EXHIBIT 4.7
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of August 20, 1997 (as the same may
be amended, supplemented or otherwise modified from time to time, this
"Agreement"), is made by ISLE OF CAPRI BLACK HAWK L.L.C., a Colorado limited
liability company having an office c/o Casino America Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), and by ISLE OF CAPRI BLACK HAWK
CAPITAL CORP., a Colorado corporation having an office c/o Casino America Inc.,
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Capital Corp." and, together
with the Company, collectively, the "Grantors" and each, a "Grantor") in favor
of IBJ ▇▇▇▇▇▇▇▇ BANK & TRUST COMPANY, a New York banking corporation, having an
office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as trustee (in such
capacity and together with any successors in such capacity, the "Trustee")
pursuant to the Indenture referred to below.
R E C I T A L S :
A. The Grantors and the Trustee are, contemporaneously with the
execution and delivery of this Agreement, entering into a certain Indenture
dated as of August 20, 1997 (as the same may be amended, supplemented or
otherwise modified from time to time, the "Indenture"), pursuant to which the
Grantors are issuing their 13% First Mortgage Notes due August 20, 2004 With
Contingent Interest (such notes, together with any notes issued in replacement
thereof or in exchange therefor, the "Securities"), in the aggregate principal
amount of $75,000,000.
B. It is a condition precedent to the purchase of the Securities
that the Grantors shall have executed and delivered this Agreement to the
Trustee for itself and the ratable benefit of the holders from time to time of
the Securities (the "Holders" and, together with the Trustee, the "Secured
Parties") to secure the payment and performance of the Obligations (as
hereinafter defined).
A G R E E M E N T :
NOW, THEREFORE, in consideration of the premises and in order to
induce the Trustee to enter into the Indenture and to induce the Holders to
purchase the Securities and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Grantors hereby
agree, for the benefit of the Trustee and for the ratable benefit of the Holders
as follows:
SECTION 1.1. Definitions. (a) Capitalized terms used herein but not
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otherwise defined shall have the meanings assigned to such terms in the
Indenture. Unless the context indicates otherwise or the terms are otherwise
defined herein or in the Indenture, definitions in the UCC apply to words and
phrases in this Agreement. The term "Grantor," as used with respect to any
Person, includes, without limitation, such Person, such Person's heirs,
successors and assigns, such Person as a debtor-in-possession, and any receiver,
trustee, liquidator, conservator, custodian or similar party appointed for such
Person or all or substantially all of its assets under any law.
(b) The following terms which are defined in the Uniform Commercial
Code in effect in the State of New York on the date hereof are used herein
as so defined: Accounts, Chattel Paper, Documents, Fixtures, General
Intangibles, Instruments, Inventory and Proceeds.
(c) The following terms shall have the following meanings:
"Agreement" shall mean this Security Agreement, as the same may be
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amended, supplemented or otherwise modified from time to time.
"Collateral" shall have the meaning set forth in Section 2 hereof.
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"Completion Capital Commitment" shall mean the Completion Capital
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Commitment by Casino America, Inc., dated as of the date hereof, as the same
may be amended, supplemented or otherwise modified from time to time.
"Contracts" shall mean (a) any and all contracts and agreements
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relating to gaming including, without limitation, any agreement in which a
person does business with or on the premises of an entity licensed pursuant to
applicable Gaming Laws and any resource or product used or useful in the
business of any Grantor, and (b) any and all other contracts and agreements of
any Grantor, as such may be amended, modified or otherwise supplemented from
time to time, in each case including, without limitation, (i) all rights to
receive moneys due and to become due to any Grantor thereunder or in connection
therewith, (ii) all rights to damages arising out of or for breach or default in
respect thereof and (iii) all rights to perform and exercise all remedies
thereunder.
"Copyrights" shall mean (a) all copyrights in all works, whether
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published or unpublished, registered or unregistered, including, without
limitation, those listed on Exhibit A, all registrations and recordings thereof,
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and all applications in connection therewith, including, without limitation,
registrations, recordings and applications in the United States Copyright Office
or in any other country, and (b) all renewals thereof.
"Copyright License" shall mean any and all agreements, written or oral
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providing for the grant by or to any Grantor of any right to reproduce, copy,
publish or otherwise use any Copyright, including, without limitation, the
agreements set forth on Exhibit A.
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"Default Rate" shall have the meaning set forth in Section 6.15
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hereof.
"Equipment" shall mean "equipment" as defined in the Uniform
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Commercial Code in effect in the State of New York on the date hereof,
including, without limitation, all machinery (including, without limitation, any
and all equipment and machinery used for or in connection with maintaining and
operating gaming facilities, lodging and restaurants), apparatus, implements,
office machinery, computers, furniture, furnaces, conveyors, tools, parts,
accessories, automobiles, trailers, tractors, trucks, forklifts, other motor
vehicles and all other equipment of any kind or nature, wherever located, and
all modifications,
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alterations, repairs, substitutions, additions and accessions thereto and all
replacements and all other parts therefor.
"General Intangibles" shall mean " general intangibles" as defined in
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the Uniform Commercial Code in effect in the State of New York on the date
hereof, including, without limitation, claims of any Grantor in respect of
litigation and claims for tax and other refunds from, inter alia, any city,
county, state, or federal government or any agency or authority or other
subdivision thereof.
"Governmental Authority" shall mean any nation or government, any
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state, municipality or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government including, without limitation, the
Colorado Division of Gaming and the Colorado Limited Gaming Control Commission.
"Investment Property" shall mean "investment property" as defined in
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the Uniform Commercial Code in effect in the State of Colorado on the date
hereof.
"Intellectual Property" shall mean Copyrights, Patents, Trademarks,
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Trade Secrets and Licenses, collectively.
"Licenses" shall mean Copyright Licenses, Patent Licenses and
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Trademark Licenses, collectively.
"Material Adverse Effect" shall mean a material adverse effect on (a)
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the business, operations, property, condition (financial or otherwise) of any
Grantor and its respective Subsidiaries, taken as a whole, (b) the Collateral,
or (c) the validity or enforceability of (i) this Agreement, any of the
Securities, the Indenture, the Completion Capital Commitment or any other
Collateral Document or (ii) the rights or remedies of the Trustee (or any other
trustee) hereunder or thereunder.
"Obligations" shall have the meaning set forth in Section 3 hereof.
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"Patents" shall mean all patents and patent applications, and the
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inventions and improvements described and claimed therein, and patentable
inventions and the reissues, divisions, continuations, renewals, extensions and
continuations-in-part of any of the foregoing, including, without limitation,
those set forth on Exhibit B.
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"Patent Licenses" shall mean any and all agreements, whether written
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or oral, providing for the grant by or to any Grantor of any right to
manufacture, use or sell any invention covered by a Patent, including, without
limitation, those set forth on Exhibit B.
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"Trademarks" shall mean (a) all registered and unregistered
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trademarks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, service marks, logos, slogans and other
source or business identifiers, and the goodwill and general intangibles
associated therewith, all registrations and recordings
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thereof, and all applications in connection therewith, whether in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political
subdivision thereof, or otherwise, including, without limitation, those set
forth on Exhibit C, and (b) all renewals thereof.
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"Trademark License" shall mean any and all agreements, written or
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oral, providing for the grant by or to any Grantor of any right to use any
Trademark, including, without limitation, those set forth on Exhibit C.
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"Trade Secret" shall mean any proprietary technology, process or
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system which is within the possession of any Grantor, including, without
limitation, manufacturing processes or methods, all formulae, processes,
procedures, compounds, drawings, designs, blueprints, surveys, reports, manuals
and operating standards relating to or used in the operation of such Grantor's
business.
"UCC" shall mean the Uniform Commercial Code as from time to time in
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effect in the State of New York.
"Works" shall mean any work which is or may be subject to copyright
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protection pursuant to Title 17 of the U.S. Code.
SECTION 1.2. Other Definitional Provisions.
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(a) The words "hereof," "herein," "hereto" and "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection and Exhibit references are to this Agreement, unless otherwise
specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. Grant of Security Interest. Except with respect to
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Permitted Liens, to the fullest extent permitted by applicable law, each Grantor
hereby grants, pledges, assigns and transfers to the Trustee, for the Trustee's
individual benefit and the ratable benefit of the Holders, as security for the
prompt and complete payment and performance when due (whether at stated
maturity, upon redemption or required repurchase, by acceleration or otherwise)
of all the Obligations of the Grantors, a continuing first priority security
interest in and lien on all of the right, title and interest of such Grantor in,
to and under the following property, in each case wherever located, whether now
owned or at any time hereafter acquired by such Grantor, whether now existing or
hereafter coming into existence, or in which such Grantor now has or at any time
in the future may acquire any right, title or interest (collectively, the
"Collateral"):
(a) the Cash Collateral Accounts, the Interest Reserve Account, the
Completion Reserve Account, the Construction Disbursement Account, the
Disbursed Funds Account (in each case, as defined in the Disbursement
Agreement), any other
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related accounts and all Trust Monies, other monies, securities, certificates,
items and other property on deposit therein;
(b) all Accounts;
(c) all Chattel Paper;
(d) all Contracts;
(e) all Documents;
(f) all Equipment;
(g) all Fixtures;
(h) all General Intangibles;
(i) all Instruments;
(j) all Intellectual Property;
(k) all Inventory;
(l) all Investment Property;
(m) to the extent not otherwise included in the foregoing, all of such
Grantor's personal property, goods, furnishings, fixtures and equipment,
supplies, building and other materials of every nature whatsoever and all other
personal property, including, but not limited to, communication systems, visual
and electronic surveillance systems and transportation systems and including all
property and materials stored therein in which such Grantor has an interest and
all tools, utensils, food and beverage, liquor, uniforms, linens, housekeeping
and maintenance supplies, vehicles, fuel, advertising and promotional material,
blueprints, surveys, plans and other documents relating to the Project, all
gaming and general equipment and devices which are or are to be installed and
used in connection with the operation of the Isle of Capri casino (the
"Project"), all computer equipment, calculators, adding machines, and gaming
tables, video game and slot machines and any other electronic equipment, all
furniture, fixtures, equipment, gaming equipment, appurtenances and personal
property now or in the future contained in, used in connection with, attached
to, or otherwise useful or convenient to the use, operation, or occupancy of, or
placed on, but unattached to, any part of the Project or the land upon which the
Project will be constructed, including all removable window and floor coverings,
all furniture and furnishings, heating, lighting, plumbing, ventilating, air
conditioning, refrigerating, incinerating and elevator and escalator plants,
cooking facilities, vacuum cleaning systems, public address and communications
systems, sprinkler systems and other fire prevention and extinguishing apparatus
and materials, motors, machinery, pipes.
