii) any defense, set-off,
counterclaim, or claim, of any kind or nature, arising directly or indirectly
from the present or future sufficiency, validity, or enforceability of the
Obligations; (iii) any defense arising by reason of any claim or defense based
upon an election of remedies by Secured Party including, to the extent
applicable, the provisions of Sections 580d and 726 of the California Code of
Civil Procedure, or any similar law of California or any other jurisdiction;
(iv) the benefit of any statute of limitations affecting such Pledgor's
liability hereunder or the enforcement thereof.
(d) To the maximum extent permitted by law, each Pledgor hereby
waives any right of subrogation such Pledgor has or may have as against Borrower
with respect to the Obligations. In addition, each Pledgor hereby waives any
right to proceed against Borrower, now or hereafter, for contribution,
indemnity, reimbursement, or any other suretyship rights and claims
(irrespective of whether direct or indirect, liquidated or contingent), with
respect to the Obligations. Each Pledgor also hereby waives any right to proceed
or to seek recourse against or with respect to any property or asset of
Borrower. Each Pledgor hereby agrees that, in light of the waivers contained in
this Section, such Pledgor shall not be deemed to be a "creditor" (as that term
is defined in the Bankruptcy Code or otherwise) of Borrower, whether for
purposes of the application of Sections 547 or 550 of the United States
Bankruptcy Code or otherwise.
(e) If any of the Secured Obligations at any time are secured by
a mortgage or deed of trust upon real property, Secured Party may elect, in its
sole discretion, upon a default with respect to the Secured Obligations, to
foreclose such mortgage or deed of trust judicially or nonjudicially in any
manner permitted by law, before or after enforcing this Agreement, without
diminishing or affecting the liability of Pledgors hereunder. Each Pledgor
understands that (a) by virtue of the operation of California's antideficiency
law applicable to nonjudicial foreclosures, an election by Secured Party
nonjudicially to foreclose such a mortgage or deed of trust probably would
16
17
have the effect of impairing or destroying rights of subrogation, reimbursement,
contribution, or indemnity of such Pledgor against Borrower or guarantors or
sureties, and (b) absent the waiver given by such Pledgor herein, such an
election might estop Secured Party from enforcing this Agreement against such
Pledgor. Understanding the foregoing, and understanding that such Pledgor is
hereby relinquishing a defense to the enforceability of this Agreement, each
Pledgor hereby waives any right to assert against Secured Party any defense to
the enforcement of this Agreement, whether denominated "estoppel" or otherwise,
based on or arising from an election by Secured Party nonjudicially to foreclose
any such mortgage or deed of trust. Each Pledgor understands that the effect of
the foregoing waiver may be that such Pledgor may have liability hereunder for
amounts with respect to which such Pledgor may be left without rights of
subrogation, reimbursement, contribution, or indemnity against Borrower or
guarantors or sureties. Each Pledgor also agrees that the "fair market value"
provisions of Section 580a of the California Code of Civil Procedure shall have
no applicability with respect to the determination of such Pledgor's liability
under this Agreement.
(f) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER
PROVISION SET FORTH IN THIS AGREEMENT, EACH PLEDGOR HEREBY WAIVES, TO THE
MAXIMUM EXTENT SUCH WAIVER IS PERMITTED BY LAW, ANY AND ALL DEFENSES ARISING
DIRECTLY OR INDIRECTLY UNDER ANY ONE OR MORE OF CALIFORNIA CIVIL CODE SECTIONS
2808, 2809, 2810, 2815, 2819, 2820, 2821, 2838, 2839, 2845, 2848, 2849, AND
2850, TO THE EXTENT APPLICABLE, CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS
580a, 580b, 580c, 580d, AND 726, AND, TO THE EXTENT APPLICABLE, CHAPTER 2 OF
TITLE 14 OF THE CALIFORNIA CIVIL CODE.
