STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (the "AGREEMENT") dated as of August 29, 1997
by and between Casino Resource Corporation, a Minnesota corporation (herein
called "PLEDGOR"), in favor of the Xxxx Xxxxxx Family General Partnership, a
Minnesota general partnership (herein called the "SECURED PARTY"); and
BankWindsor, Minneapolis, Minnesota (the "ESCROW AGENT").
RECITALS:
A. Pledgor has issued to the Secured Party a note dated August 29, 1997
(the "NOTE") evidencing Pledgor's obligation to Eight Hundred Thousand
and 00/100 Dollars ($800,000.00), pursuant to a Loan Agreement dated as
of August 29, 1997 (the "LOAN AGREEMENT").
B. As a condition to entering into, and performing its obligations under,
the Loan Agreement and accepting the Note from Pledgor, the Secured Party has
required that Pledgor provide to the Secured Party the covenants and
agreements set forth herein.
AGREEMENT:
For good and valuable consideration, including but not limited to the
foregoing recitals and the promises and mutual covenants hereinafter set
forth, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound by this Agreement, the Pledgor and the Secured
Party agree to the following:
1. SECURITY INTEREST AND COLLATERAL. To secure the debt, liability and
obligation of Pledgor to the Secured Party evidenced by or rising under the
Note and any amendments, extensions, renewals or replacements thereof (the
"OBLIGATION"), Pledgor hereby pledges, hypothecates, assigns, transfers and
grants to the Secured Party a continuing first lien and security interest
(herein called the "Security Interest") in the following described property:
100 shares of the Common Stock of Casino Building Corporation, a Minnesota
corporation (the "CBC SHARES") to be evidenced by a stock certificate to be
delivered to the Secured Party as soon as practicable (herein referred to as
the "COLLATERAL") and the Substituted Collateral, if any (as defined in
Section 3 hereof). Unless and until an Event of Default (as defined in the
Loan Agreement) shall occur and be continuing, Pledgor shall be entitled to
vote the Common Stock and to receive all dividends due thereunder.
2. RELEASE OF COLLATERAL. Upon satisfaction of the Obligation by Pledgor,
the Collateral shall promptly be released from this pledge, the stock
certificate evidencing the Collateral shall promptly be returned to the
Pledgor, and this Agreement shall be terminated and declared null and void.
Within five (5) days after satisfaction of the Obligation, the Secured Party
shall give written notice to the Escrow Agent of the fact the satisfaction of
the Obligation and shall request the Escrow Agent to promptly deliver any
Collateral in the possession of the Escrow Agent to the Pledgor.
3. SUBSTITUTION OF COLLATERAL. Prior to the due exercise by Secured Party
of any remedies under Section 7 hereof, Pledgor shall have the right to
deposit with the Escrow Agent Eight Hundred Thousand and 00/100 Dollars
($800,000.00) cash in substitution for the CBC Shares (the "SUBSTITUTED
COLLATERAL"). In the event of (and following) such substitution of
Collateral, the
Secured Party shall promptly deliver the stock certificate evidencing the CBC
Shares to Pledgor, which shall constitute a release of such CBC Shares from
the terms of this Stock Pledge Agreement. The Substituted Collateral shall
be held by the Escrow Agent in an interest-bearing account. Prior to the
existence of an uncured Event of Default, all interest earned on the
Substituted Collateral shall be paid monthly by the Escrow Agent to CRC.
4. POSSESSION AND MAINTENANCE OF SUBSTITUTED COLLATERAL. The Substituted
Collateral shall be at all times in the possession of the Escrow Agent. The
Escrow Agent's duty of care with respect to the Substituted Collateral in its
possession shall be deemed fulfilled if the Escrow Agent exercises reasonable
care in the physical safekeeping thereof.
5. CONTINUING SECURITY INTEREST. The Security Interest granted hereby is
a continuing security interest and no notice of the creation or existence of
any Obligation, or any renewal, extension or modification thereof need by
given by Secured Party to Pledgor.
6. REPRESENTATIONS AND WARRANTIES OF THE PLEDGOR. The Pledgor hereby
represents and warrants to BFP as follows:
(a) Pledgor has title to and will, at all times, keep the Collateral
free of all liens and encumbrances, except the security interests created
hereby and other security interests that are junior to the lien of the
Secured Party, and has full power and authority to execute this Stock Pledge
Agreement, to perform Pledgor's obligations hereunder and to subject the
Collateral to the security interest created hereby. All costs of keeping the
Collateral free of any liens, encumbrances and security interests prohibited
by this Agreement and removing the same, if they should arise, shall be borne
and paid by Pledgor.
