The Holdings Collateral Account Agreement
HOLDINGS COLLATERAL ACCOUNT AGREEMENT
This HOLDINGS COLLATERAL ACCOUNT AGREEMENT (this "Agreement") is
dated February 26, 1998 and entered into by and among ALADDIN GAMING HOLDINGS,
LLC, a Nevada limited liability company (the "Pledgor"), THE BANK OF NOVA
SCOTIA, a Canadian chartered bank, as the initial Disbursement Agent under the
Disbursement Agreement (in such capacity the "Secured Party"), and THE BANK OF
NOVA SCOTIA, as the initial Securities Intermediary (in such capacity the
"Securities Intermediary").
PRELIMINARY STATEMENTS
A. The Project. Aladdin Gaming, LLC (the "Borrower") proposes to develop,
construct and operate the Aladdin Hotel and Casino, a large scale theme hotel,
casino, retail, meeting and entertainment complex, and to refurbish or cause the
refurbishment of the Theater with related heating, ventilation and air
conditioning and power station facilities to be developed at the Site.
B. Credit Agreement. Concurrently herewith, the Borrower, the Agents and
the Lenders have entered into the Credit Agreement pursuant to which the Lenders
have agreed, subject to the terms thereof and hereof, to provide the Bank Credit
Facility to the Borrower in an aggregate amount not to exceed $410,000,000.
C. Discount Note Indenture. Concurrently herewith, Pledgor, Capital and
the Discount Note Indenture Trustee have entered into the Discount Note
Indenture pursuant to which Pledgor and Capital will issue Discount Notes. The
net proceeds of the Discount Notes and warrants to purchase class B common stock
of Aladdin Gaming Enterprises, Inc. will be applied by the Borrower to the
development, construction, equipping and opening of the Main Project in an
aggregate amount of approximately $107,000,000.
D. Disbursement Agreement. Concurrently herewith, the Borrower, the
Pledgor, Administrative Agent (acting on behalf of itself and the Lenders), the
Discount Note Indenture Trustee (acting on behalf of itself and the Discount
Noteholders), The Bank of Nova Scotia as "Disbursement Agent" and U.S. Bank
National Association as "Servicing Agent" have entered into the Disbursement
Agreement for the purpose of setting forth, among other things, (a) the
mechanics for and allocation of the Borrower's requests for Advances under the
Facilities and, inter
alia, from the Borrower's Funds Account, (b) the conditions precedent to the
initial Advance and conditions precedent to subsequent Advances, (c) the
establishment of the Collateral Account, (d) the management of the Collateral
Account, and (e) the events of default and remedies.
E. Capacity and Obligations of Secured Party. The Secured Party has
entered into this Agreement pursuant to the Disbursement Agreement and is
obligated to exercise its rights and perform its duties hereunder in accordance
with the Disbursement Agreement.
F. Condition. It is a condition precedent to the purchase of the Discount
Notes by Discount Noteholders that Pledgor shall have established the Collateral
Account, granted control to the Disbursement Agent (as Secured Party) of such
account, and undertaken the obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Noteholders to purchase the Discount Notes and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Pledgor hereby agrees with Secured Party as follows:
SECTION 1. Certain Definitions.
a. Specific Definitions. The following terms used in this Agreement
shall have the following meanings:
"Broker-Dealer" means a person registered as a broker or dealer
under the Securities Exchange Act of 1934, as amended,
"Business Day" means any day other than a Saturday, Sunday or any
other day which is a legal holiday or a day on which banking institutions are
permitted to be closed in New York or Nevada.
"Code" shall mean the Uniform Commercial Code as in effect in New
York.
"Collateral" means (i) the Collateral Account, (ii) all amounts
credited to or held from time to time in the Collateral Account, (iii) all
Investments and all Financial Assets, security entitlements, securities (whether
certificated or uncertificated), instruments, accounts, general intangibles and
deposits credited to
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the Collateral Account representing or evidencing any Investments, (iv) all
interest, dividends, cash, instruments, securities, investment property and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of the Collateral, and (v) to the
extent not covered by clauses (i) through (iv) above, all proceeds of any or all
of the foregoing Collateral.
"Collateral Account" means the Restricted Securities Account and any
other accounts or subaccounts in which Investments may be held or registered.
"Investments" means any Financial Assets credited to the Restricted
Securities Account, and any other property acquired by the Securities
Intermediary as a securities intermediary hereunder in exchange for, with
proceeds from or distributions on, or otherwise in respect of any Investments.
"Overnight Investments" means an interest bearing overnight deposit
account with the Securities Intermediary.
"Permitted Investments" means (a) (i) direct obligations of the
United States of America (including obligations issued or held in book-entry
form on the books of the Department of the Treasury of the United States of
America) or obligations fully guaranteed by the United States of America, (ii)
obligations, debentures, notes or other evidence of indebtedness issued or
guaranteed by any other agency or instrumentality of the United States, (iii)
interest-bearing demand or time deposits (which may be represented by
certificates of deposit) issued by banks having general obligations rated (on
the date of acquisition hereof) at least "A" or the equivalent by any Rating
Agency or, if not so rated, secured at all times, in the manner and to the
extent provided by law, by collateral security in clause (i) or (ii) of this
definition, of a market value of no less than the amount of monies so invested,
(iv) commercial paper rated (on the date of acquisition thereof) at least "A-1"
or "P-1" or the equivalent by any Rating Agency issued by any Person, (v)
repurchase obligations for underlying securities of the types described in
clause (i) or (ii) above, entered into with any commercial bank or any other
financial institution having long-term unsecured debt securities rated (on the
date of acquisition thereof) at least "A" or "A2" or the equivalent by any
Rating Agency in connection with which such underlying securities are held in
trust or by a third-party custodian, (vi) guaranteed investment contracts of any
financial institution which has a long-term debt rated (on the date of
acquisition thereof) at least "A" or "A2" or the equivalent by any Rating
Agency, (vii) obligations (including both taxable and nontaxable municipal
securities) issued or guaranteed by, and any other obligations the interest on
which is
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excluded from income for Federal income tax purposes issued by, any state of the
United States of America or the District of Columbia or the Commonwealth of
Puerto Rico or any political subdivision, agency, authority or instrumentality
thereof, which issuer or guarantor has (A) a short-term debt rated (on the date
of acquisition thereof) at least "A-1" or "P-1" or the equivalent by any Rating
Agency and (B) a long-term debt rated (on the date of acquisition thereof) at
least "A" or "A2" or the equivalent by any Rating Agency, (viii) investment
contracts of any financial institution either (A) fully secured by (1) direct
obligations of the United States, (2) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States or
(3) securities or receipts evidencing ownership interest in obligations or
specified portions thereof described in clause (1) or (2), in each case
