SECURITY AGREEMENT
Exhibit 4.2
EXECUTION VERSION
This SECURITY AGREEMENT dated as of May 19, 2009, is made by BELLAGIO, LLC, a Nevada limited
liability company (“Bellagio”) and THE MIRAGE CASINO-HOTEL, a Nevada corporation (“TMCH”) and each
of them, jointly and severally, as Grantors (each a “Grantor” and collectively, “Grantors”) and
U.S. Bank National Association, as the Trustee and collateral agent for the benefit of the Secured
Parties (as defined below) under the Indenture (as defined below) (in such capacity, together with
its successors in such capacity, “Collateral Agent”), with reference to the following facts:
RECITALS
A. MGM MIRAGE, a Delaware corporation (“Issuer”) concurrently entered into that certain
Indenture dated as of May 19, 2009 (as amended, supplemented or otherwise modified from time to
time, the “Indenture”), among Issuer, the guarantors party thereto (including Grantors) and the
Trustee, pursuant to which Issuer issued those certain 10.375 % senior secured notes due 2014 and
those certain 11.125 % senior secured notes due 2017 (collectively, the “Notes”).
B. The holders of the Notes (collectively, the “Noteholders”) are willing to purchase the
Notes for the purposes of, among other things, providing Issuer and its subsidiaries funds to repay
existing indebtedness and provide working capital.
C. Each Grantor is a subsidiary of Issuer, and will derive substantial benefit from the
purchase of the Notes by the Noteholders.
D. As a condition precedent to purchasing the Notes, the Noteholders require that each Grantor
enter into this Agreement and grant the security interests to Collateral Agent as herein provided
as security for Issuer’s obligations under the Indenture.
E. Pursuant to the 13% Secured Notes Indenture, the holders of the 13% Secured Notes issued
under the 13% Secured Notes Indenture (the “13% Secured Notes Secured Parties”) purchased the 13%
Secured Notes of the Issuer upon the terms and subject to the conditions set forth therein.
F. The 13% Secured Notes Indenture restricts the ability of each Grantor to grant a security
interest in the Collateral to secure the Notes Obligations, unless such Grantor grants an equal and
ratable security interest in the Collateral to secure the Obligations under the 13% Secured Notes
and 13% Secured Notes Indenture (the “13% Secured Notes Obligations”).
AGREEMENT
NOW, THEREFORE, for other good and valuable consideration, the receipt and adequacy of which
hereby are acknowledged, each Grantor hereby represents, warrants, covenants, agrees, assigns and
grants as follows:
1. Definitions. This Agreement is the “Security Agreement” referred to in the
Indenture. Terms defined in the Indenture and not otherwise defined in this Agreement shall have
the meanings defined for those terms in the Indenture. Terms defined in the Nevada Uniform
Commercial Code (“NVUCC”) and not otherwise defined in this Agreement or in the Indenture shall
have the meanings defined for those terms in the Nevada Uniform Commercial Code. As used in this
Agreement, the following terms shall have the meanings respectively set forth after each:
“13% Secured Notes Obligations” shall have the meaning assigned to such term in Recital
F.
“13% Secured Notes Secured Parties” shall have the meaning assigned to such term in
Recital E.
“Agreement” means this Security Agreement, and any extensions, modifications, renewals,
restatements, supplements or amendments hereof.
“Capital Stock” means:
(a) in the case of a corporation, corporate stock;
(b) in the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate stock;
(c) in the case of a partnership or limited liability company, partnership or
membership interests (whether general or limited); and
(d) any other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets or properties of, the issuing
Person.
“Collateral” means and includes all present and future right, title and interest of any
Grantor in or to any personal property or assets whatsoever, and all rights and powers of such
Grantor to transfer any interest in or to any personal property or assets whatsoever, including,
without limitation, any and all of the following personal property:
(a) All present and future accounts, accounts receivable, payment intangibles,
agreements, contracts, leases, contract rights, rights to payment, instruments, promissory
notes, documents, chattel paper, security agreements, guaranties, undertakings, surety
bonds, health-care-insurance receivables, insurance policies, commercial tort claims listed
on Schedule 4(h), notes and drafts, and all forms of obligations owing to any Grantor or in
which any Grantor may have any interest, however created or arising;
(b) All present and future general intangibles, all tax refunds of every kind and
nature to which any Grantor now or hereafter may become entitled, however arising, all other
refunds, and all deposits, reserves, loans, royalties, cost savings, deferred payments,
goodwill, choses in action, trade secrets, computer programs, software, customer
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lists, trademarks (including any applications therefor), trade names, service marks, patents (including any applications therefor), licenses (including, without limitation,
the Trademark License Agreement) or sublicenses (to the extent that there exists no
prohibition as a matter of law or pursuant to any agreements governing such licenses or
sublicenses on the transfer thereof for security as contemplated by this Agreement),
copyrights (including any applications therefor), technology, processes, proprietary
information and insurance proceeds of which such Grantor is a beneficiary (other than any
licenses issued by a Gaming Authority or pursuant to any Gaming Laws but only to the extent
that granting a security interest in such licenses would violate applicable Gaming Law);
(c) Whether characterized as accounts, general intangibles or otherwise, all rents
(including, without limitation, prepaid rents, fixed, additional and contingent rents),
issues, profits, receipts, earnings, revenue, income, security deposits, occupancy charges,
hotel room charges, cabana charges, casino revenues, show ticket revenues, food and beverage
revenues, room service revenues, merchandise sales revenues, parking, maintenance, common
area, tax, insurance, utility and service charges and contributions, instruction fees,
membership charges, restaurant and snack bar revenues;
(d) All present and future letter-of-credit rights of each Grantor;
(e) All present and future books and records, including, without limitation, books of
account and ledgers of every kind and nature, all electronically recorded data relating to
each Grantor or their business, all receptacles and containers for such records, and all
files and correspondence;
(f) All present and future goods, including, without limitation, all farm products,
inventory, equipment, video lottery terminals, slot machines and other gaming devices and
associated equipment, machinery, tools, molds, dies, furniture, furnishings, trade fixtures,
trade fixtures, motor vehicles, aircraft, documented and undocumented vessels, ships and
other watercraft, and all other goods used in connection with or in the conduct of each
Grantor’s business;
(g) All present and future inventory and merchandise, including, without limitation,
all present and future goods held for sale or lease or to be furnished under a contract of
service, all raw materials, work in process and finished goods, all packing materials,
supplies and containers relating to or used in connection with any of the foregoing, and all
bills of lading, warehouse receipts or documents of title relating to any of the foregoing;
(h) All present and future investment property, stocks, bonds, debentures, securities,
security entitlements, securities accounts, commodity contracts, commodity accounts,
subscription rights, options, warrants, puts, calls, certificates, partnership interests,
limited liability company membership or other interests, certificates of deposit, joint
venture interests, Investments and/or brokerage accounts and all rights, preferences,
privileges, dividends, distributions, redemption payments, or liquidation payments with
respect thereto;
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(i) All present and future accessions, appurtenances, components, repairs, repair
parts, spare parts, replacements, substitutions, additions, issue and/or improvements to or
of or with respect to any of the foregoing;
(j) All other tangible and intangible personal property of each Grantor;
(k) All rights, remedies, powers and/or privileges of each Grantor with respect to any
of the foregoing; and
(l) Any and all proceeds and products of any of the foregoing, including, without
limitation, all accounts, general intangibles, payment intangibles, documents, promissory
notes, instruments, certificates of deposit, chattel paper, investment property, goods,
insurance proceeds, and any other tangible or intangible property received upon the sale or
disposition of any of the foregoing.
