GUARANTY
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THIS GUARANTY (this "GUARANTY"), dated as of October 24, 1997, is made by
CASINO EXCITEMENT, INC., a Nevada corporation ("CEI"), MGC, INC., a Nevada
corporation ("MGC"), and MIKOHN NEVADA, a Nevada corporation ("MIKOHN NEVADA")
(CEI, MGC and Mikohn Nevada hereinafter are referred to individually as a
"GUARANTOR" and collectively as the "GUARANTORS"), to and for the benefit of
FIRST SOURCE FINANCIAL LLP, an Illinois registered limited liability
partnership, as agent (the "AGENT") for the "Lenders" (as defined in the Credit
Agreement defined below).
BACKGROUND
1. Mikohn Gaming Corporation, a Nevada corporation ("BORROWER"), Agent
and the financial institutions initially a signatory thereto are parties to that
certain Credit Agreement dated as of October 24, 1997 (herein, as the same from
time to time may be amended, modified, supplemented or restated and in effect,
called the "CREDIT AGREEMENT"), pursuant to which Lenders have agreed to make
loans and other financial accommodations to Borrower, subject to the terms and
conditions therein set forth. Capitalized terms used but not elsewhere defined
herein shall have the respective meanings ascribed to such terms in the Credit
Agreement.
2. Each Guarantor is a Subsidiary of Borrower and, accordingly, each
Guarantor will receive substantial direct and indirect benefits by inducing
Lenders to make the Loans.
3. One of the conditions precedent to Lenders' willingness to make the
Loans is the execution and delivery by Guarantors of this Guaranty and the
performance by Guarantors of their respective obligations hereunder.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, Guarantors hereby agree as
follows:
1. GUARANTY OF PAYMENT. Each Guarantor hereby unconditionally and
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irrevocably guarantees to Agent the punctual payment and performance when due,
whether at stated maturity or by acceleration or otherwise, of the Obligations.
Each Guarantor agrees that this Guaranty is a present and continuing guaranty of
payment and not of collectibility, and that Agent shall not be required to
prosecute collection, enforcement or other remedies against Borrower, any other
Guarantor or any other Person, or to enforce or resort to any of the Collateral
or other rights or remedies pertaining thereto, before calling on such Guarantor
for payment. Notwithstanding anything to the contrary contained in this
Guaranty, it is intended that this Guaranty, and any Liens granted by Guarantors
to secure this Guaranty, not constitute a fraudulent conveyance under Section
548 of the Bankruptcy Code, 11. U.S.C. (S)(S)101 et. seq., as amended, or a
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fraudulent conveyance or fraudulent transfer under the provisions of any
applicable state law, as in effect from time to time (any such fraudulent
conveyance or transfer being referred to herein as a "FRAUDULENT CONVEYANCE").
Consequently, if this Guaranty or any Liens granted by any Guarantor to secure
this Guaranty would, but for the application of this sentence, constitute a
Fraudulent Conveyance, this Guaranty and each such Lien shall be valid
and enforceable only to the maximum extent that would not cause this Guaranty or
the granting
of such Lien to constitute a Fraudulent Conveyance, and this Guaranty
automatically shall be deemed to have been amended accordingly at all relevant
times.