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appliances, equipment, fittings, fixtures and building materials, together
with all venetian blinds, shades, draperies, drapery and curtain rods,
brackets, bulbs, cleaning apparatus, mirrors, lamps, ornaments, cooling
apparatus and equipment, ranges and ovens, garbage disposals, dishwashers,
mantels, and any and all such property which is at any time installed in
affixed to or placed upon the land upon which the Project will be
constructed, all fixtures for generating or distributing air, water, heat,
electricity, light, fuel or refrigeration, or for ventilating or sanitary
purposes, or for the exclusion of vermin or insects, or for the removal of
dust, refuse or garbage, all specifically designed installations and
furnishings, and all other personal property, furniture, fixtures and
equipment of every nature used or located at the Project;
(n) to the extent not otherwise included in the foregoing, all of
such Grantor's accounts and accounts receivable, including, without
limitation, all rights to payment for goods sold or leased or for services
rendered which are not evidenced by an instrument or chattel paper, all
other present or future rights for money due or to become due, all of such
Grantor's chattel paper, instruments, promissory notes (including, without
limitation, all inter-company notes), markers and general intangibles for
money due or to become due of any kind, in each case whether now existing
or hereafter arising and wherever arising and whether or not earned by
performance and all royalties, earnings, income, proceeds, products, rents,
revenues, reversions, remainders, issues, profits, avails, and other
benefits directly or indirectly derived or otherwise arising from any of
the foregoing, other general intangibles, documents of title, warehouse
receipts, leases, money, tax refund claims, partnership interests,
indemnification and other similar claims and contract rights, permits and
licenses, including, without limitation, any licenses held or to be held by
such Grantor necessary to operate the Project (including, without
limitation, licenses in favor of such Grantor granted pursuant to the
Management Agreement or otherwise), franchises, variances, special permits,
rulings, validations, exemptions, filings, registrations, authorizations,
consents, approvals, waivers, orders, rights and agreements (including,
without limitation, options, option rights and contract rights)
certificates, stock, any and all books, records, customer lists, concession
agreements, supply or service contracts, documents, unearned premiums,
rebates, deposits, refunds, including, but not limited to, income tax
refunds, prepaid expenses, rebates, tax and insurance escrow and impound
accounts, if any, and all rights in, to and under all, leases and other
agreements or contracts relating to any of the foregoing or now or
hereafter obtained by such Grantor from any Governmental Authority having
or claiming jurisdiction over the Project, and all things in action, rights
represented by judgments, awards of damages, settlements and claims arising
out of tort, warranty or contract (including, without limitation, the right
to assert and otherwise be the proper party of interest to commence,
control, prosecute and/or settle such actions, whether as claims,
counterclaims or otherwise, and whether involving matters arising from
casualty, condemnation, indemnification, negligence, strict liability,
other tort, contract, warranty or in any other manner), and all securities
of any Subsidiary, whether now in existence or hereafter incorporated or
formed;
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(o) to the extent not otherwise included in the foregoing, all
computer programs of such Grantor and all intellectual property rights
therein and all other proprietary information owned by, or in which such
Grantor has an interest, such Grantor, including, but not limited to, trade
secrets;
(p) all of such Grantor's right, title and interest in and to any and
all maps, plans, preliminary plans, specifications, surveys, studies,
tests, reports, data and drawings relating to the development of the
Project including, without limitation, all marketing plans, feasibility
studies, soils tests, design contracts and all contracts and agreements of
such Grantor relating thereto including, without limitation, architectural,
structural, mechanical and engineering plans and specifications, studies,
data and drawings prepared for or relating to the development of the
Project or the construction, renovation or restoration of the Project as
finalized, amended, supplemented, or otherwise modified from time to time
by the Independent Construction Consultant, in accordance with the terms of
the Cash Collateral and Disbursement Agreement, or the extraction of
minerals, sand, gravel or other valuable substances from the land upon
which the Project will be constructed and purchase contracts or any
agreement granting such Grantor a right to acquire any land situated within
▇▇▇▇▇▇ County, Colorado;
(q) to the extent not otherwise included in the foregoing, (i) all
other rights to the payment of money, including subsidy, reserve and
deficiency payments, rents (including room rents) and other sums payable to
such Grantor under leases, rental agreements and insurance proceeds; (ii)
all books, ledgers, files, correspondence, credit files, records, invoices,
bills of lading, and other documents relating to any of the foregoing,
including, without limitation, all tapes, cards, disks, computer software,
computer runs, and other papers and documents in the possession or control
of such Grantor or any computer bureau from time to time acting for such
Grantor; (iii) all rights and rights to use or access any resource or
product used or useful in the business of such Grantor; and (iv) all
accessions and additions to, parts and appurtenances of, substitutions for
and replacements of any of the foregoing; and
(r) to the extent not otherwise included in the foregoing, all Net
Loss Proceeds, Net Proceeds, Proceeds and products of any and all of the
foregoing and all collateral security and guarantees given by any person
with respect to any of the foregoing, and in any event, including, without
limitation, any and all (i) proceeds of any insurance (including, without
limitation, all Net Insurance Proceeds), surety bonds, tax and other
refunds (including, without limitation, any city, county, state, or federal
government or any agency or authority or other subdivision thereof),
indemnity, warranty or guarantee payable to the Trustee or to such Grantor
from time to time with respect to any of the Collateral, (ii) payments (in
any form whatsoever) made or due and payable to such Grantor from time to
time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any
Governmental Authority (or any person acting under color of a Governmental
Authority), (iii) payments made or due and payable to such Grantor in
respect of litigation and other claims, (iv) products of the Collateral,
(v) subject to the
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provisions and limitations contained in the Indenture, whatever is now or
hereafter receivable or received by such Grantor upon the sale, exchange,
collection or other disposition of any item of Collateral, whether
voluntary or involuntary including, without limitation, the proceeds of a
permitted Asset Sale in accordance with the Indenture, (vi) to the extent
permitted by law, whatever is now or hereafter receivable or received by
such Grantor upon the sale, exchange, collection or other disposition of
any Gaming License, regardless or whether such Gaming License is Collateral
or an Excluded Asset, and (vii) other amounts from time to time paid or
payable under or in connection with any of the Collateral.
Notwithstanding the foregoing, the Collateral shall not include any of
the following assets (the "Excluded Assets"): (i) Gaming Licenses and Liquor
Licenses, (ii) any other governmental approval or permit, to the extent that,
under the terms and conditions of such approval or under applicable law, it
cannot be subjected to a Lien in favor of the Trustee without the approval of
the relevant Governmental Authority, to the extent that such approval has not
been obtained; and (iii) FF&E or the proceeds of an FF&E financing to the extent
that (A) the purchase of such FF&E was not financed with the proceeds of the
Notes and (B) Trustors are permitted to enter into an FF&E Financing for such
FF&E under the Indenture; provided that, in such event, the Trustee shall
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execute and deliver, at the Trustors' sole expense, any instruments necessary or
appropriate to release the lien of this Security Agreement on all such FF&E or
other personal property.
SECTION 3. Obligations. This Agreement secures with respect to each
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Grantor, and the Collateral of each Grantor is collateral security for, the
payment and performance in full when due (whether at stated maturity, upon
redemption or required repurchase, by acceleration or otherwise) of all
obligations of every type and nature of the Grantors to the Trustee, any other
trustee under the Deed of Trust, or any Holder (including, without limitation,
any and all amounts which may at any time be or become due and payable and any
and all interest accruing after the maturity of the Securities and interest
accruing after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to the Grantors,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding and interest, to the extent permitted by law, on the unpaid
interest), whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out of, or in
connection with, the Indenture, the Securities, the Completion Capital
Commitment, this Agreement, the other Collateral Documents, or any other
document made, delivered or given in connection therewith, in each case whether
on account of principal, premium, interest, fees, Liquidated Damages,
indemnities, costs, expenses or otherwise (including, without limitation, all
reasonable fees and disbursements of counsel (including, without limitation,
in-house counsel) to the Trustee or to the Holders that are required to be paid
by the Grantors pursuant to the terms of the Indenture, the Securities, the
Completion Capital Commitment, this Agreement, any other Collateral Document, or
any other document entered into by any Grantor in connection with any of the
foregoing (collectively, the "Obligations").
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SECTION 4. Special Provisions Relating to Contacts
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SECTION 4.1. Grantors Remain Liable under Contracts. Anything herein
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to the contrary notwithstanding, each Grantor shall remain liable under each of
the Contracts to which it is a party to observe and perform all the conditions
and obligations to be observed and performed by it thereunder, all in accordance
with the terms and provisions of each such Contract, except as otherwise
provided herein. Neither the Trustee (nor any other trustee under the Deed of
Trust) nor any Holder shall have any obligation or liability under any such
Contract by reason of or arising out of this Agreement or the receipt by the
Trustee (or any such other trustee) or any such Holder of any payment relating
to any such Contract pursuant hereto, nor shall the Trustee (or any such other
trustee) or any Holder be obligated in any manner to perform any of the
obligations of any Grantor under or pursuant to any Contract, to make any
payment, to make any inquiry as to the nature or the sufficiency of any payment
received by it or as to the sufficiency of any performance by any party under
any Contract, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
SECTION 4.2. Communication with Contracting Parties. The Trustee in
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its own name or in the name of others may communicate with parties to the
Contracts to verify with them to the Trustee's satisfaction the existence,
amount and terms of any Contract.
SECTION 5. Maintenance of Perfected Security Interests: Further
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Assurances.
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SECTION 5.1. Perfection Maintenance. Each Grantor agrees that it
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shall maintain the security interests created by this Agreement as perfected
first priority security interests, except with respect to Permitted Liens, and
shall defend such security interests against the claims and demands of all
persons whomsoever.
SECTION 5.2. Further Assurances. At Trustee's request, each Grantor
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agrees that at any time and from time to time, at the sole cost and expense of
such Grantor, such Grantor shall promptly, and in any event, in no less than
five days, execute, deliver and, where applicable, file all further instruments
and documents, including, without limitation, all financing, continuation or
amendment statements under the Uniform Commercial Code in effect in any
applicable jurisdiction with respect to the security interests created hereby,
and take all further action that may be necessary or that the Trustee may
reasonably request, for the purpose of obtaining, maintaining or preserving the
full benefits of this Agreement and of the rights and powers herein granted or
for the purpose of creating, preserving, perfecting or otherwise protecting the
liens and security interests created or purported to be created hereby and the
priority thereof. Without limiting the Grantors' obligation to make such
filings, each Grantor hereby authorizes the Trustee (subject to the following
sentence) to take all action (including, without limitation, the filing of any
Uniform Commercial Code financing statements or continuation statements or
amendments thereto without the signature of the Grantors as set forth in Section
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15.4 hereof) which the Trustee may deem necessary or desirable to perfect or
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otherwise protect the liens and security
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interests created or purported to be created hereunder and to obtain the
benefits of this Agreement. Subject to the Trustee's obligations under the
Indenture during the continuance of an Event of Default, the Trustee shall not
be responsible for perfecting or maintaining the perfection of any security
interest granted to it under this Agreement or for filing, refiling, recording
or rerecording any document, financing statement, notice or instrument in any
public office at any time or times and shall not be responsible for seeing to
the insurance on or the payment of any taxes with respect to any property
subject to this Agreement. In accordance with the Indenture, in the event of an
Asset Sale or an Event of Loss, the Net Proceeds or the Net Loss Proceeds
thereof shall be deposited into an account, if reasonably requested, in which,
at the time of such deposit, the Trustee shall have a perfected first priority
security interest and in respect of which account the Trustee shall have
received an Opinion of Counsel to the applicable Grantor, in form and substance
satisfactory to the Trustee, stating that the Trustee has a perfected first
priority security interest in such account.