Notwithstanding anything to the contrary in this Agreement, the term “Collateral” shall not
include (i) any of the Excluded Assets, (ii) any license, permit, or authorization issued by any of
the Gaming Authorities or any other Governmental Authority, or any other Collateral, which may not
be pledged or in which a security interest may not be granted under Gaming Laws, or other
applicable law, or under the terms of any such license, permit, or authorization, or which would
require a finding of suitability or other similar approval or procedure by any of the Gaming
Authorities or any other Governmental Authority prior to being pledged, hypothecated, or given as
collateral security (collectively, the “Gaming Collateral”) (to the extent such finding or approval
has not been obtained) or (iii) any lease, license, contract, general intangible or agreement to
which any Grantor is a party or any of its rights or interests thereunder if and for so long as the
grant of such security interest shall constitute or result in (1) the abandonment, invalidation or
unenforceability of any right, title or interest of such Grantor therein or (2) in a breach or
termination pursuant to the terms of, or a default under, any such lease, license, contract,
general intangible or agreement (in each case, other than to the extent that any such term would be
rendered ineffective pursuant to Sections 104.9401, 104.9406, 104.9407, 104.9408 or 104.9409 of the
NVUCC (or any successor provision or provisions) of any relevant jurisdiction or any other
applicable Law), provided, however, that the Collateral shall include and such security interest
shall attach immediately at such time as the condition causing such abandonment, invalidation or
unenforceability shall be remedied and to the extent severable, shall attach immediately to any
portion of such lease, license, contract, general intangible or agreement that does not result in
any of the consequences specified in (1) or (2) above; and (iv) any asset owned by any Grantor that
is subject to a Lien securing Indebtedness (including Capitalized Lease Obligations) incurred to
finance the purchase, lease or improvement of such asset and permitted to be incurred pursuant to
the provisions of the Indenture if the contract or other agreement in which such Lien is granted
(or the documentation providing for such Indebtedness) validly prohibits the creation of any other
Lien on such asset.
“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire
Capital Stock, but excluding any debt security that is convertible into, or exchangeable for,
Capital Stock.
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“Excluded Assets” means the means MH, Inc. MRGS, LLC, the tradename “Bellagio” and related
trademarks, service marks and copyrights (provided that upon the transfer of the Bellagio trademark
to another Restricted Subsidiary that is not a Grantor such Subsidiary will grant to Bellagio a
royalty free perpetual non-exclusive license to such trademark, which license and rights thereunder
will be Collateral) and interests in the nightclubs Light, Bella and Mist.
“Gaming Authority” means the Nevada Gaming Commission, the Nevada State Gaming Control Board
or any similar commission or agency which has, or may at any time after the date of this Indenture
have, jurisdiction over the gaming activities of each Grantor or a Restricted Subsidiary of any
Grantor or any successor thereto.
“Indenture” shall have the meaning assigned to such term in Recital A.
“Issuer” shall have the meaning assigned to such term in Recital A.
“Intercompany Notes” means, collectively, any intercompany promissory note executed by any
Subsidiary of any Grantor or any Affiliate of any Grantor evidencing any Indebtedness of such party
to such Grantor.
“Law” means, collectively, all international, foreign, United States federal and state and
local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or
judicial precedents or authorities, including the interpretation or administration thereof by any
Governmental Authority charged with the enforcement, interpretation or administration thereof, and
all applicable administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authority.
“Mortgaged Property” shall have the meaning given to the term “Trust Estate” in each Mortgage.
“Note Documents” means this Agreement, the Indenture, the Notes, the Subsidiary Guarantees,
the Registration Rights Agreement, the Pledge Agreement or any other document, instrument or
agreement arising out of or relating to any of the foregoing, in each case as amended, supplemented
or otherwise modified from time to time.
“Note Obligations” means any and all present and future Obligations of any type or nature of
any Grantor arising under or relating to the Indenture, the Notes, the Subsidiary Guarantees and
the other Note Documents to which such Grantor is a party.
“Noteholders” shall have the meaning assigned to such term in Recital B.
“Notes” shall have the meaning assigned to such term in Recital A.
“Secured Obligations” means (i) the Note Obligations and (ii) the 13% Secured Notes
Obligations.
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“Secured Parties” means, collectively, Collateral Agent, the Trustee, the Noteholders, 13%
Secured Notes Secured Parties and the trustee under the 13% Secured Notes Indenture.
“Trademark License Agreement” means the Trademark License Agreement dated as of May 18, 2009,
by and between Mirage Resorts, Incorporated, a Nevada corporation, as Licensor and Bellagio, for
its and on behalf of each of its subsidiaries, collectively, as licensee.
2. Further Assurances. Subject to compliance with applicable Gaming Laws, at any time
and from time to time at the written request of Collateral Agent, each Grantor shall execute and
deliver to Collateral Agent all such financing statements and other instruments and documents in
form and substance satisfactory to Collateral Agent as shall be necessary or desirable to fully
perfect, when filed and/or recorded, Collateral Agent’s security interests granted pursuant to
Section 3 of this Agreement. At any time and from time to time, Collateral Agent shall be
entitled to authenticate on behalf and in the name of either Grantor, file and/or record any or all
such financing statements, instruments and documents held by it, and any or all such further
financing statements, documents and instruments, and to take all such other actions, as Collateral
Agent may deem appropriate to perfect and to maintain perfected the security interests granted in
Section 3 of this Agreement. Before and after the occurrence of any Event of Default, at
Collateral Agent’s written request, each Grantor shall execute all such further financing
statements, instruments and documents, and shall do all such further acts and things, as may be
deemed necessary or desirable by Collateral Agent to create and perfect, and to continue and
preserve, an indefeasible security interest in the Collateral in favor of Collateral Agent, or the
priority thereof. With respect to any Collateral consisting of securities, instruments,
partnership or joint venture interests or the like, each Grantor hereby consents and agrees that
the issuers of, or obligors on, any such Collateral, or any registrar or transfer agent or trustee
for any such Collateral, shall be entitled to accept the provisions of this Agreement as conclusive
evidence of the right of Collateral Agent to effect any transfer or exercise any right hereunder or
with respect to any such Collateral, notwithstanding any other notice or direction to the contrary
heretofore or hereafter given by such Grantor or any other Person to such issuers or such obligors
or to any such registrar or transfer agent or trustee.
3. Security Agreement. For valuable consideration, each Grantor hereby assigns and
pledges to Collateral Agent, and grants to Collateral Agent for the benefit of the Secured Parties,
a security interest in, all Collateral, whether presently existing or hereafter acquired, as
security for the timely and complete payment and performance of the Secured Obligations, and each
of them. This Agreement is a continuing and irrevocable agreement and all the rights, powers,
privileges and remedies hereunder shall apply to any and all Secured Obligations, including those
arising under successive transactions which shall either continue the Secured Obligations, increase
or decrease them and notwithstanding the bankruptcy of any Grantor or any other Person or any other
event or proceeding affecting any Person.
4. Grantors’ Representations and Warranties. To induce the Collateral Agent to enter
into the Indenture and to induce the Noteholders to purchase the Notes, each Grantor hereby
represents and warrants to the Collateral Agent and each Secured Party that:
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(a) Title; No Other Liens. Except for the security interest granted to the Collateral
Agent pursuant to this Agreement and other Permitted Liens, Grantors own each item of the
Collateral free and clear of any and all Liens except for Permitted Liens.
(b) Perfected Liens. The security interests granted pursuant to this Agreement (i)
constitute valid security interests in all of the Collateral in favor of the Collateral
Agent, for the benefit of the Secured Parties, as collateral security for the Secured
Obligations, perfected to the extent perfection may be achieved by filing UCC1 financing
statements or by other action required to be taken by the terms of this Agreement and
enforceable in accordance with the terms hereof against all creditors of such Grantors,
except as enforcement may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting the enforcement of creditors’ rights or by
equitable principles related to the granting of specific performance and other equitable
remedies as a matter of judicial discretion; and (ii) are prior to all other Liens on the
Collateral.
(c) Securities Accounts. Schedule 4(c) sets forth a complete list of all
securities accounts maintained by each Grantor on the date hereof, except for securities
accounts which have an account balance in the aggregate not exceeding $1,000,000, and
includes the name and location of the securities intermediaries with which such securities
accounts are maintained and the account numbers. No agreement or arrangement establishing
“control” within the meaning of the NVUCC has been entered into with respect to any
securities account maintained by the Grantors.
(d) Goods Covered by Certificate of Title. Schedule 4(d) sets forth a complete
list of all goods owned by each Grantor on the date hereof which are covered by a
certificate of title, including, without limitation, motor vehicles, except for goods that
have a fair value in the aggregate not exceeding $1,000,000.