(b) Pledgor will duly endorse, in blank, each and every instrument
constituting Collateral by signing on said instrument or by signing a
separate assignment or other documents of transfer, if required by the
Secured Party, and will, at any time or times hereafter, perform such other
acts as Secured Party may request to establish, maintain, perfect and enforce
Secured Party's security interest in the Collateral and rights under this
Agreement.
(c) Pledgor will, upon receipt, deliver to Secured Party as Collateral
hereunder, all securities distributed on account of the Collateral such as
stock, dividends and securities resulting from stock splits, reorganizations
and recapitalizations. Pledgor represents that there are currently issued
and outstanding, 100 shares of common stock of CBC which represent all of the
issued and outstanding shares of the capital stock of CBC.
(d) Secured Party's duty of care with respect to Collateral in its
possession shall be deemed fulfilled if Secured Party exercises reasonable
care in physically safekeeping such Collateral or, in the case of Collateral
in the custody or possession of a bailee or other third
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party, exercises reasonable care in the selection of the bailee or other
third party, and Secured Party need not otherwise preserve, protect, insure
or care for any Collateral. Secured Party shall have no liability or
responsibility to any third party for any action taken or omitted with
respect to the Collateral on the direction of any third party.
(e) Secured Party, in the name of Pledgor or otherwise, following an
uncured Event of Default, shall have the authority, but not be obligated, to
demand, collect, receive and receipt for, compromise, compound, settle,
prosecute and discontinue any suits or proceedings in respect of any and all
of the Collateral; take any action which Secured Party deems necessary or
desirable in order to realize on the Collateral, including, without
limitation, the power to perform any contract, to endorse in the name of
Pledgor any checks, drafts, notes or other documents which are Collateral or
are received in payment or on account of the Collateral; to transfer any of
the Collateral into its name or that of its nominee, and to notify the
obligor on or issuer of any Collateral to Secured Party of any amounts due or
distributable thereon; and to apply any proceeds of any Collateral against
any item or items of the Secured Obligations as Secured Party, in its sole
discretion, may determine, whether the same shall be due or not due.
(f) The occurrence of any Event of Default as defined in the Loan
Agreement shall constitute a default hereunder.
(g) Whenever an uncured Event of Default shall exist, Secured Party
may, at its option without demand or notice, declare all or any part of the
Obligations immediately due and payable and Secured Party may exercise, in
addition to the rights and remedies granted hereby, all rights and remedies
of a secured party under the Uniform Commercial Code or any other applicable
law, including the right to exercise all voting and other rights as a holder
of the Collateral and the right to offer and sell the Collateral privately.
(h) Pledgor agrees, in the event of an occurrence of an Event of
Default, to pay all costs of Secured Party, including reasonable attorneys'
fees, in the collection of any of the Secured Obligations and the enforcement
of Secured Party's rights. If any notification of intended disposition of
any of the Collateral is required by law, such notification shall be deemed
reasonably and properly given if mailed at least ten (10) days before such
disposition, postage prepaid, addressed to Pledgor at the address shown below.
(i) No delay or failure by Secured Party in the exercise of any right
or remedy shall constitute a waiver thereof, and no single or partial
exercise by Secured Party of any right or remedy shall preclude other or
further exercise thereof or the exercise of any other right or remedy.
7. REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence of an Event of
Default, if such default is not cured within the time period allowed in the
Note and the Loan Agreement, the Secured Party may, in addition to any other
right or remedy available to it under the Uniform Commercial Code in force in
the State of Minnesota, retain the ownership of the Collateral without
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the need for any sale of the same. Pledgor acknowledges that such
disposition of the Collateral is commercially reasonable.
The Secured Party shall not have a duty to exercise any such rights and
shall not be responsible for any failure to do so or for any delay in doing
so. The rights and remedies provided herein are cumulative and concurrent
and may be pursued singularly, successively or together.
8. DUTIES OF ESCROW AGENT. The duties of the Escrow Agent, other than
herein specified, shall be to receive and hold the Substituted Collateral
(and invest and pay any applicable interest to CRC as set forth in Section 3
hereof). For purposes of this Stock Pledge Agreement, the Escrow Agent is
not the agent of any of the parties hereto.
