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EXHIBIT 10.2
SECURITY AGREEMENT
AGREEMENT made this 21st day of May, 1999, between CONCORDE CRIPPLE CREEK,
INC., a Colorado corporation ( the "DEBTOR") and BNC NATIONAL BANK OF MINNESOTA
(herein, with its participants, successors and assigns, called the "Lender"), as
secured party.
All capitalized terms not otherwise defined herein, shall have the meaning
set forth in that certain Loan Agreement of even date herewith by and among the
Debtor and the Lender (the "Loan Agreement").
For good and valuable consideration, each Debtor hereby jointly and
severally agrees for the benefit of the Lender as follows:
1.01 Debtor hereby grants the Lender a security interest (collectively
referred to as the "Security Interests") in the property described below, as
security for the payment and performance of each and every debt, liability and
obligation of every type and description which Debtor may now or at any time
hereafter owe to the Lender (whether such debt, liability or obligation now
exists or is hereafter created or incurred, whether it arises in a transaction
involving the Lender alone or in a transaction involving other creditors of
Debtor, and whether it is direct or indirect, due or to become due, absolute or
contingent, primary or secondary, liquidated or unliquidated, or sole, joint,
several or joint and several, and including specifically, but not limited to,
all indebtedness of Debtor arising under any loan or credit agreement or
guaranty between Debtor and the Lender, whether now in effect or hereafter
entered into; all such debts, liabilities and obligations are herein
collectively referred to as the "Obligations"). The Security Interests shall
attach to the following property of Debtor, and all products and proceeds
thereof, whether now owned or hereafter acquired (collectively, the
"Collateral"):
INVENTORY: All inventory of Debtor, whether now owned or hereafter
acquired, whether consisting of whole goods, spare parts or components,
supplies or materials, whether acquired, held or furnished for sale, for
lease or under service contracts or for manufacture or processing, and
wherever located.
RECEIVABLES: Each and every right of Debtor to the payment of money,
whether such right to payment now exists or hereafter arises, whether such
right to payment arises out of a sale, lease or other disposition of goods
or other property, out of a rendering of services, out of a loan, out of
the overpayment of taxes or other liabilities, or any other transaction or
event, whether such right to payment is created, generated or earned by
Debtor or by some other person who subsequently transfers his interest to
Debtor, whether such right to payment is or is not already earned by
performance, and howsoever such right to payment may be evidenced, together
with all other rights and interests (including all liens and security
interests) which Debtor may at any time have by law or agreement against
any account debtor or other person obligated to make any such payment or
against any property of such account debtor or other person; all including,
but not limited to, all present and future accounts, contract rights,
chattel papers, bonds, notes and other debt instruments, and rights to
payment in the nature of general intangibles.
FINANCIAL ASSETS: All securities, securities entitlements, investment
property, financial assets and certificates of deposit of Debtor, and all
funds of Debtor on deposit with and all property in the possession of the
Secured Party or any other depository institution, each whether now owned
or hereafter acquired.
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EQUIPMENT: All equipment of Debtor, whether now owned or hereafter
acquired, including all present and future gaming equipment, machinery,
vehicles, furniture, fixtures, manufacturing equipment, shop equipment,
office and recordkeeping equipment, parts, tools, supplies and all other
goods (except inventory) used or bought for use by Debtor for any business
or enterprise and including specifically (without limitation) the goods
described in any equipment schedule or list herewith or hereafter furnished
to the Lender by Debtor, all accessions thereto, all substitutions and
replacements thereof, and all like or similar property now owned or
hereafter acquired by Debtor.
GENERAL INTANGIBLES: All general intangibles of Debtor whether now owned or
hereafter acquired, including (without limitation) all present and future
patents, patent applications, copyrights, trademarks, trade names, trade
secrets, customer or supplier lists and contracts, manuals, operating
instructions, permits, franchises, the right to use Debtor's name, and the
good will of Debtor's business.
Together with all substitutions and replacements for and products and
proceeds of any of the foregoing property, and in the case of all tangible
Collateral, together with (i) all accessories, attachments, parts, equipment,
accessions and repairs now or hereafter attached to or used in connection with
any such goods, and (ii) all warehouse receipts, bills of lading and other
documents of title now or hereafter covering such goods.
1.02 Debtor represents, warrants and agrees that:
(a) Debtor has (or will have at the time it acquires rights in Collateral
hereafter arising) and will maintain so long as the Security Interests may
remain outstanding, absolute title to each item of Collateral and all proceeds
thereof, free and clear of all interests, liens, attachments, encumbrances and
security interests except the Security Interests as provided herein, and except
as the Lender may otherwise agree in writing. Debtor will defend the Collateral
against all claims or demands of all persons (other than the Lender) claiming
the Collateral or any interest therein, Debtor will not sell or otherwise
dispose of the Collateral, without the Lender's prior written consent.