(e) Investment Property. Schedule 4(e) sets forth a complete list of all
investment property of each Grantor, except for investment property having a fair value in
the aggregate not exceeding $1,000,000.
(f) Instruments. Schedule 4(f) sets forth a complete list of all instruments
of each Grantor, including, without limitation, Intercompany Notes, except for instruments
which have a face value not exceeding $1,000,000.
(g) Chattel Paper. No Grantor owns any material amount of chattel paper.
(h) Commercial Tort Claims. Schedule 4(h) sets forth a complete list of all
commercial tort claims of each Grantor that have been asserted in judicial or arbitration
proceedings.
5. Covenants. Each Grantor covenants and agrees that, from and after the date of this
Agreement until the Notes Obligations shall have been paid in full or the relevant Collateral has
been released in accordance with Section:
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(a) Delivery of Collateral Perfected by Possession. With respect to any Collateral
consisting of securities, instruments or the like, as to which Collateral Agent’s security
interest need be perfected by, or the priority thereof need be assured by, possession of
such Collateral, each Grantor will promptly deliver possession of any such Collateral with a
fair value or face value equal to or exceeding $1,000,000 individually or $5,000,000 in the
aggregate in pledge to Collateral Agent or as directed by the Collateral
Agent, and each Grantor will take all actions necessary to vest such possession in
Collateral Agent or any agent of the Collateral Agent as directed by the Collateral Agent;
(b) Securities Accounts. If any Grantor maintains any securities accounts in which
balances exceed $1,000,000 in the aggregate for any period of thirty consecutive days, such
Grantor will deliver a duly executed control agreement with respect to such Collateral in
form and substance reasonably satisfactory to Collateral Agent;
(c) Motor Vehicles. If any Grantor at any time has motor vehicles or other Collateral
subject to certificates of title having an aggregate value exceeding $1,000,000, such
Grantor will cause certificates of title evidencing such excess amount of Collateral to
reflect the Lien in favor of Collateral Agent and notify Collateral Agent of such
circumstance;
(d) Commercial Tort Claims. Each Grantor shall notify Collateral Agent of any material
commercial tort claim asserted by it in any judicial or arbitration proceeding within thirty
days of the assertion thereof and unless consented otherwise by Collateral Agent, such
Grantor shall enter into such supplemental documentation as Collateral Agent may reasonably
request to perfect a Lien in favor of Collateral Agent, for the benefit of the Secured
Parties, in such commercial tort claim;
(e) Taxes. Each Grantor will pay, prior to delinquency, all taxes, charges, Liens and
assessments against the Collateral, except such as are expressly permitted by the Indenture
or are timely contested in good faith, and upon its failure to pay or so contest such taxes,
charges, Liens and assessments, Collateral Agent at its option, following written notice to
such Grantor of its intention to do so, may pay any of them, and Collateral Agent shall be
the sole judge of the legality or validity thereof and the amount necessary to discharge the
same;
(f) Compliance with Law. The Collateral will not be knowingly used for any unlawful
purpose or in violation of any Law, nor used in any way that will void or impair any
insurance required to be carried in connection therewith;
(g) Preservation. Each Grantor will, to the extent consistent with good business
practice, keep the Collateral in reasonably good repair, working order and condition, and
from time to time make all needful and proper repairs, renewals, replacements, additions and
improvements thereto and, as appropriate and applicable, will otherwise deal with the
Collateral in all such ways as are considered good practice by owners of like property, and
will take all commercially reasonable steps to preserve and protect the Collateral;
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(h) Insurance. Until the release of the Liens or the Collateral as provided in this
Agreement, each Grantor will maintain insurance with respect to the Collateral with carriers
against such risks, in such amounts and with such deductibles as each Grantor determines to
be reasonably prudent (as determined by the board of directors in good faith) and consistent
with the past practices of such Grantor, and name Collateral Agent as an additional insured
or, with respect to casualty insurance, loss payee , as the case may be,
with losses in excess of $1,000,000 payable jointly to such Grantor and Collateral
Agent (unless a Default has occurred and is then continuing, in which case all losses are
payable solely to Collateral Agent), with no recourse against Trustee or Collateral Agent
for the payment of premiums, deductibles, commissions or club calls, and will furnish copies
of such insurance policies or certificates to Collateral Agent promptly upon request
therefor;
(i) Notification of Damage. Each Grantor will promptly notify Collateral Agent in
writing in the event of any substantial or material damage to the Collateral from any source
whatsoever, and, except for the disposition of collections and other proceeds of the
Collateral permitted by Section 6 hereof, such Grantor will not remove or permit to
be removed any material part of the Collateral from its place of business without the prior
written consent of Collateral Agent, except for such items of the Collateral as are removed
in the ordinary course of business or in connection with any transaction or disposition
otherwise permitted by the Indenture; and
(j) Changes of Name or Address. In the event any Grantor changes its name, its address
or its jurisdiction of organization as are set forth herein or in the Indenture, such
Grantor will notify Collateral Agent of such name and/or address change promptly, but in any
event within 5 business days and such Grantor shall take all action necessary to maintain
the perfection and priority of the security interest of the Collateral Agent for the benefit
of the Secured Parties in the Collateral.
6. Collateral Agent’s Rights Regarding Collateral. Subject to the limitations set
forth below Collateral Agent may, subject to Gaming Laws, to the extent it may be necessary or
desirable to protect the security hereunder, but Collateral Agent shall not be obligated to, enter
upon any premises on which Collateral is situated during regular office business hours and upon
reasonable notice and examine the same. Collateral Agent may perform such Collateral inspections
no more than twice in each calendar year, unless the applicable Grantor provides consent for
additional inspections after written request from Collateral Agent, which consent shall not be
unreasonably withheld. If an Event of Default has occurred and is continuing, without notice or
demand and at the expense of Grantors, Collateral Agent may, subject to Gaming Laws, to the extent
it may be necessary or desirable to protect the security hereunder, but Collateral Agent shall not
be obligated to, enter upon any premises on which Collateral is situated at any time without notice
and examine the same. Upon any Event of Default, Collateral Agent may, subject to Gaming Laws, to
the extent it may be necessary or desirable to protect the security hereunder, but Collateral Agent
shall not be obligated to, perform any obligation of Grantors under this Agreement or any
obligation of any other Person under the Note Documents, the 13% Secured Notes or 13% Secured Notes
Indenture. Each Grantor shall maintain books and records pertaining to the Collateral in such
detail, form and scope as is consistent with such Grantor’s past practices. Each Grantor shall at
any time at Collateral Agent’s request xxxx the Collateral
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and/or such Grantor’s ledger cards,
books of account and other records relating to the Collateral with appropriate notations reasonably
satisfactory to Collateral Agent disclosing that they are subject to Collateral Agent’s security
interests. Prior to an Event of Default, subject to the limitation set forth below, at any time
during regular office business hours and upon reasonable notice to the applicable Grantor,
Collateral Agent shall have reasonable access to and the right to audit any and all of each
Grantor’s books and records pertaining to the Collateral, and to confirm and verify the value of
the Collateral and to do whatever else Collateral Agent reasonably may
deem necessary or desirable to protect its interests. Collateral Agent may perform such audit
of the each Grantor’s books and records twice in each calendar year, unless such Grantor provides
consent to additional audits after written request from Collateral Agent, which consent shall not
be unreasonably withheld. If an Event of Default has occurred and is continuing, at all times on
reasonable notice to Grantors, Collateral Agent shall have full access to and the right to audit
any and all of each Grantor’s books and records pertaining to the Collateral, and to confirm and
verify the value of the Collateral and to do whatever else Collateral Agent reasonably may deem
necessary or desirable to protect its interests; provided, however, that any such action which
involves communicating with customers of any Grantor shall be carried out by Collateral Agent
through such Grantor’s independent auditors unless Collateral Agent shall then have the right
directly to notify obligors on the Collateral as provided in Section 10. Collateral Agent
shall be under no duty or obligation whatsoever to take any action to preserve any rights of or
against any prior or other parties in connection with the Collateral, to exercise any voting rights
or managerial rights with respect to any Collateral, whether or not an Event of Default shall have
occurred, or to make or give any presentments, demands for performance, notices of non-performance,
protests, notices of protests, notices of dishonor or notices of any other nature whatsoever in
connection with the Collateral or the Secured Obligations. Collateral Agent shall be under no duty
or obligation whatsoever to take any action to protect or preserve the Collateral or any rights of
any Grantor therein, or to make collections or enforce payment thereon, or to participate in any
foreclosure or other proceeding in connection therewith.
