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EXHIBIT 10.6
PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT (this "Agreement"), dated as of
[__________ ___], 1998, is entered into by GCI LAKES, INC., a Minnesota
corporation ("Debtor"), and [____________], a [_____________], as Trustee under
the Trust Agreement described below ("Trustee"), in favor of Grand Casinos,
Inc., a Minnesota corporation ("Secured Party").
RECITALS
A. Debtor and Secured Party are parties to a Distribution Agreement, dated
as of [__________ ___], 1998, and certain ancillary agreements thereto
(collectively, the "Distribution Agreement").
B. Debtor, Secured Party, Hilton Hotels Corporation, a Delaware
corporation, Gaming Co., Inc., a Delaware corporation, and Gaming Acquisition
Corporation, a Minnesota corporation, are parties to an Agreement and Plan of
Merger, dated as of June 30, 1998 (the "Merger Agreement" and, together with
the Distribution Agreement, the "Agreements").
C. The Agreements provide that Debtor shall indemnify, save and hold
harmless Secured Party and certain of its related parties, with respect to
certain matters upon the terms and subject to the conditions provided in the
respective Agreements and that as security therefor (and not in lieu thereof) a
trust estate shall be established for the protection of Secured Party, its
affiliates and subsidiaries.
D. Pursuant to, and as a condition of, the Merger Agreement, (i) Debtor
and Secured Party have entered into a Trust Agreement with Trustee, as Trustee,
dated as of [__________ ___], 1998 (as from time to time amended, the "Trust
Agreement"), under which Trustee owns and holds in trust, as set forth in the
Trust Agreement, the Trust Estate (as defined in the Trust Agreement), and (ii)
Debtor and Trustee are executing and delivering to Secured Party this
Agreement.
AGREEMENT
In consideration of the foregoing and the mutual promises contained herein
and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, Secured Party and Debtor, intending to be legally
bound, hereby agree as follows:
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ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1. Trust Agreement Definitions. The following terms shall have
the meanings assigned to them in the Trust Agreement:
"Cash Equivalents"
"Initial Trust Estate"
"Trust Estate"
Section 1.2. U.C.C. Definitions. Where applicable and except as otherwise
expressly provided herein, terms used herein (whether or not capitalized) shall
have the respective meanings assigned to them in the Uniform Commercial Code as
in effect in the State of New York on the date of the Merger Agreement (the
"UCC").
Section 1.3. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Agreement to Pay" means the agreement to pay an amount of $30,000,000
executed by Debtor in favor of Trustee, which agreement to pay comprises part
of the Trust Estate.
The "Agreements" is defined in Recital B of this Agreement.
This "Agreement" means this Pledge and Security Agreement.
"Cash Collateral Account" means the bank or other account into which cash
portions of the Trust Estate are to be deposited pursuant to and in accordance
with the terms of the Trust Agreement.
"Collateral" is defined in Section 2.1 of this Agreement.
"Collateral Agreement" is defined in Recital B of this Agreement.
"Trust Agreement" is defined in Recital C of this Agreement.
"Debtor" is defined in the Preamble of this Agreement.
"Debtor Collateral" is defined in Section 2.1 of this Agreement.
"Distribution Agreement" is defined in Recital A of this Agreement.