2. CONTINUING GUARANTY. All obligations of each Guarantor pursuant to
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this Guaranty and any of the other Credit Documents to which such Guarantor is a
party (the "GUARANTOR OBLIGATIONS") shall be primary obligations of such
Guarantor, shall not be subject to any counterclaim, set-off, abatement,
deferment or defense based upon any claim that such Guarantor may have against
Agent, Borrower, any other Guarantor or any other Person, and shall remain in
full force and effect without regard to, and shall not be released, discharged
or affected in any way by any circumstance or condition (whether or not such
Guarantor shall have any knowledge thereof), including without limitation:
(a) any lack of validity or enforceability of the Credit Agreement or
any of the other Credit Documents;
(b) any termination, amendment, modification or other change in the
Credit Agreement or any of the other Credit Documents;
(c) any furnishing, exchange, substitution or release of any
Collateral, or any failure to perfect any Lien in any of the Collateral;
(d) any failure, omission or delay on the part of Borrower, Agent or
any Lender to conform or comply with any term of the Credit Agreement or
any of the other Credit Documents or any failure of Agent to give notice of
any Event of Default;
(e) any waiver, compromise, release, settlement or extension of time
of payment or performance or observance of any of the obligations or
agreements contained in the Credit Agreement or any of the other Credit
Documents;
(f) any action or inaction by Agent or any Lender under or in respect
of the Credit Agreement or any of the other Credit Documents, any failure,
lack of diligence, omission or delay on the part of Agent to enforce,
assert or exercise any right, power or remedy conferred on Agent in the
Credit Agreement or any of the other Credit Documents, or any other action
or inaction on the part of Agent or any Lender;
(g) any voluntary or involuntary bankruptcy, insolvency,
reorganization, arrangement, readjustment, assignment for the benefit of
creditors, composition, receivership, liquidation, marshalling of assets
and liabilities or similar events or proceedings with respect to Borrower
or any Guarantor or any of their respective property or creditors, or any
action taken by any trustee or receiver or by any court in any such
proceeding;
(h) any merger or consolidation of Borrower or any Guarantor into or
with any Person, or any sale, lease or transfer of any of the assets of any
Guarantor or Borrower to any other Person;
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(i) any change in the ownership of Borrower or any change in the
relationship between any Guarantor and Borrower, or any termination of any
such relationship;
(j) any release or discharge by operation of law of any Guarantor,
Borrower or any other Person from any obligation or agreement contained in
the Credit Agreement or any of the other Credit Documents; or
(k) to the extent permitted by law, any other occurrence,
circumstance, happening or event, whether similar or dissimilar to the
foregoing and whether foreseen or unforeseen, which otherwise might
constitute a legal or equitable defense or discharge of the liabilities of
a guarantor or surety or which otherwise might limit recourse against any
Guarantor or Borrower.
3. WAIVERS. Each Guarantor unconditionally waives (i) notice of any of
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the matters referred to in SECTION 2 above, (ii) all notices which may be
required by statute, rule of law or otherwise, now or hereafter in effect, to
preserve intact any rights against such Guarantor, including, without
limitation, any demand, presentment and protest, proof of notice of non-payment
under the Credit Agreement or any of the other Credit Documents and notice of
any Event of Default or any failure on the part of any Guarantor or Borrower to
perform or comply with any covenant, agreement, term or condition of the Credit
Agreement or any of the other Credit Documents, (iii) any right to the
enforcement, assertion or exercise against any Guarantor or Borrower of any
right or remedy conferred under the Credit Agreement or any of the other Credit
Documents, (iv) any requirement of diligence on the part of any Person, (v) any
requirement to exhaust any remedies or to mitigate the damages resulting from
any default under the Credit Agreement or any of the other Credit Documents and
(vi) any notice of any sale, transfer or other disposition of any right, title
or interest of Agent or any Lender under the Credit Agreement or any of the
other Credit Documents.
4. TERMINATION; REINSTATEMENT. The Guarantor Obligations shall continue
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until all Obligations then due and payable shall have been paid in full and the
Commitments shall have been terminated in accordance with the Credit Agreement.
The Guarantor Obligations shall continue to be effective or automatically be
reinstated, as the case may be, if at any time payment of any of the Obligations
is rescinded or otherwise must be restored or returned by Agent or any Lender
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
any Guarantor or Borrower or for any other reason, all as though such payment
had not been made.
5. REPRESENTATIONS AND WARRANTIES. Each Guarantor represents and
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warrants to Agent that the representations and warranties contained in the
Credit Agreement, as applied to such Guarantor, are true and correct in all
material respects.
6. REMEDIES ON DEFAULT. If any Event of Default occurs (a) Guarantors
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shall pay the Obligations in full immediately upon demand by Agent and (b) Agent
may enforce its rights and remedies hereunder and under the other Credit
Documents to which Guarantors are a party in accordance with their respective
terms and enforce any other rights or remedies accorded to Agent in equity or
law, by virtue of statute or otherwise.
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7. SUCCESSORS AND ASSIGNS. This Guaranty shall inure to the benefit of
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Agent and its respective successors and assigns. This Guaranty shall be binding
on each Guarantor, and its successors and assigns, and shall continue in full
force and effect until all of the Obligations are paid and performed in full and
the Commitments have been terminated.