7. Collections on the Collateral. So long as no Event of Default shall have occurred
and be continuing, and until Collateral Agent suspends such rights, each Grantor will be entitled
to receive the benefit of all cash dividends, interest and other payments made upon or with respect
to the Collateral by such Grantor. Upon the occurrence and during the continuance of an Event of
Default, at the election of Collateral Agent or the Noteholders holding a majority in aggregate
principal amount of the Notes then outstanding pursuant to Section 6.12 of the Indenture to suspend
such rights, (i) all rights of each Grantor to receive all cash dividends, interest and other
payments made upon or with respect to the Collateral will cease, and such cash dividends, interest
and other payments will be paid to Collateral Agent; (ii) all rights of the Grantors to exercise
such voting or other consensual rights shall cease, and all such rights shall become vested in
Collateral Agent which, to the extent permitted by law, will have the sole right to exercise such
rights; and (iii) Collateral Agent may sell the Collateral or any part thereof in accordance with
the terms of this Agreement. Any remittance received by any Grantor from any Person shall be
presumed to relate to the Collateral and to be subject to Collateral Agent’s security interests.
Upon the occurrence and during the continuance of an Event of Default, Collateral Agent shall have
the right at all times to receive, receipt for, endorse, assign, deposit and deliver, in the name
of Collateral Agent or in the name of any Grantor, any and all checks, notes, drafts and other
instruments for the payment of money constituting proceeds of or otherwise relating to
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the Collateral; and such Grantor hereby authorizes Collateral Agent to affix, by facsimile signature or
otherwise, the general or special endorsement of it, in such manner as Collateral Agent shall deem
advisable, to any such instrument in the event the same has been delivered to or obtained by
Collateral Agent without appropriate endorsement, and Collateral Agent and any collecting bank are
hereby authorized to consider such endorsement to be a sufficient, valid and effective endorsement
by such Grantor, to the same extent as though it were manually executed by the duly authorized
officer of such Grantor, regardless of by whom or under what circumstances or by what authority
such facsimile signature or other endorsement actually is affixed, without
duty of inquiry or responsibility as to such matters, and such Grantor hereby expressly waives
demand, presentment, protest and notice of protest or dishonor and all other notices of every kind
and nature with respect to any such instrument.
8. Possession of Collateral by Collateral Agent. All the Collateral now, heretofore
or hereafter delivered to Collateral Agent shall be held by Collateral Agent in its possession,
custody and control. Nothing herein shall obligate Collateral Agent to invest any Collateral or
obtain any particular return thereon. Upon the occurrence and during the continuance of an Event
of Default, whenever any of the Collateral is in Collateral Agent’s possession, custody or control,
Collateral Agent may use, operate and consume the Collateral, whether for the purpose of preserving
and/or protecting the Collateral, or for the purpose of performing any of Grantors’ obligations
with respect thereto, or otherwise. Collateral Agent may at any time deliver or redeliver the
Collateral or any part thereof to Grantors, and the receipt of any of the same by Grantors shall be
complete and full acquittance for the Collateral so delivered, and Collateral Agent thereafter
shall be discharged from any liability or responsibility therefor. So long as Collateral Agent
exercises reasonable care with respect to any Collateral in its possession, custody or control,
Collateral Agent shall have no liability for any loss of or damage to such Collateral, and in no
event shall Collateral Agent have liability for any diminution in value of Collateral occasioned by
economic or market conditions or events. Collateral Agent shall be deemed to have exercised
reasonable care within the meaning of the preceding sentence if the Collateral in the possession,
custody or control of Collateral Agent is accorded treatment substantially equal to that which
Collateral Agent accords its own property, it being understood that Collateral Agent shall not have
any 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
Collateral Agent has or is deemed to have knowledge of such matters, or (b) taking any necessary
steps to preserve rights against any Person with respect to any Collateral.
Collateral Agent shall not be responsible for filing any financing or continuation statements
or recording any documents or instruments in any public office at any time or times or otherwise
perfecting or maintaining the perfection of any security interest in the Collateral. The
Collateral Agent shall be deemed to have exercised reasonable care in the custody of the Collateral
in its possession if the Collateral is accorded treatment substantially equal to that which it
accords its own property and shall not be liable or responsible for any loss or diminution in the
value of any of the Collateral, by reason of the act or omission of any carrier, forwarding agency
or other agent or bailee selected by the Collateral Agent in good faith. Collateral Agent shall
not be responsible for the existence, genuineness or value of any of the Collateral or for the
validity, perfection, priority or enforceability of the Liens in any of the Collateral, whether
impaired by operation of law or by reason of any of any action or omission to act on its part
hereunder, except
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to the extent such action or omission constitutes gross negligence, bad faith or
willful misconduct on the part of Collateral Agent, for the validity or sufficiency of the
Collateral or any agreement or assignment contained therein, for the validity of the title of
Grantors to the Collateral, for insuring the Collateral or for the payment of taxes, charges,
assessments or Liens upon the Collateral or otherwise as to the maintenance of the Collateral.
Notwithstanding anything in this Agreement to the contrary and for the avoidance of doubt, the
Collateral Agent shall have no duty to act outside of the United States in respect of any
Collateral located in the jurisdiction other than the United States.
Collateral Agent may act and rely and shall be protected in acting and relying in good faith
on the opinion or advice of or information obtained from any counsel, accountant, appraiser or
other expert or adviser, whether retained or employed by the any Grantor or by the Collateral, in
relation to any matter arising in the administration of the Note Documents.
The rights, privileges, protections immunities and indemnities contained in the Indenture
shall apply to Collateral Agent’s acceptance and administration of the Indenture and the other Note
Documents to which the Collateral Agent is a party and shall be deemed to be incorporated by
reference therein.
9. Events of Default. There shall be an Event of Default hereunder upon the
occurrence and during the continuance of an Event of Default under the Indenture.
