EXHIBIT 10.14
GENERAL SECURITY AGREEMENT
GENERAL SECURITY AGREEMENT dated as of April 30, 1998, made by
SPEAKEASY GAMING OF RENO, INC., a Nevada corporation (the "Grantor"), in
favor of XXXXXXXXX LLC, as lender (the "Lender").
W I T N E S S E T H :
WHEREAS, the Grantor, Speakeasy Gaming of Las Vegas, Inc., a Nevada
corporation ("Speakeasy Vegas"), Mountaineer Park, Inc., a West Virginia
corporation ("Mountaineer" and together with the Grantor and Speakeasy Vegas,
collectively, the "Borrowers"), MTR Gaming Group, Inc., a Delaware
corporation, (the "Guarantor" and together with the Grantor, Speakeasy Vegas
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 Vegas
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 Vegas 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 Reno 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. 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 Reno 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 the 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) 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, or as otherwise provided in the Loan Documents, 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, 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, xxx 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 RENO, INC.
By: /S/ XXXXX X. XXXXXXXX
--------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President, Chief Executive Officer