guaranteed as full faith and credit obligations of the United States of America,
having a market value at least equal to 102% of the amount deposited thereunder,
or (B) with long-term debt rated at least "A" or "A2" or the equivalent by any
Rating Agency and short-term debt rated at least "A-1" or "P-1" or the
equivalent by any Rating Agency, (ix) a contract or investment agreement with a
provider or guarantor (A) which provider or guarantor is rated (on the date of
acquisition thereof) at least "A" or "A2" or the equivalent by any Rating Agency
(provided that if a guarantor is party to the rating, the guaranty must be
unconditional and must be confirmed in writing prior to any assignment by the
provider to another subsidiary of such guarantor), (B) providing that monies
invested shall be payable without condition (other than notice) and without
brokerage fee or other penalty, upon not more than two Business Days' notice for
application when and as required or permitted under the Loan Documents (as
defined in the Credit Agreement), and (C) stating that such contract or
agreement is unconditional, expressly disclaiming any right of setoff and
providing for immediate termination in the event of insolvency of the provider
and termination upon demand of the Disbursement Agent if prior to Completion
after payment or other covenant default by the provider, or (x) any debt
instruments of any Person which instruments are rated (on the date of
acquisition thereof) at least "▇," "▇▇," "A-1" or "P-1" or the equivalent by any
Rating Agency; provided that in each case of clauses (i) through (x), such
investments are denominated in United States dollars and maturing not more than
13 months from the date of acquisition thereof; (b) investments in any money
market fund which is rated (on the date of acquisition thereof) at least "A" or
"A2" or the equivalent by any Rating Agency; (c) investments in mutual funds
sponsored by any securities broker-dealer of recognized national standing having
an investment policy that requires substantially all the invested assets of such
fund to be invested in investments described in any one or more of the foregoing
clauses and having a rating of at least "A" or "A2" or the equivalent by any
Rating Agency or (d) invest-
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ments in both taxable and nontaxable (i) periodic auction reset securities
("PARS") which have final maturities between one and 30 years from the date of
issuance and are repriced through a dutch auction or other similar method every
35 days or (ii) auction preferred shares ("APS") which are senior securities of
leveraged closed end municipal bond funds and are repriced pursuant to a variety
of rate reset periods, in each case having rating of at least "A" or "A2" or the
equivalent by any Rating Agency.
"Restricted Securities Account" means the Restricted Securities
Account established and maintained with Securities Intermediary pursuant to
Section 2 known as the Construction Note Disbursement Account.
"Secured Obligations" means all obligations and liabilities of every
nature of Pledgor now or hereafter existing under or arising out of or in
connection with the Discount Note Indenture, the Discount Notes and each other
agreement to which the Discount Note Indenture Trustee is a party or which
grants a security interest for the benefit of the Discount Note Indenture
Trustee or the Discount Noteholders, and all extensions or renewals thereof,
whether for principal, interest (including interest that, but for the filing of
a petition in bankruptcy with respect to Pledgor, would accrue on such
obligations), fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated whether or not jointly owned with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from Secured Party or any Discount Noteholder as a preference,
fraudulent transfer or otherwise, and all obligations of every nature of Pledgor
now or hereafter existing under this Agreement.
"Securities Intermediary" means The Bank of Nova Scotia or any
successor thereto.
"Suspension Period" means each period beginning on the occurrence of
a Default or Event of Default and continuing so long as any Default or Event of
Default shall continue.
b. General Provisions. Capitalized terms used but not defined herein
shall have the meaning given to such terms in Exhibit A. Unless
otherwise defined herein or in Exhibit A, terms used in
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Articles 8 and 9 of the Code are used herein as therein defined.
Words used herein, regardless of the number or gender specifically
used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or
neuter, as the context indicates is appropriate. When a reference is
made in this Agreement to an Appendix, Exhibit, Introduction,
Recital, Section or Schedule, such reference shall be to an
Appendix, an Exhibit, the Introduction, a Recital or a Section of,
or a Schedule to, this Agreement unless otherwise indicated. The
headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
SECTION 2. Establishment and Operation of the Collateral Account.
a. Establishment of Construction Note Disbursement Account. Pledgor and
Secured Party hereby authorize and direct Securities Intermediary to
establish and maintain at its office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, a securities account numbered ▇▇▇▇▇▇▇ in the name of
Secured Party and under the sole dominion and control of Secured
Party, designated as "The Bank of Nova Scotia, as Disbursement Agent
under Disbursement Agreement dated February 26, 1998, Construction
Note Disbursement Account fbo the Discount Note Indenture Trustee".
Securities Intermediary hereby undertakes to treat Secured Party as
the person entitled to exercise the rights and property interest
that comprise any Financial Asset credited to the Bank Proceeds
Account. The Secured Party and the Pledgor agree that this account
shall be the "Construction Note Disbursement Account."
b. Operations of the Collateral Account. The Collateral Account shall
be operated, and all Investments shall be acquired and registered or
held (as applicable), in accordance with the terms of this Agreement
and the directions of Secured Party.
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c. Account Statements. Securities Intermediary shall send Secured
Party and Pledgor written account statements with respect to the
Collateral Account not less frequently than monthly. Reports or
confirmation of the execution of orders and statements of account
shall be conclusive if not objected to in writing within 30 days
after delivery pursuant to Section 21.
SECTION 3. Mechanics of Deposits of Funds in Collateral Account.
a. Transfers to Construction Note Disbursement Account. All transfers
of funds to the Construction Note Disbursement Account shall be made
by wire transfer (or, if applicable, intra-bank transfer from
another account of Pledgor with Securities Intermediary) of
immediately available funds, in each case addressed as follows:
Account No.: ▇▇▇▇▇▇▇
ABA No.: 026-002532
Reference: Aladdin Gaming Holdings-Construction
Note Disbursement Account
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
b. Financial Assets Election. The Securities Intermediary hereby agrees
that each item of property (whether investment property, financial
asset, security, instrument or cash) credited to the Collateral
Account shall be treated as a "financial asset" within the meaning
of Section 8-102(a)(9) of the Code.
c. Notice of Transfers. In the event of any transfer of funds to or
from the Collateral Account pursuant to any provision of Section 3,
Pledgor, Secured Party or Securities Intermediary, as the case may
be, shall promptly after initiating or sending out written
instructions with respect to such transfer, give notice to the other
such party by facsimile of the date and amount of such transfer.