SECTION 6. Representations, Warranties and Covenants. Each Grantor
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hereby represents and warrants to, and covenants and agrees with, the Trustee
(for the benefit of the Trustee and the ratable benefit of the Holders) as
follows:
SECTION 6.1. Title: No Other Liens. Each Grantor is as of the date
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hereof, and, as to Collateral acquired by it from time to time after the date
hereof, each Grantor will be, the owner of each item of Collateral of such
Grantor (or in the case of Collateral held by such Grantor as lessee under a
lease or licensee under a license, each Grantor has and will have a valid and
subsisting leasehold interest or license, as applicable, in such Collateral), in
each case free and clear from any and all Liens, claims or other right, title or
interest of any person other than Permitted Liens. No financing statement or
other public notice with respect to all or any part of the Collateral is on file
or of record in any public office, except (i) financing statements related to
Permitted Liens and (ii) financing statements which have been filed in favor of
the Secured Parties pursuant to this Agreement.
SECTION 6.2. Perfected First Priority Liens. The security interests
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granted pursuant to this Agreement (a) constitute perfected security interests
in the Collateral in favor of the Trustee, as collateral security for the
Obligations, and (b) are prior to all other Liens on the Collateral in existence
on the date hereof, other than Permitted Liens.
SECTION 6.3. Necessary Filings. The filings, registrations and
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recordings described on Schedule B hereto constitute the only filings,
registrations and recordings necessary or appropriate to create, preserve,
protect and perfect the security interests granted by the Grantors to the
Trustee pursuant to this Agreement in respect of the Collateral. All such
filings, registrations and recordings have been accomplished as of the date
hereof.
SECTION 6.4. Other Financing Statements. The Grantors shall not
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execute or authorize or permit to be filed in any public office or elsewhere any
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) relating to the Collateral, except financing
statements filed or to be filed (a) in respect of Permitted Liens and (b) in
favor of the Secured Parties pursuant to this Agreement.
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SECTION 6.5. Chief Executive Office; Location of Collateral and
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Records. Each Grantor's chief executive office is located at the address set
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forth for the Grantor on Schedule C. Each Grantor represents and warrants that
it has no place of business, offices where such Grantor's books of account and
records are kept, or places where the Collateral is used, stored or located, and
all Collateral is in its sole possession and control, except (i) as set forth on
Schedule C hereto, and (ii) except as set forth in Section 6.9. Each Grantor
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further covenants that it will not store, use or locate any of the Collateral at
any place other than as set forth on Schedule C (or, upon 45 days' prior written
notice to the Trustee, at such other location in a jurisdiction where all action
required by Sections 5 and 6.6 (if applicable) shall have been taken).
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SECTION 6.6. Changes in Locations, Name, etc. Each Grantor represents
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and warrants that it currently uses no business or trade names, except as set
forth on Schedule C hereto. No Grantor shall (a) change the location of its
chief executive office from that specified in Schedule C, (b) change its name,
identity or corporate structure or (c) change the location where it maintains
its books and records from the addresses set forth on Schedule C, unless (i) it
shall have given the Trustee not less than 45 days' prior written notice of its
intention to do so, clearly describing such new location, name, identity or
corporate structure and providing such other information in connection
therewith as the Trustee may reasonably request and (ii) with respect to such
new location, name, identity or corporate structure, the applicable Grantor
shall have taken all action which is necessary or appropriate or which is
reasonably requested by the Trustee to maintain the perfection and proof of the
security interest of the Trustee for the benefit of the Secured Parties in the
Collateral intended to be granted hereby and shall have delivered to the Trustee
an Officers' Certificate as to compliance with this clause (ii).
SECTION 6.7. Delivery of Instruments, Investment Property and Chattel
--------------------------------------------------------
Paper. If any amount payable under or in connection with any of the Collateral,
-----
or any Collateral itself, shall be or become evidenced by any Instrument,
Investment Property or Chattel Paper, such Instrument, Investment Property or
Chattel Paper shall be promptly delivered to the Trustee, duly endorsed in a
manner satisfactory to the Trustee, to be held as Collateral pursuant to this
Agreement (except as otherwise specifically provided in the Account Pledge
Agreement and the Disbursement Agreement).
SECTION 6.8. Information and Inspection. Upon reasonable notice to the
--------------------------
applicable Grantor, such Grantor shall (a) allow the Trustee to inspect and copy
all records relating to the Collateral and the Obligations; and (b) furnish to
the Trustee such information as the Trustee may reasonably request from time to
time with respect to the Collateral, any distributions thereon, and any proceeds
thereof.
SECTION 6.9. Location of Equipment. All Equipment held on the date
---------------------
hereof by the Grantors is located at one of the locations shown for such Grantor
on Schedule C. All Equipment now held or subsequently acquired by any Grantor
shall be kept at one or more of the locations shown for such Grantor on Schedule
C hereto, or such new location as such Grantor may establish if (a) it shall
have given to the Trustee at least 45 days' prior written notice of its
intention to do so, clearly describing such new location and providing
11
such other information in connection therewith as the Trustee may reasonably
request, and (b) with respect to such new location, such Grantor shall have
taken all action which is necessary or appropriate or which is reasonably
requested by the Trustee to maintain the perfection and priority of the security
interest of the Trustee for the benefit of the Secured Parties in the Collateral
granted or purported to be granted hereby and shall have delivered to the
Trustee an Officers' Certificate as to compliance with this clause (b). Schedule
A contains a true, complete and correct listing of all of the motor vehicles and
other Equipment of each Grantor subject to a certificate of title statute in any
jurisdiction and the jurisdiction in which such Collateral is subject to a
certificate of title statute.
SECTION 6.10 Copyrights, Patents and Trademarks.
----------------------------------
(a) (i) Exhibit A includes all Copyrights and Copyright Licenses owned
---------
by each Grantor in its own name on the date hereof; (ii) Exhibit B includes
---------
all Patents and Patent Licenses owned by each Grantor in its own name on
the date hereof; (iii) Exhibit C includes all Trademarks and Trademark
---------
Licenses owned by each Grantor in its own name on the date hereof; (iv)
each Copyright, Patent and Trademark is on the date hereof valid,
subsisting, unexpired, enforceable and has not been abandoned; (v)except as
set forth in any of Exhibit A, Exhibit B or Exhibit C, none of such
--------- --------- ---------
Copyrights, Patents and Trademarks is on the date hereof the subject of any
licensing or franchise agreement; (vi) to the best of each Grantor's
knowledge after due inquiry, no holding, decision or judgment has been
rendered by any Governmental Authority which would limit, cancel or
question the validity of any Copyright, Patent or Trademark in any respect
that could reasonably be expected have a Material Adverse Effect; and (vii)
to the best of each Grantor's knowledge after due inquiry, no action or
proceeding is pending on the date hereof (1) seeking to limit, cancel or
question the validity of any Copyright, Patent or Trademark, or (2) which,
if adversely determined, could reasonably be expected have a Material
Adverse Effect on the value of any Copyright, Patent or Trademark.
(b) Each Grantor (either itself or through licensees or sublicensees)
will (i) continue to use each material Trademark on each and every
trademark class of goods or services applicable to its current line as
reflected in its current catalogs, brochures and price lists, if any, in
order to maintain such Trademark in full force free from any claim of
abandonment for non-use, (ii) maintain as in the past the quality of
products and services offered under such Trademark, (iii) employ each
material Trademark with the appropriate notice of registration, (iv) not
adopt or use any ▇▇▇▇ which is confusingly similar or a colorable imitation
of such Trademark unless the Trustee, for the ratable benefit of the
Holders, shall obtain a perfected first priority security interest in such
▇▇▇▇ pursuant to this Agreement, and (v) not (and not permit any licensee
or sublicensee thereof to) do any act or knowingly omit to do any act
whereby such Trademark may reasonably be expected to become invalidated.
(c) The Grantors will not do any act, or omit to do any act, whereby
any Patent may become abandoned or dedicated if such abandonment or
dedication could reasonably be expected have a Material Adverse Effect.
12
(d) Each Grantor will notify the Trustee immediately if it knows, or
has reason to know, that any application or registration relating to any
material Patent or Trademark may become abandoned or dedicated, or of any
adverse determination or development (including, without limitation, the
institution of, or any such determination or development in, any proceeding
in the United States Patent and Trademark Office or any court or tribunal
in any country) regarding such Grantor's ownership of any Patent or
Trademark material to the business of such Grantor or its right to register
the same or to keep and maintain the same and of any action such Grantor is
taking in respect of such event.
(e) Whenever any Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the
registration of any Patent or Trademark with the United States Patent and
Trademark Office or any similar office or agency in any other country or
any political subdivision thereof, such Grantor shall report such filing to
the Trustee within five Business Days after the last day of the fiscal
quarter in which such filing occurs. Such Grantor shall execute and deliver
any and all agreements, instruments, documents, and papers as may be
necessary or appropriate or as the Trustee may reasonably request to
evidence Trustee's and the Holders' security interest in any Patent or
Trademark and the goodwill and general intangibles of such Grantor relating
thereto or represented thereby and shall deliver to the Trustee an
Officers' Certificate as to compliance with this subparagraph (e).
(f) Each Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States
Patent and Trademark Office, or any similar office or agency in any other
country or any political subdivision thereof, to maintain and pursue each
application (and to obtain the relevant registration) and to maintain each
registration of the Patents and Trademarks material to the business of such
Grantor, including, without limitation, filing of applications for renewal,
affidavits of use and affidavits of incontestability and, as to Patents,
the payment of maintenance fees, except where the failure to take such
action could not have a Material Adverse Effect.
(g) In the event that any Patent or Trademark is infringed,
misappropriated or diluted by a third party, which infringement,
misappropriation or dilution could reasonably be expected to have a
Material Adverse Effect, the applicable Grantor shall upon receipt of
knowledge of such infringement, misappropriation or dilution, promptly (i)
take such actions as such Grantor shall reasonably deem appropriate under
the circumstances to protect such Patent or Trademark and (ii) if such
Patent or Trademark is of material economic value, promptly notify the
Trustee after it learns thereof and ▇▇▇ for infringement, misappropriation
or dilution, to seek injunctive relief where appropriate and to recover any
and all damages for such infringement, misappropriation or dilution.
(h) Each Grantor (either itself or through licensees or sublicensees)
will (i) employ the appropriate notice of copyright for each published Work
subject to copyright protection to the extent necessary to protect the
Copyright relating to such
13
Work and (ii) not (and not permit any licensee or sublicensee thereof to)
do any act or knowingly omit to do any act whereby any material Copyright
may become invalidated, except where the failure to take any such action
could not reasonably be expected to have a Material Adverse Effect.
(i) No Grantor will (either itself or through licensees) do any act,
or omit to do any act, whereby any material Copyright may become injected
into the public domain, except where the failure to take any such action
could not reasonably be expected to have a Meterial Adverse Effect.
(j) Each Grantor will notify Trustee immediately if it knows, or has
reason to know, that any Copyright may become injected into the public
domain or of any adverse determination or development (including, without
limitation, the institution of, or any such determination or development
in, any proceeding in any court or tribunal in any country) regarding such
Grantor's ownership of any such Copyright or its validity and of any action
such Grantor is taking in respect of such event.
(k) Whenever any Grantor, either by itself or through any agent,
employee licensee, sublicensee or designee, shall file an application for
the registration of any Copyright with the United States Copyright Office
or any similar office in any other country or political subdivision
thereof, such Grantor shall report such filing to the Trustee within five
Business Days after the last day of the fiscal quarter in which such filing
occurs. Such Grantor shall execute and deliver any and all agreements,
instruments, documents and papers as shall be necessary or appropriate or
as the Trustee reasonably may request to evidence the Trustee's and the
Holders' security interest in such Copyright and shall deliver to the
Trustee an Officers' Certificate as to compliance with this subparagraph
(k).