10. Rights Upon Event of Default. Upon the occurrence and during the continuance of
an Event of Default, Collateral Agent shall have, in any jurisdiction where enforcement hereof is
sought, in addition to all other rights and remedies that Collateral Agent may have under
applicable Law or in equity or under this Agreement (including, without limitation, all rights set
forth in Section 6 hereof), the 13% Secured Notes, the 13% Secured Notes Indenture or under
any other Note Document, all rights and remedies of a secured party under the Uniform Commercial
Code as enacted in any jurisdiction, and, in addition, the following rights and remedies, all of
which may be exercised with or without notice to Grantors (except to the extent notice is otherwise
required to be given pursuant to the fourth paragraph this Section 10) and without
affecting the Obligations of Grantors hereunder or under any other Note Document, the 13% Secured
Notes or the 13% Secured Notes Indenture or the enforceability of the Liens and security interests
created hereby:
(a) to foreclose the Liens and security interests created hereunder or under any other
agreement relating to any Collateral by any available judicial procedure or without judicial
process;
(b) to enter any premises where any Collateral may be located for the purpose of
securing, protecting, inventorying, appraising, inspecting, repairing, preserving, storing,
preparing, processing, taking possession of or removing the same;
(c) to sell, assign, lease or otherwise dispose of any Collateral or any part thereof,
either at public or private sale or at any broker’s board, in lot or in bulk, for cash, on
credit or otherwise, with or without representations or warranties and upon such terms as
shall be acceptable to Collateral Agent;
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(d) to notify obligors on the Collateral that the Collateral has been assigned to
Collateral Agent and that all payments thereon are to be made directly and exclusively to
Collateral Agent;
(e) to collect by legal proceedings or otherwise all dividends, distributions,
interest, principal or other sums now or hereafter payable upon or on account of the
Collateral;
(f) to cause the Collateral to be registered in the name of Collateral Agent, as legal
owner;
(g) to enter into any extension, reorganization, deposit, merger or consolidation
agreement, or any other agreement relating to or affecting the Collateral, and in connection
therewith Collateral Agent may deposit or surrender control of the Collateral and/or accept
other Property in exchange for the Collateral;
(h) to settle, compromise or release, on terms acceptable to Collateral Agent, in whole
or in part, any amounts owing on the Collateral and/or any disputes with respect thereto;
(i) to extend the time of payment, make allowances and adjustments and issue credits in
connection with the Collateral in the name of Collateral Agent or in the name of Grantors;
(j) to enforce payment and prosecute any action or proceeding with respect to any or
all of the Collateral and take or bring, in the name of Collateral Agent or in the name of
Grantors, any and all steps, actions, suits or proceedings deemed by Collateral Agent
necessary or desirable to effect collection of or to realize upon the Collateral, including
any judicial or nonjudicial foreclosure thereof or thereon in accordance with applicable
Law, and each Grantor specifically consents to any nonjudicial foreclosure of any or all of
the Collateral or any other action taken by Collateral Agent which may release any obligor
from personal liability on any of the Collateral, and each Grantor waives to the extent
permitted by Law, any right not expressly provided for in this Agreement to receive notice
of any public or private judicial or nonjudicial sale or foreclosure of any security or any
of the Collateral; and any money or other property received by Collateral Agent in exchange
for or on account of the Collateral, whether representing collections or proceeds of
Collateral, and whether resulting from voluntary payments or foreclosure proceedings or
other legal action taken by Collateral Agent or any Grantor may be applied by Collateral
Agent without notice to such Grantor to the Secured Obligations in such order and manner as
Collateral Agent in its sole discretion shall determine;
(k) to insure, process and preserve the Collateral;
(l) to exercise all rights, remedies, powers or privileges provided under any of the
Note Documents;
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(m) to remove, from any premises where the same may be located, the Collateral and any
and all documents, instruments, files and records, and any receptacles and cabinets
containing the same, relating to the Collateral, and Collateral Agent may, at the cost and
expense of Grantors, use such of its supplies, equipment, facilities and space at its places
of business as may be reasonably necessary or appropriate to properly administer, process,
store, control, prepare for sale or disposition and/or sell or dispose of the portion of the
Collateral owned by any Grantor or to properly administer and control the handling of
collections and realizations thereon, and Collateral Agent shall be deemed to
have a rent-free tenancy of any premises of any Grantor for such purposes and for such
periods of time as reasonably required by Collateral Agent;
(n) to receive, open and dispose of all mail addressed to any Grantor and notify postal
authorities to change the address for delivery thereof to such address as Collateral Agent
may designate; provided that Collateral Agent agrees that it will promptly deliver over to
such Grantor such mail as does not relate to the Collateral; and
(o) to exercise all other rights, powers, privileges and remedies of an owner of the
Collateral; all at Collateral Agent’s sole option and as Collateral Agent in its sole
discretion may deem advisable. Any Grantor will, at Collateral Agent’s written request,
assemble the Collateral (or any part thereof, as requested) and make it available to
Collateral Agent at places which Collateral Agent may designate, whether at the premises of
such Grantor or elsewhere (provided, however, that such Grantor shall not be required to
deliver Collateral consisting of gaming devices to a location in a jurisdiction where
possession of such items is unlawful), and will make available to Collateral Agent, free of
cost, all premises, equipment and facilities of such Grantor for the purpose of Collateral
Agent’s taking possession of the Collateral or storing same or removing or putting the
Collateral in salable form or selling or disposing of same.
Upon the occurrence and during the continuance of an Event of Default, Collateral Agent also
shall have the right, without notice or demand, either in person, by agent or by a receiver to be
appointed by a court, and without regard to the adequacy of any security for the Secured
Obligations, to take possession of the Collateral or any part thereof and to collect and receive
the rents, issues, profits, income and proceeds thereof. Taking possession of the Collateral shall
not cure or waive any Event of Default or notice thereof or invalidate any act done pursuant to
such notice. The rights, remedies and powers of any receiver appointed by a court shall be as
ordered by said court.
Any public or private sale or other disposition of the Collateral may be held at any office of
Collateral Agent, or at a Grantor’s place of business, or at any other place permitted by
applicable Law, and without the necessity of the Collateral being within the view of prospective
purchasers. With respect to any Collateral located within or subject to the jurisdiction of the
Gaming Authority, Collateral Agent may also request, in connection therewith, the Gaming Authority
to petition such local judicial or administrative tribunal or other authority as may be deemed
appropriate by Collateral Agent for the appointment of a supervisor or similar official to conduct
the normal gaming activities on the premises following the appointment of a receiver or similar
remedy. Collateral Agent may direct the order and manner of sale of the Collateral, or
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portions thereof, as it in its sole and absolute discretion may determine, and each Grantor expressly waives
any right to direct the order and manner of sale of any Collateral. Collateral Agent or any Person
on Collateral Agent’s behalf may bid and purchase at any such sale or other disposition. The net
cash proceeds resulting from the collection, liquidation, sale, lease or other disposition of the
Collateral shall be applied, first, to the expenses (including attorneys’ fees and disbursements)
of retaking, holding, storing, processing and preparing for sale or lease, selling, leasing,
collecting, liquidating and the like; and thereafter pro rata to the satisfaction of the Secured
Obligations (i) as among the Noteholders, pursuant to Section 6.06 of the Indenture and (ii) as
among the 13% Secured Notes Secured Parties, as set forth in the 13% Secured Notes Indenture. In making the determination and allocations required by this Section 10, the
Collateral Agent may conclusively rely upon information supplied by the 13% Secured Notes Secured
Parties or the trustee for the 13% Secured Notes as to the amounts of unpaid principal and interest
and other amounts outstanding with respect to the 13% Secured Notes Obligations and the Collateral
Agent shall have no liability to any of the Secured Parties for actions taken in reliance on such
information. All distributions made by the Collateral Agent pursuant to this Section 10
shall be final, and the Collateral Agent shall have no duty to inquire as to the application by the
13% Secured Notes Secured Parties or trustee for the 13% Secured Notes of any amounts distributed
to the 13% Secured Notes Secured Parties. Grantors and any other Person then obligated therefor
shall pay to Collateral Agent on written demand any deficiency with regard thereto which may remain
after such sale, disposition, collection or liquidation of the Collateral.
Unless the Collateral is perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market, Collateral Agent will send or otherwise make available to
Grantors, reasonable notice of the time and place of any public sale thereof or of the time on or
after which any private sale thereof is to be made. The requirement of sending reasonable notice
conclusively shall be met if such notice is mailed, first class mail, postage prepaid, to each
Grantor at its addresses designated below, at least ten days before the date of the sale, each
Grantor expressly waives any right to receive notice of any public or private sale of any
Collateral or other security for the Secured Obligations extent as expressly provided for in this
paragraph.
With respect to any Collateral consisting of securities, partnership interests, joint venture
interests, Investments or the like, and whether or not any of such Collateral has been effectively
registered under the Securities Act of 1933 or other applicable Laws, Collateral Agent may, in its
sole and absolute discretion, sell all or any part of such Collateral at private sale in such
manner and under such circumstances as Collateral Agent may deem necessary or advisable in order
that the sale may be lawfully conducted. Without limiting the foregoing, Collateral Agent may (i)
approach and negotiate with a limited number of potential purchasers, and (ii) restrict the
prospective bidders or purchasers to persons who will represent and agree that they are purchasing
such Collateral for their own account for investment and not with a view to the distribution or
resale thereof. In the event that any such Collateral is sold at private sale, each Grantor agrees
that if such Collateral is sold for a price which Collateral Agent in good faith believes to be
reasonable under the circumstances then existing, then
(a) the sale shall be deemed to be commercially reasonable in all respects,
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(b) Grantors shall not be entitled to a credit against the Secured Obligations in an
amount in excess of the purchase price, and
(c) Collateral Agent shall not incur any liability or responsibility to Grantors in
connection therewith, notwithstanding the possibility that a substantially higher price
might have been realized at a public sale. Each Grantor recognizes that a ready market may
not exist for such Collateral if it is not regularly traded on a recognized securities
exchange, and that a sale by Collateral Agent of any such Collateral for an amount
substantially less than a pro rata share of the fair market value of the issuer’s assets
minus liabilities may be commercially reasonable in view of the difficulties that may be
encountered in attempting to sell a large amount of such Collateral or Collateral that is
privately traded.