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SECTION 4. Permitted Investments and Transfers of Amounts in the
Collateral Account.
a. Strict Compliance. Cash held by Securities Intermediary in the
Collateral Account shall not be (i) invested or reinvested, (ii)
sold or redeemed, or (iii) transferred from or among the Collateral
Account, except as provided in this Section 4.
b. Pledgor's Right to Direct Investment. Except during any Suspension
Period, Securities Intermediary shall, in accordance with Pledgor's
written Entitlement Orders given to Securities Intermediary from
time to time, sell or redeem Investments, and apply amounts
transferred to or held for the credit of the respective Restricted
Securities Account to make investments for credit to the Restricted
Securities Account, in Securities Intermediary's name and as
custodian under this Agreement, in Permitted Investments. During any
Suspension Period, (i) Pledgor's right to direct such investments
under this Section 4(b) shall be suspended, and Securities
Intermediary shall not accept Entitlement Orders with respect to the
Restricted Securities Account from any person other than Secured
Party; and (ii) any credit balances shall be invested and reinvested
only as provided in Section 4(c).
c. Overnight Investments. To the extent that there are credit balances
expected in any Restricted Securities Account as of the end of day,
or as of 12:00 noon, New York time on any Business Day after
settlement of all pending transactions, unless otherwise instructed
by Secured Party or Pledgor pursuant to Section 4(b), Securities
Intermediary shall apply the expected credit balances to acquire
Overnight Investments. Any Overnight Investments shall be held for
the credit of the Collateral Account from which the proceeds for
acquisition was derived. Pledgor shall have no right to invest funds
in a Restricted Securities Account to the extent that free balances
have been invested in Overnight Investments pursuant to this
Section. Pledgor hereby acknowledges that "Overnight Investments"
may not benefit from any protections afforded to domestic depositors
by state or Federal law and may have a lesser preference in a
liquidation than a domestic deposit.
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d. Actions of Securities Intermediary on Purchase of Investments.
Promptly upon the purchase, acquisition or transfer for credit of
any Collateral Account of any Investment, Securities Intermediary
shall take all steps that it customarily takes in the ordinary
course of its business to ensure that such Investment is credited on
its books to the Collateral Account for which the Investment was
acquired. Without limiting the generality of the foregoing,
Securities Intermediary shall promptly (i) send to Pledgor and
Secured Party a written confirmation of the acquisition of such
Investment, and (ii) indicate by book entry in its records that such
Investment has been credited to, and is held for the credit of, the
specified Collateral Account.
e. Control Agreement. Anything contained herein to the contrary
notwithstanding, including the actual or alleged absence of a
Default or Event of Default, if at any time Securities Intermediary
shall receive any order from Secured Party, Securities Intermediary
shall (i) comply with Entitlement Orders originated by Secured Party
with respect to Financial Assets relating to the Collateral Account
and any Security Entitlements therein, (ii) transfer, sell or redeem
any Financial Assets relating to the Collateral, (iii) transfer any
or all of the Collateral to any account or accounts designated by
Secured Party, including any Collateral Account or an account
established in Secured Party's name (whether at Secured Party or
Securities Intermediary or otherwise), (iv) register title to any
Collateral in any name specified by Secured Party, including the
name of Secured Party or any of its nominees or agents, without
reference to any interest of Pledgor, or (v) otherwise deal with the
Collateral as directed by Secured Party, in each case, without
consent of Pledgor or any other person. Securities Intermediary
shall act on any instruction of Secured Party notwithstanding
assertions or proof that (1) Secured Party has no right under
Sections 14 or 15 to originate the instruction or take the
underlying action; (2) such instruction or action constitutes a
breach of this Agreement or any other agreement; or (3) this
Agreement has terminated, unless notified in writing by Secured
Party that this Agreement has terminated and such notice has not
been withdrawn. Nothing contained in this paragraph shall constitute
a waiver by Pledgor of any rights or remedies it may have against
Secured Party under this Agreement or any other agreement.
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f. Deposit of Proceeds. Any interest, cash dividends or other cash
distributions received in respect of any Investments and the net
proceeds of any sale or payment of any Investments shall be promptly
credited to, and held for the credit of, the Collateral Account to
which such Investment was credited. Any distribution of property
other than cash in respect of any Investment shall be credited to
and held for the credit of the Collateral Account to which the
related Investment was credited; provided that, unless otherwise
instructed in writing by Secured Party, Securities Intermediary
shall, for credit to the Collateral Account, promptly sell, redeem
or otherwise liquidate any such property that, as of the date of
receipt, is not a Permitted Investment.
SECTION 5. Pledge of Security for Secured Obligations.
Pledgor hereby pledges and assigns to Secured Party and
hereby grants to Secured Party a security interest in,
all of Pledgor's right, title and interest in and to the
Collateral as collateral security for the prompt payment
or performance in full when due, whether at stated
maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment
of amounts that would become due but for the operation
of the automatic stay under Section 362(a) of the United
States Bankruptcy Code, 11 U.S.C. 362(a)), of all
Secured Obligations.
SECTION 6. Acknowledgments of Security Interests in Favor of
Secured Party; Covenant Against Creation of Other
Interests.
a. Acknowledgment of Security Interest. Securities Intermediary
acknowledges the security interest granted by Pledgor in favor of
Secured Party in the Collateral.
b. Acknowledgment of Securities Intermediary's Role. Securities
Intermediary hereby further acknowledges that it holds the
Collateral Account, and all Security Entitlements therein, as
custodian for, for the benefit of, and subject to the control of,
Secured Party. Securities Intermediary shall, by book entry or
otherwise, indicate that the
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Collateral Account, and all Security Entitlements registered to or
held therein, are subject to the control of Secured Party as
provided in Section 4(e).
c. Securities Intermediary Has No Notice of Adverse Claims. Securities
Intermediary represents and warrants that (i) it has no notice of
any Adverse Claim against any of the Collateral other than the claim
of Secured Party under this Agreement; and (ii) it is not, in its
capacity as securities intermediary, party to any agreement other
than this Agreement that governs its rights or duties or conflicts
with the rights of Secured Party, including the exclusive right of
Secured Party to control as provided in Section 4(e), with respect
to the Collateral Account.
d. Securities Intermediary Shall Not Acknowledge Other Claims.
Securities Intermediary agrees that, except as expressly provided in
this Agreement or with the written consent of Secured Party, it
shall not agree to or acknowledge (i) any right by any Person other
than Secured Party to originate Entitlement Orders or control with
respect to the Collateral Account; or (ii) any limitation on the
right of Secured Party to originate Entitlement Orders with respect
to or direct the transfer of any Investments or cash credited to the
Collateral Account.
SECTION 7. Securities Intermediary Maintenance of the Collateral
Account.
a. Transactions Shall Comply With Rules. The parties acknowledge that
all transactions in Financial Assets under this Agreement shall be
in accordance with the rules and customs of the exchange, market or
clearing organization, if any, in which the transactions are
executed or settled and in conformity with applicable law and
regulations of governmental authorities and future amendments or
supplements thereto.
b. Fees and Charges of Securities Intermediary. Pledgor shall pay to
Securities Intermediary, in accordance with Securities
Intermediary's usual schedule of charges or any written agreement
between Securities Intermediary and Pledgor, any fees or charges
reasonably
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imposed by Securities Intermediary with respect to the
establishment, maintenance and transactions in or affecting the
Collateral Account.
c. Securities Intermediary Shall Not Permit Leverage of Investments.