"Event of Default" means any of the following events: (i) Debtor's failure
to pay any Secured Obligation (other than any obligations under the Agreement to
Pay) when due, and such failure continues for five calendar days after either
(A) it is acknowledged in writing by Debtor or (B) such Secured Obligation is
determined to be due and payable in arbitration proceedings conducted in
accordance with Section 21 of the Trust Agreement or by order of a
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court of competent jurisdiction; (ii) Debtor's failure to pay any obligation
under the Agreement to Pay when due (iii) any representation or warranty made by
Debtor in this Agreement proves to have been inaccurate in any material respect
when made, and such inaccuracy continues for 10 calendar days after written
notice thereof is given to Debtor by Secured Party; (iv) Debtor and/or Trustee
fails to perform or observe any term, covenant or agreement contained in the
Trust Agreement or this Agreement, and such failure continues for 10 calendar
days after either (A) it is acknowledged in writing by Debtor or Trustee or (B)
such failure is determined to have occurred and such term, covenant or agreement
is determined to be enforceable in arbitration proceedings conducted in
accordance with Section 21 of the Trust Agreement or by order of a court of
competent jurisdiction; (v) Debtor admits in writing its inability to pay its
debts generally or makes a general assignment for the benefit of creditors; (vi)
any proceeding is instituted by or against Debtor seeking an order for relief
under the United States Bankruptcy Code or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its property under any
law relating to bankruptcy, insolvency, liquidation or reorganization or relief
of debtors and either (A) any such relief in any such proceeding is sought or
consented to by Debtor or an order for any such relief is entered against
Debtor, or (B) any such proceeding instituted against Debtor remains undismissed
and unstayed for a period of 60 calendar days; (vii) Debtor takes any corporate
action to authorize any of the actions described in clause (vi) above; (viii)
any provision of the Trust Agreement or this Agreement for any reason ceases to
be valid and binding on Debtor and/or Trustee in any respect materially adverse
to Secured Party or the holders of Secured Obligations, and a valid and binding
reasonably equivalent substitute is not offered to Secured Party, to be held in
trust as part of the Trust Estate, within 10 calendar days after written notice
thereof is given by Secured Party; (ix) Debtor repudiates or purports to revoke
or terminate, in any material respect, any of its obligations under the Trust
Agreement or this Agreement, and such event continues for 10 calendar days after
written notice thereof is given to Debtor by Secured Party; or (x) this
Agreement for any reason does not create or this Agreement ceases to create a
valid and perfected first priority security interest in any property described
herein as part of the Collateral, and such event continues for 10 calendar days
after written notice thereof is given to Debtor and Trustee by Secured Party.
"Lien" means any mortgage, deed of trust, lien, pledge, charge, security
interest, hypothecation, assignment, deposit arrangement or encumbrance of any
kind in respect of any asset, whether or not filed, recorded or otherwise
perfected or effective under applicable law, as well as the interest of a
vendor or lessor under any conditional sale agreement, capital or finance lease
or other title retention agreement relating to such asset.
"Merger Agreement" is defined in Recital B of this Agreement.
"Proceeds" includes (i) any and all payments, dividends, cash, options,
warrants, rights, instruments and other property of any type or nature at any
time received, receivable or otherwise distributed, voluntarily or
involuntarily, on account of, in respect of or in replacement, substitution or
exchange for any item of Collateral or upon the collection, sale, or other
disposition of any item of Collateral; (ii) any and all insurance or payments
under any indemnity,
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warranty or guaranty now or hereafter payable in respect of any item of
Collateral or any proceeds thereof or any loss relating thereto; (iii) any and
all claims against any person or entity based on or in any respect relating to
or arising from any item of Collateral; (iv) any and all "proceeds" of any
Collateral, as the term "proceeds" is used in the UCC; and (v) any and all
property and interests in property acquired with or in exchange for any of the
foregoing.
"Secured Obligations" means (i) each and all present and future
indemnities, liabilities and obligations of every type and description of
Debtor at any time arising under, pursuant to or in respect of (A) the Merger
Agreement, (B) the Distribution Agreement; (C) this Agreement, or (D) the Trust
Agreement (in each case whether now outstanding or hereafter arising or
incurred, whether sole, joint, several, or joint and several) and (ii) each and
all present and future indemnities, liabilities and obligations of every type
and description of Trustee at any time arising under, pursuant to or in respect
of the Trust Agreement (in each case whether now outstanding or hereafter
arising or incurred, whether sole, joint, several, or joint and several) and,
in each case, all costs and expenses incurred by Secured Party in asserting,
collecting, enforcing or protecting its security interest in any Collateral in
any bankruptcy case or insolvency proceeding to which Debtor may be party and
all collection costs and enforcement expenses incurred by Secured Party in
retaking, holding, preparing for sale, selling or otherwise disposing of or
realizing on any Collateral or otherwise exercising or enforcing any of its
rights or remedies hereunder, together with Secured Party's reasonable
attorneys' fees and disbursements and court costs related thereto.
"Secured Party" means the person identified as such in the preamble of
this Agreement and any of its successors or assigns.
"Securities Act" is defined in Section 6.5 of this Agreement.
"Trustee" means the person identified as such in the preamble of this
Agreement, acting as Trustee under the Trust Agreement, and any successor
Trustee thereunder.
"Trustee Collateral" is defined in Section 2.1 of this Agreement.
ARTICLE II.
SECURITY INTEREST AND COLLATERAL
Section 2.1. Creation of Security Interest.