Upon consummation of any sale of Collateral hereunder, Collateral Agent shall have the right
to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold.
Each such purchaser at any such sale shall hold the Collateral so sold absolutely free from any
claim or right upon the part of any Grantor or any other Person, and each Grantor hereby waives (to
the extent permitted by applicable Laws) all rights of redemption, stay and 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. If the sale of all or any part of the Collateral is made on credit or for
future delivery, Collateral Agent shall not be required to apply any portion of the sale price to
the Secured Obligations until such amount actually is received by Collateral Agent, and any
Collateral so sold may be retained by Collateral Agent until the sale price is paid in full by the
purchaser or purchasers thereof.
Collateral Agent shall not incur any liability in case any such purchaser or purchasers shall
fail to pay for the Collateral so sold, and, in case of any such failure, the Collateral may be
sold again.
11. Attorney-in-Fact. Each Grantor hereby irrevocably nominates and appoints
Collateral Agent as its attorney-in-fact for the following purposes:
(a) following Collateral Agent’s request thereof and any Grantor’s failure to perform
within the time frame permitted by this Agreement or any other Collateral Document, to do
all acts and things which Collateral Agent may deem necessary or advisable to perfect and
continue perfected the security interests created by this Agreement or any other Collateral
Document and, upon the occurrence and during the continuance of an Event of Default, to
preserve, process, develop, maintain and protect the Collateral or Mortgaged Property;
(b) upon the occurrence and during the continuance of an Event of Default, to do any
and every act which any Grantor is obligated to do under this Agreement or any other
Collateral Document, at the expense of such Grantor and without any obligation to do so;
(c) following Collateral Agent’s request thereof and any Grantor’s failure to perform
within the time frame permitted by this Agreement, to prepare, sign, file and/or
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record, for such Grantor, in the name of such Grantor, any financing statement, application for
registration, or like paper, and to take any other action deemed by Collateral Agent
necessary or desirable in order to perfect or maintain perfected the security interests
granted hereby or any other Collateral Document; and
(d) upon the occurrence and during the continuance of an Event of Default, to execute
any and all papers and instruments and do all other things necessary or desirable to
preserve and protect the Collateral or Mortgaged Property and to protect Collateral Agent’s
security interests therein or liens thereon; provided, however, that Collateral Agent shall
be under no obligation whatsoever to take any of the foregoing actions, and,
absent bad faith or actual malice, Collateral Agent shall have no liability or
responsibility for any act taken or omission with respect thereto.
12. Costs and Expenses. Each Grantor agrees to pay to Collateral Agent all costs and
expenses (including, without limitation, attorneys’ fees and disbursements) incurred by Collateral
Agent in the enforcement or attempted enforcement of this Agreement or any other Collateral
Document, whether or not an action is filed in connection therewith, and in connection with any
waiver or amendment of any term or provision hereof. All advances, charges, costs and expenses,
including attorneys’ fees and disbursements, incurred or paid by Collateral Agent in exercising any
right, privilege, power or remedy conferred by this Agreement or any other Collateral Document
(including, without limitation, the right to perform any Secured Obligation of any Grantor under
the Note Documents, 13% Secured Notes or 13% Secured Notes Indenture), or in the enforcement or
attempted enforcement thereof, shall be secured hereby and shall become a part of the Secured
Obligations and shall be paid to Collateral Agent by Grantors, promptly following written demand.
13. Statute of Limitations and Other Laws. Until the Notes Obligations, other than
contingent indemnification obligations, shall have been paid and performed in full, the power of
sale and all other rights, privileges, powers and remedies granted to Collateral Agent hereunder
shall continue to exist and may be exercised by Collateral Agent at any time and from time to time
irrespective of the fact that any of the Secured Obligations may have become barred by any statute
of limitations. Each Grantor expressly waives the benefit of any and all statutes of limitation,
and any and all Laws providing for exemption of property from execution or for valuation and
appraisal upon foreclosure, to the maximum extent permitted by applicable Law.
14. Other Agreements. Nothing herein shall in any way modify or limit the effect of
terms or conditions set forth in any other security or other agreement executed by any Grantor or
in connection with the Secured Obligations, but each and every term and condition hereof shall be
in addition thereto. All provisions contained in the Indenture or any other Note Document that
apply to Note Documents generally are fully applicable to this Agreement and are incorporated
herein by this reference.
15. Understandings With Respect to Waivers and Consents. Each Grantor warrants and
agrees that each of the waivers and consents set forth herein are made after consultation with
legal counsel and with full knowledge of their significance and consequences, with the
understanding that events giving rise to any defense or right waived may diminish, destroy or
otherwise adversely affect rights which any Grantor otherwise may have against Collateral Agent
-17-
or
others, or against Collateral. If any of the waivers or consents herein are determined to be
contrary to any applicable Law or public policy, such waivers and consents shall be effective to
the maximum extent permitted by Law.
16. Termination. Upon payment of all Notes Obligations in full or upon satisfaction
of the terms and conditions of Section 11.04(a) of the Indenture, this Agreement shall terminate,
and Collateral Agent shall forthwith take all necessary action (at the request of and the expense
of Grantors) to release and reconvey the Collateral to Grantors, and shall deliver the Collateral
in its possession to Grantors including, without limitation, the executing and delivering releases
and satisfactions wherever required in form reasonably satisfactory to Grantors and
Collateral Agent, and the 13% Secured Notes Obligations shall no longer be secured hereby.
This Agreement shall terminate with respect to the 13% Secured Notes Secured Parties in the event
the 13% Secured Notes Obligations are no longer required to be secured hereby as a result of the
release of the Lien on the Collateral under the 13% Secured Notes Indenture.
17. Release of Collateral. The Liens on the Collateral under this Agreement shall be
released upon the terms and conditions of Sections 11.04 and 11.05 of the Indenture. Any release
of Collateral shall comply with Section 11.08 of the Indenture.
18. Certain Regulatory Requirements. At any time after the occurrence and during the
continuance of an Event of Default, each Grantor shall take all lawful action that the Collateral
Agent may reasonably request in the exercise of its rights and remedies, which include the right to
require any Grantor to transfer or assign any Gaming Collateral held by it to any party or parties
to facilitate an arms’ length public or private sale for the benefit of the Collateral Agent. In
furtherance of this right, each Grantor shall (i) cooperate fully with the Collateral Agent in
obtaining all approvals and consents from the Gaming Authority and each other Governmental
Authority and from any third parties that the Collateral Agent may deem necessary or advisable to
accomplish any transfer or assignment of the Gaming Collateral, and (ii) prepare, execute and file
with the Gaming Authority and any other Governmental Authority any application, request for
consent, certificate or instrument that the Collateral Agent may deem necessary or advisable to
accomplish any such transfer or assignment. If any Grantor fails to execute such applications,
requests for consent, certificates or instruments, the clerk of any court that has jurisdiction
over the Note Documents may, upon an ex parte request by the Collateral Agent, execute and file the
same on behalf of such Grantor for purposes of placing such request before the Gaming Authority,
except to the extent as would not be permissible under applicable Law.
To enforce the provisions of Section 10, the Collateral Agent is authorized to request
the consent or approval of the Gaming Authority or any other Governmental Authority to a voluntary
or an involuntary transfer of control of any Grantor or the voluntary or involuntary assignment of
any Gaming Collateral held by such Grantor. In connection with the exercise of its remedies under
this Agreement, the Collateral Agent may obtain the appointment of a trustee or receiver to assume
control of any Grantor, subject to any required prior approval of the Gaming Authority or any other
Governmental Authority. Such trustee or receiver shall have all rights and powers provided to it
by law or by court order or provided to the Collateral Agent under this Agreement.