Securities Intermediary shall not execute any transaction to acquire
a Financial Asset under Section 4(b) unless there are sufficient
funds in a specific Collateral Account or reasonably expected with
respect to pending transactions in such Collateral Account to settle
such transaction for the account of such Collateral Account.
Notwithstanding the foregoing sentence, in the event that Securities
Intermediary executes a transaction without adequate funds to
settle the transaction, Pledgor shall be liable to Securities
Intermediary for any deficiency and shall promptly reimburse
Securities Intermediary for any loss or expense incurred thereby,
including losses sustained by reason of Securities Intermediary's
inability to borrow any securities or other property sold for the
Collateral Account. Pledgor agrees to pay interest charges which may
be imposed by Securities Intermediary in accordance with its usual
custom, with respect to late payments for Financial Assets purchased
for any Collateral Account and prepayments to any Collateral
Account (i.e., the crediting of the proceeds of sale before the
settlement date or receipt by Securities Intermediary of the items
sold in good deliverable form). Pledgor agrees to pay promptly any
amount which may become due in order to satisfy demands for
additional margin or marks to market with respect to any security
purchased or sold on instruction from Pledgor.
d. Risk of Investments and Transactions. It is not the intention of the
parties that Securities Intermediary should bear any investment risk
associated with Permitted Investments or Overnight Investments
acquired for the credit of the Collateral Account in accordance with
Section 4. Any losses or gains realized on such Investments shall be
charged or credited to the Collateral Account, as appropriate. On
committing to a transaction for the credit of the Collateral Account
pursuant to an instruction permitted in accordance with Section 4,
Securities Intermediary may, (i) pending settlement, block (A) the
Investments to be sold or (B) credit balances sufficient to settle
any acquisition and, (ii) at the time of settlement, deliver such
Investments or funds in accordance with the rules, custom or
practice of the particular market.
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e. Use of Intermediaries and Nominees. Securities Intermediary is
authorized, subject to Secured Party's written instructions, to
register any Financial Assets acquired by Securities Intermediary
pursuant to this Agreement in the name of Securities Intermediary or
in the name of its nominee, or to cause such securities to be
registered in the name of a Federal reserve bank, a recognized
securities intermediary or clearing corporation, or a nominee of
any of them. Securities Intermediary may at any time and from time
to time appoint, and may at any time remove, any bank, trust
company, clearing corporation, or Broker-Dealer as its agent to
carry out such of the provisions of this Agreement. The appointment
or use of any intermediary, or the appointment of any such agent,
shall not relieve Securities Intermediary of any responsibility or
liability under this Agreement.
f. Corporate Actions. Except as otherwise set forth herein, the parties
agree that neither Secured Party nor Securities Intermediary shall
have any responsibility for ascertaining or acting upon any calls,
conversions, exchange offers, tenders, interest rate changes or
similar matters relating to any Financial Assets credited to or held
for the credit of the Restricted Securities Account (except based on
written instructions originated by Pledgor or Secured Party), or for
informing Pledgor or Secured Party with respect thereto, whether or
not Securities Intermediary or Secured party has, or is deemed to
have, knowledge of any of the aforesaid. Securities Intermediary is
authorized to withdraw securities sold or otherwise disposed of, and
to credit the appropriate Collateral Account with the proceeds
thereof or make such other disposition thereof as may be directed in
accordance with this Agreement. Securities Intermediary is further
authorized to collect all income and other payments which may become
due on Financial Assets credited to the Collateral Account, to
surrender for payment maturing obligations and those called for
redemption and to exchange certificates in temporary form or like
certificates in definitive form, or, if the par value of any shares
is changed, to effect the exchange for new certificates. It is
understood and agreed by Pledgor and Secured Party that, although
Securities Intermediary will use reasonable efforts to effect the
transactions set forth in the preceding sentence, Securities
Intermediary shall incur no liability for its failure to effect the
same unless its failure is the result of wilful misconduct.
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g. Disclosure of Account Relationships. Pledgor and Secured Party
acknowledge that Securities Intermediary may be required to disclose
to securities issuers the name, address and securities positions
with respect to Financial Assets credited to the Collateral Account,
and hereby consent to such disclosures.
h. Forwarding of Documents. Securities Intermediary shall forward to
Pledgor and Secured Party, or notify Pledgor and Secured Party by
telephone of, all communications received by Securities Intermediary
as owner of any Financial Assets credited to the Collateral Account
and which are intended to be transmitted to the beneficial owner
thereof.
i. Direction of Secured Party Controls in Disputes. Pledgor, Securities
Intermediary and Secured Party hereby agree that in the event any
dispute arises with respect to the payment, ownership or right to
possession of the Collateral Account or any other Collateral
credited to or held therein, Securities Intermediary shall take such
actions and shall refrain from taking such actions with respect
thereto as may be directed by Secured Party.
j. No Setoff, etc. Securities Intermediary shall not exercise on its
own behalf any claim, right of set-off, banker's lien, clearing
lien, counterclaim or similar right against any of the Collateral;
provided that Securities Intermediary may deduct, from any credit
balances, any usual and ordinary transaction and administration fees
payable in connection with the administration and operation of the
Collateral Account. Except for claims for deductions permitted in
the preceding sentence, Securities Intermediary agrees that any
security interest it may have in the Collateral Account or any
security entitlement carried therein shall be subordinate and junior
to the interest of Secured Party.
k. Only Agreement. This Agreement shall govern the actions, rights and
obligations of Securities Intermediary, and shall determine the
governing law, with respect to the Collateral Account and the
Collateral notwithstanding any term or condition in any agreement
other than this Agreement as it may be amended, supplemented or
otherwise modified in writing.
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l. Care of Financial Assets. Securities Intermediary shall maintain
possession or control of all Financial Assets credited to the
Collateral Account by segregating such Financial Assets from its
proprietary assets and keeping them free of any lien, charge or
claim of any third party granted or created by Securities
Intermediary. Securities Intermediary shall take such other steps to
ensure that Financial Assets credited to the Collateral Account are
identified as being held for customers of Securities Intermediary as
may be required under applicable law, including 17 CFR Part 450, or
in accordance with custom and practice in the industry.
m. Further Actions. Securities Intermediary shall take such further
actions as Secured Party shall reasonably request as being necessary
or desirable to maintain or achieve perfection or priority of
Secured Party's security interest with respect to the Collateral and
to permit Secured Party to exercise its rights with respect to the
Collateral.