(a) Debtor Collateral. As security for the due and punctual payment and
performance of each and all of the Secured Obligations, Debtor hereby
irrevocably grants Secured Party a security interest in all right, title and
interest of Debtor, to the extent Debtor has any such right, title or interest,
in, to, under or derived from the following property (collectively, the "Debtor
Collateral"), in each case whether now owned or hereafter acquired by Debtor and
wherever located:
(1) CASH, CASH EQUIVALENTS AND OTHER ASSETS OF THE TRUST ESTATE:
All cash, Cash Equivalents and other property of every type
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and description now or at any time hereafter constituting part of
the Trust Estate or required by the terms of the Trust Agreement to
constitute part of the Trust Estate;
(2) INTEREST IN THE TRUST ESTATE OR UNDER THE TRUST AGREEMENT:
All rights and interests of every type and description, whenever and
however arising, in or to the Trust Estate or in, to or under the
Trust Agreement (including, without limitation, the Agreement to
Pay); and
(3) PROCEEDS: All Proceeds, except Proceeds that have been
released from the Trust Estate and delivered to Debtor pursuant to
the Trust Agreement.
(b) Trustee Collateral. As security for the due and punctual
payment and performance of each and all of the Secured Obligations, Trustee
hereby irrevocably grants Secured Party a security interest in all right, title
and interest of Trustee, in, to, under or derived from the following property
(collectively, the "Trustee Collateral" and, together with the Debtor
Collateral, the "Collateral"), in each case whether now owned or hereafter
acquired by Debtor and wherever located:
(4) CASH, CASH EQUIVALENTS AND OTHER ASSETS OF THE TRUST ESTATE:
All cash, Cash Equivalents and other property of every type and
description now or at any time hereafter constituting part of the
Trust Estate or required by the terms of the Trust Agreement to
constitute part of the Trust Estate;
(5) INTEREST IN THE TRUST ESTATE OR UNDER THE TRUST AGREEMENT:
All rights and interests of every type and description, whenever and
however arising, in or to the Trust Estate or in, to or under the
Trust Agreement (including, without limitation, the Agreement to
Pay); and
(6) PROCEEDS: All Proceeds, except Proceeds that have been
released from the Trust Estate and delivered to Debtor pursuant to
the Trust Agreement.
Section 2.2. Delivery of Instruments; Deposit of Funds. All stock
certificates, notes, bonds, debentures and other instruments, if any,
constituting Collateral shall be delivered to and held by Secured Party, without
any notice from or demand by Secured Party, in each case in suitable form for
transfer by delivery or accompanied by duly executed instruments of transfer or
assignments in blank or with appropriate endorsements, in form and substance
satisfactory to Secured Party. All cash (including Proceeds in the form of
cash) constituting Collateral shall be deposited (in a manner acceptable to
Secured Party) in the Cash Collateral Account, to be held by Secured Party,
without notice from or demand, by Secured Party.
Section 2.3. Further Assurances. Each of Debtor and Trustee will
promptly (and in no event later than five days after request by Secured Party)
execute and deliver, and use its reasonable best efforts to obtain from others,
any and all instruments, certificated securities and documents (including,
without limitation, assignments, transfer documents and transfer
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notices, financing statements and other lien notices), in form and substance
satisfactory to Secured Party, and take all other actions (including, without
limitation, the deposit of funds) which are necessary or, in the good faith
judgment of Secured Party, desirable or appropriate to create, perfect, protect,
or enforce Secured Party's security interests in the Collateral, to enable
Secured Party to exercise and enforce its rights and remedies hereunder with
respect to any Collateral, to protect the Collateral against the rights, claims
or interests of third persons, or to effect or to assure further the purposes
and provisions of this Agreement, and Debtor will pay all costs related thereto
and all reasonable expenses incurred by Secured Party in connection therewith.
Section 2.4. Survival of Security Interest. Except as otherwise required
by law, the security interest granted hereby shall, except as to property
released from the Trust Estate and delivered to or for account of Debtor by
Trustee pursuant to, and in accordance with, the Trust Agreement, (i) remain
enforceable as security for any and all Secured Obligations, whether now
outstanding or created or incurred at any future time, until all of the Secured
Obligations have been indefeasibly paid, retired and discharged in full, and
(ii) survive any sale, exchange or other disposition by Debtor or Trustee of its
interest in any Collateral and remain enforceable against each transferee and
subsequent owner of such interest (to the fullest extent permitted under
applicable law), even if such sale, exchange or other disposition is permitted
at the time under the Trust Agreement.