(l) Each Grantor will take all reasonable and necessary steps in
accordance with its reasonable business judgment, to maintain and pursue
each application (and to obtain the relevant registration) and to maintain
to the extent permitted by law each registration of each material Copyright
owned by such Grantor including, without limitation, filing of
applications for renewal, where necessary.
(m) Each Grantor will promptly notify the Trustee of any material
infringement of any Copyright owned by it of which it becomes aware and
will take all reasonable and necessary actions to protect such Copyright,
including, where appropriate, the bringing of suit or the settling of
actual or potential suits for infringement, seeking injunctive relief and
seeking to recover any and all damages for such infringement.
SECTION 6.11. Authorization. Enforceability. Each Grantor has the
-----------------------------
requisite power, authority and legal right to grant a security interest in all
the Collateral of such Grantor pursuant to this Agreement, and this Agreement
has been duly authorized, executed and delivered by, and constitutes the legal,
valid and binding obligation of such Grantor, enforceable against such Grantor
in accordance with its terms. Each Contract to
14
which any Grantor is a party is in full force and effect and constitutes a valid
and legally enforceable obligation of such Grantor, except as the
enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally or by general equitable principles
(whether considered in a proceeding in equity or at law).
SECTION 6.12. No Consents. Except for the filings, registrations and
-----------
recordings contemplated in Section 6.3, no consent of any person (including,
-----------
without limitation, any stockholders or creditors of any Grantor) and no
consent, authorization, approval, or other action by, and no notice to or filing
with, any Governmental Authority or regulatory body or other person is required
(a) for the grant by the Grantors of a security interest in the Collateral
pursuant to this Agreement, (b) for the perfection or maintenance of such
security interest created hereby, including the first priority nature of such
security interest, or the exercise of rights and remedies provided for herein,
(c) for the enforceability of such security interest against third parties,
including judgment lien creditors, (d) for the authorization, execution,
delivery or performance of this Agreement by the Grantors, or (e) for the
exercise by the Trustee of the remedies in respect of the Collateral pursuant to
this Agreement.
SECTION 6.13. Collateral. All information set forth herein (including,
----------
without limitation, the information set forth in the Schedules and Exhibits
annexed hereto) relating to the Collateral is accurate and complete in all
material respects.
SECTION 6.14. Ownership and Control of Collateral. Except as may
-----------------------------------
otherwise be permitted by the Indenture, each Grantor at all times will be the
sole legal and beneficial owner of the Collateral of such Grantor.
SECTION 6.15. Insurance. The Grantors shall maintain the insurance
---------
coverage required under the Indenture and otherwise comply with the requirements
of the Indenture relating to insurance including, without limitation, Sections
4.18 and 10.5 thereof.
SECTION 6.16. Representations Regarding Contracts.
-----------------------------------
(a) Each Contract to which any Grantor is a party is in full force
and effect and constitutes a valid and legally enforceable obligation of
such Grantor, except as the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights generally
or by general equitable principles (whether considered in a proceeding in
equity or at law)
(b) Except as could not reasonably be expected to have a Material
Adverse Effect, no Grantor or (to the best of such Grantor's knowledge) any
other party to any Contract to which such Grantor is a party is in default
in default in the performance or observance of any of the terms thereof and
each Grantor is not aware
15
of any fact that, with notice or lapse of time, could reasonably be
expected to result in such a default.
(c) Except as could not reasonably be expected to have a Material
Adverse Effect, each Grantor has fully performed all its obligations under
each Contract to which such Grantor is a party.
(d) The right, title and interest of each Grantor in, to and under
each Contract to which such Grantor is a party are not subject to any
defense, offset, counterclaim or claim which could materially adversely
affect the value of such Contract as Collateral or otherwise have a
Material Adverse Effect, nor have any of the foregoing been asserted or
alleged against such Grantor as to any Contract to which such Grantor is a
party.
(e) No amount constituting Collateral and payable to any Grantor
under or in connection with any Contract to which such Grantor is a party
is evidenced by any Instrument, Chattel Paper or Investment Property which
has not been delivered to the Trustee.
(f) None of the parties to any Contract is a Governmental Authority,
other than contracts with the City of Black Hawk regarding the plat of
subdivision, the exchange of property and the maintenance of a sign.
SECTION 6.17. Covenants Regarding Contracts.
-----------------------------
(a) Each Grantor will perform and comply in all material respects
with all its obligations under the material Contracts to which such Grantor
is a party.
(b) Except as expressly permitted by the Indenture, each Grantor will
not amend, notify, terminate or waive any provision of any Contract to
which such Grantor is a party in any manner which could materially
adversely affect the value of such Contract as Collateral or which could
otherwise reasonably be expected to have a Material Adverse Effect;
provided, that any Grantor may replace a Contract (the "Initial Contract")
--------
so long as (1) the contract entered into to replace the Initial Contract
(the "Replacement Contract") is subject to the security interest created by
this Agreement, and (2) the Replacement Contract is on no less favorable
terms to such Grantor than the Initial Contract.
(c) Except as expressly permitted by the Indenture, no Grantor will
fail to exercise promptly and diligently each and every material right
which it may have under each material Contract to which such Grantor is a
party; provided that such Grantor may amend, modify, terminate or waive
--------
rights subject to Section 6.17(b) above.
---------------
16
(d) Except as expressly permitted by the Indenture, no Grantor will
fail to deliver to the Trustee a copy of each material demand, notice or
document received by it relating in any way to any material Contract to
which such Grantor is a party.
(e) Except as expressly permitted in the Indenture, in any suit,
proceeding or action brought by or on behalf of the Trustee or any Holder
under any Contract to which any Grantor is a party, such Grantor will
defend, save, indemnify and keep the Trustee and such Holder harmless from
and against any and all expenses, losses, claims, liabilities and damages,
as incurred, suffered by reason of any defense, setoff, counterclaim,
recoupment or reduction or liability whatsoever of the obligor thereunder,
arising out of a breach by such Grantor of any obligation thereunder or
arising out of any other agreement, indebtedness or liability at any time
owing to or in favor of such obligor or its successors from such Grantor.
(f) The covenants set forth at Section 6.17(a) and (c) shall
terminate on, and be of no further force or effect from and after, the date
that the Isle-Black Hawk (as defined in the Indenture) is Operating (as
defined in the Indenture).
SECTION 6.18. Further Actions and Identification of Collateral. At any
------------------------------------------------
time upon the occurrence of a Default or Event of Default or otherwise no more
than two times in any twelve-month period, each Grantor shall, at its sole cost
and expense, make, execute, endorse, acknowledge, file and/or deliver to the
Trustee from time to time such lists, descriptions and designations of the
Collateral of such Grantor, copies of warehouse receipts, receipts in the nature
of warehouse receipts, bills of lading, documents of title, vouchers, invoices
and schedules relating to the Collateral of such Grantor, as the Trustee may
reasonably request, all in reasonable detail.
SECTION 6.19. Records of Collateral: Notation on Books and Records.
----------------------------------------------------
Each Grantor shall keep full and accurate books and records relating to the
Collateral of such Grantor, and stamp or otherwise ▇▇▇▇ such books and records
in such manner as may be necessary or as the Trustee may reasonably require in
order to reflect the security interests granted by this Agreement.
SECTION 6.20. Notices. Each Grantor will advise the Trustee promptly,
-------
in reasonable detail, at the Trustee's address for notices provided for in the
Indenture of any Lien (other than security interests created hereby or Permitted
Liens) on any of the Collateral of such Grantor or any attachment or other legal
process levied against any of the Collateral of such Grantor.
SECTION 6.21. Collateral Maintenance. Each Grantor will keep and
----------------------
maintain the Collateral in good operating condition, working order and repair,
ordinary wear and tear excepted, and from time to time will make or cause to be
made all repairs, replacements and other improvements in connection therewith
that are necessary or desirable toward such end. No Grantor will misuse or abuse
the Collateral, or waste or allow it to deteriorate, except for the ordinary
wear and tear of its normal and expected use in such Grantor's business in
accordance with such Grantor's policies as then in effect (provided that
--------
17
no changes are made to such Grantor's policies as in effect on the date hereof
that would be materially adverse to the interests of any of the Secured
Parties), and will comply with all laws, statutes and regulations pertaining to
the use or ownership of the Collateral of such Grantor.
SECTION 6.22. After-Acquired Intellectual Property. If any Grantor
------------------------------------
shall (i) obtain any rights to any new invention (whether or not patentable),
know-how, trade secret, design, process, procedure, formula, diagnostic test,
service ▇▇▇▇, trademark, trademark registration, trade name, copyright or
license or (ii) become entitled to the benefit of any patent, service ▇▇▇▇ or
trademark application, trademark, trademark registration, license renewal,
copyright renewal or extension, or patent for any reissue, division,
continuation, renewal extension, or continuation-in-part of any patent or any
improvement on any patent, the provisions of this Agreement shall
automatically apply thereto and any item enumerated in clause (i) or (ii) of
this sentence shall automatically constitute Collateral and shall be subject
to the assignment, lien and security interest created hereby without further
action by any party. Each Grantor promptly shall (x) give to the Trustee written
notice of its acquisition of or entitlement to any of the rights set forth in
clauses (i) and (ii) of the immediately preceding sentence and (y) confirm the
attachment of the lien and security interest created hereby to any of such
rights by execution of an appropriate instrument delivered to the Trustee,
including an amendment to Exhibits A, B and/or C annexed hereto to include any
----------------------
such rights.
SECTION 6.23. Other Agreements. The Company has provided a copy of the
----------------
Indenture to Casino America, Inc., as Manager of the Isle-Black Hawk (in such
capacity, together with any successor or replacement manager, the "Manager") and
has caused the Manager to review the Indenture and has caused and will cause the
Isle-Black Hawk to be managed in accordance with the terms of the Indenture.
SECTION 7. Special Provisions Relating to Intellectual Property.
----------------------------------------------------
SECTION 7.1 Modifications. The Grantors and the Trustee may modify
-------------
this Agreement, without the consent of Holders, by amending Exhibits A, B and/or
--------------------
C annexed hereto to include any future Intellectual Property of the Grantors in
-
accordance with Section 6.10 or Section 6.24 or to reflect any disposition of
------------ ------------
Intellectual Property made in compliance with the provisions of this Agreement
and the Indenture.
SECTION 7.2 Applications. Except in the ordinary course of business
------------
consistent with prudent business practice, and as may otherwise be permitted by
the Indenture, no Grantor shall abandon any registration of any Intellectual
Property or any right to file an application with respect to Intellectual
Property or any pending application, unless refused by the Patent and Trademark
Office Examiner, without the prior written consent of the Trustee.
SECTION 7.3. Restriction on Licensing Intellectual Property. No
----------------------------------------------
Grantor shall license the Intellectual Property or any portion thereof, or amend
or permit the amendment of any of the Licenses, in either case in a manner that
adversely affects the right
18
to receive any material amount of payments thereunder, or, except as otherwise
permitted under the Indenture, in any manner adverse to the interests of the
Trustee in the Intellectual Property without the prior written consent of the
Trustee.
SECTION 7.4. Use of Intellectual Property Prior to Event of Default.
------------------------------------------------------
Subject to Section 7.3 but notwithstanding any other provision herein to the
-----------
contrary, so long as no Event of Default shall have occurred and be continuing,
each Grantor will be permitted to exploit, use, enjoy, protect, license,
sublicense, assign, sell, dispose of or take other actions with respect to the
Intellectual Property in the ordinary course of the business of such Grantor.