(g) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER
PROVISION SET FORTH IN THIS AGREEMENT, EACH PLEDGOR HEREBY WAIVES ALL RIGHTS AND
DEFENSES ARISING OUT OF AN ELECTION OF REMEDIES BY SECURED PARTY, EVEN THOUGH
THAT ELECTION OF REMEDIES, SUCH AS A NONJUDICIAL FORECLOSURE WITH RESPECT TO
SECURITY FOR A SECURED OBLIGATION, HAS DESTROYED SUCH PLEDGOR'S RIGHTS OF
SUBROGATION AND REIMBURSEMENT AGAINST THE PRINCIPAL BY THE OPERATION OF SECTION
580d OF THE CODE OF CIVIL PROCEDURE OR OTHERWISE.
[Signature page to follow.]
17
18
IN WITNESS WHEREOF, each Pledgor and Secured Party have caused
this Agreement to be duly executed and delivered by their officers thereunto
duly authorized as of the date first written above.
FITZGERALDS SOUTH, INC., a Nevada corporation
FITZGERALDS MISSISSIPPI, INC., a Mississippi corporation
FITZGERALDS LAS VEGAS, INC., a Nevada corporation
FITZGERALDS FREMONT EXPERIENCE CORPORATION,
a Nevada corporation
FITZGERALDS RENO, INC., a Nevada corporation
FITZGERALDS INCORPORATED, a Nevada corporation
FITZGERALDS BLACK HAWK, INC., a Nevada corporation
FITZGERALDS BLACK HAWK II, INC., a Colorado corporation
000 XXXX XXXXXX LIMITED LIABILITY COMPANY,
a Colorado limited liability company
By /s/ XXXXXXX X. XXXXXXXXX
------------------------------------
Name: Xxxxxxx X. XxXxxxxxx
Title: Senior Vice President, Chief Financial Officer,
Treasurer, and Secretary of each of the above-
listed companies
FOOTHILL CAPITAL CORPORATION, a California corporation
By /s/ XXXXX XXXXX
-----------------------------------
Title: Vice President
-------------------------------
S-1
19
SCHEDULE A
TO
PLEDGE AGREEMENT
Pledgor: Xxxxxxxxxx'x South, Inc.
Former Name, if Pledgor's
Pledged Certificate any, in which Percentage Jurisdiction of
Issuer Shares Class Number(s) Certificate Issued Ownership Incorporation
------ ------ ----- --------- ------------------ --------- -------------
Fitzgeralds Mississippi, Inc. 8,000,000 common 16 100% Mississippi
(formerly known as Polk
Landing Entertainment
Corporation)
Fitzgeralds Las Vegas, Inc. 10,000 common 6 100% Nevada
A-1
20
SCHEDULE A
TO
PLEDGE AGREEMENT
Pledgor: Fitzgeralds Mississippi, Inc.
Former Name, if Pledgor's
Pledged Certificate any, in which Percentage Jurisdiction of
Issuer Shares Class Number(s) Certificate Issued Ownership Incorporation
------ ------ ----- --------- ------------------ --------- -------------
none
A-2
21
SCHEDULE A
TO
PLEDGE AGREEMENT
Pledgor: Fitzgeralds Las Vegas, Inc.
Former Name, if Pledgor's
Pledged Certificate any, in which Percentage Jurisdiction of
Issuer Shares Class Number(s) Certificate Issued Ownership Incorporation
------ ------ ----- --------- ------------------ --------- -------------
Fitzgeralds Fremont 100 common 1 Fitzgeralds Las 100% Nevada
Experience Corporation Vegas Limited
Partnership
A-3
22
SCHEDULE A
TO
PLEDGE AGREEMENT
Pledgor: Fitzgeralds Fremont Experience Corporation
Former Name, if Pledgor's
Pledged Certificate any, in which Percentage Jurisdiction of
Issuer Shares Class Number(s) Certificate Issued Ownership Incorporation
------ ------ ----- --------- ------------------ --------- -------------
none
A-4
23
SCHEDULE A
TO
PLEDGE AGREEMENT
Pledgor: Fitzgeralds Reno, Inc.