Section 2.5. Reinstatement. If at any time any payment on any Secured
Obligation is set aside, avoided, or rescinded or must otherwise be restored or
returned, this Agreement and the security interest created hereby shall remain
in full force and effect and, if previously released or terminated, shall be
automatically and fully reinstated, without any necessity for any act, consent
or agreement of Debtor, as fully as if such payment had never been made and as
fully as if any such release or termination had never become effective.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties. Each of Debtor and Secured
Party represents and warrants, severally and not jointly, that with respect to
itself only:
(a) Debtor's chief executive office is located in Hennepin County,
Minnesota. Trustee's chief executive office is located in __________,
__________.
(b) It at all times is (or, as to any item of Collateral acquired after
the date hereof, will be) the sole legal and beneficial owner of all Collateral
reflected on its books and records as belonging to it and has exclusive
possession and control thereof free and clear of any and all Liens, subject to
the Trust Agreement and this Agreement and the interests, possession and control
granted thereunder. No financing statement, notice of lien, mortgage, deed of
trust or instrument similar in effect covering the Collateral, any portion
thereof, or any proceeds thereof, exists or is on file in any public office,
except as may have been filed in favor of Secured Party.
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(c) Except for the UCC, neither it nor any Collateral purported to
be granted by it is subject to any requirement of law or contractual obligation
which prohibits, restricts, or limits the execution, delivery or performance of
this Agreement or the creation, perfection or enforcement of the security
interest purported to be created hereby.
(d) Debtor's United States federal taxpayer identification number
is: [__________]. Trustee's United States federal taxpayer identification
number is: [__________].
(e) It is a corporation duly incorporated, validly existing and in
good standing under the laws of the jurisdiction in which it is organized and is
duly qualified to do business and in good standing in each jurisdiction where
its assets are located or its operations are conducted, except where the failure
to be so qualified could not reasonably be expected to cause a change that would
be material and adverse to it or to Secured Party's rights under this Agreement.
(f) It has the corporate power to execute, deliver and perform
its obligations under the Trust Agreement and this Agreement.
(g) Its execution, delivery and performance of each of the Trust
Agreement and this Agreement (i) have been duly authorized by all necessary
action of its board of directors, (ii) do not contravene its certificate or
articles of incorporation or by-laws or any other governing document, and (iii)
do not and will not result in or require the creation of any Lien (other than
pursuant to the Trust Agreement and this Agreement) upon any of its property or
assets.
(h) No authorization or approval or other action by, and no notice
to or filing with, any governmental officer, department, agency or authority is
required for the due execution, delivery and performance by it of each of the
Trust Agreement and this Agreement, except the filing of required financing
statements, if any, to perfect Secured Party's security interest which have been
duly filed.
(i) Each of the Trust Agreement and this Agreement is a legal,
valid and binding obligation of it, enforceable against it in accordance with
its respective terms, subject to applicable laws generally affecting the
enforcement of creditors' rights.
(j) Its execution, delivery and performance of each of the Trust
Agreement and this Agreement (i) does and will comply with all applicable laws,
(ii) does and will comply with, and does not and will not conflict with,
constitute a breach of or give rise to any Lien, default, event of default or
other adverse consequence under, any note, indenture, undertaking, agreement or
other contractual obligation that is binding upon Debtor or secured by or
enforceable against any property of Debtor, except for such conflicts, breaches,
Liens, defaults, events of default or other adverse consequences that could not,
individually or in the aggregate, have a material adverse effect on Debtor or,
with respect to the Secured Party, on Secured Party's rights under this
Agreement.
(k) Secured Party holds an enforceable and perfected first Lien in
the Collateral. No other Liens are outstanding against the Collateral.
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ARTICLE IV.
COVENANTS
Section 4.1. Covenants. Each of Debtor and Trustee covenants and agrees
that so long as the security interest created hereby remains outstanding and/or
so long as required by the Trust Agreement:
(a) As and when required by the Trust Agreement, it will (i) deliver to
Secured Party each instrument and certificated security included in the
Collateral as set forth in Article II and (ii) deposit in the Cash Collateral
Account all cash (including Proceeds in the form of cash) constituting
Collateral included in the Collateral as set forth in Article II or required to
be deposited or otherwise delivered to the Secured Party pursuant to the terms
of this Agreement or the Trust Agreement.
(b) It will (i) notify, in a reasonably prompt manner, the Secured Party
of any change in its name, identity or corporate structure, or in the location
of its chief executive office, or (ii) not keep any tangible Collateral or any
records relating to any Claim owned by it, or permit or suffer any such
Collateral or records to be moved, to any other location unless (in each case)
an appropriate financing statement has been filed in the proper office and in
the proper form, and all other requisite actions have been taken, to perfect or
continue the perfection (without loss of priority) of Secured Party's security
interest in the Collateral.