(b) Debtor does business solely under its own name and the trade names (if
any) set forth below (or if none are listed, Debtor warrants that it does not
have any trade names). The sole place of business and chief executive office of
Debtor is located at the address set forth below and all of Debtor's records
relating to its business or the Collateral are kept at that location. Debtor
will not permit any tangible Collateral or any records pertaining to Collateral
to be located in any state or area in which, in the event of such location, a
financing statement covering such Collateral would be required to be, but has
not in fact been, filed in order to perfect the Security Interests. Debtor will
not change its name or the location of its place of business, without prior
written notice to the Lender.
(c) None of the Collateral is or will become a fixture on real estate,
unless a sufficient fixture filing is in effect with respect thereto.
(d) Each right to payment and each instrument, document, chattel paper and
other agreement constituting or evidencing Collateral is (or, in the case of all
future Collateral, will be when arising or issued) the valid, genuine and
legally enforceable obligation, subject to no defense, setoff or counterclaim,
of the account debtor or other obligor named therein or in Debtor's records
pertaining thereto as being obligated to pay such obligation. Debtor will not
agree to modify, amend, subordinate, cancel or terminate the obligation of any
such account debtor or other obligor, without the Lender's prior written
consent.
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(e) Debtor will keep all tangible Collateral in good repair, working order
and condition, normal depreciation excepted, and will, from time to time,
replace any worn, broken or defective parts.
(f) Debtor will promptly pay all taxes and other governmental charges
levied or assessed upon or against any Collateral or upon or against the
creation, perfection or continuance of the Security Interests.
(g) Debtor will keep all Collateral free and clear of all security
interests, liens and encumbrances except the Security Interests provided herein
and except other security interests approved in writing by the Lender.
(h) Debtor will at all reasonable times permit the Lender or its
representatives to examine or inspect any Collateral, or any evidence of
Collateral, wherever located, and Debtor will at any time and from time to time
send requests for verification of accounts or notices of assignment to account
debtors and other obligors.
(i) Debtor will keep accurate and complete records pertaining to the
Collateral and pertaining to Debtor's business and financial condition, prepared
on the basis of generally accepted accounting principles consistently applied;
will submit to the Lender such weekly, monthly and other periodic reports
concerning the Collateral and Debtor's business and financial condition as the
Lender may from time to time request; and will permit the Lender, or its
employees, accountants, attorneys or agents, to examine and copy any or all of
its records at any time during Debtor's business hours.
(j) Debtor will promptly notify the Lender of any loss of or material
damage to any Collateral or of any substantial adverse change, known to Debtor,
in any Collateral or the prospect of payment thereof.
(k) Upon request by the Lender, whether such request is made before or
after the occurrence of an Event of Default, Debtor will promptly deliver to the
Lender in pledge all instruments, documents and chattel papers constituting
Collateral, duly endorsed or assigned by Debtor.
(l) Debtor will at all times keep its business all tangible Collateral
insured against risks of fire (including so-called extended coverage), theft,
and such other risks and in such amounts as the Lender may reasonably request,
with a lender's loss payee endorsement to the Lender to the extent of its
interest.
(m) Debtor will pay or reimburse the Lender on demand for all costs of
collection of any of the Obligations and all other out-of-pocket expenses
(including in each case all reasonable attorneys' fees and legal expenses)
incurred by the Lender in connection with the creation, perfection, protection,
satisfaction, foreclosure or enforcement of the Security Interests or the
creation, continuance or enforcement of this Agreement or any or all of the
Obligations.
(n) Debtor will use and keep the Collateral, and will require that others
use and keep the Collateral, only for lawful purposes, without violation of any
federal, state or local law, statute or ordinance.
(o) Debtor represents and warrants that the description, serial number,
and location of each item of the Equipment (if any) covered hereby is accurately
set forth on the equipment list attached as Schedule 1 to this Agreement, and
that each item of such Equipment is currently located in the state of South
Dakota unless another location is noted thereon. Debtor agrees to provide the
Lender with an updated list of each item of Equipment upon request by the
Lender. Debtor agrees to notify the Lender in
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writing before it changes the location of it chief executive office or the place
where it keeps its books and records. The Debtor agrees not to remove any
Equipment from where it is currently located without the Lender's prior written
consent and until all necessary filings have been made and other actions taken
to continue the perfection of the Lender's Security Interest in such new
location. The Lender's Security Interest attaches to all the Collateral wherever
located, and the failure of Debtor to inform the Lender of the location of any
item or items of Collateral shall not impair the Lender's Security Interest
therein.