In furtherance of the foregoing, unless an Event of Default shall have occurred
and be continuing the Trustee shall, from time to time upon the request of the
Grantors, execute and deliver to the Grantors any instruments, certificates or
other documents, in the form so requested, which the Grantors shall have
certified are appropriate to allow the Grantors to take any action permitted
above (including relinquishment of the license provided as to any specific
Intellectual Property).
SECTION 8. Transfers and Other Liens. Except as permitted by the
-------------------------
Indenture, the Grantors shall not sell, convey, assign or otherwise dispose of,
or grant any option with respect to, any of the Collateral. The Grantors shall
not create or permit to exist any Lien upon or with respect to any of the
Collateral other than Permitted Liens or Liens in favor of the Secured Parties
pursuant to this Agreement.
SECTION 9. Reasonable Care. Beyond the duties set forth in Section
--------------- -------
15.3 and the exercise of reasonable care in custody thereof, the Trustee shall
----
have no duty as to the collection of any Collateral in its possession or control
or in the possession or control of any agent or nominee of the Trustee, or any
income thereon or as to the preservation of rights against prior parties or any
other rights pertaining thereto. The Trustee shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if such Collateral is accorded treatment substantially equivalent to
that which the Trustee, in its individual capacity, accords its own property, it
being understood that the Trustee shall not have responsibility for taking any
necessary steps to preserve rights against any person with respect to any
Collateral.
SECTION 10. Remedies Upon Event of Default.
------------------------------
SECTION 10.1. Notice to Obligors and Contract Parties. At any time
---------------------------------------
after the occurrence and during the continuance of an Event of Default, the
Trustee may, and, if requested by the Trustee, the Grantors shall, notify
parties to the Contracts and account debtors in respect of any General
Intangibles or Accounts constituting Collateral that such Collateral has been
assigned to the Trustee for the ratable benefit of the Holders and that payments
in respect thereof shall be made directly to the Trustee.
SECTION 10.2. Proceeds to be Turned Over to Trustee. If an Event of
-------------------------------------
Default shall have occurred and be continuing, all amounts and proceeds
(including instruments) received by any Grantor in respect of any Collateral
shall be held by such Grantor in trust for the Trustee and the Holders,
segregated from other funds of such
19
Grantor, and shall, forthwith upon receipt by such Grantor, be turned over to
the Trustee in the exact form received by such Grantor (duly endorsed by such
Grantor to the Trustee, if required or requested) and held by the Trustee in the
Collateral Account, which shall be maintained under the sole dominion and
control of the Trustee. All Proceeds while held by the Trustee in the
Collateral Account (or by any Grantor in trust for the Trustee and the Holders)
shall continue to be held as collateral security for all the Obligations and
shall not constitute payment thereof until applied as provided in Section 11.
----------
SECTION 10.3. Obtaining Possession of the Collateral. If an Event of
--------------------------------------
Default shall have occurred and be continuing, then and in every such case, the
Trustee may, but shall not be obligated to, in addition to any other action
permitted by law (and not limited in any manner to the remedies contained in the
Securities and the Indenture) take one or more of the following actions:
(a) personally, or by agents or attorneys, immediately take
possession of the Collateral or any part thereof, from any Grantor or any
other person who then has possession of any part thereof with or without
notice or process of law, and for that purpose may enter upon any Grantor's
premises where any of the Collateral is located and remove such Collateral
and use in connection with such removal any and all services, supplies,
aids and other facilities of any Grantor;
(b) sell, assign or otherwise liquidate, or direct any Grantor to
sell, assign or otherwise liquidate, any or all investments made in whole
or in part with the Collateral or any part thereof, and take possession of
the proceeds of any such sale, assignment or liquidation; and
(c) take possession of the Collateral or any part thereof, by
directing any Grantor in writing to deliver the same to the Trustee at any
place or places which the Trustee shall reasonably select, in which event
such Grantor shall at its own expense; (x) forthwith cause the same to be
moved to the place or places so designated by the Trustee and there
delivered to the Trustee; (y) store and keep any Collateral so delivered to
the Trustee at such place or places pending further action by the Trustee
and (z) while the Collateral shall be so stored and kept, provide such
guards and maintenance services as shall be reasonably necessary to protect
the same and to preserve and maintain them in good condition. The Grantors'
obligation to deliver the Collateral is of the essence of this Agreement.
Upon application to a court of equity having jurisdiction, the Trustee
shall, to the extent permitted by law, be entitled to a decree requiring
specific performance by any Grantor of such obligation.
SECTION 10.4. Use and Preservation of the Collateral. Upon and during
--------------------------------------
the existence of an Event of Default, the Trustee may, in its sole discretion,
use or manage the Collateral to preserve the Collateral or its value, or to pay
the Obligations which includes, without limitation, the right to take possession
of any Grantor's premises and property, to exclude any Grantor and any third
parties (whether or not claiming under such Grantor) from such premises and
property, to make repairs, replacements, alterations, additions and
20
improvements to or take any acts to preserving the Collateral, and to dispose of
all or any portion of the Collateral.
SECTION 10.5. Remedies Under UCC. In addition to the rights and
------------------
remedies provided in this Agreement or otherwise available to it, the Trustee
shall have all the rights and remedies of a secured party under the UCC or under
the Uniform Commercial Code of any other relevant jurisdiction.
SECTION 10.6. Additional Remedies. Upon the occurrence and during the
-------------------
continuance of an Event of Default, the Trustee, without demand of performance
or other demand, presentment, protest, advertisement or notice of any kind
(except any notice required by law referred to below) to or upon the Grantors or
any other person (all and each of which demands, defenses, advertisements and
notices are, to the extent permitted by law, hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker's
board or office of the Trustee or elsewhere upon such terms and conditions as
the Trustee may deem advisable and at such prices as it may elect, for cash or
on credit or for future delivery without assumption of any credit risk. The
Trustee or any Holder shall have the right, to the extent permitted by law, upon
any such public sale or sales or upon any such private sale or sales, to
purchase for cash the whole or any part of the Collateral so sold (but any such
purchase may not, in whole or in part, be in the form of cancellation of
indebtedness without the consent of each Holder). Each Grantor further agrees,
at the Trustee's request, to assemble the Collateral of such Grantor and make it
available to the Trustee at places which the Trustee shall reasonably select,
whether at such Grantor's premises or elsewhere. The Trustee shall apply the net
proceeds of any action taken by it pursuant to this Agreement, after deducting
all reasonable costs and expenses of every kind incurred by the Trustee in
connection therewith or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the Trustee
and the Holders hereunder, including, without limitation, reasonable attorneys'
fees and disbursements, as provided in Section 11 hereof, and only after such
----------
application and after the payment by the Trustee of any other amount required by
any provision of law, including, without limitation, Section 9-504(1)(c) of the
UCC, need the Trustee account for the surplus, if any, to the Grantors. To the
extent permitted by law, each Grantor waives all claims, damages and demands it
may acquire against the Trustee (or any other trustee under the Deed of Trust)
or any Holder arising out of the exercise by any of them of any rights
hereunder. If any notice of proposed sale or other disposition of Collateral
shall be required by law, such notice shall, to the extent permitted by law, be
deemed reasonable and proper if given at least 10 days before such sale or other
disposition. Notwithstanding the foregoing, the Trustee shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given.
The Trustee may, without notice or publication, adjourn any public or private
sale, or cause the same to be adjourned from time to time by announcement at the
time and place fixed for sale or, with respect to a private sale, after which
such sale may take place, and any such sale may, without further notice, be made
at the time and place to which it was adjourned or, with respect to a private
sale, after which such sale may take
21
place. Each purchaser at any such sale shall hold the property sold free from
any claim or right on the part of any Grantor, and each Grantor hereby waives,
to the full extent permitted by law, all rights of redemption, stay and/or
appraisal which such Grantor now has or may at any time in the future have under
any rule of law or statute now existing or hereafter enacted. To the extent
permitted by law, each Grantor also hereby waives any claims against the Trustee
arising by reason of the fact that the price at which any Collateral may have
been sold at a private sale was less than the price which might have been
obtained at a public sale, even if the Trustee accepts the first offer received
and does not offer such Collateral to more than one offeree. In case any sale
of all or any part of the Collateral is made on credit or for future delivery,
the Collateral so sold may be retained by the Trustee until the sale price is
paid by the purchaser or purchasers thereof, and the Trustee shall not incur any
liability in case any such purchaser or purchasers shall fail to take up and pay
for the Collateral purchased. In case of any such failure, such Collateral may
be sold again upon like notice. The parties hereto agree that the notice
provisions, method, manner and terms of any sale, transfer or disposition of any
Collateral in compliance with the terms set forth herein or any other provision
of this Agreement are commercially reasonable.
SECTION 10.7. Certain Sales of Collateral. Each Grantor recognizes
---------------------------
that, by reason of certain prohibitions contained in law, rules, regulations or
orders of any Governmental Authority, the Trustee may be compelled, with
respect to any sale of all or any part of the Collateral, to limit purchasers to
those who meet the requirements of such Governmental Authority. Each Grantor
acknowledges that any such sales may be at prices and on terms less favorable to
the Trustee than those obtainable through a public sale without such
restrictions, and, notwithstanding such circumstances, agrees that any such
restricted sale shall be deemed to have been made in a commercially reasonable
manner.
SECTION 10.8. Certain Remedies in Respect of Intellectual Property. If
----------------------------------------------------
an Event of Default shall have occurred and shall be continuing, in addition to
the other rights and remedies provided for herein or otherwise available to it,
the Trustee may license or sublicense (whether general, special or otherwise,
and whether on an exclusive or non-exclusive basis) all or any portion of the
Intellectual Property throughout the world for such term or terms, on such
conditions and in such manner as the Trustee shall determine. Upon request by
the Trustee, the Grantors shall execute and deliver to the Trustee any powers of
attorney, in form and substance satisfactory to the Trustee, for the
implementation of any assignment, license, sublicense, grant of option, sale or
other disposition of any Intellectual Property. In the event of any sale,
assignment, or other disposition of any of the Intellectual Property, the
goodwill and general intangibles connected with and symbolized by the
Intellectual Property subject to such disposition shall be included, and the
Grantors shall supply to the Trustee or its designee, for inclusion in such
sale, assignment or other disposition, all Intellectual Property relating to
such Intellectual Property. Notwithstanding the foregoing or any other provision
hereof, the provisions of this Security Agreement, including this Section 10.8
are subject to the License Agreement, dated as of July 29, 1997, between Casino
America, Inc. and the Company, and the use and enjoyment by the Trustee of the
license rights thereunder shall be subject to the limitations contained therein.
22
SECTION 10.9. Special Performance. In addition to any of the other
-------------------
rights and remedies hereunder, the Trustee shall have the right to institute a
proceeding seeking specific performance in connection with any of the agreements
or obligations hereunder.
SECTION 10.10. Receivership. Upon and during the continuance of a
------------
Default or an Event of Default, the Trustee may, to the fullest extent permitted
by law, have a court having jurisdiction appoint a receiver, which receiver
shall take charge and possession of and protect, preserve, replace and repair
the Collateral or any part thereof, and manage and operate the same, and receive
and collect all rents, income, receipts, royalties, revenues, issues and profits
therefrom. Except to the extent prohibited by law, each Grantor shall
irrevocably consent and shall be deemed to have hereby irrevocably consented to
the appointment thereof, and upon such appointment, such Grantor shall
immediately deliver possession of such Collateral to the receiver. Except to the
extent prohibited by law, each Grantor also irrevocably consents to the entry of
an order authorizing such receiver to invest interest upon any funds held or
received by the receiver in connection with such receivership. The Trustee shall
be entitled to such appointment as a matter of right, if it shall so elect,
without the giving of notice to any party and without regard to the adequacy of
the security of the Collateral.