(c) It will defend, at Debtor's expense, the Collateral against all claims
and demands of all persons at any time claiming the same or any interest
therein.
(d) It will not encumber, sell, exchange or otherwise dispose of any item
of Collateral or any interest therein, or permit or suffer any such item to be
encumbered, sold, exchanged or otherwise disposed of, unless (i) such action is
permitted at the time under the Trust Agreement and (ii) it makes all payments
on account of the Secured Obligations required to be made therefrom, or in
exchange or substitution therefor, and it takes all other actions required to be
taken in connection therewith, under the Trust Agreement.
(e) Secured Party is hereby authorized to file one or more financing
statements or fixture filings, and continuations thereof and amendments thereto,
relative to all or any part of the Collateral, without the signature of Debtor
or Trustee where permitted by law. A copy of this Agreement may be filed as a
financing statement wherever permitted by law.
(f) Secured Party may at any time (but shall not be obligated to) (i)
perform any of the obligations of Debtor or Trustee under this Agreement if
Debtor or Trustee fails to perform such obligation within five calendar days
after written demand by Secured Party and (ii) make any payments and do any
other acts Secured Party may deem necessary or desirable to protect its security
interest in the Collateral, including, without limitation, the right to pay,
purchase, contest or compromise any Lien that attaches or is asserted against
any Collateral and to appear in and defend any action or proceeding relating to
the Collateral, and Debtor will promptly reimburse Secured Party for all
payments made by Secured Party in doing so, together
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with interest thereon at the judgment rate and all costs and expenses related
thereto as set forth in Section 9.10.
ARTICLE V.
INTEREST AND DISTRIBUTIONS
Section 5.1. Distributions and Payments. Trustee shall be entitled to
hold as part of the Trust Estate, subject to the Trust Agreement, all income,
interest or distributions from cash, Cash Equivalents and all Proceeds, provided
that such income, interest or distributions shall be pledged as Collateral
hereunder.
ARTICLE VI.
DEFAULTS AND REMEDIES
Section 6.1. Remedies. Upon and at any time after the occurrence of any
Event of Default, and from time to time on each occasion when an Event of
Default has occurred and is continuing, Secured Party may exercise and enforce
each and all of the rights and remedies available to a secured party upon
default under the UCC or other applicable law.
(a) Secured Party may cause any or all instruments or investment
securities, if any, constituting part of the Trust Estate to be transferred into
Secured Party's name and exercise and enforce any or all of the rights,
interests, privileges and remedies of a holder against the issuer thereof, as
freely and fully as if Secured Party were the absolute owner but as a secured
party and as part of the Trust Estate.
(b) Secured Party may sell or otherwise dispose of any or all of the
Collateral or any part thereof in one or more parcels and from time to time in
any quantity or portion and on any number of occasions, at a public sale or in a
private sale or transaction, on any exchange or market or at Secured Party's
offices or at any other location, for cash, on credit or for future delivery,
and may enter into all contracts necessary or appropriate in connection
therewith, without any notice whatsoever unless required by law.
(c) Debtor agrees that at least 10 calendar days' written notice to Debtor
of the time and place of any public sale or the time after which any private
sale is to be made shall be commercially reasonable. The giving of notice of
any such sale or other disposition shall not obligate Secured Party to proceed
with the sale or disposition, and any such sale or disposition may be postponed
or adjourned from time to time, without further notice.
Section 6.2. Remedies Cumulative. Secured Party may exercise and
enforce each right and remedy available to it upon the occurrence of an Event of
Default either before or concurrently with or after, and independently of, any
exercise or enforcement of any other right or remedy of Secured Party or any
holder of any Secured Obligation against any person, entity or property. All
such rights and remedies shall be cumulative, and no one of them shall exclude
or preclude any other.
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Section 6.3. Surplus: Deficiency. Any surplus proceeds of any sale or
other disposition of Collateral by Secured Party remaining after all the Secured
Obligations are indefeasibly paid in full and discharged shall be paid over to
Debtor or to whomever may be lawfully entitled to receive such surplus or as a
court of competent jurisdiction may direct, except that if any contingent,
unliquidated or unmatured Secured Obligation then remains outstanding, such
surplus proceeds may be retained by Secured Party and held as Collateral until
such time as all outstanding Secured Obligations have been determined,
liquidated and indefeasibly paid in full and discharged. Debtor shall be and
remain liable for any deficiency.