(p) Debtor from time to time will execute and deliver or endorse any and
all instruments, documents, conveyances, assignments, security agreements,
financing statements and other agreements and writings which the Lender may
reasonably request in order to secure, protect, perfect or enforce the Security
Interests or the rights of the Lender under this Agreement (but any failure to
request or assure that Debtor executes, delivers or endorses any such item shall
not affect or impair the validity, sufficiency or enforceability of this
Agreement and the Security Interests, regardless of whether any such item was or
was not executed, delivered or endorsed in a similar context or on a prior
occasion).
If Debtor at any time fails to perform or observe any of the foregoing
agreements, and if such failure shall continue for a period of ten (10) calendar
days after the Lender gives Debtor written notice thereof (or in the case of the
agreements contained in clauses (g) and (1) above, immediately upon the
occurrence of such failure, without notice or lapse of time), the Lender may,
but need not, perform or observe such agreement on behalf and in the name, place
and stead of Debtor (or, at the Lender's option, in the Lender's name) and may,
but need not, take any and all other actions which the Lender may reasonably
deem necessary to cure or correct such failure (including, without limitation,
the payment of taxes, the satisfaction of security interests, liens or
encumbrances, the performance of obligations owed to account debtors or other
obligors, the procurement and maintenance of insurance, the execution of
assignments, security agreements and financing statements, and the endorsement
of instruments); and Debtor shall thereupon pay to the Lender on demand the
amount of all monies expended and all costs and expenses (including reasonable
attorneys' fees and legal expenses) incurred by the Lender in connection with or
as a result of the performance or observance of such agreements or the taking of
such action by the Lender, together with interest thereon from the date expended
or incurred at the highest lawful rate then applicable to any of the
Obligations. To facilitate the performance or observance by the Lender of such
agreements to Debtor, Debtor hereby irrevocably appoints the Lender, or the
delegate of the Lender, acting alone, as the attorney-in-fact of Debtor with the
right (but not the duty) from time to time to create, prepare, complete,
execute, deliver, endorse or file in the name and on behalf of Debtor any and
all instruments, documents, assignments, security agreements, financing
statements, applications for insurance and other agreements and writings
required to be obtained, executed, delivered or endorsed by Debtor under this
Section 1.02.
1.03 With respect to any or all rights to payment constituting Collateral
the Lender may at any time (either before or after the occurrence of an Event of
Default) notify any account debtor or other person obligated to pay the amount
due that such right to payment has been assigned or transferred to the Lender
for security and shall be paid directly to the Lender. Debtor will join in
giving such notice, if the Lender so requests. At any time after Debtor or the
Lender gives such notice to an account debtor or other obligor, the Lender may,
but need not, in the Lender's name or in Debtor's name, (i) demand, xxx for,
collect or receive any money or property at any time payable or receivable on
account of, or securing, any such right to payment, or grant any extension to,
make any compromise or settlement with or otherwise agree to waive, modify,
amend or change the obligations (including collateral obligations) of any such
account debtor or other obligor; and (ii) as agent and attorney-in-fact of
Debtor notify the United States Postal Service to change the address for
delivery of Debtor's mail to any address designated by the Lender and otherwise
intercept, receive, open and dispose of Debtor's mail, applying all Collateral
as permitted under this Agreement or the Loan Agreement and holding all other
mail for Debtor's account or forwarding such mail to Debtor's last known
address.
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1.04 As additional security for the payment and performance of the
Obligations, Debtor hereby assigns to the Lender any and all monies (including,
without limitation, proceeds of insurance and refunds of unearned premiums) due
or to become due under, and all other rights of Debtor with respect to, any and
all policies of insurance now or at any time hereafter covering the Collateral
or any evidence thereof or any business records or valuable papers pertaining
thereto, and Debtor hereby directs the issuer of any such policy to pay all such
monies directly to the Lender, At any time, whether before or after the
occurrence of any Event of Default, the Lender may (but need not), in the
Lender's name or in Debtor's name, execute and deliver proof of claim, receive
all such monies, endorse checks and other instruments representing payment of
such monies, and adjust, litigate, compromise or release any claim against the
issuer of any such policy.