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19. Acknowledgement by Grantors. Each Grantor acknowledges that the approval of the
Gaming Authority and each other appropriate Governmental Authority to the assignment of the Gaming
Collateral is integral to the Collateral Agent’s realization of the value of the Collateral, that
there is no adequate remedy at law for failure by any Grantor to comply with the provisions of
Section 18 and that such failure could not be adequately compensable in damages.
Therefore, each Grantor agrees that the provisions of Section 18 may be specifically
enforced, without any requirement to post bond (such rights being fully waived by each Grantor) and
without regard to the adequacy of any remedies available at law (the defense of the adequacy of
remedies at law being fully waived by each Grantor).
20. Waivers and Consents. Each Grantor acknowledges that the Liens created or granted
herein will or may secure obligations of Persons other than Grantors and, in full recognition of
that fact, each Grantor consents and agrees that Collateral Agent may, at any time and from time to
time, without notice or demand, and without affecting the enforceability or security hereof:
(a) supplement, modify, amend, extend, renew, accelerate, or otherwise change the time
for payment or the terms of the Notes Obligations or any part thereof, including any
increase or decrease of the rate(s) of interest thereon;
(b) supplement, modify, amend or waive, or enter into or give any agreement, approval
or consent with respect to, the Notes Obligations or any part thereof or any of the Notes
Documents or any additional security or guaranties, or any condition, covenant, default,
remedy, right, representation or term thereof or thereunder;
(c) accept new or additional instruments, documents or agreements in exchange for or
relative to any of the Note Documents or the Notes Obligations or any part thereof;
(d) accept partial payments on the Notes Obligations;
(e) receive and hold additional security or guaranties for the Notes Obligations or any
part thereof;
(f) release, reconvey, terminate, waive, abandon, subordinate, exchange, substitute,
transfer and enforce any security or guaranties, and apply any security and direct the order
or manner of sale thereof as Collateral Agent in its sole and absolute discretion may
determine;
(g) release any Person or any guarantor from any personal liability with respect to the
Notes Obligations or any part thereof;
(h) settle, release on terms satisfactory to Collateral Agent or by operation of
applicable laws or otherwise liquidate or enforce any Notes Obligations and any security or
guaranty therefor in any manner, consent to the transfer of any security and bid and
purchase at any sale; and
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(i) consent to the merger, change or any other restructuring or termination of the
corporate or other existence of Issuer or any other Person, and correspondingly restructure
the Notes Obligations, and any such merger, change, restructuring or termination shall not
affect the liability of any Grantor or the continuing existence of any Lien hereunder, under
any other Note Document to which such Grantor is a party or the enforceability hereof or
thereof with respect to all or any part of the Notes Obligations;
provided, however, that the requisite written consent of the 13% Secured Notes Secured Parties
pursuant to the 13% Secured Notes Indenture shall be required with respect to any release, waiver,
amendment or other modification of this Agreement that would materially and adversely affect the
rights of the 13% Secured Notes Secured Parties to equally and ratably share in the security
provided for herein or any other Collateral Document with respect to the Collateral or the
Mortgaged Property. Except as set forth in this Section 20, the 13% Secured Notes Secured
Parties shall not have any rights to approve any release, waiver, amendment, modification, charge,
discharge or termination with respect to this Agreement or any other Collateral Document.
Upon the occurrence of and during the continuance of any Event of Default, Collateral Agent
may enforce this Agreement or any other Collateral Document independently of any other remedy or
security Collateral Agent at any time may have or hold in connection with the Secured Obligations,
and it shall not be necessary for Collateral Agent to marshal assets in favor of any Grantor or any
other Person or to proceed upon or against and/or exhaust any other security or remedy before
proceeding to enforce this Agreement or any other Collateral Document. Each Grantor expressly
waives any right to require Collateral Agent to marshal assets in favor of any Grantor, or any
other Person or to proceed against any other Person or any collateral provided by any other Person,
and agrees that Collateral Agent may proceed against any Person and/or collateral in such order as
it shall determine in its sole and absolute discretion. Collateral Agent may file a separate
action or actions against any Grantor, whether or not action is brought or prosecuted with respect
to any other security or against Issuer or any other Person, or whether or not any other Person is
joined in any such action or actions. Each Grantor agrees that Collateral Agent and Issuer and any
Person may deal with each other in connection with the Secured Obligations or otherwise, or alter
any contracts or agreements now or hereafter existing between any of them, in any manner
whatsoever, all without in any way altering or affecting the validity of, or the pledge or security
interest granted or created by, this Agreement. Collateral Agent’s rights hereunder or any other
Collateral Document shall be reinstated and revived, and the enforceability of this Agreement or
any other Collateral Document shall continue, with respect to any amount at any time paid on
account of the Secured Obligations which thereafter shall be required to be restored or returned by
Collateral Agent upon the bankruptcy, insolvency or reorganization of any other Person or otherwise
(and whether by litigation, settlement, demand or otherwise), all as though such amount had not
been paid. Each Grantor agrees that the Liens created or granted herein and any other Collateral
Document and the enforceability of this Agreement and any other Collateral Document at all times
shall remain effective to secure the full amount of all the Secured Obligations including, without
limitation, the amount of all loans and interest thereon at the rates provided for in the
Indenture, the Notes, the 13% Secured Notes Indenture and the 13% Secured Notes, even though the
Secured Obligations, including any part thereof or any other security or guaranty therefor, may be
or hereafter may become invalid or otherwise unenforceable as against Issuer or any other Person
and whether or not Issuer or any
-20-
other Person shall have any personal liability with respect thereto. Each Grantor expressly
waives any and all defenses now or hereafter arising or asserted by reason of
(a) any disability or other defense of Issuer or any other Person with respect to the
Secured Obligations,
(b) the unenforceability or invalidity of any security or guaranty for the Secured
Obligations or the lack of perfection or continuing perfection or failure or subordination
of priority of any security for the Secured Obligations,
(c) the cessation for any cause whatsoever of the liability of Issuer (other than by
reason of the full payment and performance of all Secured Obligations),
(d) any failure of Collateral Agent to marshal assets in favor of Grantors or any other
Person,
(e) except as otherwise provided in this Agreement, any failure of Collateral Agent to
give notice of sale or other disposition of collateral to Grantors or any other Person or
any defect in any notice that may be given in connection with any sale or disposition of
collateral,
(f) except as otherwise provided in this Agreement or any other Collateral Document,
any failure of Collateral Agent to comply with applicable Laws in connection with the sale
or other disposition of any Collateral or other security for any Secured Obligation,
including, without limitation, any failure of Collateral Agent to conduct a commercially
reasonable sale or other disposition of any Collateral or other security for any Secured
Obligation,
(g) any act or omission of Collateral Agent or others that directly or indirectly
results in or aids the discharge or release of Issuer or any other Person or the Secured
Obligations or any other security or guaranty therefor by operation of Law or otherwise,
(h) any Law which provides that the obligation of a surety or guarantor must neither be
larger in amount nor in other respects more burdensome than that of the principal or which
reduces a surety’s or guarantor’s obligation in proportion to the principal obligation,
(i) any failure of Collateral Agent to file or enforce a claim in any bankruptcy or
other proceeding with respect to any Person,
(j) the election by Collateral Agent, in any bankruptcy proceeding of any Person, of
the application or non-application of Section 1111(b)(2) of the United States Bankruptcy
Code,
(k) any extension of credit or the grant of any Lien under Xxxxxxx 000 xx xxx Xxxxxx
Xxxxxx Bankruptcy Code,
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(l) any use of cash collateral under Section 363 of the United States Bankruptcy Code,
(m) any agreement or stipulation with respect to the provision of adequate protection
in any bankruptcy proceeding of any Person,
(n) the avoidance of any Lien in favor of Collateral Agent for any reason,
(o) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt,
liquidation or dissolution proceeding commenced by or against any Person, including any
discharge of, or bar or stay against collecting, all or any of the Secured Obligations (or
any interest thereon) in or as a result of any such proceeding,
(p) to the extent permitted by applicable Law, the benefits of any form of one-action
rule under any applicable Law, or
(q) any action taken by Collateral Agent that is authorized by this Section 20
or any other provision of any Notes Document.