SECTION 11. Application of Proceeds. All cash proceeds received by the
-----------------------
Trustee upon any sale of, collection of, or other realization upon, all or any
part of the Collateral shall be applied as follows:
First: To the payment of all reasonable out-of-pocket expenses
-----
incurred by the Trustee in connection with the sale of, collection of or
other realization upon Collateral, including reasonable attorneys' fees and
disbursements and court costs, if applicable;
Second: To the payment of the Obligations in such manner
------
consistent with applicable laws and the Indenture as the Trustee in its
discretion shall decide; and
Third: To the extent of the balance (if any) of such proceeds, to
-----
payment to the Grantors or other Person legally entitled thereto.
Non-cash proceeds of any disposition by the Trustee of Collateral
available to satisfy the Obligations shall be applied to the Obligations in such
order and in such manner consistent with applicable law and the Indenture as the
Trustee in its discretion shall decide.
SECTION 12. Expenses. The Grantors will immediately upon demand pay to
--------
the Trustee the amount of any and all reasonable expenses, including the fees
and expenses of the Trustee's counsel and the fees and expenses of any experts
and agents which the Trustee may incur in connection with (a) the collection of
the Obligations, (b) the enforcement and administration of this Agreement, (c)
the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (d) the exercise or enforcement of any
of the rights of the Trustee or any Secured Party hereunder, (e) the
23
failure by the Grantors to perform or observe any of the provisions hereof, (f)
the preparation and filing or recording of financing statements and other
documents (including all taxes in connection therewith) in public offices
necessary or desirable to create and maintain first priority perfected security
interests in the Collateral in favor of the Trustee, (g) the payment or
discharge of any taxes, insurance premiums required or permitted under any
Collateral Document or encumbrances with respect to the Collateral, (h)
defending or prosecuting any actions or proceedings arising out of or related to
the transactions to which this Agreement relates (other than actions by any
Grantor for breach of the Indenture or any Collateral Documents determined by a
court of competent jurisdiction pursuant to a non-appealable order), or (i)
otherwise protecting, maintaining or preserving the Collateral and the
perfection and priority of the security interests granted or purported to be
granted hereunder, or the enforcing, foreclosing, retaking, holding, storing,
processing, selling or otherwise realizing upon the Collateral and the Trustee's
security interest therein, whether through judicial proceedings or otherwise.
All amounts payable by the Grantors under this Section shall be due upon demand
and shall be part of the Obligations. The Grantors' obligations under this
Section shall survive the termination of this Agreement and the discharge of the
Grantors' other obligations hereunder.
SECTION 13. Amendments in Writing: No Waiver. Cumulative Remedies:
------------------------------------------------------
Reinstatement: Additional Grantors.
----------------------------------
SECTION 13.1. Amendments. Subject to the provisions of Article 9 of
----------
the Indenture, none of the terms or provisions of this Agreement may be waived,
amended, supplemented or otherwise modified, except by a written instrument
executed by the Grantors (except as otherwise provided in Section 13.4) and the
------------
Trustee; provided that any provision of this Agreement imposing obligations on
--------
any Grantor may be waived by the Trustee in a written instrument executed solely
by the Trustee.
SECTION 13.2. No Waiver: Remedies Cumulative. To the maximum extent
------------------------------
permitted by law, (a) no failure on the part of the Trustee to exercise, no
course of dealing with respect to, and no delay on the part of the Trustee in
exercising, any right, power, privilege or remedy hereunder shall operate as a
waiver thereof or constitute an acquiescence to any default or Event of Default;
nor (b) shall any single or partial exercise of any such right, power, privilege
or remedy hereunder preclude any other or future exercise thereof or the
exercise of any other right, power or remedy. A waiver by the Trustee or any
Holder of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Trustee or such Holder would
otherwise have on any future occasion. To the maximum extent permitted by law,
the remedies herein provided are cumulative and are not exclusive of any
remedies provided by law.
SECTION 13.3. Reinstatement. In the event the Trustee shall have
-------------
instituted any proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall
have been discontinued or abandoned for any reason or shall have been determined
adversely to the Trustee, then and in every such case, each Grantor, the Trustee
and each Holder shall be restored to their respective former positions and
rights hereunder with respect to the Collateral, and all rights, remedies and
24
powers of the Trustee and the Secured Parties shall continue as if no such
proceeding had been institued.
SECTION 13.4. Additional Grantors. If either Grantor shall acquire or
-------------------
create a Sudsidiary after the date of this Agreement, then such newly acquired
or created Sudsidiary shall (i) become a party to this Security Agreement by
executing and delivering to the Trustee an Amendment to Security Agreement
(Additional Grantor) and (ii) shall enter into such documents as shall be
necessary in the Trustee's opinion to create a perfected, first priority
security interest in the capital stock and all property of such Sudsidiary
(including, without limitation, any real property and all personal property of
such Sudsidiary) and the proceeds and products thereof. Upon the execution and
delivery to the Trustee by any Person of an Amendment to Security Agreement
(Additional Grantor) in substantially the form of Annex I hereto (each, an
"Amendment to Security Agreement (Additional Grantor)"), which Amendment to
Security Agreement (Additional Grantor) need not be executed by the Grantors,
and the acceptance thereof by the Trustee, such Person shall be and become a
Grantor hereunder, and each reference in this Agreement to the "Grantor" shall
include such Person and each reference in the Indenture, the Securities and any
other Collateral Document to the "Grantor" shall include such Person.
SECTION 14. Appointment as the Trustee. The actions of the Trustee
--------------------------
hereunder are subject to the provisions of the Indenture. The Trustee shall have
the right hereunder to make demands, to give notices, to exercise or refrain
from exercising any rights, and to take or refrain from taking action
(including, without limitation, the release or substitution of Collateral), in
accordance with this Agreement and the Indenture. The Trustee may resign and a
successor Trustee may be appointed in the manner provided in the Indenture. Upon
the acceptance of any appointment as the Trustee by a successor Trustee, that
successor Trustee shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Trustee under this
Agreement, and the retiring Trustee shall thereupon be discharged from its
duties and obligations under this Agreement. After any retiring Trustee's
resignation, the provisions of this Agreement shall inure to its benefit as to
any actions taken or omitted to be taken by it under this Agreement while it was
the Trustee.
SECTION 15. The Trustee Appointed Attorney-in-Fact; the Trustee May
-------------------------------------------------------
Perform.
-------
SECTION 15.1. The Trustee Appointed as Attorney-in-Fact. Each Grantor
-----------------------------------------
hereby irrevocably constitutes and appoints the Trustee and any officer or agent
thereof, with full power of substitution, as its true and lawful attorneys-in-
fact with full irrevocable power and authority in the place and stead of such
Grantor and in the name of such Grantor or in its own name, for the purpose of
carrying out the terms of this Agreement to take any and all appropriate action
and to execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement, and, without limiting
the generality of the foregoing, each Grantor hereby gives the Trustee and any
officer or agent of the Trustee the power and right, on behalf of such Grantor,
without notice to or assent by such Grantor, to do any or all of the following:
25
(a) in the name of such Grantor or its own name, or otherwise, take
possession of and endorse and collect any checks, drafts, notes, acceptances or
other instruments for the payment of moneys due under any Contract or with
respect to any other Collateral and file any claim or take any other action or
proceeding in any court of law or equity or otherwise deemed appropriate by the
Trustee for the purpose of collecting any and all such moneys due under any
Contract or with respect to any other Collateral whenever payable;
(b) in the case of any Copyright, Patent or Trademark, execute and
deliver any and all agreements, instruments, documents and papers as the Trustee
may request to evidence the Trustee's security interest in such Copyright,
Patent or Trademark and the goodwill and general intangibles of such Grantor
relating thereto or represented thereby;
(c) pay or discharge taxes and Liens levied or placed on or threatened
against the Collateral, effect any repairs or any insurance called for by the
terms of this Agreement and pay all or any part of the premiums therefor and the
costs thereof;
(d) execute, in connection with any sale provided for in Sections
--------
10.3, 10.4 or 10.5 or any other sale of Collateral pursuant to this Agreement,
---- ---- ----
any endorsements, assignments or other instruments of conveyance or transfer
with respect to the Collateral; and
(e) (i) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due thereunder
directly to the Trustee or as the Trustee shall direct; (ii) ask or demand for,
collect, receive payment of and receipt for, any and all moneys, claims and
other amounts due or to become due at any time in respect of or arising out of
any Collateral; (iii) sign and endorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verfications, notices and other documents in connection with any of
the Collateral; (iv) commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any thereof and to enforce any other right in respect of any
Collateral; (v) defend any suit, action or proceeding brought against such
Grantor with respect to any Collateral; (vi) settle, compromise or adjust any
such suit, action or proceeding and, in connection therewith, to give such
discharges or releases as the Trustee may deem appropriate; (vii) generally,
sell, transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Trustee were
the absolute owner thereof for all purposes, and do, at the Trustee's option and
the Grantors' expense, at any time, or from time to time, all acts and things
which the Trustee deems necessary to protect, preserve or realize upon the
Collateral and the Trustee's and the Holders' security interests therein and to
effect the intent of this Agreement, all as fully and effectively as the
applicable Grantor might do.
26
The foregoing grant of authority is a power of attorney coupled with
an interest and such appointment shall be irrevocable until this Agreement is
terminated and the security interests created hereby are released. Each Grantor
hereby ratifies all that such attorneys shall lawfully do or cause to be done by
virtue and in accordance with the terms hereof. Anything in this Section to the
contrary notwithstanding, the Trustee agrees that it will not exercise any
rights under the power of attorney provided for in this Section unless an Event
of Default shall have occurred and be continuing.
SECTION 15.2. The Trustee May Perform. If any Grantor shall fail to
-----------------------
do any act or thing that it has covenanted to do hereunder or under the
Indenture or if any representation or warranty on the part of such Grantor
contained herein or under the Indenture shall be breached, the Trustee or any
Secured Party may (but shall not be obligated to), after providing such Grantor
with at least five Business Days' notice, do the same or cause it to be done or
remedy any such breach, and may expend funds for such purpose. Any and all
amounts so expended by the Trustee or such Secured Party shall be paid by such
Grantor promptly upon demand therefor, with interest at the Default Rate during
the period from and including the date on which such funds were so expended to
the date of repayment. The Grantors' obligations under this Section shall
survive the termination of this Agreement and the discharge of the Grantors'
other obligations under this Agreement.