1.05 Upon the occurrence of any Event of Default and at any time
thereafter, the Lender may exercise one or more of the following rights and
remedies: (i) declare all unmatured Obligations to be immediately due and
payable, and the same shall thereupon be immediately due and payable, without
presentment or other notice or demand (but the Lender expressly reserves the
right to demand payment of any Obligation payable on demand, at any time,
whether or not an Event of Default has occurred or is continuing); (ii) exercise
and enforce any and all rights and remedies available upon default to a secured
party under the Uniform Commercial Code, including, without limitation, the
right to take possession of Collateral, or any evidence thereof, proceeding
without judicial process or by judicial process (without a prior hearing or
notice thereof, which Debtor hereby expressly waives) and the right to sell,
lease or otherwise dispose of any or all of the Collateral, and in connection
therewith Debtor will on demand assemble the collateral and make it available to
the Lender at a place to be designated by the Lender which is reasonably
convenient to both parties, and the Lender shall have the right to take
immediate possession of the Collateral and may enter any of the premises of
Debtor or wherever the Collateral is located with or without process of law and
to keep and store the same on said premises until sold (and if said premises be
the property of Debtor, Debtor agrees not to charge the Lender or a purchaser
from the Lender for storage thereof for a period of at least 90 days). If notice
to Debtor of any intended disposition of Collateral or any other intended action
is required by law in a particular instance, such notice shall be deemed
commercially reasonable if given (in the manner specified in Section 1.07) at
least ten (10) calendar days prior to the date of intended disposition or other
action; (iii) without notice or demand offset any indebtedness the Lender or any
of its participants, successors or assigns then owes to Debtor, whether or not
then due, against any Obligation then owed to the Lender or any of its
participants, successors or assigns by Debtor, whether or not then due; and (iv)
exercise or enforce any and all other rights or remedies available by law or
agreement against the Collateral, against Debtor, or against any other person or
property. The proceeds of all sales and collections will be applied first to all
reasonable expenses of retaking, holding, preparing for sale, selling and the
like, including attorneys' fees and legal expenses (whether or not suit is
commenced) including, without limitation, attorneys' fees and legal expenses
incurred in connection with any appeal of a lower court's order or judgment and
second to the payment (in whatever order the Lender elects) of all other
Obligations chargeable to Debtor in connection with the loan transactions with
Lender. Subject to the provisions of the Commercial Code, the Lender will return
any excess to the Debtor and the Debtor shall remain liable to the Lender for
any deficiency.
1.06 This Agreement does not contemplate a sale of accounts, contract
rights or chattel paper, and, as provided by law, Debtor is entitled to any
surplus and shall remain liable for any deficiency. The Lender's duty of care
with respect to Collateral in its possession (as imposed by law) shall be deemed
fulfilled in the selection of the bailee or other third person, and the Lender
need not otherwise preserve, protect, insure or care for any Collateral. The
Lender shall not be obligated to preserve any rights Debtor may have against
prior parties, to realize on the Collateral at all or in any particular manner
in order or to apply any cash proceeds of the Collateral in any particular order
of application.
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1.07 This Agreement can be waived, modified, amended, terminated or
discharged, and the Security Interests can be released, only explicitly in a
writing signed by the Lender. A waiver so signed shall be effective only in the
specific instance and for the specific purpose given. Mere delay or failure to
act shall not preclude the exercise or enforcement of any rights or remedies
available to the Lender. All rights and remedies of the Lender shall be
cumulative and may be exercised singularly in any order or sequence, or
concurrently, at the Lender's option, and the exercise or enforcement of any
such right or remedy shall neither be a condition to nor bar the exercise or
enforcement of any other. All notices to be given to Debtor shall be deemed
sufficiently given if delivered or mailed by registered, certified or ordinary
mail, postage prepaid, to Debtor at its address set forth below or at its most
recent address shown on the Lender's records.
1.08 As used herein, the term "Event of Default" shall have the meaning
assigned to such term in the Loan Agreement.
1.09 The Lender and its participants, if any, are not partners or joint
venturers, and the Lender shall not have any liability or responsibility for any
obligation, act or omission of any of its participants.
1.10 This Agreement, and the Security Interests granted hereby, shall be
binding upon Debtor, its successors and assigns, and shall inure to the benefit
of and be enforceable by the Lender and each and all of its participants,
successors and assigns, and shall be effective when executed by Debtor and
delivered to the Lender whether or not this Agreement is executed by the Lender.
All rights and powers specifically conferred upon the Lender may be transferred
or delegated to any of the participants, successors or assigns of the Lender.
Except to the extent otherwise required by law, this Agreement and the
transaction evidenced hereby shall be governed by the substantive laws of the
state in which this Agreement is accepted by the Lender. If any provision 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. All representations and warranties
contained in this Agreement or in any other agreement between Debtor and the
Lender shall survive the execution, delivery and performance of this Agreement
and the creation and payment of the Obligations. Debtor waives notice of the
acceptance of this Agreement by the Lender.
IN WITNESS WHEREOF, this Security Agreement has been duly executed and
delivered by the proper officers thereunto duly authorized on the day and year
first above written.
CONCORDE CRIPPLE CREEK, INC.
By: /s/ Xxxxx X. Xxxx
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TRADE NAMES: Its: President
Accepted at Minneapolis, Minnesota
on May 21, 1999
BNC NATIONAL BANK OF MINNESOTA
By: /s/ Xxxxx X. Xxxx
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Its: Vice President
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