8. NO WAIVER OF RIGHTS. Neither any delay in exercising, nor any failure
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on the part of Agent to exercise any right, power or privilege under this
Guaranty or any of the other Credit Documents shall operate as a waiver thereof,
and no single or partial exercise of any right, power or privilege shall
preclude any other or further exercise thereof or the exercise of any other
power or right, or be deemed to establish a custom or course of dealing or
performance among the parties hereto. The rights and remedies herein provided
are cumulative and not exclusive of any rights or remedies provided by law. No
notice to or demand on any Guarantor in any case shall entitle any Guarantor to
any other or further notice or demand in the same, similar or any other
circumstance.
9. MODIFICATION. The terms of this Guaranty may be waived, discharged or
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terminated only by an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought. No
amendment, modification, waiver or other change of any of the terms of this
Guaranty shall be effective without the prior written consent of Agent.
10. COSTS AND EXPENSES. Guarantors agree to pay on demand all costs and
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expenses incurred by or on behalf of Agent (including, without limitation,
reasonable attorneys' fees and expenses) in enforcing the obligations of
Guarantors under this Guaranty.
11. SEVERABILITY. Whenever possible each provision of this Guaranty shall
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be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Guaranty. All obligations of Guarantors and
Agent expressed herein or in the other Credit Documents shall be in addition to
and not in limitation of those provided by applicable law or in any other
written instrument or agreement relating to any of the Obligations.
11. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
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GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS AND DECISIONS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICT OF LAWS
PROVISIONS.
12. SUBMISSION TO JURISDICTION. ALL DISPUTES AMONG THE LENDERS, AGENT AND
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THE GUARANTORS, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL
BE RESOLVED ONLY BY STATE AND FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS, AND
THE COURTS TO WHICH AN APPEAL THEREFROM MAY BE TAKEN; PROVIDED, HOWEVER, THAT
AGENT ON BEHALF OF THE LENDERS, SHALL HAVE THE RIGHT, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, TO PROCEED
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AGAINST ANY GUARANTORS OR THEIR RESPECTIVE PROPERTIES IN ANY LOCATION REASONABLY
SELECTED BY AGENT IN GOOD FAITH TO ENABLE AGENT TO REALIZE ON SUCH PROPERTY, OR
TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH GUARANTOR
AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS, SETOFFS OR CROSS-
CLAIMS IN ANY PROCEEDING BROUGHT BY AGENT OR ANY LENDER. EACH GUARANTOR WAIVES
ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH AGENT OR
ANY LENDER HAS COMMENCED A PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON FORUM NON CONVENIENS.
13. SERVICE OF PROCESS. EACH GUARANTOR HEREBY WAIVES PERSONAL SERVICE
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UPON IT AND, AS ADDITIONAL SECURITY FOR THE OBLIGATIONS, HEREBY IRREVOCABLY
DESIGNATES AND APPOINTS CT CORPORATION SYSTEM, WITH AN OFFICE ON THE DATE HEREOF
AT 000 XXXXX XXXXXXX XXXXXX, XXXXXXX, XXXXXXXX 00000, AND SUCH OTHER PERSONS AS
MAY HEREAFTER BE SELECTED BY SUCH GUARANTOR WHICH IRREVOCABLY AGREE IN WRITING
TO SO SERVE AS ITS AGENT, TO RECEIVE ON ITS BEHALF SERVICE OF ALL PROCESS ISSUED
BY ANY COURT IN ANY LEGAL ACTION OR OTHER PROCEEDING WITH RESPECT TO THIS
GUARANTY, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY SUCH PERSON TO BE EFFECTIVE
AND BINDING SERVICE IN EVERY RESPECT. A COPY OF ANY SUCH PROCESS SO SERVED
SHALL BE MAILED BY REGISTERED MAIL TO THE APPLICABLE GUARANTOR C/O MIKOHN GAMING
CORPORATION, 0000 XXXXX XXXXXXX XXXXX, XXX XXXXX, XXXXXX 00000, EXCEPT THAT,
UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL
NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY ANY
GUARANTOR REFUSES TO ACCEPT SERVICE, EACH SUCH PERSON HEREBY AGREES THAT SERVICE
UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE AND EFFECTIVE AND BINDING
SERVICE IN EVERY RESPECT. NOTHING HEREIN SHALL AFFECT THE RIGHT OF AGENT OR ANY
LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR SHALL
LIMIT THE RIGHT OF AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST ANY
GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION.