SECTION 15.3. Duty of the Trustee. The Trustee's sole duty with
-------------------
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the UCC, Section 9 hereof or
---------
otherwise, shall be to deal with it in the same manner as the Trustee deals with
similar property for itsown account. Neither the Trustee, any Holder nor any of
their respective officers, directors, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of the Grantors or any other person or to
take any other action whatsoever with regard to the Collateral or any part
thereof. The powers conferred on the Trustee and the Holders hereunder are
solely to protect the Trustee's and the Holders' interests in the Collateral and
shall not impose any duty upon the Trustee or any Holder to exercise any such
powers. The Trustee and the Holders shall be accountable only for amounts that
they actually receive as a result of the exercise of such powers, and neither
they nor any of their officers, directors, employees or agents shall be
responsible to the Grantors for any act or failure to act hereunder, except for
their own gross negligence or willful misconduct. Except for the safe custody of
any Collateral in its possession and the accounting for moneys actually received
by it hereunder, the Trustee shall have no duty as to any Collateral, as to
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
the Trustee has or is deemed to have knowledge of such matters, or as to the
taking of any necessary steps to preserve rights against prior parties or any
other rights pertaining to any reasonable care in the custody and preservation
of any Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which the Trustee accords its own property. Except
as provided in this Section, the Trustee shall not have any duty or liability to
protect or preserve any Collateral or to preserve rights pertaining thereto.
Nothing contained in this Agreement shall be construed as requiring or
obligating the Trustee or the Holders, and neither the Trustee
27
nor the Holders shall be required or obligated, to (a) present or file any claim
or notice or take any action, with respect to any Collateral or in connection
therewith or (b) notify the Grantors of any decline in the value of any
Collateral.
SECTION 15.4 Execution of Financing Statements. Pursuant to Section
---------------------------------
9-402(2)(e) of the UCC, the Grantors authorize the Trustee (subject to the last
sentence of Section 5.2) to file financing statements and continuation
-----------
statements with respect to the Collateral without the signature of the Grantors
in such form and in such filing offices as the Trustee reasonably determines
appropriate to perfect, and maintain perfected, the security interests of the
Trustee under this Agreement. A carbon, photographic or other reproduction of
this Agreement shall be sufficient as a financing statement for filing in any
jurisdiction.
SECTION 15.5. Authority of the Trustee. The Grantors acknowledge that
------------------------
the rights and responsibilities of the Grantors under this Agreement with
respect to any action taken by the Trustee or the exercise or non-exercise by
the Trustee of any option, voting right, request, judgement or other right or
remedy provided for herein or resulting or arising out of this Agreement shall,
as between the Trustee and the Holders, be governed by the Indenture and by such
other agreements with respect thereto as may exist from time to time among them,
but, as between the Trustee and the Grantors, the Trustee shall be conclusively
presumed to be acting as agent for the Holders with full and valid authority so
to act or refrain from acting, and the Grantors shall be under no obligation, or
entitlement, to make any inquiry respecting such authority. The Trustee may
exercise its rights under this Agreement through an agent or other designee.
SECTION 16. Notices. All notices, requests, demands and other
-------
communication shall be given in the manner set forth in Section 13.02 of the
Indenture and shall be given or delivered at the following respective addresses
and facsimile and telephone numbers and to the attention of the following
individuals or departments: (i) if to any Grantor, at its address specified
pursuant to the Indenture , (ii) if to the Trustee, at its address specified
pursuant to the Indenture or, (iii) as to any such party, at such other address
or, facismile or telephone number or to the attention of such other individual
or department as the party to which such information pertains may hereafter
specify for the purpose in a notice to the other specifically captioned "Notice
of Change of Address".
SECTION 17. Continuing Security Interest: Assignment. This
----------------------------------------
Agreement shall create a continuing security interest in the Collateral and
shall (a) be binding upon each Grantor, its successors and assigns, and (b)
inure, together with the rights and remedies of the Trustee hereunder, to the
benefit of the Trustee (and, to the extent provided herein, any other trustee
under the Deed of Trust) and the other Secured Parties and each of their
respective successors, transferees and assigns; and no other Persons (including,
without limitation, any other creditors of any Grantor) shall have any interest
herein or any right or benefit with respect hereto. Without limiting the
generality of the foregoing clause (b), any Secured Party may assign or
otherwise transfer any security or guarantee held by it secured by this
Agreement to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to such Secured Party,
herein or otherwise, subject however, to the provisions of the Indenture.
28
SECTION 18. Release of Collateral. Reference is hereby made to
---------------------
Article 10 of the Indenture for provisions which discuss the release of the
Collateral from the Liens created by this Agreement.
SECTION 19. Termination. When all Obligations have been indefeasibly
-----------
paid in full, this Agreement shall terminate (except as to those provisions
which it is provided herein shall survive such termination) and the Trustee
shall forthwith cause to be assigned, transferred and delivered, against
receipt but without any recourse, warranty or representation whatsoever, any
remaining Collateral and money received in respect thereof, to or to the order
of the Grantors and to be released and canceled all licenses and rights referred
to in Section 7.4 hereof; provided, however, that any licenses or sublicenses
----------- -------- -------
granted by the Trustee pursuant to Section 10.8 shall continue to be in full
------------
force and effect in accordance with their terms. The Trustee shall also execute
and deliver to the Grantors upon such termination such Uniform Commercial Code
termination statements such other documentation as shall be reasonably requested
by the Grantors to effect the termination and release of the security interests
in the Collateral.
SECTION 20. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK (INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW) WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF,
EXCEPT TO THE EXTENT THAT THE PERFECTION AND ENFORCEMENT OF THE SECURITY
INTERESTS HEREUNDER ARE GOVERNED BY THE LAWS OF ANOTHER JURISDICTION.
SECTION 21. Severability of Provisions. 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
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 22. Interaction with Indenture.
--------------------------
(a) Incorporation by Reference. All terms, covenants, conditions,
--------------------------
provisions and requirements of the Indenture are incorporated by reference
in this Security Agreement.
(b) Conflicts. Notwithstanding any other provision of this Security
---------
Agreement, the terms and provisions of this Security Agreement shall be
subject and subordinate to the terms of the Indenture. To the extent that
the Indenture provides the Trustors with a particular cure or notice
period, or establishes any limitations or conditions on the Trustee's
actions with regard to a particular set of facts, the Trustors shall be
entitled to the same cure periods and notice periods, and the Trustee shall
be subject to the same limitations and conditions, under this Security
Agreement, as under the Indenture, in place of the cure periods, notice
periods, limitations and
29
conditions provided for under this Security Agreement; provided, however,
-------- -------
that such cure periods, notice periods, limitations and conditions shall
not be cumulative as between the Indenture and this Security Agreement. In
the event of any conflict or inconsistency between the provisions of this
Security Agreement and those of the Indenture, including, without
limitation, any conflicts or inconsistencies in any definitions herein or
therein, the provisions or definitions of the Indenture shall govern.
SECTION 23. Other Security. To the extent that the Obligations are
--------------
now or hereafter secured by property other than the Collateral or by the
guarantee, endorsement or property of any other Person, then the Trustee shall
have the right in its sole discretion to pursue, relinquish, subordinate, modify
or take any other action with respect thereto, without in any way modifying or
affecting any of the Trustee's or any Holder's rights and remedies hereunder.
SECTION 24. Execution in Counterparts. This Agreement and any
-------------------------
amendments, waivers, consents or supplements hereto may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original,
but all such counterparts together shall constitute one and the same agreement.
SECTION 25. Headings. The Section and subsection headings used in
--------
this Agreement are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement.
SECTION 26. Obligations Absolute. All obligations of the Grantors
--------------------
hereunder shall be absolute and unconditional irrespective of:
(a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of any Grantor;
(b) any lack of validity or enforceability of the Indenture, the
Completion Capital Commitment, the Securities, any other Collateral
Document, or any other agreement or instrument relating thereto;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Indenture, the
Completion Capital Commitment, the Securities, and other Collateral
Document or any other agreement or instrument relating thereto (except to
the extent specified in such change, amendment or waiver);
(d) any taking, exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to any
departure from any guarantees, for all or any of the Obligations;
30
(e) any exercise or non-exercise, or any waiver of any right, remedy,
power or privilege under or in respect of this Agreement, the Indenture,
the Completion Capital Commitment, the Securities, any other Collateral
Document, or any other agreement or instrument relating thereto, except as
specifically set forth in a waiver granted pursuant to the provisions of
the Indenture;
(f) any manner of application of collateral, or proceeds thereof, to
all or any of the Obligations, or any manner of sale or other disposition
of any collateral for all or any of the Obligations or any other
obligations of any Grantor under the Indenture, the Securities or any other
Collateral Document or any other assets of any Grantor or any of its
Subsidiaries;
(g) any change, restructuring or termination of the corporate
structure or existence of any Grantor or any of its Subsidiaries;
(h) any failure of the Trustee or any Secured Party to disclose to
any Grantor any information relating to the business, condition (financial
or otherwise), operations, properties or prospects of any other Grantor now
or in the future known to the Trustee or any other Secured Party (the
Grantors hereby waiving any duty on the part of the Trustee and any other
Secured Party to disclose such information); or
(i) any other circumstance (including, without limitation, any
statute of limitations) or any existence of or reliance on any
representation by the Trustee or any other Secured Party that might
otherwise constitute a defense available to, or a discharge of, any Grantor
or any guarantor or surety.
SECTION 27. Waiver of Marshaling. Each Grantor for itself and for all
--------------------
Persons hereafter claiming through or under it or who may at any time hereafter
become holders of liens junior to the liens granted under this Agreement, hereby
expressly waives and releases all rights to direct the order in which any of the
Collateral shall be sold in the event of any sale or sales pursuant hereto and
to have any of the Collateral and/or any other property now or hereafter
constituting security for any of the obligations secured hereunder marshaled
upon the exercise of any remedies under this Agreement or any other agreement
granting security for the obligations secured hereunder.
SECTION 28. Independence of Covenants. All covenants hereunder shall
-------------------------
be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of a default if such action is taken or condition
exists.
SECTION 29. Savings Clause. It is the intention of the parties to
--------------
conform strictly to the usury laws, whether state or federal, that are
applicable to the transaction of which this Agreement is a part. All agreements
between the Grantors and the Trustee, whether now existing or hereafter arising
and whether oral or written, are hereby expressly limited so that in no
contingency or event whatsoever shall the amount paid or agreed to be
31
paid by the Grantors for the use, forbearance or detention of the money to be
loaned or advanced under the Indenture, the Securities, the Completion Capital
Commitment, this Agreement, any other Collateral Document, or any other
agreement or instrument relating thereto, or for the payment or performance of
any covenant or obligation contained herein or therein, exceed the maximum
amount permissible under applicable federal or state usury laws. If under any
circumstances whatsoever fulfillment of any such provision, at the time
performance of such provision shall be due, shall involve exceeding the limit of
validity prescribed by law, then the obligation to be fulfilled shall be reduced
to the limit of such validity. If under any circumstances the Grantors shall
have paid an amount deemed interest by applicable law, which would exceed the
highest lawful rate, such amount that would be excessive interest under
applicable usury laws shall be applied to the reduction of the principal amount
owing in respect of the Obligations and not to the payment of interest, or if
such excessive interest exceeds the unpaid balance of principal and any other
amounts due hereunder, the excess shall be refunded to the Grantors. All sums
paid or agreed to be paid for the use, forbearance or detention of the principal
under any extension of credit or advancement of funds by the Trustee or any
Holder, shall, to the extent permitted by law, and to the extent necessary to
preclude exceeding the limit of validity prescribed by law, be amortized,
prorated, allocated and spread from the date of this Agreement until payment in
full of the Obligations so that the actual rate of interest on account of such
principal amounts is uniform throughout the term hereof.