Section 6.4. No Recourse to Trustee. As to Trustee only (without in any
way affecting Secured Party's rights as to Debtor), upon and Event of Default,
Secured Party shall look solely to the Collateral, and not to Trustee's other
assets or property, for relief and Secured Party shall have no recourse to any
of Trustee's other assets or property.
ARTICLE VII.
THE SECURED PARTY
Section 7.1. No Liability. Secured Party makes no statement, promise,
representation or warranty whatsoever, and shall have no liability whatsoever,
to any holder of any Secured Obligations as to the authorization, execution,
delivery, legality, enforceability or sufficiency of this Agreement or as to the
creation, perfection, priority or enforceability of any security interest
granted hereunder or as to the existence, ownership, quality, condition, value
or sufficiency of any Collateral or as to any other matter whatsoever.
Section 7.2. Holders Bound. Except where the consent of others may be
required pursuant to the express provisions of the Trust Agreement, any
modification, amendment, waiver, termination or discharge of any security
interest, right, remedy, power or benefit conferred upon Secured Party hereby
that is effectuated in a writing signed by Secured Party shall be binding upon
all holders of Secured Obligations if it is authorized in the Trust Agreement.
Section 7.3. Duty of Care. Neither Secured Party nor any director,
officer, employee, attorney or agent of Secured Party shall be obligated to care
for the Collateral hereunder or to collect, enforce, vote, or protect the
Collateral or any rights or interests of Debtor related thereto or to preserve
or enforce any rights which Debtor or any other Person may have against any
third party, except only that Secured Party shall exercise reasonable care in
physically safekeeping any item of Collateral that was delivered into Secured
Party's possession. Secured Party shall be deemed to have exercised such
reasonable care if the Collateral is accorded treatment substantially equal to
that which Secured Party accords to its own property or if it selects, with
reasonable care, a custodian or agent to hold such Collateral for Secured
Party's account.
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ARTICLE VIII.
EXONERATION AND WAIVERS
Section 8.1. Rights and Interests Not Prejudiced, Affected or Impaired.
None of (i) the security interests granted hereby, (ii) the trusts and interests
created under the Trust Agreement, (iii) any power, privilege, right or remedy
of Secured Party relating thereto, or (iv) the beneficial interest of Secured
Party and other holders of Secured Obligations therein and thereunder shall at
any time in any way be prejudiced, affected or impaired by any act or failure to
act on the part of Debtor or by any act or failure to act on the part of Trustee
or Secured Party or any other holder of Secured Obligations or by any breach or
default by any of them in the performance or observance of any promise, covenant
or obligation enforceable by Debtor, regardless of any knowledge thereof that
Trustee or Secured Party or any such other holder may have or otherwise be
charged with.
(a) Without in any way limiting the generality of the foregoing, Secured
Party and each other holder of any Secured Obligations may at any time and from
time to time without incurring any responsibility or liability to Debtor or
Trustee and without in any manner prejudicing, affecting or impairing any such
security interest, trust, interest, power, privilege, right or remedy or the
obligations of Debtor or Trustee to Secured Party and the other holders of
Secured Obligations:
(i) Make loans and advances to Debtor, or issue, guaranty or
obtain letters of credit for account of Debtor or otherwise extend
credit to Debtor, in any amount and without any limitation or
restriction whatsoever, on any terms, whether pursuant to a
commitment or as a discretionary advance and whether or not any
default or Event of Default or failure of condition is then
continuing;
(ii) Change the manner, place or terms of payment or extend
the time of payment of, or renew or alter, compromise, accelerate,
extend, refinance, release or discharge, any Secured Obligation or
any other indebtedness or liability of Debtor or Trustee or any
agreement, guaranty, lien or obligation of Debtor or Trustee or any
other person or entity in any manner related thereto, or otherwise
amend, supplement or change in any manner any Secured Obligation or
any such indebtedness or liability or any such agreement, guaranty,
lien or obligation;
(iii) In any manner modify, transform, change, refinance,
replace, reclassify, subordinate or recharacterize any such
indebtedness or liability;
(iv) Without the consent of or notice to Debtor or Trustee,
release or discharge any guaranty or any other Lien, right, remedy
or claim against any person or entity;
(v) Without the consent of or notice to Debtor or Trustee,
take or fail to take any collateral security for any Secured
Obligation or take or fail to
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take any action which may be necessary or appropriate to ensure that
any lien upon any property securing any Secured Obligation is duly
enforceable or perfected or entitled to priority as against any
other Lien or to ensure that any proceeds of any property subject to
any Lien are applied to the payment of any Secured Obligation;
(vi) Without the consent of or notice to Debtor or Trustee,
release, discharge or permit the lapse of any or all Liens upon any
property at any time securing any Secured Obligation;
(vii) Without the consent of or notice to Debtor or Trustee
(except as required by applicable law), exercise or enforce, in any
manner, order or sequence, or fail to exercise or enforce, any
right or remedy against Debtor or Trustee or in respect of the
Collateral or the Trust Estate or any other collateral security or
any other person, entity or property in respect of any Secured
Obligation or Lien securing any Secured Obligation or any right
under this Agreement or the Trust Agreement; or
(viii) Without the consent of or notice to Debtor or Trustee,
sell, exchange, release, foreclose upon or otherwise deal with any
property that may at any time be subject to any Lien securing any
Secured Obligation.