14. JURY TRIAL. GUARANTOR, AGENT AND THE LENDERS HEREBY WAIVE ANY RIGHT
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TO A TRIAL BY JURY. INSTEAD, ANY DISPUTES WILL BE RESOLVED IN A BENCH TRIAL.
15. WAIVER OF RIGHTS AGAINST BORROWER. NOTWITHSTANDING ANYTHING TO THE
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CONTRARY WHICH MAY BE CONTAINED HEREIN, EACH GUARANTOR HEREBY UNCONDITIONALLY
AND IRREVOCABLY AGREES THAT SUCH GUARANTOR (I) WILL NOT AT ANY TIME ASSERT
AGAINST BORROWER (OR BORROWER'S ESTATE IF BORROWER BECOMES BANKRUPT OR BECOMES
THE SUBJECT OF ANY CASE OR PROCEEDING UNDER THE BANKRUPTCY LAWS
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OF THE UNITED STATES OF AMERICA) ANY RIGHT OR CLAIM, AT LAW OR IN EQUITY, TO
INDEMNIFICATION, REIMBURSEMENT, CONTRIBUTION, RESTITUTION OR PAYMENT FOR OR WITH
RESPECT TO ANY AND ALL AMOUNTS SUCH GUARANTOR MAY PAY OR BE OBLIGATED TO PAY TO
AGENT, INCLUDING, WITHOUT LIMITATION, THE OBLIGATIONS AND ANY AND ALL OTHER
OBLIGATIONS WHICH SUCH GUARANTOR MAY PERFORM, SATISFY OR DISCHARGE, UNDER OR
WITH RESPECT TO THIS GUARANTY, AND (II) WAIVES AND RELEASES ALL SUCH RIGHTS AND
CLAIMS, AT LAW OR IN EQUITY, TO INDEMNIFICATION, REIMBURSEMENT, CONTRIBUTION,
RESTITUTION OR PAYMENT WHICH SUCH GUARANTOR MAY HAVE NOW OR AT ANY TIME AGAINST
BORROWER (OR BORROWER'S ESTATE IF BORROWER BECOMES BANKRUPT OR BECOMES THE
SUBJECT OF ANY CASE OR PROCEEDING UNDER THE BANKRUPTCY LAWS OF THE UNITED STATES
OF AMERICA). EACH GUARANTOR FURTHER UNCONDITIONALLY AND IRREVOCABLY AGREES THAT
SUCH GUARANTOR SHALL HAVE NO RIGHT OF SUBROGATION, AND WAIVES ANY RIGHT TO
ENFORCE ANY REMEDY WHICH AGENT NOW HAS OR HEREAFTER MAY HAVE AGAINST BORROWER,
AND WAIVES ANY DEFENSE BASED UPON AN ELECTION OF REMEDIES BY AGENT, WHICH
DESTROYS OR OTHERWISE IMPAIRS ANY SUBROGATION RIGHTS OF GUARANTORS AND/OR THE
RIGHT OF GUARANTORS TO PROCEED AGAINST BORROWER FOR REIMBURSEMENT.
16. NO JOINDER. Each Guarantor agrees that any action to enforce this
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Guaranty may be brought against such Guarantor without any reimbursement or
joinder of Borrower in such action.
[signature page follows]
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IN WITNESS WHEREOF, Guarantors have executed this Guaranty as of the date
first above written.
CASINO EXCITEMENT, INC., a Nevada corporation
By:/s/ XXXXX X. XXXXXXXX
Name: Xxxxx X. Xxxxxxxx
Title: Chairman of the Board & CEO
MGC, INC., a Nevada corporation
By: /s/ XXXXX X. XXXXXXXX
Name: Xxxxx X. Xxxxxxxx
Title: Chairman of the Board & CEO
MIKOHN NEVADA, a Nevada corporation
By: /s/ XXXXX X. XXXXXXXX
Name: Xxxxx X. Xxxxxxxx
Title: Chairman of the Board & CEO
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