SECTION 30. Certain Waivers by the Grantors. Each Grantor waives (a)
-------------------------------
any claim that, as to any part of the Collateral, a public sale, should the
Trustee elect so to proceed, is, in and of itself, not a commercially reasonable
method of sale for such Collateral, (b) except as otherwise provided in this
Agreement, to the fullest extent not prohibited by applicable laws, notice or
judicial hearing in connection with the Trustee's disposition of any of the
Collateral including any and all prior notice and hearing for any pre-judgment
remedy or remedies and any such right that such Grantor would otherwise have
under the Constitution or any statute of the United States or of any state, and
all other requirements as to the time, place and terms of sale or other
requirements with respect to the enforcement of the Trustee's rights hereunder,
(c) all rights of redemption, appraisal or valuation, and (d) all rights and
defenses arising out of an election of remedies by any Secured Party, even
though that election of remedies, such as a nonjudicial foreclosure with respect
to security for a guaranteed obligation, has destroyed such Grantor's rights of
subrogation and reimbursement against the principal.
SECTION 31. Waiver of Jury Trial. THE TRUSTEE AND THE GRANTORS HEREBY
--------------------
WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDINGS INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP
ESTABLISHED HEREUNDER.
SECTION 32. Gaming Laws. The grant of security interest and the terms
-----------
and provisions of this Agreement, including, but not limited to, all rights and
remedies of the Trustee and powers of attorney and appointment, are expressly
subject to all laws, statutes,
32
regulations and orders affecting limited gaming or the sale of liquor
(collectively, the "Gaming Laws"), in the State of Colorado, which may include,
but not be limited to, the necessity for the Trustee to obtain the prior
approval of the regulatory agencies enforcing the Gaming Laws before taking any
action hereunder and to be licensed by such regulatory agencies before
exercising certain rights and remedies hereunder.
SECTION 33. Entire Agreement. This written agreement represents the
----------------
final agreement between the parties with respect to the subject matter hereof
and may not be contradicted by evidence of prior, contemporaneous, or subsequent
oral agreements of the parties with respect to the subject matter hereof. There
are no unwritten oral agreements among the parties with respect to the subject
matter hereof.
33
IN WITNESS WHEREOF, the Grantors and the Trustee have caused this
Security Agreement to be duly executed and delivered as of the date first above
written.
ISLE OF CAPRI BLACK HAWK L.L.C.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Title: Secretary
-----------------------
By: /s/ H. ▇▇▇▇▇▇ ▇▇▇▇
-------------------------------
Name: H. ▇▇▇▇▇▇ ▇▇▇▇
------------------------
Title: Vice President
------------------------
ISLE OF CAPRI BLACK HAWK
CAPITAL CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Title: Secretary
------------------------
IBJ ▇▇▇▇▇▇▇▇ BANK & TRUST COMPANY,
as Trustee
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
Title: Vice President
-------------------------
EXHIBIT A
---------
TO THE SECURITY AGREEMENT
-------------------------
COPYRIGHTS, COPYRIGHT REGISTRATIONS AND
APPLICATIONS FOR COPYRIGHT REGISTRATIONS
Title Date Filed Registration No. Effective Date
----- ---------- ---------------- --------------
NONE
COPYRIGHT LICENSES
------------------
Title Date Filed Registration No. Effective Date
----- ---------- ---------------- --------------
NONE
A-1
EXHIBIT B
---------
TO THE SECURITY AGREEMENT
-------------------------
PATENTS AND PATENT APPLICATIONS
-------------------------------
File Patent Country Registration No. Date
---- ------ ------- ---------------- ----
NONE
PATENT LICENSES
---------------
File Patent Country Registration No. Date
---- ------ ------- ---------------- ----
NONE
B-1
EXHIBIT C
---------
TO THE SECURITY AGREEMENT
-------------------------
TRADE NAMES, TRADEMARKS, SERVICE MARKS,
TRADEMARK AND SERVICE ▇▇▇▇ REGISTRATIONS AND
APPLICATIONS FOR TRADEMARK AND SERVICE ▇▇▇▇ REGISTRATIONS
Application (A)
Registration (R) Registration
▇▇▇▇ or Series No. (S) or Filing Date
---- ----------------- --------------
Farraday's 75-252,127 (A) March 5, 1997
Isle Style 75-224,559 (A) January 13, 1997
TRADE NAME, TRADEMARKS AND SERVICE ▇▇▇▇ LICENSES
Trademarks licensed to the Company:
Application (A)
Registration (R) Registration
▇▇▇▇ or Series No. (S) or Filing Date
---- ----------------- --------------
Isle of Capri (parrot logo) 2,039,052 (R) February 18, 1997
Isle of Capri 1,789,909 (R) August 24, 1993
Isle of Capri 1,789,917 (R) August 24, 1993
Island Gold 1,925,975 (R) October 10, 1995
Calypso's 2,022,801 (R) December 17, 1996
Farraday's 75-252,127 (A) March 5, 1997
Isle Style 75-224,559 (A) January 13, 1997
C-1
SECURITY AGREEMENT
Schedule A
Motor Vehicles and Other Equipment subject to Certificates of Title
------------------------------------------------------------------
NONE
A-1
SECURITY AGREEMENT
Schedule B
Filings
-------
1. UCC-1 Financing Statements describing the Collateral and naming the Grantor
as a debtor and the Trustee as secured party to be filed with:
(a) the Secretary of State of the State of Colorado
(b) the Secretary of State of the State of Mississippi
(c) the Secretary of State of the State of New York
(d) Chancery Clerk of ▇▇▇▇▇▇▇▇ County, Mississippi
2. With respect to the interests granted in Trademark Licenses, (a) a notice
filing with United States Patent and Trademark Office, and (b) UCC-1
Financing Statements describing the security interest and naming the
Grantors as debtor and the Trustee as secured party to filed with (i) the
Secretary of the State of Colorado; (ii) the Secretary of State of the
State of Mississippi, (iii) the Secretary of State of the State of New York
and (iv) Chancery Clerk of ▇▇▇▇▇▇▇▇ County, Mississippi
3. With respect only to motor vehicles and other equipment subject to a
certificate of title statue, filings, registrations or recordings listing
the Trustee as secured party on each applicable certificate of title.
B-1
SECURITY AGREEMENT
Schedule C
Executive Office; Collateral Location; Trade Names
--------------------------------------------------
1. The chief executive office of each of the Company and Capital Corp. is
located at:
c/o Casino America Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
2. All Collateral is located at Black Hawk, Colorado, except to the extent
certain Collateral is deemed by applicable laws to be located at the chief
executive office of the Company and/or Capital Corp.
3. The Company uses the following business or trade names:
(a) Isle of Capri Black Hawk L.L.C.
(b) Isle of Capri
(c) Island Gold
(d) Calypso's
(e) Farraday's
(f) Isle Style
C-1
ANNEX I
FORM OF
AMENDMENT TO SECURITY AGREEMENT
(ADDITIONAL GRANTOR)
This Amendment to Security Agreement (Additional Grantor) (this
"AMENDMENT"), dated as of [____________, 19__], relates to the Security
---------
Agreement dated as of August __, 1997, as amended, modified and supplemented to
date (as so amended, supplemented or modified, the "AGREEMENT") executed by Isle
---------
of Capri Black Hawk L.L.C. (the "COMPANY") and Isle of Capri Black Hawk
-------
Capital Corp. ("CAPITAL CORP.", and together with the Company, collectively, the
------------
"GRANTORS" and each a "GRANTOR") in favor of IBJ ▇▇▇▇▇▇▇▇ Bank & Trust Company,
-------- -------
as trustee (the "TRUSTEE") for the benefit of the Secured Parties (as defined in
-------
the Agreement).
In compliance with Section 4.17 of the Indenture dated as of August
__, 1997 (as amended, supplemented or otherwise modified from time to time, the
"INDENTURE") between the Grantors and the Trustee, [NAME OF SUBSIDIARY] (the
---------
"ADDITIONAL GRANTOR") and the Trustee hereby agree as follows (capitalized terms
------------------
used but not otherwise defined herein shall have the meanings ascribed to them
in the Agreement):
1. AMENDMENT. The Agreement is hereby amended to add as a party,
---------
and more specifically, as a Grantor thereunder, the Additional Grantor.
2. REPRESENTATIONS AND WARRANTIES. The Additional Grantor
------------------------------
represents and warrants to the Trustee and each other Secured Party that each of
the representations and warranties of the Grantors contained in the Agreement is
hereby made by the Additional Grantor and is true and correct as to the
Additional Grantor .
3. GRANT OF SECURITY INTEREST. The Additional Grantor hereby
--------------------------
grants, pledges, assigns and transfers to the Trustee, for the Trustee's
individual benefit and the ratable benefit of the Holders, as security for the
prompt and complete payment and performance when due (whether at stated
maturity, upon redemption or require repurchase, by acceleration or otherwise)
of all the Obligations of the Additional Grantor, a continuing first priority
perfected security interest in and lien on all of the right, title and interest
of the Additional Grantor in, to and under all types and items of property of
the Additional Grantor within the definition of Collateral (as defined in the
Agreement), in each case wherever located, whether now owned or at any time
hereafter acquired by the Additional Grantor, whether now existing or hereafter
coming into existence, or in which the Additional Grantor now has or at any time
in the future may acquire any right, title or interest.
Annex I-1
4. SCHEDULE SUPPLEMENTS. The Additional Grantor has attached hereto
--------------------
supplements to Schedules A through C to the Agreement, and the Additional
Grantor hereby represents and warrants that such supplements have been prepared
by the Additional Grantor in substantially the form of the Schedules to the
Agreement and are true, accurate and complete as of the date first above
written.
5. ASSUMPTION OF RIGHTS, OBLIGATIONS AND LIABILITIES. The Additional
-------------------------------------------------
Grantor assumes all of the rights, obligations and liabilities of a Grantor
under the Agreement and agrees to be bound thereby as if the Additional Grantor
were an original party to the Agreement. Without limiting the generality of the
foregoing, the Additional Grantor waives notice of the creation, advance,
increase, existence, extension, or renewal of, or of any indulgence with respect
to, the Obligations; waives presentment, demand, notice of dishonor, and
protest; waives notice of the amount of the Obligations outstanding at any time,
notice of any change in financial condition of the Grantor, notice of any
default or Event of Default, and all other notices respecting the Obligations
(except for any such notices that are required to be given to the Additional
Grantor pursuant to the other provisions of this Agreement or the provisions of
the Securities, the Indenture or any other Collateral Document); and agrees that
maturity of the Obligations and any part thereof may be accelerated, extended,
or renewed one or more times by the Holders, in its or their discretion, without
notice to the Additional Grantor.
6. EFFECTIVENESS. This Amendment shall become effective on the date
-------------
hereof upon the execution hereof by the Additional Grantor and the Trustee and
delivery hereof to the Trustee.
7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE
-------------
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
(INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW) WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT LAWS THEREOF,
EXCEPT TO THE EXTENT THAT THE PERFECTION AND ENFORCEMENT OF THE SECURITY
INTERESTS HEREUNDER ARE GOVERNED BY THE LAWS OF ANOTHER JURISDICTION.
Annex I-2
IN WITNESS WHEREOF, the Additional Grantor and the Trustee have caused
this Amendment to Security Agreement (Additional Grantor) to be duly executed
and delivered as of the date first written above.
[ADDITIONAL GRANTOR]
By:_______________________________
Name:
Title:
Address for Notice:
__________________________________
__________________________________
Attn:_____________________________
Telephone:________________________
Telecopy:_________________________
IBJ ▇▇▇▇▇▇▇▇ BANK & TRUST COMPANY,
as Trustee
By:_______________________________
Name:
Title:
Annex I-3