Until all of the Notes Obligations have been paid and performed in full, Grantors shall have
no right of subrogation, contribution, reimbursement or indemnity, and each Grantor expressly
waives any right to enforce any remedy that Collateral Agent now has or hereafter may have against
any other Person and waives the benefit of, or any right to participate in, any other security now
or hereafter held by Collateral Agent. Each Grantor waives all rights and defenses arising out of
an election of remedies by Collateral Agent, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for the Secured Obligations has destroyed
Grantors’ rights of subrogation and reimbursement against the principal. Each Grantor expressly
waives all setoffs and counterclaims and all presentments, demands for payment or performance,
notices of nonpayment or nonperformance, protests, notices of protest, notices of dishonor and all
other notices or demands of any kind or nature whatsoever with respect to the Secured Obligations,
and all notices of acceptance of this Agreement or any other Collateral Document or of the
existence, creation or incurring of new or additional Secured Obligations.
The obligations of the Collateral Agent to the 13% Secured Notes Secured Parties hereunder and
under the other Collateral Documents shall be limited solely to (i) holding the Collateral and the
Mortgaged Property for the benefit of the 13% Secured Notes Secured Parties for so long as (A) any
Notes Obligations remain outstanding and (B) any 13% Secured Notes Obligations are secured by such
Collateral and the Mortgaged Property and (ii) distributing any proceeds received by the Collateral
Agent from the sale, collection or realization of the Collateral and the Mortgaged Property to the
13% Secured Notes Secured Parties in respect of the 13% Secured Notes Obligations in accordance
with the terms of this Agreement. The 13% Secured Notes Secured Parties shall not be entitled to
exercise (or direct the Collateral Agent to exercise) any rights or remedies hereunder with respect
to the 13% Secured Notes Obligations, including without limitation the right to enforce the
security interest in the Collateral and the Mortgaged Property, request any action, institute
proceedings, give any instructions, make any election, give any notice to account debtors, make
collections, sell or otherwise foreclose on any portion of the Collateral and the Mortgaged
Property or execute any amendment, supplement, or acknowledgment
-22-
hereof or of any other Collateral Document. This Agreement shall not create any
liability of the Collateral Agent or the Noteholders to any of the 13% Secured Notes Secured
Parties by reason of actions taken with respect to the creation, perfection or continuation of the
security interest on the Collateral and the Mortgaged Property, actions with respect to the
occurrence of an Event of Default, actions with respect to the foreclosure upon, sale, release, or
depreciation of, or failure to realize upon, any of the Collateral and the Mortgaged Property or
action with respect to the collection of any claim for all or any part of the Secured Obligations
from any account debtor, guarantor or any other party or the valuation, use or protection of the
Collateral and the Mortgaged Property. By acceptance of the benefits under this Agreement and the
other Collateral Documents, the 13% Secured Notes Secured Parties will be deemed to have
acknowledged and agreed that the provisions of the preceding sentence are intended to induce the
Noteholders to permit such persons to be Secured Parties under this Agreement and certain of the
other Collateral Documents and are being relied upon by the Noteholders as consideration therefor.
The Collateral Agent shall not be required to ascertain or inquire as to the performance by the
Issuer or any other obligor of the 13% Secured Notes Obligations.
Notwithstanding anything to the contrary herein, nothing in this Agreement shall or shall be
construed to (i) result in the security interest in the Collateral and the Mortgaged Property
securing the 13% Secured Notes Obligations less than equally and ratably with the Notes Obligations
pursuant to the 13% Secured Notes Indenture to the extent required or (ii) modify or affect the
rights of the 13% Secured Notes Secured Parties to receive the pro rata share specified in
Section 10 of any proceeds of any collection or sale of Collateral and the Mortgaged
Property.
The parties hereto agree that the 13% Secured Notes Obligations and the Notes Obligations are,
and will be, equally and ratably secured with each other by the Liens on the Collateral and the
Mortgaged Property, and that it is their intention to give full effect to the equal and ratable
provisions of the 13% Secured Notes Indenture, as in effect on the date hereof. To the extent that
the rights and benefits herein or in any other Collateral Document conferred on the 13% Secured
Notes Secured Parties shall be held to exceed the rights and benefits required so to be conferred
by such provisions, such rights and benefits shall be limited so as to provide such 13% Secured
Notes Secured Parties only those rights and benefits that are required by such provisions. Any and
all rights not herein expressly given to the 13% Secured Notes Secured Parties are expressly
reserved to the Collateral Agent and the Noteholders.
21. WAIVER OF JURY TRIAL. EACH GRANTOR AND COLLATERAL AGENT HEREBY EXPRESSLY WAIVE
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS
AGREEMENT, ANY NOTE DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS
OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT, THE INDENTURE, THE NOTES, OR
THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH GRANTOR AND COLLATERAL AGENT HEREBY
AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT EACH GRANTOR
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OR COLLATERAL AGENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
22. CONSENT TO JURISDICTION: CHOICE OF FORUM.
(a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER NOTE DOCUMENT
MAY BE BROUGHT IN THE COURTS IN THE STATE OF NEVADA OR OF THE UNITED STATES FOR THE DISTRICT OF
NEVADA, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH GRANTOR HEREBY IRREVOCABLY ACCEPTS
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. EACH GRANTOR HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS
LACK PERSONAL JURISDICTION OVER EACH GRANTOR, AND AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL ACTION
OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER NOTE DOCUMENTS BROUGHT IN ANY OF THE
AFOREMENTIONED COURTS, THAT SUCH COURTS LACK PERSONAL JURISDICTION OVER EACH GRANTOR. EACH GRANTOR
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO EACH GRANTOR AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH
SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH GRANTOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR
CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER THE NOTE DOCUMENTS THAT SERVICE OF
PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE
ADMINISTRATIVE AGENT, ANY LENDER OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER
PERMITI ED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY GRANTOR IN ANY
OTHER JURISDICTION.
(b) EACH GRANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT OR THE NOTE DOCUMENTS BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (A) ABOVE AND
HEREBY FURTHER IRREVOCABLY, TO THE EXTENT PERMITTED BY APPLICABLE LAW, WAIVES AND AGREES NOT TO
PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
23 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEVADA.
-24-
24. Additional Powers and Authorization. The Collateral Agent has been appointed as
the Collateral Agent hereunder pursuant to the Indenture and shall be entitled to the benefits of
the Indenture and the other Note Documents. By accepting the benefits of this Agreement and the
other Collateral Documents, each 13% Secured Notes Secured Party hereby appoints the Collateral
Agent, to serve as collateral agent of the 13% Secured Notes Secured Parties under each of this
Agreement and the other Collateral Documents on the terms set forth herein and in the other
Collateral Documents. Notwithstanding anything contained herein to the contrary, the Collateral
Agent may employ agents, trustees, or attorneys-in-fact and may vest any of them with any property
(including, without limitation, the Collateral and the Mortgaged Property), title, right or power
deemed necessary for the purposes of such appointment.
25. Notices. All notices, requests and demands to or upon Collateral Agent or
Grantors hereunder shall be effected in the manner provided for in Section 12.01 of the Indenture;
provided that any such notice, request or demand to or upon any Grantor shall be addressed to such
Grantor at its notice address set forth on the signature page hereto.
[signature page follows]
-25-
IN WITNESS WHEREOF, Each Grantor has executed this Agreement by its duly authorized officer as
of the date first written above.
“Grantors” | ||||||
BELLAGIO, LLC, a Nevada limited liability company | ||||||
By: | /s/ Xxxx X. XxXxxxx | |||||
Title: Assistant Secretary | ||||||
THE MIRAGE CASINO-HOTEL, a Nevada corporation | ||||||
By: | /s/ Xxxx X. XxXxxxx | |||||
Title Assistant Secretary | ||||||
Address: c/o MGM MIRAGE 0000 Xxx Xxxxx Xxxxxxxxx Xxxxx Xxx Xxxxx, Xxxxxx 00000 |
ACCEPTED AND AGREED
AS OF THE DATE FIRST
ABOVE WRITTEN:
AS OF THE DATE FIRST
ABOVE WRITTEN:
“Collateral Agent”
U.S. Bank National Association
By:
|
/s/ Xxxxxxx X. Xxxxxxxxxx
Title: Vice President |