SECTION 8. Transactions in Collateral Account.
a. Power of Secured Party to Sell or Transfer. Pledgor agrees that
Secured Party may sell or cause the sale or redemption of any
Investment and instruct Securities Intermediary to transfer the
proceeds of such sale or any other credit or balance in the
Collateral Account or any third party or account, in either case (i)
if such sale or redemption is necessary to permit Secured Party to
perform its duties under this Agreement or the Disbursement
Agreement or (ii) as provided in Section 14.
SECTION 9. Representations and Warranties By Securities
Intermediary. Securities Intermediary hereby represents
and warrants to Pledgor and Secured Party as follows:
a. Corporate Power. Securities Intermediary has all necessary corporate
power and authority to enter into and perform this Agreement.
15
b. Execution Authorized. The execution, delivery and performance of
this Agreement by Securities Intermediary have been duly authorized
by all necessary corporate action on the part of the Securities
Intermediary.
c. Securities Intermediary. Security Intermediary is a "securities
intermediary" (as that term is defined in Section 8-102(a)(14) of
the Code) and is acting in such capacity with respect to the
Collateral Account. Securities Intermediary is not a "clearing
corporation" (as that term is defined in Section 8-102(a)(5) of the
Code).
SECTION 10. Representations and Warranties of Pledgor. Pledgor
represents and warrants as follows:
a. Ownership of Collateral; Security Interest; Perfection and Priority.
Pledgor is (or at the time of transfer thereof to Securities
Intermediary will be) the legal and beneficial owner of the
Collateral from time to time transferred by Pledgor to Securities
Intermediary, as agent for Secured Party, free and clear of any Lien
except for the security interest created by this Agreement. The
pledge and assignment of the Collateral pursuant to this Agreement
creates a valid security interest in the Collateral securing the
payment of the Secured Obligations. Assuming compliance by
Securities Intermediary with this Agreement, Secured Party will have
a perfected security interest in the Collateral senior in priority
to any other security interest created by Pledgor.
b. Governmental Authorizations. Except as may be required under Nevada
Gaming Laws, no authorization, approval or other action by, and no
notice to or filing with, any governmental authority or regulatory
body is required for either (i) the grant by Pledgor of the security
interest granted hereby, (ii) the execution, delivery or performance
of this Agreement by Pledgor, or (iii) the perfection of or the
exercise by Secured Party or Securities Intermediary of its rights
and remedies hereunder (except as may have been taken by or at the
direction of Pledgor).
c. Other Information. All information heretofore, herein or hereafter
supplied to Secured Party or Securities Intermediary by or
16
on behalf of Pledgor with respect to the Collateral, the
establishment of the Collateral Account or otherwise is accurate and
complete in all material respects.
SECTION 11. Further Assurances.
a. Pledgor. Pledgor agrees that from time to time, at the expense of
Pledgor, Pledgor shall promptly execute and deliver all further
instruments and documents, and take all further action, that may be
necessary or reasonably desirable, or that Secured Party may
reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable
Secured Party or Securities Intermediary to exercise and enforce its
rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, Pledgor shall: (a)
execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be
necessary or reasonably desirable, or as Secured Party may
reasonably request, in order to perfect and preserve the security
interests granted or purported to be granted hereby, and (b) at
Secured Party's request, appear in and defend any action or
proceeding that may affect Pledgor's title to or Secured Party's
security interest in all or any part of the Collateral.
b. Securities Intermediary. Securities Intermediary shall take such
further actions as Secured Party shall reasonably request as being
necessary or desirable to maintain or achieve perfection or priority
of Secured Party's security interest with respect to the Collateral
and to permit Secured Party to exercise its rights with respect to
the Collateral.
c. Document Delivery. The Pledgor shall deliver to the Discount Note
Indenture Trustee copies of all documents delivered to the
Disbursement Agent pursuant to this Agreement, and shall do or cause
to be done all such acts and things as may be necessary or proper,
or as may be required by the provisions herein, to assure and
confirm to the Discount Note Indenture Trustee and the Disbursement
Agent that the security interest in the Collateral is available for
the security of the Discount Note Indenture and the Discount Notes
secured thereby.
17
d. Opinions. The Pledgor shall furnish to the Discount Note Indenture
Trustee simultaneously with the execution and delivery of the
Discount Note Indenture an Opinion of Counsel (as such term is
defined in the Discount Note Indenture) either (a) stating that in
the opinion of such counsel all action has been taken with respect
to the recording, registering and filing of the Discount Note
Indenture, financing statements or other instruments necessary to
make effective the Liens intended to be created by this Agreement,
and reciting with respect to the security interests in the
Collateral, the details of such action, or (b) stating that, in the
opinion of such counsel, no such action is necessary to make such
Liens effective. The Pledgor shall furnish to the Disbursement Agent
and the Discount Note Indenture Trustee on February 1 in each year
beginning with February 1, 1999, an Opinion of Counsel dated as of
such date, either (a)(i) stating that in the opinion of such
counsel, action has been taken with respect to the recording,
registering, filing, re-recording, re-registering and refiling of
all supplemental indentures, financing statements, continuation
statements or other instruments of further assurance as is necessary
to maintain the Liens and reciting with respect to the security
interests in the Collateral, the details of such section or
referring to prior Opinions of Counsel in which such details are
given, (ii) stating that, based on relevant laws as in effect on the
date of such Opinion of Counsel, all financing statements and
continuation statements have been executed and filed that are
necessary as of such date and during the succeeding twelve (12)
months fully to preserve and protect, to the extent such
preservation and protection are possible by filing, the rights of
the Discount Noteholders, the Disbursement Agent and the Discount
Note Indenture Trustee under the Discount Note Indenture and this
Agreement with respect to the security interests in the Collateral,
or (b) stating that, in the opinion of such counsel, no such action
is necessary to maintain such liens and assignments.
SECTION 12. Transfers and other Liens. Pledgor agrees that, except
as permitted in Section 4(b) and for the security
interest created by this Agreement, it shall not (a)
sell, assign (by operation of law or otherwise), redeem
or otherwise dispose of any of the Collateral or (b)
create or suffer to
18
exist any Lien upon or with respect to any of the
Collateral.
SECTION 13. Secured Party Appointed Attorney-in-Fact; Secured Party
Performance.
a. Secured Party Appointed Attorney-in-Fact. Pledgor hereby irrevocably
appoints Secured Party as Pledgor's attorney-in-fact, with full
authority in the place and stead of Pledgor and in the name of
Pledgor, Secured Party or otherwise, from time to time in Secured
Party's discretion to take any action and to execute any instrument
that Secured Party may deem necessary or advisable to accomplish the
purposes of this Agreement, including (a) to file one or more
financing or continuation statements, or amendments thereto,
relative to all or any part of the Collateral without the signature
of Pledgor and (b) to receive, endorse and collect any instruments
or other Investments made payable to Pledgor representing any
dividend, principal or interest payment or other distribution in
respect of the Collateral or any part thereof and to give full
discharge for the same.
b. Performance by Secured Party. If Pledgor fails to perform any
agreement contained herein, Secured Party may itself perform, or
cause performance of, such agreement, and the expenses of Secured
Party incurred in connection therewith shall be payable by Pledgor
under Section 16.