(b) No exercise, delay in exercising or failure to exercise any
right arising under this Agreement or the Trust Agreement, no act or omission of
Secured Party or any other holder of any Secured Obligation in respect of Debtor
or any other person or entity or the Collateral or the Trust Estate or any other
collateral security for any Secured Obligation or any right arising under this
Agreement or the Trust Agreement, no change, impairment, or suspension of any
right or remedy of Secured Party or any other holder of any Secured Obligation,
and no other act, failure to act, circumstance, occurrence or event which, but
for this provision, would or could act as a release or exoneration of the
obligations of Debtor or Trustee shall in any way affect, decrease, diminish or
impair any of the obligations of Debtor or Trustee under this Agreement or give
Debtor or any other person or entity any recourse or defense against Secured
Party or any other holder of Secured Obligations in respect of any security
interest, trust, interest, power, privilege, right or remedy arising under this
Agreement or the Trust Agreement.
ARTICLE IX.
MISCELLANEOUS PROVISIONS
Section 9.1. Notices. All notices, requests, approvals, consents and
other communications required or permitted to be made hereunder shall, except as
otherwise provided, be given in the manner specified and to the addresses set
forth in Section 13 of the Trust Agreement.
Section 9.2. Headings. The various headings in this Agreement are
inserted for convenience only and shall not affect the meaning or interpretation
of this Agreement or any provision hereof.
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Section 9.3. Changes. This Agreement or any provision hereof may be
changed, waived, or terminated only by a statement in writing signed by the
party against which such change, waiver or termination is sought to be enforced.
Any such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
Section 9.4. Debtor Remains Liable. Debtor shall remain liable under all
contracts and agreements, if any, included in the Collateral to the extent set
forth therein to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed. The exercise or
enforcement by Secured Party of any of its rights and remedies under this
Agreement or in respect of the Collateral shall not release Debtor from any of
its duties or obligations under any such contracts or agreements. Neither
Secured Party nor Trustee shall be obligated to perform any such duties or
obligations or shall be liable for any breach thereof.
Section 9.5. No Waiver. No failure by Secured Party to exercise, or
delay by Secured Party in exercising, any power, right or remedy under this
Agreement shall operate as a waiver thereof. No waiver by Secured Party shall
be effective unless given in a writing signed by it. No waiver so given shall
operate as a waiver in respect of any other matter or in respect of the same
matter on a future occasion. Acceptance of or acquiescence in a course of
performance in respect of this Agreement shall not waive or affect the
construction or interpretation of the terms of this Agreement even if the
accepting or acquiescing party had knowledge of the nature of the performance
and opportunity for objection.
Section 9.6. Entire Agreement. This Agreement and the Trust Agreement
are intended by the parties as a final expression of their agreement and a
complete and exclusive statement of the terms and conditions related to the
subject matter thereof.
Section 9.7. Severability. If any provision of this Agreement is
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions hereof, or of such provision in
any other application, shall not be in any way affected or impaired thereby and
such other provisions and applications shall be enforceable to the fullest
extent lawful.