Former Name, if Pledgor's
Pledged Certificate any, in which Percentage Jurisdiction of
Issuer Shares Class Number(s) Certificate Issued Ownership Incorporation
------ ------ ----- --------- ------------------ --------- -------------
none
A-5
24
SCHEDULE A
TO
PLEDGE AGREEMENT
Pledgor: Fitzgeralds Incorporated
Former Name, if Pledgor's
Pledged Certificate any, in which Percentage Jurisdiction of
Issuer Shares Class Number(s) Certificate Issued Ownership Incorporation
------ ------ ----- --------- ------------------ --------- -------------
Fitzgeralds Black Hawk, 100 common 1 Xxxxxxxx Gaming, 100% Nevada
Inc. Inc.
A-6
25
SCHEDULE A
TO
PLEDGE AGREEMENT
Pledgor: Fitzgeralds Black Hawk, Inc.
Former Name, if Pledgor's
Pledged Certificate any, in which Percentage Jurisdiction of
Issuer Shares Class Number(s) Certificate Issued Ownership Incorporation
------ ------ ----- --------- ------------------ --------- -------------
Fitzgeralds Black Hawk II, 100 2 100% Colorado
Inc.
A-7
26
SCHEDULE A
TO
PLEDGE AGREEMENT
Pledgor: Fitzgeralds Black Hawk II, Inc.
Pledged Former Name, if
Member Certificate any, in which Jurisdiction of
Issuer Interest Number(s) Certificate Issued Organization
------ -------- --------- ------------------ ------------
000 Xxxx Xxxxxx Limited 100% 1 Colorado
Liability Company
A-8
27
SCHEDULE A
TO
PLEDGE AGREEMENT
Pledgor: 000 Xxxx Xxxxxx Limited Liability Company
Former Name, if Pledgor's
Pledged Certificate any, in which Percentage Jurisdiction of
Issuer Shares Class Number(s) Certificate Issued Ownership Incorporation
------ ------ ----- --------- ------------------ --------- -------------
none
X-0
00
XXXXXXXX X
TO
PLEDGE AGREEMENT
Pledgor Address of Chief Executive Office
----------------------------------- ---------------------------------
Fitzgeralds South, Inc., 000 Xxxxxxx Xxxxxx
a Nevada corporation Xxx Xxxxx, Xxxxxx 00000
Fitzgeralds Mississippi, Inc., 000 Xxxxxxx Xxxxxx
a Mississippi corporation Xxx Xxxxx, Xxxxxx 00000
Fitzgeralds Las Vegas, Inc., 000 Xxxxxxx Xxxxxx
a Nevada corporation Xxx Xxxxx, Xxxxxx 00000
Fitzgeralds Xxxxxxx Xxxxxx 000 Xxxxxxx Xxxxxx
Experience Corporation, Xxx Xxxxx, Xxxxxx 00000
a Nevada corporation
Fitzgeralds Reno, Inc., 000 Xxxxxxx Xxxxxx
a Nevada corporation Xxx Xxxxx, Xxxxxx 00000
Fitzgeralds Incorporated, 000 Xxxxxxx Xxxxxx
a Nevada corporation Xxx Xxxxx, Xxxxxx 00000
Fitzgeralds Las Vegas, Inc., 000 Xxxxxxx Xxxxxx
a Nevada corporation Xxx Xxxxx, Xxxxxx 00000
Fitzgeralds Black Hawk, Inc., 000 Xxxxxxx Xxxxxx
a Nevada corporation Xxx Xxxxx, Xxxxxx 00000
Fitzgeralds Black Hawk II, Inc., 000 Xxxxxxx Xxxxxx
a Colorado corporation Xxx Xxxxx, Xxxxxx 00000
000 Xxxx Xxxxxx Limited Liability 000 Xxxxxxx Xxxxxx
Company, a Colorado limited Xxx Xxxxx, Xxxxxx 00000
liability company
B-1
29
SCHEDULE C
TO
PLEDGE AGREEMENT
Existing Future Rights and Proceeds: None.
C-1