SECTION 14. Remedies.
a. Transfer or Sequestration of Collateral after Default or Event of
Default. If any Default or Event of Default (as such terms are
defined under the Discount Note Indenture) shall have occurred and
be continuing, Secured Party may instruct Securities Intermediary to
(i) sell or redeem any Investments, (ii) transfer any or all of the
Collateral to any account designated by Secured Party, including
account or accounts established in Secured Party's name (whether at
Secured Party or Securities Intermediary or otherwise), (iii)
register title to any Collateral in any name specified by Secured
Party, including the name of Secured Party or any of its nominees or
agents, without reference to
19
any interest of Pledgor, or (iv) otherwise deal with the Collateral
as directed by Secured Party.
b. Rights of Secured Party after Event of Default. If any Event of
Default (as defined under the Discount Note Indenture) shall have
occurred and be continuing, Secured Party may exercise in respect of
the Collateral, in addition to all other rights and remedies
provided for herein or otherwise available to it, all the rights and
remedies of a secured party on default under the Uniform Commercial
Code as in effect in any relevant jurisdiction (the "UCC") (whether
or not the UCC applies to the affected Collateral), and Secured
Party may also in its sole discretion sell the Collateral or any
part thereof in one or more parcels at public or private sale, at
any exchange or broker's board or at any of Secured Party's offices
or elsewhere, for cash, on credit or for future delivery, at such
time or times and at such price or prices and upon such other terms
as Secured Party may deem commercially reasonable, irrespective of
the impact of any such sales on the market price of the Collateral.
Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of Pledgor, and
Pledgor hereby waives (to the extent permitted by applicable law)
all rights of redemption, stay or appraisal which it now has or may
at any time in the future have under any rule of law or statute now
existing or hereafter enacted. Secured Party shall not be obligated
to make any sale of Collateral regardless of notice of sale having
been given. Secured Party may adjourn any public or private sale
from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
c. Agreement as to Manner of Sale. Pledgor hereby agrees that the
Collateral is of a type customarily sold on recognized markets and,
accordingly, that no notice to any Person is required before any
sale of any of the Collateral pursuant to the terms of this
Agreement; provided that, without prejudice to the foregoing,
Pledgor agrees that, to the extent notice of any such sale shall be
required by law, at least ten days' notice to Pledgor of the time
and place of any public sale or the time after which any private
sale is to be made shall constitute reason able notification.
20
d. Deficiency. If the proceeds of any sale or other disposition of the
Collateral are insufficient to pay all the Secured Obligations,
Pledgor shall be liable for the deficiency and the fees of any
attorneys employed by Secured Party to collect such deficiency.
SECTION 15. Application of Proceeds. If any Event of Default (as
defined under the Discount Note Indenture) shall have
occurred and be continuing, all cash included as
Collateral and all proceeds received by Secured Party
in respect of any sale or redemption of, collection
from, or other realization upon all or any part of the
Collateral may, in the discretion of Secured Party, be
held by or for Secured Party as Collateral for, or
then, or at any other time thereafter, applied in full
or in part by Secured Party against, the Secured
Obligations in the following order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Secured Party and its agents and counsel, and all other expenses,
liabilities and advances made or reasonably incurred by Secured Party in
connection therewith, and all amounts for which Secured Party is entitled
to indemnification hereunder and all advances made by Secured Party
hereunder for the account of Pledgor, and to the payment of all costs and
expenses paid or incurred by Secured Party in connection with the exercise
of any right or remedy hereunder, all in accordance with Section 16;
SECOND: To the payment of all other Secured Obligations in
accordance with the Discount Note Indenture; and
THIRD: To the payment to or upon the order of Pledgor, or to
whomsoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from such
proceeds.
21
SECTION 16. Limitations on Duties; Exculpation; Indemnity;
Expenses.
a. Securities Intermediary.
i. Limitation on Duties. Securities Intermediary's duties
hereunder are only those specifically provided herein, and
Securities Intermediary shall incur no liability whatsoever
for any actions or omissions hereunder except for any such
liability arising out of or in connection with Securities
Intermediary's gross negligence or wilful misconduct.
Securities Intermediary has no obligation to inquire into, or
to ensure, the sufficiency of this Agreement or the
arrangements described hereunder to satisfy any objectives of
Secured Party or Pledgor. Securities Intermediary shall have
no duty to supervise or to provide investment counseling or
advice to Pledgor or Secured Party with respect to the
purchase, sale, retention or other disposition of any
Financial Assets held hereunder. Except as specifically
otherwise provided in this Agreement, Securities Intermediary
shall not be responsible for enforcing compliance by the other
parties to this Agreement with their respective duties and
obligations to each other under this or any other Agreement.
ii. Consultation with Counsel. Securities Intermediary may consult
with, and obtain advice from, legal counsel as to the
construction of any of the provisions of this Agreement, and
shall incur no liability in acting in good faith in accordance
with the reasonable advice and opinion of such counsel.
iii. Indemnification. Pledgor agrees to indemnify Securities
Intermediary from and against any and all claims, losses,
liabilities and expenses (including reasonable attorneys' fees
and expenses) in any way relating to, growing out of or
resulting from this Agreement or the performance of its
obligations hereunder, except to the extent arising out of or
in connection with Securities Intermediary's gross negligence
or wilful misconduct.
22
iv. Reasonable Reliance. Securities Intermediary shall be fully
protected and shall suffer no liability in acting in
accordance with any written instructions reasonably believed
by it to have been given (A) by Secured Party with respect to
any aspect of the operation of the Collateral Account
(including any such instructions relating to any investment or
transfer of any amounts held therein or (B) by Pledgor, to the
extent provided in Section 4(b), with respect to the
Collateral Account.
b. Secured Party.
i. Exculpation. The powers conferred on Secured party hereunder
are solely to protect its interest in the Collateral and shall
not impose any duty upon it to exercise any such powers.
Except for the exercise of reasonable care in the custody of
any Collateral in its possession and the accounting for moneys
actually received by it hereunder, Secured Party shall have no
duty as to any Collateral, it being understood that Secured
Party shall have no responsibility for (a) ascertaining or
taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any
Collateral, whether or not Secured Party has or is deemed to
have knowledge of such matters, (b) taking any necessary steps
(other than steps taken in accordance with the standard of
care set forth above to maintain possession of the Collateral)
to preserve rights against any parties with respect to any
Collateral, (c) taking any necessary steps to collect or
realize upon the Secured Obligations or any guarantee
therefor, or any part thereof, or any of the Collateral, (d)
initiating any action to protect the Collateral against the
possibility of a decline in market value, (e) any loss
resulting from Investments made, held or sold pursuant to
Section 4, except for a loss resulting from Secured Party's
gross negligence or wilful misconduct in complying with
Section 4, or (f) determining (i) the correctness of any
statement or calculation made by Pledgor in any written or
telex (tested or otherwise) instructions or (ii) whether any
transfer to the Collateral Account is proper. Secured Party
shall be deemed to have exercised reasonable
23
care in the custody and preservation of Collateral in its
possession if such Collateral is accorded treatment
substantially equal to that which Secured Party accords its
own property of like kind. In addition to the foregoing and
without limiting the generality thereof, Secured Party shall
not be responsible for any actions or omissions of Securities
Intermediary.
ii. Indemnification. Pledgor agrees to indemnify Secured Party,
Discount Note Indenture Trustee and each Noteholder from and
against any and all claims, losses and liabilities in any way
relating to, growing out of or resulting from this Agreement
and the transactions contemplated hereby (including
enforcement of this Agreement), except to the extent such
claims, losses or liabilities result solely from Secured
Party's gross negligence or wilful misconduct as finally
determined by a court of competent jurisdiction.
iii. Reasonable Reliance. Secured Party shall be fully protected
and shall suffer no liability in acting in accordance with any
written instructions reasonably believed by it to have been
given by Pledgor, to the extent provided in Section 4(b), with
respect to any investments of any amounts held for the credit
of the Collateral Account.
iv. Expenses. Pledgor shall pay to Secured Party upon demand the
amount of any and all costs and expenses, including the
reasonable fees and expenses of its counsel and of any experts
and agents, that Secured Party may reasonably incur in
connection with (a) the administration of this Agreement, (b)
the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, any of the
Collateral, (c) the exercise or enforcement of any of the
rights of Secured Party hereunder, or (d) the failure by
Pledgor to perform or observe any of the provisions hereof.
24
SECTION 17. Resignation and Removal of Securities
Intermediary.
a. Removal. Securities Intermediary may be removed at any time by
written notice given by Secured Party to Securities Intermediary and
Pledgor, but such removal shall not become effective until a
successor Securities Intermediary shall have been appointed by
Secured Party and shall have accepted such appointment in writing.
b. Resignation. Securities Intermediary may resign at any time by
giving not less than thirty days' written notice to Secured Party
and Pledgor, but such removal shall not become effective until a
successor Securities Intermediary shall have been appointed by
Secured Party and shall have accepted such appointment in writing.
If an instrument of acceptance by a successor Securities
Intermediary shall not have been delivered to the resigning
Securities Intermediary within thirty days after the giving of any
such notice of resignation, the resigning Securities Intermediary
may, at the expense of Pledgor, petition any court of competent
jurisdiction for the appointment of a successor Securities
Intermediary.
c. Successor Securities Intermediary. Any successor Securities
Intermediary shall be (i) The Bank of Nova Scotia Trust Company of
New York, (ii) ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital Corporation (or an affiliate
thereof) or (iii) a corporation qualified to, and located in, New
York, which (A) is subject to supervision or examination by the
applicable Governmental Instrumentality, (B) has a combined capital
and surplus of at least Five Hundred Million Dollars
(US$500,000,000), (C) has a long-term credit rating of not less than
"A-" or "A3", respectively, by any Rating Agency; and provided, that
any such bank with a long-term credit rating of "A-" or "A3" shall
not cease to be eligible to act as Securities Intermediary upon a
downward change in either such rating of no more than one category
or grade of such minimum rating, as the case may be.
d. Process of Succession. Upon the appointment of a successor
Securities Intermediary and its acceptance of such appointment, the
resigning or removed Securities Intermediary shall transfer all
items of Collateral held by it to such successor (which items of
Collateral
25
shall be transferred to appropriate new Collateral Account
established and maintained by such successor). Following such
appointment all references herein to Securities Intermediary shall
be deemed a reference to such successor; provided that the
provisions of Section 16(a) hereof shall continue to inure to the
benefit of the resigning or removed Securities Intermediary with
respect to any actions taken or omitted to be taken by it under this
Agreement while it was Securities Intermediary hereunder.
SECTION 18. Continuing Security Interest; Termination of Obligations
of Securities Intermediary. This Agreement shall create
a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the
indefeasible payment in full of the Secured
Obligations, (b) be binding upon Pledgor, its successors
and assigns, and (c) inure, together with the rights
and remedies of Secured Party hereunder, to the benefit
of Secured Party, Discount Note Indenture Trustee and
Noteholders and their respective successors,
transferees and assigns. Upon the indefeasible payment
in full of all Secured Obligations, the security
interest granted hereby shall terminate and all rights
to the Collateral shall revert to Pledgor. Upon any such
termination Secured Party shall, at Pledgor's expense,
execute and deliver to Pledgor such documents as
Pledgor shall reasonably request to evidence such
termination and Pledgor shall be entitled to the return,
upon its request and at its expense, against receipt and
without recourse to Secured Party, of such of the
Collateral as shall not have been sold or otherwise
applied pursuant to the terms hereof. Securities
Intermediary shall not be released from its obligations
hereunder, and shall continue to maintain any
Collateral in accordance with this Agreement, until
notified in writing by Secured Party that this Agreement
has terminated and so long as Se-
26
cured Party has not withdrawn such notification.
SECTION 19. Secured Party as Disbursement Agent.
a. Agency. Secured Party has been appointed to act as Secured Party
hereunder pursuant to the Disbursement Agreement. Secured Party
shall be obligated, and 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 any action (including,
without limitation, the release or substitution of Collateral),
solely in accordance with this Agreement and the Disbursement
Agreement.
b. Identity of Agent. Secured Party shall at all times be the same
Person that is Disbursement Agent under the Disbursement Agreement.
Written notice of resignation by Disbursement Agent pursuant to
Section 4.7 of the Disbursement Agreement shall also constitute
notice of resignation as Secured Party under this Agreement; removal
of Disbursement Agent pursuant to Section 4.7 of the Disbursement
Agreement shall also constitute removal as Secured Party under this
Agreement; and substitution of a successor Disbursement Agent
pursuant to Section 4.7 of the Disbursement Agreement shall also
constitute substitution of a successor Secured Party under this
Agreement. Upon the acceptance of any appointment as Disbursement
Agent under Section 4.7 of the Disbursement Agreement by a successor
Disbursement Agent, that successor Disbursement Agent shall
thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring or removed Secured Party under
this Agreement, and the retiring or removed Secured Party under this
Agreement shall promptly (i) transfer to such successor Secured
Party all items of Collateral held by Secured Party (which as
appropriate shall be credited to, and held for the credit of, any
new restricted Collateral Account established and maintained by such
successor Secured Party), together with all records and other
documents necessary or appropriate in connection with the
performance of the duties of the successor Secured Party under this
Agreement, and (ii) execute and deliver to such successor Secured
Party such amendments to financing statements, and take such other
actions, as may be necessary or appropriate in connection with the
assignment to such successor
27
Secured Party of the security interests created hereunder, whereupon
such retiring or removed Secured Party shall be discharged from its
duties and obligations under this Agreement. After any retiring or
removed Disbursement Agent's resignation or removal hereunder as
Secured Party, 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 Secured Party hereunder.
SECTION 20. Amendments; etc. No amendment or waiver of any provision
of this Agreement, or consent to any departure by any
party herefrom, shall in any event be effective unless
the same shall be in writing and signed by the other
parties, and then such waiver or consent shall be
effective only in the specific instance and for the
specific purpose for which it was given.
SECTION 21. Notices. Any communications between the parties hereto
or notices provided herein to be given may be given to
the address of the party as set forth under such party's
name on the signature page hereof. All notices or other
communications required or permitted to be given
hereunder shall be in writing and shall be considered as
properly given (a) if delivered in person, (b) if sent
by reputable overnight delivery service, (c) in the
event overnight delivery services are not readily
available, if mailed by first class mail, postage
prepaid, registered or certified with return receipt
requested or (d) if sent by prepaid telex, or by
telecopy with correct answer back received. Notice so
given shall be effective upon receipt by the addressee,
except that communication or notice so transmitted by
telecopy or other direct written electronic means shall
be deemed to have been validly and effectively given on
the day (if a Business Day and, if not, on the next
following Business Day) on which it is validly transmit-
28
▇▇▇ if transmitted before 4 p.m., recipient's time, and
if transmitted after that time, on the next following
Business Day, provided, however, that if any notice is
tendered to an addressee and the delivery thereof is
refused by such addressee, such notice shall be
effective upon such tender. Any party shall have the
right to change its address for notice hereunder to any
other location by giving of no less than twenty (20)
days' notice to the other parties in the manner set
forth hereinabove.
SECTION 22. Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of Secured
Party in the exercise of any power, right or privilege
hereunder shall impair such power, right or privilege or
be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude
any other or further exercise thereof or for any other
power, right or privilege. All rights and remedies
existing under this Agreement are cumulative to, and
not exclusive of, any rights or remedies otherwise
available.
SECTION 23. Severability. In case any provision in or obligation
under this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions
or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 24. Headings. Section and subsection headings in this
Agreement are included herein for convenience of
reference only and shall not constitute
29
a part of this Agreement for any other purpose or be
given any substantive effect.
SECTION 25. Governing Law. BOTH THIS AGREEMENT AND THE
RESTRICTED SECURITIES ACCOUNT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES. REGARDLESS OF ANY
PROVISION IN ANY OTHER AGREEMENT, FOR PURPOSES OF THE
UCC, NEW YORK SHALL BE DEEMED TO BE THE SECURITIES
INTERMEDIARY'S JURISDICTION AND THE RESTRICTED
SECURITIES ACCOUNT (AS WELL AS THE SECURITIES
ENTITLEMENTS RELATED THERETO) SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK.
SECTION 26. Consent to Jurisdiction and Service of Process. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT
OF OR RELATING TO THIS AGREEMENT MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS
30
AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
Pledgor hereby agrees that service of all process in any
such proceeding in any such court may be made by
registered or certified mail, return receipt requested,
to Pledgor at its address provided in Section 21, such
service being hereby acknowledged by Pledgor to be
sufficient for personal jurisdiction in any action
against Pledgor in any such court and to be otherwise
effective and binding service in every respect. Nothing
herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right
of Secured Party to bring proceedings against Pledgor
in the courts of any other jurisdiction.
SECTION 27. Waiver of Jury Trial. PLEDGOR, SECURITIES
INTERMEDIARY AND SECURED PARTY HEREBY AGREE TO WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. The scope of this waiver is intended to be
all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject
matter of this transaction, including contract claims,
tort claims, breach of duty claims, and all other common
law and statutory claims. Pledgor and Secured Party each
acknowledge that this waiver is a material inducement
for Pledgor and Secured Party to enter into a business
relationship, that Pledgor and Secured Party have
already relied on this waiver in entering into this
Agreement and that each will continue to rely on this
waiver in their related
31
future dealings. Pledgor and Secured Party further
warrant and represent that each has reviewed this
waiver with its legal counsel, and that each knowingly
and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written
consent to a trial by the court.
SECTION 28. Counterparts. This Agreement may be executed in one or
more counterparts and by different parties hereto in
separate counterparts, each of which when so executed
and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the
same instrument; signature pages may be detached from
multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically
attached to the same document.
SECTION 29. Temporary Override. NOTWITHSTANDING ANYTHING HEREIN TO
THE CONTRARY, INCLUDING, WITHOUT LIMITATION, THE DEFINITION OF THE TERM
"PERMITTED INVESTMENTS" IN SECTION 1 HEREOF, IT IS UNDERSTOOD AND AGREED BY THE
PARTIES HERETO THAT SO LONG AS THE BANK OF NOVA SCOTIA SHALL BE THE SECURITIES
INTERMEDIARY HEREUNDER, THE ONLY "PERMITTED INVESTMENTS" THAT MAY BE MADE UNDER
THIS AGREEMENT ARE OVERNIGHT DEPOSITS AND TIME DEPOSITS WITH SCOTIABANK AND
COMMERCIAL PAPER ISSUED BY SCOTIABANK. THIS SECTION OF THE AGREEMENT SHALL
TERMINATE UPON THE APPOINTMENT OF A SUCCESSOR SECURITIES
32
INTERMEDIARY PURSUANT TO THE PROVISIONS OF SECTION 17 HEREOF.
[Remainder of page intentionally left blank]
33
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first set forth above.
PLEDGOR:
ALADDIN GAMING HOLDINGS, LLC,
a Nevada limited liability company
By:
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: CEO & President
Notice Address:
Aladdin Gaming, LLC
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
With a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
LLP & Affiliates
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
S-1
SECURITIES INTERMEDIARY:
THE BANK OF NOVA SCOTIA, a Canadian
chartered bank, as Securities Intermediary
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Relationship Manager
Notice Address: The Bank of Nova Scotia
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Relationship Manager
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: The Bank of Nova Scotia
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
S-2
SECURED PARTY:
THE BANK OF NOVA SCOTIA, a Canadian chartered
bank, as Disbursement Agent under the
Disbursement Agreement
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Relationship Manager
Notice Address: The Bank of Nova Scotia
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Relationship Manager
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: The Bank of Nova Scotia
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
S-3
EXHIBIT A
To Holdings Collateral Account Agreement
DEFINITIONS
Exhibit A-1