The Escrow Agent may conclusively rely upon and shall be protected in
acting upon any statement, certificate, notice, request, consent, order or
other document reasonably believed by it to be genuine and to have been
signed or presented by the proper party or parties. The Escrow Agent shall
be under no obligation to institute or defend any action, suit or proceeding
in connection with this Escrow Agreement unless first indemnified to its
satisfaction. The Escrow Agent may consult counsel in respect of any
question arising under the Escrow Agreement, and the Escrow Agent shall not
be liable for any action taken or omitted in good faith upon advice of such
counsel. Furthermore, the Escrow Agent's liability hereunder shall be
limited to such damages resulting from, arising out of, or caused by the
negligent acts or omissions of the Escrow Agent. The Substituted Collateral
or cash held by the Escrow Agent pursuant to this Stock Pledge Agreement
shall constitute trust property for the purposes for which they are held and
shall remain the property of the respective party, as the case may be, and
shall not be subject to any liens or charges by the Escrow Agent.
9. FEE. The Escrow Agent shall receive from Pledgor $750 as its fee for
its services performed hereunder; PROVIDED, HOWEVER, if any material
controversy arises hereunder, or the Escrow Agent is made a party to or
justifiably intervenes in any litigation pertaining to this Stock Pledge
Agreement, or the subject matter hereof, the Escrow Agent shall be reasonably
compensated for such extraordinary services and reimbursed for reasonable
costs and expenses, actually incurred, including reasonable attorneys' fees,
necessitated by such controversy or litigation. Such compensation, cost and
fees (other than the initial $750 payment) shall be paid equally by Pledgor
and the Secured Party.
10. NOTICES. All notices, requests, consent and other communications
required or permitted hereunder shall be in writing and shall be personally
delivered, telefaxed (if telefaxed, a copy shall also be sent by another
means of delivery permitted hereby), or sent by national overnight courier or
mailed first-class postage prepaid, registered or certified mail, as follows:
TO PLEDGOR: Casino Resource Corporation
000 Xxxxxxxxx Xxxx.
Xxxxx Xxxxxxx, XX 00000
Attn: Xx. Xxxx X. Xxxxxx
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WITH A COPY TO: Xxxxxxx, Rumble & Butler, P.A.
0000 Xxxxx Xxxxxx Towers
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Attn: Xx. Xxxxxx X. Xxxxxx
TO SECURED PARTY: The Xxxxxx Family Partnership
c/o Grand Casinos, Inc.
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xx. Xxxxxxx X. Xxxxxxx
WITH A COPY TO: Xxxxxx Xxxxxxx Xxxxxx & Brand, LLP
3300 Norwest Center
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xx. Xxxx X. Sell
TO ESCROW AGENT: BankWindsor
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xx. Xxxxx X. Xxxx
and such notices and other communications shall for all purposes of this
Stock Pledge Agreement be treated as being effective or having been given if
delivered personally, or, if sent by mail or telefax, when received. Such
names of notifying parties, address or telefax numbers may be changed by
written notice to the parties.
11. MISCELLANEOUS. This Stock Pledge Agreement shall be binding upon and
inure to the benefit of Pledgor and the Secured Party and their respective
heirs, representatives, successors and assigns and shall take effect when
signed by Pledgor and delivered to the Secured Party and Pledgor waives
notice of the Secured Party acceptance thereof. This Stock Pledge Agreement
shall be governed by the laws of the State of Minnesota. If any provisions
or application of this agreement is held unlawful or unenforceable in any
respect, such illegality or unenforceability shall not affect other
provisions or applications which can be given effect and this agreement shall
be construed as if the unlawful or unenforceable provision or application had
never been contained herein or prescribed hereby. This Stock Pledge
Agreement may be executed in any number of counterparts each of which shall
be deemed an original and together shall be one and the same instrument.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
date set forth above:
CASINO RESOURCE CORPORATION
By __________________________________
Xxxx X. Xxxxxx
Its President
"PLEDGOR"
XXXX XXXXXX FAMILY
GENERAL PARTNERSHIP
By __________________________________
Its _______________________________
"SECURED PARTY"
BANKWINDSOR
By __________________________________
Its _______________________________
(An Authorized Signatory)
"ESCROW AGENT"
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