Section 9.8. Power of Attorney. Each of Debtor and Trustee hereby
appoints and constitutes Secured Party or any delegate, nominee or agent acting
for Secured Party as Debtor's and Trustee's attorney-in-fact with the power and
authority (but not the duty), in the name of Debtor or Trustee or in the name
of Secured Party or such delegate, nominee or agent, to (i) execute, deliver and
file such financing statements, agreements, deeds and writings as Debtor or
Trustee is required to execute, deliver or file hereunder, (ii) endorse, collect
or transfer any item of Collateral which Debtor or Trustee is required to
endorse, collect or transfer hereunder or which Secured Party is permitted to
endorse, collect or transfer hereunder, (iii) make any payments or take any
action under Section 2.3 or Section 4.1(f), (iv) take any other action required
of Debtor or Trustee or permitted to Secured Party hereunder, and (v) take any
action reasonably necessary or incidental to any of the foregoing. This power
of attorney is coupled
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with an interest and is irrevocable as to Debtor and Trustee. Secured Party
shall have no duty whatsoever to exercise any power herein granted it.
Section 9.9. Counterparts. This Agreement and any amendments, waivers,
consents or supplements may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original, but all of
which shall together constitute one and the same agreement.
Section 9.10. Costs and Expenses; Indemnification. Debtor hereby agrees
(i) to pay or reimburse Secured Party for all reasonable costs and expenses
(including, without limitation, reasonable attorneys' fees and disbursements and
court costs) incurred in connection with or as a result of the exercise or
enforcement by Secured Party of any right or remedy available to it or the
protection or enforcement of Secured Party's interest in the Collateral in any
bankruptcy case or insolvency proceeding and (ii) to indemnify Secured Party
for, and defend and hold it harmless against, any loss, liability or expense
incurred by it in connection with its entering into this Agreement or carrying
out any of its duties or exercising any of its rights hereunder, on the terms
and subject to the limitations set forth in Section 11 of the Trust Agreement.
Section 9.11. GOVERNING LAW; ARBITRATION; LIMITATION OF LIABILITY; WAIVER
OF BOND.
(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED
UNDER THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE
PERFECTION OF THE SECURITY INTERESTS HEREUNDER IN RESPECT OF ANY PARTICULAR
COLLATERAL IS GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW
YORK.
(b) ARBITRATION. The parties hereto agree that any dispute, controversy
or disagreement between the parties related to the obligations of the parties
under this Agreement in respect of which resolution cannot be reached shall be
submitted for mediation and final and binding arbitration in accordance with
Section 9.14 of the Distribution Agreement, including Section 9.14(c) thereof
regarding the parties' ability to seek specific performance or injunctive relief
thereof.
(c) LIMITATION OF LIABILITY. NO CLAIM MAY BE MADE BY DEBTOR OR TRUSTEE
AGAINST SECURED PARTY OR THE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES,
ATTORNEYS OR AGENTS OF SECURED PARTY FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR
PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM (WHETHER BASED UPON BREACH OF CONTRACT,
TORT, BREACH OF STATUTORY DUTY OR ANY OTHER THEORY OF LIABILITY) ARISING OUT OF
OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, OR ANY ACT,
OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, AND DEBTOR HEREBY WAIVES,
RELEASES AND AGREES NOT TO XXX UPON ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER OR
NOT NOW
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ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
(d) WAIVER OF BOND. EACH OF DEBTOR AND TRUSTEE WAIVES THE POSTING OF ANY
BOND OTHERWISE REQUIRED OF SECURED PARTY IN CONNECTION WITH THE ENFORCEMENT OF
ANY OF ITS REMEDIES HEREUNDER, INCLUDING, WITHOUT LIMITATION, ANY ORDER OR WRIT
FOR REPLEVIN OR DELIVERY OF POSSESSION OF ANY COLLATERAL.
Section 9.12. Successors and Assigns. This Agreement is binding upon and
enforceable against Debtor and its successors and assigns. This Agreement is
binding upon and enforceable against Trustee and its successors and assigns.
This Agreement shall inure to the benefit of and may be enforced by Secured
Party and its successors and assigns and each and every other person or entity
which at any time holds or is entitled to enforce any of the Secured Obligations
and each of their respective heirs, representatives, successors and assigns.
Trustee reserves the right to resign as Trustee under the Trust Agreement, in
the manner and with the effect set forth in Section 10(f) and 10(g) thereof.
[signature page to follow]
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IN WITNESS WHEREOF, the parties have caused this Pledge and Security
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
"DEBTOR"
GCI LAKES, INC., a Minnesota corporation
By:_________________________
Name:
Title:
"SECURED PARTY"
GRAND CASINOS, INC., a Minnesota
corporation
By:_________________________
Name:
Title:
"TRUSTEE"
[_________], a [__________],
as Trustee
By:_________________________
Name:
Title:
