EXHIBIT 10.02
LINE OF CREDIT LOAN AGREEMENT
This Line of Credit Loan Agreement (this "Agreement") is
made as of the 19th day of November 1996, by and between Xxxx-Son
Gaming Corporation, a Nevada corporation (hereinafter referred to
as "Lender"), and Xxxxxx X. Xxxxxx (hereinafter referred to as
"Borrower").
RECITALS
A. Borrower desires to borrow certain sums of money from
Lender upon such repayment terms and at such rates of interest as
shall be set forth in the Line of Credit Promissory Note (as
hereinafter defined) contemplated by this Agreement; and
B. Lender is willing to loan such sums to Borrower.
NOW, THEREFORE, in consideration of the several and mutual
promises, agreements, covenants, understandings, undertakings,
representations and warranties hereinafter set forth, and for
other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree
that the Recitals are true and correct and by this reference
incorporated herein as if fully set forth and further covenant
and agree as follows:
1. DEFINITIONS
In this Agreement and in the Loan Documents (as hereinafter
defined) (unless the context thereof requires a contrary
definition or unless the same shall be defined therein, in which
latter event, the definitions shall be cumulative and not
exclusive), the following words, phrases, and expressions shall
have the respective meanings attributed to them:
(a) "AGREEMENT" shall mean this Line of Credit Loan
Agreement, and all extensions, amendments, modifications and
alterations thereto, in writing from time to time.
(b) "BORROWER" shall mean Xxxxxx X. Xxxxxx.
(c) "BUSINESS DAY" shall mean any day except Saturday,
Sunday or legal holidays in the State of Nevada.
(d) "COLLATERAL" shall mean all property and security
described in any of the Collateral Documents now or hereafter
existing.
(e) "COLLATERAL DOCUMENTS" shall mean any and all
documents, instruments, notes, agreements, and written memoranda,
referred to in this Agreement or referred to in any of the
foregoing, or executed in connection herewith or therewith, now
or hereafter existing, and specifically, but not by way of
limitation, the documents identified in Section 6 hereof.
(f) "CONDITIONS PRECEDENT" shall mean the conditions set
forth in Sections 7 and 8 hereof.
(g) "DEFAULT EVENT" shall mean the occurrence of any act,
omission or failure as set forth in Section 11 hereof.
(h) "DEFAULT INTEREST RATE" shall mean one and one-half
times (x 1.50) the Interest Rate (as hereinafter defined).
(i) "GUARANTOR" shall mean Xxxx X. Xxxxxx, the wife of
Xxxxxx X. Xxxxxx.
(j) "INDEBTEDNESS" shall mean and include by way of example
only, but not by way of limitation:
(i) All indebtedness, obligations and liabilities
of the Borrower referred to in this Agreement, or in any of
the Collateral Documents, of whatsoever kind, nature and
description, primary or secondary, direct, indirect or
contingent, due or to become due, and whether now existing
or hereafter arising and howsoever evidenced or acquired,
and whether joint, several, or joint and several;
(ii) All present and future Money Advances made by
Lender in connection with this Agreement or the Collateral
Documents, or otherwise, and whether made at Lender's option
or otherwise;
(iii) All future advances made by Lender for the
protection or preservation of Lender's rights and interests
in the Collateral, or arising under this Agreement or the
Collateral Documents, including, but not by way of
limitation, advances for taxes, levies, assessments,
insurance or maintenance of the Collateral, and reasonable
attorneys fees;
(iv) All costs and expenses incurred by Lender in
connection with or arising out of the protection,
enforcement or collection of any of the foregoing including,
without limitation, reasonable attorney fees; and
(v) All costs and expenses incurred by Lender in
connection with, or arising out of, the sale, disposition,
liquidation or other realization [including, but not by way
of limitation, the taking, retaking or holding, and all
proceedings (judicial or otherwise)] of the Collateral,
including, without limitation, reasonable attorney fees.
(k) "INTEREST PERIOD" shall mean the period commencing on
each Rate Change Date (as hereafter defined) and ending on the
next succeeding Rate Change Date.
(l) "INTEREST RATE" shall mean the Prime Rate (as
hereinafter defined) plus two percent (2%) and shall be a
variable rate which shall change quarterly on the first day of
each quarter during the term hereof ("Rate Change Date"),
commencing on the first day of April 1997, and continuing on the
first day of each July, October, January thereafter until the
Maturity Date, provided that if the first day of any quarter
during the term hereof is not a Business Day, then the Rate
Change Date shall be the first Business Day following the first
day of such quarter.
(m) "LENDER" shall mean Xxxx-Son Gaming Corporation, a
Nevada corporation.
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(n) "LINE OF CREDIT PROMISSORY NOTE" shall mean the
promissory note executed in conjunction with this Agreement that
evidences Borrower's Indebtedness to Lender.
(o) "LOAN COMMITMENT" shall mean the commitment set forth
in Section 2 hereof.
(p) "LOAN DOCUMENTS" shall mean:
(i) Any and all Collateral Documents;
(ii) Any and all documents, instruments, notes,
agreements, and written memoranda, referred to in this
Agreement or referred to in any of the foregoing, or
executed in connection herewith or therewith, now or
hereafter existing, and specifically, but not by way of
limitation, the documents identified in Section 6 hereof;
and
(iii) Any and all documents, instruments, notes,
agreements, and written memoranda executed and delivered by
Guarantor in connection herewith or therewith, now or
hereafter existing (hereinafter collectively referred to as
the "Pledge Documents"), and specifically including, but not
by way of limitation, the following:
(1) PLEDGE AGREEMENT. Guarantor shall execute
an agreement in which Guarantor agrees to pledge any
and all Pledge Collateral (as hereinafter defined) to
Lender as inducement for Lender to make Loan to
Borrower;
(2) GUARANTY. Guarantor shall execute an
agreement in which Guarantor agrees to guaranty the
obligations, covenants and agreements of Borrower under
this Agreement, the Collateral Documents, or any other
agreement executed by and between the Lender, Borrower
or to which they are a party, whether now existing or
hereafter created;
(3) POWER OF ATTORNEY. Guarantor shall execute
a power of attorney in favor of the Lender to be
returned by Lender permitting Lender to negotiate,
encumber, transfer or dispose of all stock certificates
issued in the name of the Guarantor.
(4) UNIFORM COMMERCIAL CODE SECURITY
AGREEMENT. Guarantor shall execute an agreement in
which Guarantor agrees to grant Lender a security
interest in the Pledge Collateral.
(5) UNIFORM COMMERCIAL CODE FINANCING
STATEMENTS. Guarantor shall execute the following
Uniform Commercial Code Financing Statements in order
to perfect a security interest in favor of Lender, in
and to the Pledge Collateral, and to evidence a first
and perfected lien with respect to such Pledge
Collateral:
- Uniform Commercial Code Financing
Statement Form UCC-1 to be filed in the state
of Nevada; and
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- Uniform Commercial Code Financing
Statement Form UCC-1 to be filed in the state
of Ohio.
(6) OTHER DOCUMENTS. Any other document or
agreement which the Lender may reasonably require in
connection with the Loan.
(q) "MONEY ADVANCE" shall mean any disbursement of monies
by Lender to or for the benefit of Borrower, whether mandatory or
optional.
(r) "PLEDGE COLLATERAL" shall mean the following:
(i) Any and all shares of common stock of Lender
held now or hereafter acquired by the Guarantor (the
"Shares");
(ii) Any and all options to purchase common stock of
Lender held now or hereafter acquired by the Guarantor;
(iii) Any rights to payment, including returned
premiums, with respect to any insurance relating to any of
the Shares; and
(iv) Any stock rights, rights to subscribe, stock
splits, liquidating dividends, cash dividends, dividends
paid in stock, new securities or other property of any kind
which Guarantor is or may hereafter be entitled to receive
on account of the Shares pledged hereunder, including
without limitation, stock received by Pledgor due to stock
splits or dividends paid in stock or sums paid upon or in
respect of any securities pledged hereunder upon the
liquidation or dissolution of the issuer thereof.
(s) "PRIME RATE" shall mean the rate of interest most
recently published in THE WALL STREET JOURNAL, as the average of
Money Center interest rates charged by banks to their most
favored commercial customers or, if discontinued, in any other
publication selected by Lender.
(t) "PROMISSORY NOTE" shall mean the Line of Credit
Promissory Note.
(u) "STOCK OPTIONS" shall mean any and all stock options to
purchase common stock of Xxxx-Son Gaming Corporation which the
Borrower, Guarantor or Borrower and Guarantor jointly may now
possess or hereafter acquire a possessory interest.
2. LOAN COMMITMENTS
Lender agrees, subject to the Conditions Precedent hereto
set forth in Sections 7 and 8 of this Agreement, and further
provided that no Default Event exists, and all other terms,
conditions and obligations of Borrower have been met, to lend to
Borrower, and Borrower agrees to take from Lender, an amount not
exceeding One Hundred Fifty Thousand and no/100ths Dollars
($150,000.00 U.S.) upon the terms, covenants and conditions
hereinafter set forth. In no event shall Lender be required to
make Money Advances that total, in the aggregate, in excess of
One Hundred Fifty Thousand and no/100ths Dollars ($150,000.00
U.S.).
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(a) CAP ON LOAN COMMITMENT. The extent of the Lender's
monetary obligation under the Loan Commitment is limited to One
Hundred Fifty Thousand and no/100ths Dollars ($150,000.00
U.S.). Notwithstanding the Borrower's prepayment of principal,
the total amount of funds to be provided by the Lender shall not
exceed aggregate Money Advances of One Hundred Fifty Thousand
and no/100ths Dollars ($150,000.00 U.S.).
(b) SUSPENSION OF LOAN COMMITMENT. Lender's obligation to
make Money Advances under the Loan Commitment shall be suspended
during:
(i) the existence of any Default Event;
(ii) the failure of Borrower to meet the Conditions
Precedent set forth in Sections 7 and 8 of this Agreement;
(iii) the failure of Borrower to fulfill, maintain or
uphold the covenants, representations and warranties set
forth in the Collateral Documents; or
(iv) the failure of Guarantor to fulfill, maintain
or uphold the covenants, representations and warranties set forth
in the Pledge Documents.
3. EVIDENCE OF INDEBTEDNESS
Borrower shall execute a Promissory Note in the amount of
One Hundred Fifty Thousand and no/100ths Dollars
($150,000.00 U.S.) evidencing the maximum amount
respectively provided for pursuant to the Loan Commitment
and all Money Advances respectively made thereunder, and
Borrower shall pay to Lender the payments required by the
Promissory Note.
4. NATURE OF OBLIGATION
Borrower fully appreciates the recourse nature of this
Agreement and fully understands that any and all assets of
Borrower may be used for payment of accrued interest and
principal should a Default Event occur.
5. PRE-PAYMENT OF LOAN
Borrower may prepay the unpaid principal balance of the Note
(partial or full) at anytime. Notwithstanding any partial
or full prepayment, Lender is not obligated to extend to
Borrower any additional funds above and beyond a total
aggregate amount of Money Advances totaling One Hundred
Fifty Thousand and no/100ths Dollars ($150,000.00 U.S.).
6. COLLATERAL AND COLLATERAL DOCUMENTS
As part of the Collateral and Collateral Documents providing
security for the payment of the Promissory Note, Loan and all
Indebtedness hereunder, and for the timely and faithful perfor
xxxxx and observance of the terms, covenants, obligations and
conditions of this Agreement and the Collateral Documents,
Borrower (and/or others herein required or to the extent
required) hereby grants a security interest to Lender in the
Collateral and shall execute and deliver to
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Lender, or cause to be executed and delivered to Lender, the
following, all of which shall constitute a portion of the
Collateral Documents:
(a) PROMISSORY NOTE. Borrower shall execute the Promissory
Note that evidences Borrower's indebtedness to Lender in an
amount not to exceed total aggregate Money Advances of One
Hundred Fifty Thousand and no/100ths Dollars ($150,000.00 U.S.).
(b) ASSIGNMENT AGREEMENT. Borrower shall execute an
agreement in which the Borrower agrees to assign any and all
rights, titles, benefits and interests currently owned or
hereafter acquired including, but not limited to, the following:
(i) Consulting Agreement by and between Xxxx X.
Xxxx, Xx. and Xxxxxx X. Xxxxxx entered into on the 1st day
of July, 1996 (the "Xxxx Agreement");
(ii) Stock Option Agreement by and between Xxxx X.
Xxxx, Xx. and Xxxxxx X. Xxxxxx entered into on the 1st day
of July, 1996 (the "Option Agreement") in conjunction with
the Xxxx Agreement;
(iii) All options to purchase common stock of
Xxxx-Son Gaming Corporation that Borrower presently owns or
hereafter acquires, including but not limited to those
options granted to Borrower under the Option Agreement;
(iv) Consulting Agreement by and between Xxxx-Son
Gaming Corporation, a Nevada corporation, and Xxxxxx X.
Xxxxxx entered into on the 1st day of July, 1996 (the
"Xxxx-Son Agreement");
(v) All stock of Xxxx-Son Gaming Corporation that
Borrower presently owns or hereafter acquires; and
(vi) All payments due from Xxxx-Son Gaming
Corporation to Borrower, including, but not limited to, any
and all fees associated with the Borrower's position as
director of the Lender.
(c) UNIFORM COMMERCIAL CODE FINANCING STATEMENTS. Borrower
shall execute the following Uniform Commercial Code Financing
Statements in order to perfect a security interest in favor of
Lender, in and to the Collateral, and to evidence a first and
perfected lien with respect to such Collateral:
(i) Uniform Commercial Code Financing Statement
Form UCC-1 to be filed in the state of Nevada; and
(ii) Uniform Commercial Code Financing Statement
Form UCC-1 to be filed in the state of Ohio.
(d) UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. Borrower
shall execute an agreement in which Borrower agrees to grant
Lender a security interest in the Collateral.
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(e) GUARANTY. Guarantor shall execute an agreement in which
Guarantor agrees to guaranty the obligations, covenants and
agreements of Borrower under this Agreement, the Collateral
Documents, or any other agreement executed by and between the
Lender, Borrower or to which they are a party, whether now
existing or hereafter created.
(f) POWER OF ATTORNEY. Borrower shall execute a power of
attorney in favor of the Lender to be returned by Lender
permitting Lender to negotiate, encumber, transfer or dispose of
all stock certificates issued in the name of the Borrower.
(g) OTHER DOCUMENTS. Any other document or agreement which
the Lender may reasonably require.
7. CONDITIONS PRECEDENT TO EFFECTIVENESS OF AGREEMENT
This Agreement may not become effective until the execution
and delivery of all Loan Documents as described in Section
6.
8. CONDITIONS PRECEDENT TO MONEY ADVANCES
The obligation of Lender to make any Money Advances
pursuant to this Agreement is subject to the following
conditions precedent:
(a) COMPLIANCE OF BORROWER. Borrower must be in compliance
with all provisions of this Agreement and of the Collateral
Documents, as of the date of each Money Advance under the Loan.
(b) COMPLIANCE OF GUARANTOR. Guarantor must be in
compliance with all provisions of the Pledge Documents, as of the
date of each Money Advance under the Loan.
(c) WRITTEN APPLICATIONS. Each request for a Money Advance
to be made under this Agreement must be written and submitted to
the Lender for approval.
9. REPRESENTATIONS AND WARRANTIES OF BORROWER
Borrower represents and warrants that the following are true
and correct:
(a) AUTHORITY. Borrower has full power and authority to
execute and deliver this Agreement and the Collateral Documents.
(b) DEFAULT. There is no Default Event under this
Agreement, now existing or hereafter executed, and no event, act
or omission has occurred and is continuing which, with applicable
notice or the passage of t ime or either, would constitute an
Default Event thereunder.
(c) LITIGATION. There are no actions, suits or proceedings
pending or, to the knowledge of Borrower threatened against or
affecting Borrower or the property of Borrower in any court or
before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which may result in
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any material adverse change in the properties or assets or in the
condition, financial or otherwise, of Borrower. Borrower is not
in default with respect to any order, writ, injunction, decree or
demand of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency,
instrumentality, default under which might have consequences
which would materially and adversely affect the business or
properties of Borrower.
(d) SURVIVAL AND CONTINUATION. All representations and
warranties contained in this Agreement, or in any of the Xxxxx
xxxxx Documents, now or hereafter existing, are and shall
continue to be true and accurate, at all times while any Money
Advances are outstanding, and the continuing truth and accuracy
thereof shall be Conditions Precedent to the making of any Money
Advances hereunder and shall survive the execution hereof and the
consummation of the transactions herein contemplated.
10. COVENANTS OF BORROWER
So long as any Money Advance remains outstanding under this
Agreement or any Indebtedness is due BankLender, Borrower
covenants and agrees to the following:
(a) PAYMENT OF INTEREST. Borrower shall pay accrued
interest thereon when due in accordance with the terms of the
Promissory Note, and have no Money Advances outstanding
thereunder as otherwise prohibited by this Agreement or the
Collateral Documents.
(b) PAYMENT OF PRINCIPAL. Borrower shall pay principal when
due in accordance with the terms of the Promissory Note.
(c) REQUEST FOR MONEY ADVANCES. Borrower shall not make a
Request For Payment that is not in accordance with the terms of
this Agreement and which does not have all respective conditions
precedent thereto fulfilled.
(d) PERFORMANCE OF OBLIGATIONS. Borrower shall perform all
of the obligations, covenants and agreements of Borrower under
this Agreement, the Collateral Documents, or any other agreement
executed by and between the Lender, Borrower or to which they are
a party, whether now existing or hereafter created, and maintain
and take all action (or not fail to take any action or suffer or
permit any omission) necessary to maintain the representations
and warranties made, as true and accurate.
(e) ALIENATION OF COLLATERAL. Borrower will not, without
the prior written consent of Lender, sell, contract to sell,
lease, encumber or otherwise dispose of any Collateral unless and
until this Agreement and all debts secured thereby have been
fully satisfied.
(f) INFORMATION. Borrower shall furnish promptly and in a
form satisfactory to Lender, such information as Lender may
reasonably request, from time to time.
(g) LITIGATION. Borrower shall notify Lender promptly of
any litigation, or administrative or tax proceeding or any other
material matter which could adversely impair the Borrower's
financial condition including, but not limited to, any inquiry or
proceedings initiated by any state, federal or foreign regulatory
agency. For the purposes of this Agreement, any such
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litigation, proceeding, matter or inquiry in which the sum
in dispute is Five Thousand and no/100ths Dollars ($5,000.00
U.S.) or an aggregate total of Twenty-Five Thousand and no/100ths
($25,000.00 U.S.) or more shall be deemed to be material.
(h) PRESERVATION OF COLLATERAL. Borrower shall not waste or
destroy Collateral or any part thereof; and Borrower shall not
use Collateral in violation of any statute or ordinance. Lender
shall have the right to possess Collateral.
11. DEFAULT EVENTS
The Indebtedness shall mature and become immediately due and
payable, at the option of Lender, notwithstanding any maturity
date to the contrary upon the occurrence of any of the following
acts, omissions or failures (hereinafter referred to as "Default
Events"):
(a) FAILURE OF PAYMENT. Failure of Borrower to make payment
of any installment of principal and/or interest required under
the Promissory Note or of any payment by Borrower required
pursuant to this Agreement or under the Collateral Documents,
within five (5) days from the date same is due and payable shall
constitute a Default Event, if not paid, including any applicable
late charge or Default Interest Rate, ten (10) calendar days
after the five (5) day grace period.
(b) BREACH OR FAILURE. The failure or breach of any other
covenant, warranty, agreement, undertaking, condition, promise,
representation or warranty herein contained and/or contained in
the Loan Documents shall constitute a Default Event.
(c) INSOLVENCY OF BORROWER. Insolvency shall be a Default
Event and shall mean: (i) a general assignment by Borrower for
the benefit of creditors; (ii) the filing of a voluntary petition
in bankruptcy by Borrower; (iii) the filing of any involuntary
petition under any bankruptcy or insolvency law by Borrower's
creditors, said petition remaining undischarged for a period of
sixty (60) days; (iv) the appointment by any court of a receiver
to take possession of substantially all of Borrower's assets,
said receivership remaining undischarged for a period of sixty
(60) days; or (v) the attachment, execution or other judicial
seizure of substantially all of Borrower's assets, such
attachment, execution or other seizure remaining undismissed or
undischarged for a period of sixty (60) days after the levy
thereof.
12. EFFECT OF DEFAULT
(a) REMEDIES OF LENDER. Upon the occurrence of any Default
Event, Lender shall have the right to exercise any and all rights
and remedies which may be available, whether contained in this
Agreement, the Loan Documents, or available by virtue of law,
including the Uniform Commercial Code or other similar laws or
statutes applicable, or contained in any other instruments or
agreements between the Lender and the Borrower. The rights and
remedies available to the Lender include, but are not limited to,
the following:
(i) Lender shall have the right to exercise,
negotiate, transfer, encumber or dispose of all Stock
Options;
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(ii) Lender may (i) upon written notice, require
Borrower to assemble any or all of the Collateral and make
it available to Lender at a place designated by Lender;
(ii) without prior notice, take possession of, collect,
sell, and dispose of any or all of the Collateral; or (iii)
sell, assign and deliver at any place or in any lawful
manner all or any part of the Collateral and bid and become
purchaser at any such sales; and
(iii) Lender may, for the account of Borrower and at
Borrower's expense: (i) operate, use, consume, sell or
dispose of the Collateral as Lender deems appropriate for
the purpose of performing any or all of the obligations
secured by this Agreement; (ii) enter into any agreement,
compromise, or settlement, including insurance claims, which
Lender may deem desirable or proper with respect to any of
the Collateral; (iii) endorse and deliver evidences of title
for, and receive, enforce and collect by legal action or
otherwise, all indebtedness and obligations now or hereafter
owing to Borrower in connection with or on account of any or
all of the Collateral; and (iv) perform any of the
obligations secured by this Agreement.
(b) RENUNCIATION BY BORROWER. Upon the occurrence of any
Default Event, Borrower agrees that such Default Event, after the
lapse of any cure period, shall automatically, without notice,
immediately effectuate a renunciation in favor of Lender of any
and all rights, benefits, claims and interests of Borrower in the
following:
(i) Consulting Agreement by and between Xxxx X.
Xxxx, Xx. and Xxxxxx X. Xxxxxx entered into on the 1st day
of July, 1996 (the "Xxxx Agreement");
(ii) Stock Option Agreement by and between Xxxx X.
Xxxx, Xx. and Xxxxxx X. Xxxxxx entered into on the 1st day
of July, 1996 (the "Option Agreement") in conjunction with
the Xxxx Agreement;
(iii) Consulting Agreement by and between Xxxx-Son
Gaming Corporation, a Nevada corporation, and Xxxxxx X.
Xxxxxx entered into on the 1st day of July, 1996 (the
"Xxxx-Son Agreement");
(iv) All options to purchase common stock of
Xxxx-Son Gaming Corporation that Borrower presently owns or
hereafter obtains, including but not limited to those
options granted to Borrower under (i), (ii) and (iii) above;
(v) All stock of Xxxx-Son Gaming Corporation that
Borrower presently owns or hereafter obtains, including but
not limited to stock obtained by or through (i), (ii), (iii)
and (iv) above; and
(vi) All payments due from Xxxx-Son Gaming
Corporation to Borrower, including, but not limited to, any
and all fees associated with the Borrower's position as
director of the Lender.
(c) NO RELEASE AND NO DISCHARGE. The exercise of any such
right or remedy by Lender shall not serve to release or discharge
any other security, property or Collateral held by Lender
in connection with this transaction.
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(d) NON-EXCLUSIVITY OF RIGHTS AND REMEDIES. The rights and
remedies referred to in this section shall be cumulative and not
exclusive.
(e) NO WAIVER. No waiver of any Default Event shall be
implied from any failure of Lender to take or any delay by Lender
in taking action with respect to any such Default Event or from
any previous waiver of any similar or unrelated Default Event. A
waiver of any term contained in the Collateral Documents or of
any of the covenants and obligations of Borrower contained in the
Collateral Documents, must be made in writing and shall be
limited to the express written terms of such waiver.
13. GENERAL PROVISIONS
(a) AMENDMENT. No amendment or modification of this
Agreement shall be deemed effective unless and until it is an
express writing, executed by both Borrower and Lender.
(b) ASSIGNMENT. The rights, benefits and obligations of
Borrower under this Agreement are personal in nature and shall
not be assignable, transferable or encumberable in any manner
whatsoever, whether directly or indirectly or, and whether inter
vivos or testamentary. Any purported assignment by Borrower in
violation of this Section 13(b) shall be null and void and of no
force and effect. All covenants and agreements hereunder shall
inure to the benefit of and be enforceable by Lender, its
successors or assigns.
(c) ATTORNEYS' FEES AND COSTS. Borrower and Lender agree
that Borrower shall be liable for and pay any and all attorneys'
fees and costs associated with the execution of the Loan,
including, but not limited to, the preparation of the Loan
Documents. Borrower and Lender further agree that in the event of
a dispute, arbitration by either party in any dispute,
arbitration or litigation c oncerning this Agreement, the losing
party shall pay the prevailing party's reasonable attorneys' fees
and costs in that dispute, arbitration or litigation.
(d) CAPTIONS AND PRONOUNS. The captions appearing at the
commencement of the sections hereof are descriptive only and for
convenience in reference to this Agreement and in no way
whatsoever define, limit or describe the scope or intent of this
Agreement nor in any way affect this Agreement.
(e) CONTINUED FORCE AND EFFECT. This Agreement may not be
invalidated by and may not be made subject to any order of any
domestic relations or family law court without the express
written consent of Lender.
(f) COUNTERPARTS. This Agreement may be executed at
different times and in multiple counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument.
(g) EFFECT OF WAIVER. The waiver by either party of a
breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach thereof.
(h) ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties and cannot be changed or terminated
unless in an express writing, executed by the parties hereto.
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(i) GENDER. Masculine or feminine pronouns shall be
substituted for the neuter form and vice versa and the plural
shall be substituted for the singular form and vice versa in any
place or places herein in which the context requires such
substitution or substitutions.
(j) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada in
effect on the date of this Agreement without resort to any
conflict of laws principles, and the courts of the State of
Nevada shall have sole and exclusive jurisdiction over any matter
brought under, or by reason of, this Agreement.
(k) INCORPORATION. The Collateral Documents are
incorporated herein by reference, and in the event any provision
thereof is inconsistent with the provisions of this Agreement,
then this Agreement shall be deemed paramount unless the rights
and remedies of the Lender would be adversely affected or
diminished thereby.
(l) NEUTRAL INTERPRETATION. The provisions contained herein
shall not be construed in favor of or against any party because
that party or its counsel drafted this Agreement, but shall be
construed as if all parties prepared this Agreement, and any
rules of construction to the contrary are hereby specifically
waived. The terms of this Agreement were negotiated at arm's
length by the parties hereto.
(m) NOTICE. Any and all notices required under this
Agreement shall be in writing and shall be either (i)
hand-delivered; (ii) mailed, first-class postage prepaid,
certified mail, return receipt requested; (iii) transmitted via
telecopier provided that confirmation is obtained; or (iv)
delivered via a nationally recognized overnight courier service,
addressed to:
LENDER: Xxxx X. Xxxx, Xx.
Chairman of the Board and Chief
Executive Officer
Xxxx-Son Gaming Corporation
0000 X. Xxxxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
COPY TO: Xxxxxxxx X. Xxxxxxx, Esq.
0000 X. Xxxxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
BORROWER: Xxxxxx X. Xxxxxx
00000 Xxxxxxxx Xxxx
Xxxxxx Xxxx, Xxxx 00000
All notices hand-delivered shall be deemed delivered
as of the date actually delivered. All notices mailed or
delivered via overnight courier shall be deemed delivered as of
three (3) business days after the date postmarked. Any changes in
any of the addresses listed herein shall be made by notice as
provided in this Section 13(m).
(n) PARTIAL INVALIDITY. If any term, condition, covenant,
or provision of this Agreement, or any application thereof, shall
be held by a court of competent jurisdiction to be invalid, void
or
12
unenforceable, all provision, covenants, and conditions of
this Lease and applications thereof, not held invalid, void or
unenforceable, shall continue in full force and effect and shall
in no way be affected, impaired or invalidated thereby.
(o) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained in this Agreement shall
survive the execution and delivery of this Agreement.
In Witness Whereof, the parties have executed this Agreement
as of the day first above written.
"Lender"
Xxxx-Son Gaming Corporation
/s/ Xxxx X. Xxxx, Xx.
By: Xxxx X. Xxxx, Xx.
Chairman of the Board and
Chief Executive Officer
"Borrower"
/s/ Xxxxxx X. Xxxxxx
By: Xxxxxx X. Xxxxxx
"Guarantor"
Solely to acknowledge the guaranty and
other collateral documentation
deliverable under same.
/s/ Xxxx X. Xxxxxx
By: Xxxx X. Xxxxxx
13
LINE OF CREDIT PROMISSORY NOTE
$150,000.00 (U.S.) Las Vegas, Nevada
Twenty-Four Month Term, Interest Only November 19, 1996
This Line of Credit Promissory Note ("Note") is made this
19th day of November, 1996, executed by Xxxxxx X. Xxxxxx
(hereinafter referred to as "Borrower") in favor of Xxxx-Son
Gaming Corporation, a Nevada corporation (hereinafter referred to
as "Lender").
RECITALS
A. This Note is being executed in connection with the
Lender's grant of a line of credit loan to Borrower in the
original principal amount of ONE-HUNDRED FIFTY THOUSAND AND
NO/100THS DOLLARS ($150,000.00 U.S.) (the "Loan");
B. The Loan is evidenced by series of documents and
agreements executed by Borrower, including, but not limited to a
Line of Credit Loan Agreement, this Line of Credit Promissory
Note (including any amendments or modifications thereto or
restatements thereof, the Note), Assignment Agreement, Power of
Attorney Agreement, Uniform Commercial Code Security Agreement,
Uniform Commercial Code Financing Statements (hereinafter
collectively referred to as the "Collateral Documents") and the
relating documents thereunder; and
C. Lender requires as a condition to the making of the
Loan that Borrower assign his present or hereafter acquired
rights, titles, benefits and interests as set forth in the
Collateral Documents.
Now, Therefore, in consideration of the several and mutual
promises, agreements, covenants, understandings, undertakings,
representations and warranties hereinafter set forth, and for
other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree
that the Recitals are true and correct and by this reference
incorporated herein as if fully set forth and Borrower further
covenants and agrees as follows:
1. Definitions. In this Note and in the Collateral
Documents (as hereinafter defined) (unless the context thereof
requires a contrary definition or unless the same shall be
defined therein, in which latter event, the definitions shall be
cumulative and not exclusive), the following words, phrases, and
expressions shall have the respective meanings attributed to
them:
(a) "BORROWER" shall mean Xxxxxx X. Xxxxxx.
(b) "BUSINESS DAY" shall mean any except Saturday,
Sunday or legal holidays in the State of Nevada.
(c) "COLLATERAL" shall mean all property and security
described in any of the Collateral Documents now or
hereafter existing.
(d) "COLLATERAL DOCUMENTS" shall mean any and all
documents, instruments, notes, agreements, and written
memoranda, referred to in this Agreement or referred to in
any of the foregoing, or executed in connection herewith or
therewith, now or hereafter existing, and specifically, but
not by way of limitation, the documents identified in the
Recitals.
(e) "DEFAULT EVENT" shall mean and include by way of
example only, but not by way of limitation:
(i) FAILURE OF PAYMENT. Failure of Borrower to
make payment of any installment of principal and/or
interest required under the Promissory Note or of any
payment by Borrower required pursuant to this Agreement
or under the Collateral Documents, within five (5) days
from the date same is due and payable shall constitute
a Default Event, if not paid, including any applicable
late charge or Default Interest Rate, ten (10) calendar
days after the five (5) day grace period.
(ii) BREACH OR FAILURE. The failure or breach of
any other covenant, warranty, agreement, undertaking,
condition, promise, representation or warranty herein
contained and/or contained in the Collateral Documents
shall constitute a Default Event.
(iii) INSOLVENCY OF BORROWER. Insolvency
shall be a Default Event and shall mean: (i) a general
assignment by Borrower for the benefit of creditors;
(ii) the filing of a voluntary petition in bankruptcy
by Borrower; (iii) the filing of any involuntary
petition under any bankruptcy or insolvency law by
Borrower's creditors, said petition remaining
undischarged for a period of sixty (60) days; (iv) the
appointment by any court of a receiver to take
possession of substantially all of Borrower's assets,
said receivership remaining undischarged for a period
of sixty (60) days; or (v) the attachment, execution or
other judicial seizure of substantially all of
Borrower's assets, such attachment, execution or other
seizure remaining undismissed or undischarged for a
period of sixty (60) days after the levy thereof.
(f) "DEFAULT INTEREST RATE" shall mean one and one-
half times (x 1.50) the Interest Rate (as hereinafter
defined).
(g) "GUARANTOR" shall mean Xxxx X. Xxxxxx, the wife of
Xxxxxx X. Xxxxxx.
(h) "INDEBTEDNESS" shall mean and include by way of
example only, but not by way of limitation:
(i) all indebtedness, obligations and liabilities
of the Borrower referred to in this Note, or in any of
the Collateral Documents, of whatsoever kind, nature
and description, primary or secondary, direct, indirect
or contingent, due or to become due, and whether now
existing or hereafter arising and howsoever evidenced
or acquired, and whether joint, several, or joint and
several;
2
(ii) all present and future Money Advances made by
Lender in connection with this Note or the Collateral
Documents, or otherwise, and whether made at Lender's
option or otherwise;
(iii) all future advances made by Lender for
the protection or preservation of Lender's rights and
interests in the Collateral, or arising under this Note
or the Collateral Documents, including, but not by way
of limitation, advances for taxes, levies, assessments,
insurance or maintenance of the Collateral, and
reasonable attorneys fees;
(iv) all costs and expenses incurred by Lender in
connection with or arising out of the protection,
enforcement or collection of any of the foregoing
including, without limitation, reasonable attorney
fees; and
(v) all costs and expenses incurred by Lender in
connection with, or arising out of, the sale,
disposition, liquidation or other realization
[including, but not by way of limitation, the taking,
retaking or holding, and all proceedings (judicial or
otherwise)] of the Collateral, including, without
limitation, reasonable attorney fees.
(i) "INTEREST RATE" shall mean the Prime Rate (as
hereinafter defined) plus two percent (2%) and shall be a
variable rate which shall change quarterly on the first day
of each quarter during the term hereof ("Rate Change Date"),
commencing on the first day of April 1997, and continuing on
the first day of each July, October, January thereafter
until the Maturity Date, provided that if the first day of
any quarter during the term hereof is not a Business Day,
then the Rate Change Date shall be the first Business Day
following the first day of such quarter.
(j) "INTEREST PERIOD" shall mean the period commencing
on each Rate Change Date (as hereafter defined) and ending
on the next succeeding Rate Change Date.
(k) "LENDER" shall mean Xxxx-Son Gaming Corporation, a
Nevada corporation.
(l) "MATURITY DATE" shall mean December 1, 1998.
(m) "NOTE" shall mean this Line of Credit Promissory
Note, and all extensions, amendments, modifications and
alterations hereto, in writing from time to time.
(n) "PRIME RATE" shall mean the rate of interest most
recently published in THE WALL STREET JOURNAL, as the
average of Money Center interest rates charged by banks to
their most favored commercial customers, or, if
discontinued, in any other publication selected by Lender.
2. For value received, Xxxxxx X. Xxxxxx (hereinafter
referred to as "Borrower") promises to pay to the order of Xxxx-
Son Gaming Corporation (hereinafter referred to as "Lender"), the
principal amount of One-Hundred Fifty Thousand and no/100ths
Dollars
3
($150,000.00 U.S.) (the "Loan"), with interest on the unpaid
principal balance at the Interest Rate or Default Rate. The
Interest Rate shall change quarterly on the first day of each
quarter during the term hereof ("Rate Change Date"), commencing
on the first day of April 1997, and continuing on the first day
of each July, October, January thereafter until the Maturity
Date, provided that if the first day of any quarter during the
term hereof is not a Business Day, then the Rate Change Date
shall be the first Business Day following the first day of such
quarter with interest payable for the actual number of days to
the date of payment.
3. The principal and interest shall be payable at Xxxx-Son
Gaming Corporation, 0000 X. Xxxxxxxxxx Xxxx, Xxx Xxxxx, Xxxxxx
00000, or such other place as the Lender may designate in
writing, in immediately available funds, as follows:
(a) Borrower shall pay consecutive quarterly
installments of interest only commencing on the first day of
April 1997 and on the first day of each and every quarter
thereafter up to and including the first day of December,
1998 (provided, however, that interest due on April 1, 1997,
shall be calculated from the date of the actual disbursement
of funds hereunder to and including March 31, 1997 and shall
be paid, in advance, simultaneously with such disbursement),
and a final installment equal to the entire unpaid principal
balance and accrued interest thereon, if not sooner paid,
shall be due and payable on the first day of December 1,
1998 (the "Maturity Date"). If any payment becomes due on
any day which is not a Business Day, such payment shall be
made on the next succeeding Business Day without penalty,
but without waiver of any interest accrued between such due
date and the extended date of payment.
4. Interest hereunder shall be calculated for the actual
number of days elapsed on the basis of a 360-day year.
5. Upon and after the occurrence of a Default Event under
this Note or any other document or instrument evidencing,
securing or relating to the Loan (any such default or event of
default, a "Default Event"), the Loan shall bear interest,
payable upon demand, at a rate per annum equal to one and one-
half times (x 1.50) the Interest Rate (Interest Rate x 1.50 is
hereinafter referred to as "Default Rate").
6. Time is of the essence hereof. If Payments are not
paid within five (5) calendar days from the date same become due
or any other payment hereunder is not paid on or before the
Maturity Date, any Payment or other payment so unpaid, as the
case may be, shall bear interest from the date such was due until
paid at the Default Rate. Interest on such payment so unpaid
shall be compounded quarterly and shall be payable upon demand.
In addition, if any Payment is not paid within five (5) calendar
days from the date such becomes due or any other payment
hereunder is not paid on or before the Maturity Date, Borrower
shall pay a reasonable late or collection charge equal to five
percent (5%) of the amount so unpaid. Lender and Borrower agree
that the actual damages and costs sustained by Lender due to the
failure to make timely payments would be extremely difficult to
measure and that the charges specified in this paragraph
represent a reasonable estimate by Borrower and Lender of a fair
average compensation for such damages and costs. Such charges
shall be paid by Borrower without prejudice to the right of
Lender to collect any other amounts provided to be paid under
this Note or any other agreement or, with respect to late
payments, to declare a Default Event.
4
7. Both principal and interest shall be paid by Borrower
in lawful money of the United States of America such that Lender
has received immediately available funds for the credit of
Borrower not later than 3:00 p.m. Pacific Time on the date that
such payment is due. Any payment made after 3:00 p.m. Pacific
Time shall be deemed received on the next Business Day. If any
Payment becomes due on any day which is not a Business Day, such
Payment shall be made on the next succeeding Business Day without
penalty, but without waiver of any interest accrued between such
due date and the extended date of payment.
8. Borrower may prepay the unpaid principal balance of the
Note (partial or full) at anytime. Notwithstanding any partial
or full prepayment, Lender is not obligated to extend to Borrower
any additional funds above and beyond an aggregate amount of
Money Advances totaling One Hundred Fifty Thousand and no/100ths
Dollars ($150,000.00 U.S.).
9. Borrower and Lender agree that Borrower shall be liable
for and pay any and all attorneys' fees and costs associated with
the execution of the Loan, including, but not limited to, the
preparation of the Loan Documents. Borrower and Lender further
agree that in the event of a dispute, arbitration by either party
in any dispute, arbitration or litigation concerning this
Agreement, the losing party shall pay the prevailing party's
reasonable attorneys' fees and costs in that dispute, arbitration
or litigation.
10. No waiver of any Default Event shall be implied from
any failure of Lender to take or any delay by Lender in taking
action with respect to any such Default Event or from any
previous waiver of any similar or unrelated Default Event. A
waiver of any term of any Collateral Document or of any of the
covenants and obligations of Borrower contained in the Collateral
Documents, must be made in writing and shall be limited to the
express written terms of such waiver.
11. Borrower shall not, whether voluntarily, involuntarily
or by operation of law, convey, sell or further encumber all or
any part of the Collateral without obtaining Lender's prior
written consent. Any such conveyance, sale or further
encumbrance of such property, without Lender's prior written
consent, shall be considered a Default Event.
12. Borrower waives presentment, demand, notice of
dishonor, notice of default or delinquency, notice of
acceleration, notice of protest and nonpayment, notice of costs,
expenses or losses and interest thereon, notice of interest on
interest and late charges and diligence in taking any action to
collect any sums owing under this Note or in proceeding against
any of the rights and interests in and to properties securing
payment of this Note.
13. This Note shall be construed and enforced in accordance
with the laws of the State of Nevada, except to the extent that
Lender shall at any time have greater rights under Federal law;
and all persons and entities in any manner obligated under this
Note consent to the jurisdiction of any Federal or State court
within the County of Xxxxx, State of Nevada selected by Lender
and also consent to service of process by any means authorized by
Nevada or Federal law.
14. This Note is hereby expressly limited so that in no
contingency or event whatsoever, whether by acceleration of
maturity of the debt evidenced hereby or otherwise, shall the
amount paid or agreed to be paid to Lender for the use,
forbearance or detention of the money advanced or to be
5
advanced under this Note exceed the highest lawful rate
permissible under the laws of the State of Nevada as applicable
to Borrower. If, from any circumstances whatsoever, fulfillment
of any provision hereof or of any other agreement, evidencing or
securing the debt, at the time performance of such provisions
shall be due, shall involve the payment of interest in excess of
that authorized by law, the obligation to be fulfilled shall be
reduced to the limit so authorized by law, and if from any
circumstances, Lender shall ever receive as interest an amount
which would exceed the highest lawful rate applicable to the
Borrower, such amount which would be excessive interest shall be
applied to the reduction of the unpaid principal balance of the
debt evidenced hereby and not to the payment of interest.
In Witness Whereof, this Note has been executed by
undersigned as of the date first above written.
Borrower:
/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
6
SECURITY AGREEMENT
This Security Agreement ("Agreement") is made as of the 19th
day of November 1996, and executed by Xxxxxx X. Xxxxxx
(hereinafter referred to as "Borrower") in favor of Xxxx-Son
Gaming Corporation, a Nevada corporation (hereinafter referred to
as "Lender").
RECITALS
A. This Agreement is being executed in connection with
Lender's grant of a line of credit loan to Borrower in the
original principal amount of ONE-HUNDRED FIFTY THOUSAND AND
NO/100THS DOLLARS ($150,000.00 U.S.) (the "Loan");
B. The Loan is evidenced by series of documents and
agreements executed by Borrower, including, but not limited to a
Line of Credit Loan Agreement, Line of Credit Promissory Note
(including any amendments or modifications thereto or
restatements thereof, the "Note"), this Security Agreement,
Assignment Agreement, Power of Attorney Agreement, Uniform
Commercial Code Financing Statements and the relating documents
thereunder (collectively referred to as the "Collateral
Documents"); and
C. Lender requires as a condition to the making of the
Loan that Borrower assign his present or hereafter acquired
rights, titles, benefits and interests as set forth below and in
the Collateral Documents.
Now, Therefore, in consideration of the several and mutual
promises, agreements, covenants, understandings, undertakings,
representations and warranties hereinafter set forth, and for
other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Borrower agrees
that the Recitals are true and correct and by this reference
incorporated herein as if fully set forth and further covenants
and agrees as follows:
1. DEFINITIONS
In this Agreement and in the Loan Documents (as hereinafter
defined) (unless the context thereof requires a contrary
definition or unless the same shall be defined therein, in which
latter event, the definitions shall be cumulative and not
exclusive), the following words, phrases, and expressions shall
have the respective meanings attributed to them:
(a) "AGREEMENT" shall mean this Security Agreement, and all
extensions, amendments, modifications and alterations thereto, in
writing from time to time.
(b) "BORROWER" shall mean Xxxxxx X. Xxxxxx.
(c) "COLLATERAL" shall mean all property and security
described in any of the Collateral Documents now or hereafter
existing.
(d) "COLLATERAL DOCUMENTS" shall mean any and all
documents, instruments, notes, agreements, and written memoranda,
referred to in this Agreement or referred to in any of the
foregoing, or executed in connection herewith or therewith, now
or hereafter existing, and specifically, but not by way of limita
tion, the documents identified in Recitals.
(e) "DEFAULT EVENT" shall mean the occurrence of any act,
omission or failure as set forth in Section 7 hereof, including
any applicable notice required thereunder and time period to cure
same.
(f) "DEFAULT INTEREST RATE" shall mean one and one-half
times (x 1.50) the Interest Rate (as hereinafter defined).
(g) "EFFECTIVE DATE" shall mean the date first written
above.
(h) "GUARANTOR" shall mean Xxxx X. Xxxxxx, the wife of
Xxxxxx X. Xxxxxx.
(i) "INDEBTEDNESS" shall mean and include by way of example
only, but not by way of limitation:
(i) all indebtedness, obligations and liabilities
of the Borrower referred to in this Agreement, or in
any of the Collateral Documents, of whatsoever kind,
nature and description, primary or secondary, direct,
indirect or contingent, due or to become due, and
whether now existing or hereafter arising and howsoever
evidenced or acquired, and whether joint, several, or
joint and several;
(ii) all present and future Money Advances made by
Lender in connection with this Agreement or the
Collateral Documents, or otherwise, and whether made at
Lender s option or otherwise;
(iii) all future advances made by Lender for
the protection or preservation of Lender's rights and
interests in the Collateral, or arising under this
Agreement or the Collateral Documents, including, but
not by way of limitation, advances for taxes, levies,
assessments, insurance or maintenance of the
Collateral, and reasonable attorneys fees;
(iv) all costs and expenses incurred by Lender in
connection with or arising out of the protection,
enforcement or collection of any of the foregoing
including, without limitation, reasonable attorney
fees; and
(v) all costs and expenses incurred by Lender in
connection with, or arising out of, the sale,
disposition, liquidation or other realization
[including, but not by way of limitation, the taking,
retaking or holding, and all proceedings (judicial or
otherwise)] of the Collateral, including, without
limitation, reasonable attorney fees.
(j) "INTEREST RATE" shall mean the Prime Rate (as
hereinafter defined) plus two percent (2%) and shall be a
variable rate which shall change quarterly on the first day of
each quarter during the term hereof ("Rate Change Date"),
commencing on the first day of April 1997, and continuing on the
first day of each July, October, January thereafter until the
Maturity Date, provided that if the first day of any quarter
during the term hereof is not a Business Day, then the Rate
Change Date shall be the first Business Day following the first
day of such quarter.
2
(k) "LENDER" shall mean Xxxx-Son Gaming Corporation, a
Nevada corporation.
(l) "LOAN DOCUMENTS" shall mean
(i) Any and all Collateral Documents;
(ii) Any and all documents, instruments, notes,
agreements, and written memoranda executed and delivered by
Borrower in connection herewith or therewith, now or
hereafter existing (hereinafter collectively referred to as
the "Pledge Documents"), and specifically including, but not
by way of limitation, the following:
(1) PLEDGE AGREEMENT. Guarantor shall execute an
agreement in which Guarantor agrees to pledge Pledge
Collateral (as hereinafter defined) to Lender as
inducement for Lender to make Loan to Borrower;
(2) GUARANTY. Guarantor shall execute an
agreement in which Guarantor agrees to guaranty the
obligations, covenants and agreements of Borrower under
this Agreement, the Collateral Documents, or any other
agreement executed by and between the Lender, Borrower
or to which they are a party, whether now existing or
hereafter created;
(3) POWER OF ATTORNEY. Guarantor shall execute a
power of attorney in favor of the Lender to be returned
by Lender permitting Lender to negotiate, encumber,
transfer or dispose of all stock certificates issued in
the name of the Guarantor.
(4) UNIFORM COMMERCIAL CODE SECURITY AGREEMENT.
Guarantor shall execute an agreement in which Guarantor
agrees to grant Lender a security interest in the
Pledge Collateral.
(5) UNIFORM COMMERCIAL CODE FINANCING STATEMENTS.
Guarantor shall execute the following Uniform
Commercial Code Financing Statements in order to
perfect a security interest in favor of Lender, in and
to the Pledge Collateral, and to evidence a first and
perfected lien with respect to such Pledge Collateral:
- Uniform Commercial Code Financing Statement
Form UCC-1 to be filed in the state of Nevada; and
- Uniform Commercial Code Financing Statement
Form UCC-1 to be filed in the state of Ohio.
(6) OTHER DOCUMENTS. Any other document or
agreement which the Lender may reasonably require in
connection with the Loan.
(iii) Any and all documents, instruments, notes,
agreements, and written memoranda, referred to in the
Collateral Documents or Pledge Documents or referred to
3
in any of the foregoing, or executed in connection herewith
or therewith, now or hereafter existing.
(m) "MONEY ADVANCE" shall mean any disbursement of monies
by Lender to or for the benefit of Borrower, whether mandatory or
optional.
(n) "PRIME RATE" shall mean the rate of interest most
recently published in THE WALL STREET JOURNAL, as the average of
Money Center interest rates charged by banks to their most
favored commercial customers or, if discontinued, in any other
publication selected by Lender.
(o) "STOCK OPTIONS" shall mean any and all stock options to
purchase common stock of Xxxx-Son Gaming Corporation which the
Borrower, Guarantor or Borrower and Guarantor jointly may now
possess or hereafter acquire a possessory interest.
2. SECURITY INTEREST
Borrower grants and assigns to Lender as of the Effective
Date a security interest in all of Borrower's acquired rights,
titles, benefits and interests currently owned or hereinafter
acquired, including, but not limited to, the following
(hereinafter collectively referred to as the "Collateral"):
(a) Consulting Agreement by and between Xxxx X. Xxxx, Xx.
and Xxxxxx X. Xxxxxx entered into on the 1st day of July, 1996
(the "Xxxx Agreement");
(b) Stock Option Agreement by and between Xxxx X. Xxxx, Xx.
and Xxxxxx X. Xxxxxx entered into on the 1st day of July, 1996
(the "Option Agreement") in conjunction with the Xxxx Agreement;
(c) All options to purchase common stock of Xxxx-Son Gaming
Corporation that Borrower presently owns or hereafter acquires,
including but not limited to those options granted to Borrower
under the Option Agreement;
(d) Consulting Agreement by and between Xxxx-Son Gaming
Corporation, a Nevada corporation, and Xxxxxx X. Xxxxxx entered
into on the 1st day of July, 1996 (the "Xxxx-Son Agreement");
(e) All stock of Xxxx-Son Gaming Corporation that Borrower
presently owns or hereafter acquires; and
(f) All payments due from Xxxx-Son Gaming Corporation to
Borrower, including, but not limited to, any and all fees
associated with the Borrower's position as director of the Xxxx-
Son Gaming Corporation.
3. OBLIGATIONS SECURED
This Agreement secures the payment and performance of all
present and future obligations of Borrower to Lender under the
Collateral Documents, and under any other agreement which recites
that it is secured hereby.
4
4. REPRESENTATIONS AND WARRANTIES OF BORROWER
Borrower represents and warrants that the following are true
and correct:
(a) GOOD TITLE. Borrower has, or will have, good title to
the Collateral.
(b) ENCUMBRANCES. Borrower has not previously assigned or
encumbered the Collateral, and no financing statement covering
any of the Collateral has been delivered to any other person or
entity.
(c) AUTHORITY. Borrower has full power and authority to
execute and deliver this Agreement and the Collateral Documents.
(d) DEFAULT. There is no Default Event under this
Agreement, now existing or hereafter executed, and no event, act
or omission has occurred and is continuing which, with applicable
notice or the passage of time or either, would constitute an
Default Event thereunder.
(e) LITIGATION. There are no actions, suits or proceedings
pending or, to the knowledge of Borrower threatened against or
affecting Borrower or the property of Borrower in any court or
before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which may result in any material adverse
change in the properties or assets or in the condition, financial
or otherwise, of Borrower. Borrower is not in default with
respect to any order, writ, injunction, decree or demand of any
court or federal, state, municipal or other governmental
department, commission, board, bureau, agency, instrumentality,
default under which might have consequences which would
materially and adversely affect the business or properties of
Borrower.
(f) SURVIVAL AND CONTINUATION. All representations and
warranties contained in this Agreement, or in any of the
Collateral Documents, now or hereafter existing, are and shall
continue to be true and accurate, at all times while any Money
Advances are outstanding, and the continuing truth and accuracy
thereof shall be conditions precedent to the making of any Money
Advances hereunder and shall survive the execution hereof and the
consummation of the transactions herein contemplated.
5. COVENANTS OF BORROWER
(a) PRESERVATION OF COLLATERAL. Borrower shall not waste
or destroy Collateral or any part thereof; and Borrower shall not
use Collateral in violation of any statute or ordinance. Lender
shall have the right to possess Collateral.
(b) ALIENATION OF COLLATERAL. Borrower will not, without
the prior written consent of Lender, sell, contract to sell,
lease, encumber or otherwise dispose of any Collateral unless and
until this Agreement and all debts secured thereby have been
fully satisfied.
(c) PERFORMANCE OF OBLIGATIONS. Perform all of the
obligations, covenants and agreements of Borrower under this
Agreement, the Collateral Documents, or any other agreement
executed by and between the Lender, Borrower or to which they are
a party, whether now
5
existing or hereafter created, and maintain and take all action
(or not fail to take any action or suffer or permit any omission)
necessary to maintain the representations and warranties made, as
true and accurate.
(d) INFORMATION. Borrower shall furnish promptly and in a
form satisfactory to Lender, such information as Lender may
reasonably request, from time to time.
(e) LITIGATION. Borrower shall notify Lender promptly of
any litigation, or administrative or tax proceeding or any other
material matter which could adversely impair the Borrower's
financial condition including, but not limited to, any inquiry or
proceedings initiated by any state, federal or foreign regulatory
agency. For the purposes of this Agreement, any such litigation,
proceeding, matter or inquiry in which the sum in dispute is Five
Thousand and no/100ths Dollars ($5,000.00 U.S.) or an aggregate
total of Twenty-Five Thousand and no/100ths ($25,000.00 U.S.) or
more shall be deemed to be material.
6. RIGHTS OF LENDER
In addition to Lender's rights as a "Secured Party" under
the Nevada Uniform Commercial Code, as amended or recodified from
time to time ("UCC"), Lender may, but shall not be obligated to,
at any time without notice and at the expense of Borrower: (a)
give notice to any person of Lender's rights hereunder and
enforce such rights; (b) insure, protect, defend and preserve the
Collateral or any rights or interests of Lender therein; (c)
inspect the Collateral; and (d) endorse, collect and receive any
right to payment of money owing to Borrower under or from the
Collateral. Lender shall have no duty or obligation to make or
give any presentments, demands for performance, notices of
nonperformance, notices of protest or notices of dishonor in
connection with any of the Collateral.
7. DEFAULT EVENTS
The Indebtedness shall mature and become immediately due and
payable, at the option of Lender, notwithstanding any maturity
date to the contrary upon the occurrence of any of the following
acts, omissions or failures (hereinafter referred to as "Default
Events"):
(a) FAILURE OF PAYMENT. Failure of Borrower to make
payment of any installment of principal and/or interest required
under the Note or of any payment by Borrower required pursuant to
this Agreement or under the Collateral Documents, within five (5)
days from the date same is due and payable shall constitute a
Default Event, if not paid, including any applicable late charge
or Default Interest Rate, ten (10) calendar days after the five
(5) day grace period.
(b) BREACH OR FAILURE. The failure or breach of any other
covenant, warranty, agreement, undertaking, condition, promise,
representation or warranty herein contained and/or contained in
the Loan Documents shall constitute a Default Event.
(c) INSOLVENCY OF BORROWER. Insolvency shall mean: (i) a
general assignment by Borrower for the benefit of creditors; (ii)
the filing of a voluntary petition in bankruptcy by Borrower;
(iii) the filing of any involuntary petition under any bankruptcy
or insolvency law by Borrower's creditors, said petition
remaining undischarged for a period of sixty (60) days; (iv) the
appointment by
6
any court of a receiver to take possession of substantially all
of Borrower's assets, said receivership remaining undischarged
for a period of sixty (60) days; or (v) the attachment, execution
or other judicial seizure of substantially all of Borrower's
assets, such attachment, execution or other seizure remaining
undismissed or undischarged for a period of sixty (60) days after
the levy thereof.
8. CONSEQUENCES OF DEFAULT
(a) REMEDIES OF LENDER. Upon the occurrence of any Default
Event, Lender shall have the right to exercise any and all rights
and remedies which may be available, whether contained in this
Agreement, the Loan Documents, or available by virtue of law,
including the Uniform Commercial Code or other similar laws or
statutes applicable, or contained in any other instruments or
agreements between the Lender and the Borrower. The rights and
remedies available to the Lender include, but are not limited to,
the following:
(i) Lender shall have the right to exercise,
negotiate, transfer, encumber or dispose of all Stock
Options;
(ii) Lender may (i) upon written notice, require
Borrower to assemble any or all of the Collateral and make
it available to Lender at a place designated by Lender; (ii)
without prior notice, take possession of, collect, sell, and
dispose of any or all of the Collateral; or (iii) sell,
assign and deliver at any place or in any lawful manner all
or any part of the Collateral and bid and become purchaser
at any such sales; and
(iii) Lender may, for the account of Borrower and
at Borrower's expense: (i) operate, use, consume, sell or
dispose of the Collateral as Lender deems appropriate for
the purpose of performing any or all of the obligations
secured by this Agreement; (ii) enter into any agreement,
compromise, or settlement, including insurance claims, which
Lender may deem desirable or proper with respect to any of
the Collateral; (iii) endorse and deliver evidences of title
for, and receive, enforce and collect by legal action or
otherwise, all indebtedness and obligations now or hereafter
owing to Borrower in connection with or on account of any or
all of the Collateral; and (iv) perform any of the
obligations secured by this Agreement.
(b) RENUNCIATION BY BORROWER. Upon the occurrence of any
Default Event, Borrower agrees that such Default Event, after the
lapse of any cure period, shall automatically, without notice,
and immediately effectuate a renunciation in favor of Lender of
any and all rights, benefits, claims and interests of Borrower in
the following:
(i) Consulting Agreement by and between Xxxx X. Xxxx,
Xx. and Xxxxxx X. Xxxxxx entered into on the 1st day of July,
1996 (the "Xxxx Agreement");
(ii) Stock Option Agreement by and between Xxxx X.
Xxxx, Xx. and Xxxxxx X. Xxxxxx entered into on the 1st day
of July, 1996 (the "Option Agreement") in conjunction with
the Xxxx Agreement;
7
(iii) Consulting Agreement by and between Xxxx-Son
Gaming Corporation, a Nevada corporation, and Xxxxxx X. Xxxxxx
entered into on the 1st day of July, 1996 (the "Xxxx-Son
Agreement");
(iv) All options to purchase common stock of Xxxx-Son
Gaming Corporation that Borrower presently owns or hereafter
obtains, including but not limited to those options granted
to Borrower under (i), (ii) and (iii) above;
(v) All stock of Xxxx-Son Gaming Corporation that
Borrower presently owns or hereafter obtains, including but
not limited to stock obtained by or through (i), (ii), (iii)
and (iv) above; and
(vi) All payments due from Xxxx-Son Gaming Corporation
to Borrower, including, but not limited to, any and all fees
associated with the Borrower's position as director of the
Lender.
(c) NO RELEASE AND NO DISCHARGE. The exercise of any such
right or remedy by Lender shall not serve to release or discharge
any other security, property or Collateral held by Lender in
connection with this transaction.
(d) NON-EXCLUSIVITY OF RIGHTS AND REMEDIES. The rights and
remedies referred to in this section shall be cumulative and not
exclusive.
(e) NO WAIVER. No waiver of any Default Event shall be
implied from any failure of Lender to take or any delay by Lender
in taking action with respect to any such Default Event or from
any previous waiver of any similar or unrelated Default Event. A
waiver of any term contained in the Collateral Documents or of
any of the covenants and obligations of Borrower contained in the
Collateral Documents, must be made in writing and shall be
limited to the express written terms of such waiver.
9. POWER OF ATTORNEY
Borrower hereby irrevocably appoints Lender as Borrower's
attorney-in-fact (such agency being coupled with an interest),
and as such attorney-in-fact Lender may, without the obligation
to do so, in Lender's name or in the name of Borrower, prepare,
execute and file or record financing statements, continuation
statements, applications for registration and like papers
necessary to create, perfect or preserve any of Lender's security
interests and rights in or to any of the Collateral, and, upon
occurrence of a Default Event hereunder take any other action
specified in Section 8 hereof; provided that Lender as such
attorney-in-fact shall be accountable only for such funds as are
actually received by Lender.
10. GENERAL PROVISIONS
(a) AMENDMENT. No amendment or modification of this
Agreement shall be deemed effective unless and until it is an
express writing executed by both Borrower and Lender.
8
(b) ASSIGNMENT. The rights, benefits and obligations of
Borrower under this Agreement are personal in nature and shall
not be assignable, transferable or encumberable in any manner
whatsoever, whether directly or indirectly or, and whether inter
vivos or testamentary. Any purported assignment by Borrower in
violation of this Section 10(b) shall be null and void and of no
force and effect. All covenants and agreements hereunder shall
inure to the benefit of and be enforceable by Lender, its
successors or assigns.
(c) ATTORNEYS' FEES AND COSTS. Borrower and Lender agree
that Borrower shall be liable for and pay any and all attorneys'
fees and costs associated with the execution of the Loan,
including, but not limited to, the preparation of the Loan
Documents. Borrower and Lender further agree that in the event
of a dispute, arbitration by either party in any dispute,
arbitration or litigation concerning this Agreement, the losing
party shall pay the prevailing party's reasonable attorneys' fees
and costs in that dispute, arbitration or litigation.
(d) CAPTIONS AND PRONOUNS. The captions appearing at the
commencement of the sections hereof are descriptive only and for
convenience in reference to this Agreement and in no way
whatsoever define, limit or describe the scope or intent of this
Agreement nor in any way affect this Agreement.
(e) COUNTERPARTS. This Agreement may be executed at
different times and in multiple counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument.
(f) CONTINUED FORCE AND EFFECT. This Agreement may not be
invalidated by and may not be made subject to any order of any
domestic relations or family law court without the express
written consent of Lender.
(g) EFFECT OF WAIVER. The waiver by either party of a
breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach thereof.
(h) ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties and cannot be changed or terminated
unless in an express writing, executed by the parties hereto.
(i) GENDER. Masculine or feminine pronouns shall be
substituted for the neuter form and vice versa and the plural
shall be substituted for the singular form and vice versa in any
place or places herein in which the context requires such
substitution or substitutions.
(j) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada in
effect on the date of this Agreement without resort to any
conflict of laws principles, and the courts of the State of
Nevada shall have sole and exclusive jurisdiction over any matter
brought under, or by reason of, this Agreement.
(k) INCORPORATION. The Loan Documents are incorporated
herein by reference, and in the event any provision thereof is
inconsistent with the provisions of this Agreement, then this
Agreement shall be deemed paramount unless the rights and
remedies of the Lender would be adversely affected or diminished
thereby.
9
(l) NEUTRAL INTERPRETATION. The provisions contained
herein shall not be construed in favor of or against any party
because that party or its counsel drafted this Agreement, but
shall be construed as if all parties prepared this Agreement, and
any rules of construction to the contrary are hereby specifically
waived. The terms of this Agreement were negotiated at arm's
length by the parties hereto.
(m) NOTICE. Any and all notices required under this
Agreement shall be in writing and shall be either (i) hand-
delivered; (ii) mailed, first-class postage prepaid, certified
mail, return receipt requested; (iii) transmitted via telecopier
provided that confirmation is obtained; or (iv) delivered via a
nationally recognized overnight courier service, addressed to:
LENDER: Xxxx X. Xxxx, Xx.
Chairman of the Board and Chief
Executive Officer
Xxxx-Son Gaming Corporation
0000 X. Xxxxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
COPY TO: Xxxxxxxx X. Xxxxxxx, Esq.
0000 X. Xxxxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
BORROWER: Xxxxxx X. Xxxxxx
00000 Xxxxxxxx Xxxx
Xxxxxx Xxxx, Xxxx 00000
All notices hand-delivered shall be
deemed delivered as of the date actually delivered. All notices
mailed or delivered via overnight courier shall be deemed
delivered as of three (3) business days after the date
postmarked. Any changes in any of the addresses listed herein
shall be made by notice as provided in this Section 10(m).
(n) PARTIAL INVALIDITY. If any term, condition, covenant,
or provision of this Agreement, or any application thereof, shall
be held by a court of competent jurisdiction to be invalid, void
or unenforceable, all provision, covenants, and conditions of
this Lease and applications thereof, not held invalid, void or
unenforceable, shall continue in full force and effect and shall
in no way be affected, impaired or invalidated thereby.
(o) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained in this Agreement shall
survive the execution and delivery of this Agreement.
10
In Witness Whereof, the undersigned has executed this
Agreement as of the day first above written.
"BORROWER"
/s/ Xxxxxx X. Xxxxxx
By: Xxxxxx X. Xxxxxx
11
ASSIGNMENT AGREEMENT
This Assignment Agreement ("Assignment") is made this 19th
day of November, 1996 by and between Xxxxxx X. Xxxxxx
(hereinafter referred to as "Borrower") to Xxxx-Son Gaming
Corporation, a Nevada corporation (hereinafter referred to as
"Lender").
RECITALS
A. This Assignment is being executed in connection with
Lender's grant of a line of credit loan to Borrower in the
original principal amount of ONE-HUNDRED FIFTY THOUSAND AND
NO/100THS DOLLARS ($150,000.00 U.S.) (the "Loan");
B. The Loan is evidenced by series of documents and
agreements executed by Borrower, including, but not limited to a
Line of Credit Loan Agreement, Line of Credit Promissory Note
(including any amendments or modifications thereto or
restatements thereof, the "Note"), Security Agreement, this
Assignment Agreement, Power of Attorney Agreement, Uniform
Commercial Code Security Agreement, Uniform Commercial Code
Financing Statements (hereinafter collectively referred to as the
"Collateral Documents") and the relating documents thereunder;
and
C. Lender requires as a condition to the making of the
Loan that Borrower assign his present or hereafter acquired
rights, titles, benefits and interests as set forth below and in
the Collateral Documents.
Now, Therefore, in consideration of the several and mutual
promises, agreements, covenants, understandings, undertakings,
representations and warranties hereinafter set forth, and for
other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree
that the Recitals are true and correct and by this reference
incorporated herein as if fully set forth and Borrower further
covenants and agrees as follows:
1. DEFINITIONS
In this Assignment and in the Loan Documents (as hereinafter
defined) (unless the context thereof requires a contrary
definition or unless the same shall be defined therein, in which
latter event, the definitions shall be cumulative and not
exclusive), the following words, phrases, and expressions shall
have the respective meanings attributed to them:
(a) "ASSIGNMENT" shall mean this Assignment Agreement, and
all extensions, amendments, modifications and alterations
thereto, in writing from time to time.
(b) "BORROWER" shall mean Xxxxxx X. Xxxxxx.
(c) "COLLATERAL" shall mean all property and security
described in any of the Collateral Documents now or hereafter
existing.
(d) "COLLATERAL DOCUMENTS" shall mean any and all
documents, instruments, notes, agreements, and written memoranda,
referred to in this Assignment or referred to in any of the fore
going, or executed in connection herewith or therewith, now or
hereafter existing, and specifically, but not by way of limita
tion, the documents identified in the Recitals.
(e) "DEFAULT EVENT" shall mean the occurrence of any act,
omission or failure as set forth in Section 6 hereof.
(f) "DEFAULT INTEREST RATE" shall mean one and one-half
times (x 1.50) the Interest Rate (as hereinafter defined).
(g) "GUARANTOR" shall mean Xxxx X. Xxxxxx, the wife of
Xxxxxx X. Xxxxxx.
(h) "INDEBTEDNESS" shall mean and include by way of example
only, but not by way of limitation:
(i) All indebtedness, obligations and liabilities of
the Borrower referred to in the Loan Agreement (as
hereinafter defined), or in any of the Loan Documents, of
whatsoever kind, nature and description, primary or
secondary, direct, indirect or contingent, due or to become
due, and whether now existing or hereafter arising and
howsoever evidenced or acquired, and whether joint, several,
or joint and several;
(ii) All present and future Money Advances made by
Lender in connection with the Loan Agreement or the Loan
Documents, or otherwise, and whether made at Lender s option
or otherwise;
(iii) All future advances made by Lender for the
protection or preservation of Lender's rights and interests
in the Collateral, or arising under the Loan Agreement or
the Loan Documents, including, but not by way of limitation,
advances for taxes, levies, assessments, insurance or
maintenance of the Collateral, and reasonable attorneys
fees;
(iv) All costs and expenses incurred by Lender in
connection with or arising out of the protection,
enforcement or collection of any of the foregoing including,
without limitation, reasonable attorney fees; and
(v) All costs and expenses incurred by Lender in
connection with, or arising out of, the sale, disposition,
liquidation or other realization [including, but not by way
of limitation, the taking, retaking or holding, and all
proceedings (judicial or otherwise)] of the Collateral,
including, without limitation, reasonable attorney fees.
(i) "INTEREST RATE" shall mean the Prime Rate (as
hereinafter defined) plus two percent (2%) and shall be a
variable rate which shall change quarterly on the first day of
each quarter during the term hereof ("Rate Change Date"),
commencing on the first day of April 1997, and continuing on the
first day of each July, October, January thereafter until the
Maturity Date, provided that if the first day of any quarter
during the term hereof is not a Business Day, then the Rate
Change Date shall be the first Business Day following the first
day of such quarter.
2
(j) "LENDER" shall mean Xxxx-Son Gaming Corporation, a
Nevada corporation.
(k) "LOAN AGREEMENT" shall mean the Line of Credit Loan
Agreement executed by and between the Borrower and Lender of even
date herewith.
(l) "LOAN DOCUMENTS" shall mean:
(i) Any and all Collateral Documents;
(ii) Any and all documents, instruments, notes,
agreements, and written memoranda executed and delivered by
Guarantor in connection herewith or therewith, now or
hereafter existing (hereinafter collectively referred to as
the "Pledge Documents"), and specifically including, but not
by way of limitation, the following:
(1) PLEDGE AGREEMENT. Guarantor shall execute an
agreement in which Guarantor agrees to pledge Pledge
Collateral (as hereinafter defined) to Lender as
inducement for Lender to make Loan to Borrower;
(2) GUARANTY. Guarantor shall execute an
agreement in which Guarantor agrees to guaranty the
obligations, covenants and agreements of Borrower under
this Agreement, the Collateral Documents, or any other
agreement executed by and between the Lender, Borrower
or to which they are a party, whether now existing or
hereafter created;
(3) POWER OF ATTORNEY. Guarantor shall execute a
power of attorney in favor of the Lender to be returned
by Lender permitting Lender to negotiate, encumber,
transfer or dispose of all stock certificates issued in
the name of the Guarantor.
(4) UNIFORM COMMERCIAL CODE SECURITY AGREEMENT.
Guarantor shall execute an agreement in which Guarantor
agrees to grant Lender a security interest in the
Pledge Collateral.
(5) UNIFORM COMMERCIAL CODE FINANCING STATEMENTS.
Guarantor shall execute the following Uniform
Commercial Code Financing Statements in order to
perfect a security interest in favor of Lender, in and
to the Pledge Collateral, and to evidence a first and
perfected lien with respect to such Pledge Collateral:
- Uniform Commercial Code Financing
Statement Form UCC-1 to be filed in the state of
Nevada; and
- Uniform Commercial Code Financing
Statement Form UCC-1 to be filed in the state of
Ohio.
(6) OTHER DOCUMENTS. Any other document or
agreement which the Lender may reasonably require in
connection with the Loan.
3
(iii) any and all documents, instruments, notes,
agreements, and written memoranda, referred to in the
Collateral Documents or Pledge Documents or referred to in
any of the foregoing, or executed in connection herewith or
therewith, now or hereafter existing.
(m) "MONEY ADVANCE" shall mean any disbursement of monies
by Lender to or for the benefit of Borrower, whether mandatory or
optional.
(n) "PRIME RATE" shall mean the rate of interest most
recently published in THE WALL STREET JOURNAL, as the average of
Money Center interest rates charged by banks to their most
favored commercial customers or, if discontinued, in any other
publication selected by Lender.
2. ASSIGNMENT OF RIGHTS, TITLES, BENEFITS AND INTERESTS
(a) Borrower hereby absolutely and unconditionally
transfers, sets over and assigns to Lender all of Borrower's
acquired rights, titles, benefits and interests currently owned
or hereinafter acquired including, but not limited to the
following:
(i) Consulting Agreement by and between Xxxx X. Xxxx,
Xx. and Xxxxxx X. Xxxxxx entered into on the 1st day of
July, 1996 (the "Xxxx Agreement");
(ii) Stock Option Agreement by and between Xxxx X.
Xxxx, Xx. and Xxxxxx X. Xxxxxx entered into on the 1st day
of July, 1996 (the "Option Agreement") in conjunction with
the Xxxx Agreement;
(iii) All options to purchase common stock of Xxxx-
Son Gaming Corporation that Borrower presently owns or
hereafter acquires, including but not limited to those
options granted to Borrower under the Option Agreement;
(iv) Consulting Agreement by and between Xxxx-Son
Gaming Corporation, a Nevada corporation, and Xxxxxx X.
Xxxxxx entered into on the 1st day of July, 1996 (the "Xxxx-
Son Agreement");
(v) All stock of Xxxx-Son Gaming Corporation that
Borrower presently owns or hereafter acquires; and
(vi) All payments due from Xxxx-Son Gaming Corporation
to Borrower, including, but not limited to, any and all fees
associated with the Borrower's position as director of the
Xxxx-Son Gaming Corporation.
(b) This is an absolute assignment, not an assignment for
security only.
3. TERMINATION
At such time as the unpaid principal and accrued interest on
the Loan is paid in full and the Uniform Commercial Code
Financing Statement is released of record, this Assignment and
all of
4
Lender's rights, titles and interests hereunder with respect to
the Collateral Documents shall terminate.
5
4. REPRESENTATIONS AND WARRANTIES OF BORROWER
Borrower represents and warrants that the following are true
and correct:
(a) GOOD TITLE. Borrower has, or will have, good title to
the Collateral.
(b) ENCUMBRANCES. Borrower has not previously assigned or
encumbered the Collateral, and no financing statement covering
any of the Collateral has been delivered to any other person or
entity.
(c) AUTHORITY. Borrower has full power and authority to
execute and deliver this Agreement and the Collateral Documents.
(d) DEFAULT. There is no Default Event under this
Agreement, now existing or hereafter executed, and no event, act
or omission has occurred and is continuing which, with applicable
notice or the passage of time or either, would constitute an
Default Event thereunder.
(e) LITIGATION. There are no actions, suits or proceedings
pending or, to the knowledge of Borrower threatened against or
affecting Borrower or the property of Borrower in any court or
before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which may result in any material adverse
change in the properties or assets or in the condition, financial
or otherwise, of Borrower. Borrower is not in default with
respect to any order, writ, injunction, decree or demand of any
court or federal, state, municipal or other governmental
department, commission, board, bureau, agency, instrumentality,
default under which might have consequences which would
materially and adversely affect the business or properties of
Borrower.
(f) SURVIVAL AND CONTINUATION. All representations and
warranties contained in this Agreement, or in any of the Xxxxx
xxxxx Documents, now or hereafter existing, are and shall
continue to be true and accurate, at all times while any Money
Advances are outstanding, and the continuing truth and accuracy
thereof shall be Conditions Precedent to the making of any Money
Advances hereunder and shall survive the execution hereof and the
consummation of the transactions herein contemplated.
5. COVENANTS OF BORROWER
(a) PRESERVATION OF COLLATERAL. Borrower shall not waste
or destroy Collateral or any part thereof; and Borrower shall not
use Collateral in violation of any statute or ordinance. Lender
shall have the right to possess Collateral.
(b) ALIENATION OF COLLATERAL. Borrower will not, without
the prior written consent of Lender, sell, contract to sell,
lease, encumber or otherwise dispose of any Collateral unless and
until this Agreement and all debts secured thereby have been
fully satisfied.
(c) PERFORMANCE OF OBLIGATIONS. Perform all of the
obligations, covenants and agreements of Borrower under this
Agreement, the Collateral Documents, or any other agreement
executed by and between the Lender, Borrower or to which they are
a party, whether now
6
existing or hereafter created, and maintain and take all action
(or not fail to take any action or suffer or permit any omission)
necessary to maintain the representations and warranties made, as
true and accurate.
(d) INFORMATION. Borrower shall furnish promptly and in a
form satisfactory to Lender, such information as Lender may
reasonably request, from time to time.
(e) LITIGATION. Borrower shall notify Lender promptly of
any litigation, or administrative or tax proceeding or any other
material matter which could adversely impair the Borrower's
financial condition including, but not limited to, any inquiry or
proceedings initiated by any state, federal or foreign regulatory
agency. For the purposes of this Agreement, any such litigation,
proceeding, matter or inquiry in which the sum in dispute is Five
Thousand and no/100ths Dollars ($5,000.00) or an aggregate total
of Twenty-Five Thousand and no/100ths ($25,000.00 U.S.) or more
shall be deemed to be material.
6. DEFAULT EVENTS
The Indebtedness shall mature and become immediately due and
payable, at the option of Lender, notwithstanding any maturity
date to the contrary upon the occurrence of any of the following
acts, omissions or failures (hereinafter referred to as "Default
Events"):
(a) FAILURE OF PAYMENT. Failure of Borrower to make
payment of any installment of principal and/or interest required
under the Note or of any payment by Borrower required pursuant to
this Agreement or under the Collateral Documents, within five (5)
days from the date same is due and payable shall constitute a
Default Event, if not paid, including any applicable late charge
or Default Interest Rate, ten (10) calendar days after the five
(5) day grace period.
(b) BREACH OR FAILURE. The failure or breach of any other
covenant, warranty, agreement, undertaking, condition, promise,
representation or warranty herein contained and/or contained in
the Loan Documents shall constitute a Default Event.
(c) INSOLVENCY OF BORROWER. Insolvency shall be a Default
Event and shall mean: (i) a general assignment by Borrower for
the benefit of creditors; (ii) the filing of a voluntary petition
in bankruptcy by Borrower; (iii) the filing of any involuntary
petition under any bankruptcy or insolvency law by Borrower's
creditors, said petition remaining undischarged for a period of
sixty (60) days; (iv) the appointment by any court of a receiver
to take possession of substantially all of Borrower's assets,
said receivership remaining undischarged for a period of sixty
(60) days; or (v) the attachment, execution or other judicial
seizure of substantially all of Borrower's assets, such
attachment, execution or other seizure remaining undismissed or
undischarged for a period of sixty (60) days after the levy
thereof.
7. EFFECT OF DEFAULT
(a) REMEDIES OF LENDER. Upon the occurrence of any Default
Event, Lender shall have the right to exercise any and all rights
and remedies which may be available, whether contained in this
Assignment, the Loan Documents, or available by virtue of law,
including the Uniform Commercial Code or other similar laws or
statutes applicable, or contained in any other
7
instruments or agreements between the Lender and the Borrower.
The rights and remedies available to the Lender include, but are
not limited to, the following:
(i) Lender shall have the right to exercise,
negotiate, transfer, encumber or dispose of all Stock
Options;
(ii) Lender may (i) upon written notice, require
Borrower to assemble any or all of the Collateral and make
it available to Lender at a place designated by Lender; (ii)
without prior notice, take possession of, collect, sell, and
dispose of any or all of the Collateral; or (iii) sell,
assign and deliver at any place or in any lawful manner all
or any part of the Collateral and bid and become purchaser
at any such sales; and
(iii) Lender may, for the account of Borrower and
at Borrower's expense: (i) operate, use, consume, sell or
dispose of the Collateral as Lender deems appropriate for
the purpose of performing any or all of the obligations
secured by the Loan Agreement; (ii) enter into any
agreement, compromise, or settlement, including insurance
claims, which Lender may deem desirable or proper with
respect to any of the Collateral; (iii) endorse and deliver
evidences of title for, and receive, enforce and collect by
legal action or otherwise, all indebtedness and obligations
now or hereafter owing to Borrower in connection with or on
account of any or all of the Collateral; and (iv) perform
any of the obligations imposed by the Loan Documents.
(b) RENUNCIATION BY BORROWER. Upon the occurrence of any
Default Event, Borrower agrees that such Default Event, after the
lapse of any cure period, shall automatically, without notice,
and immediately effectuate a renunciation in favor of Lender of
any and all rights, benefits, claims and interests of Borrower in
the following:
(i) Consulting Agreement by and between Xxxx X. Xxxx,
Xx. and Xxxxxx X. Xxxxxx entered into on the 1st day of
July, 1996 (the "Xxxx Agreement");
(ii) Stock Option Agreement by and between Xxxx X.
Xxxx, Xx. and Xxxxxx X. Xxxxxx entered into on the 1st day
of July, 1996 (the "Option Agreement") in conjunction with
the Xxxx Agreement;
(iii) Consulting Agreement by and between Xxxx-Son
Gaming Corporation, a Nevada corporation, and Xxxxxx X.
Xxxxxx entered into on the 1st day of July, 1996 (the "Xxxx-
Son Agreement");
(iv) All options to purchase common stock of Xxxx-Son
Gaming Corporation that Borrower presently owns or hereafter
obtains, including but not limited to those options granted
to Borrower under (i), (ii) and (iii) above;
(1) All stock of Xxxx-Son Gaming Corporation that
Borrower presently owns or hereafter obtains, including but
not limited to stock obtained by or through (i), (ii), (iii)
and (iv) above; and
8
(2) All payments due from Xxxx-Son Gaming Corporation
to Borrower, including, but not limited to, any and all fees
associated with the Borrower's position as director of the
Lender.
(c) NO RELEASE AND NO DISCHARGE. The exercise of any such
right or remedy by Lender shall not serve to release or discharge
any other security, property or Collateral held by Lender in
connection with this transaction.
(d) NON-EXCLUSIVITY OF RIGHTS AND REMEDIES. The rights and
remedies referred to in this section shall be cumulative and not
exclusive.
(e) NO WAIVER. No waiver of any Default Event shall be
implied from any failure of Lender to take or any delay by Lender
in taking action with respect to any such Default Event or from
any previous waiver of any similar or unrelated Default Event. A
waiver of any term contained in the Collateral Documents or of
any of the covenants and obligations of Borrower contained in the
Collateral Documents, must be made in writing and shall be
limited to the express written terms of such waiver.
8. GENERAL PROVISIONS
(a) AMENDMENT. No amendment or modification of this
Assignment shall be deemed effective unless and until it is an
express writing executed by both Borrower and Lender.
(b) ASSIGNMENT. The rights, benefits and obligations of
Borrower under this Assignment are personal in nature and shall
not be assignable, transferable or encumberable in any manner
whatsoever, whether directly or indirectly or, and whether inter
vivos or testamentary. Any purported assignment by Borrower in
violation of this Section 8(b) shall be null and void and of no
force and effect. All covenants and agreements hereunder shall
inure to the benefit of and be enforceable by Lender, its
successors or assigns.
(c) ATTORNEYS' FEES AND COSTS. Borrower and Lender agree
that Borrower shall be liable for and pay any and all attorneys'
fees and costs associated with the execution of the Loan,
including, but not limited to, the preparation of the Loan
Documents. Borrower and Lender further agree that in the event
of a dispute, arbitration by either party in any dispute,
arbitration or litigation concerning this Agreement, the losing
party shall pay the prevailing party's reasonable attorneys' fees
and costs in that dispute, arbitration or litigation.
(d) CAPTIONS AND PRONOUNS. The captions appearing at the
commencement of the sections hereof are descriptive only and for
convenience in reference to this Assignment and in no way
whatsoever define, limit or describe the scope or intent of this
Assignment nor in any way affect this Assignment.
(e) COUNTERPARTS. This Assignment may be executed at
different times and in multiple counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument.
9
(f) CONTINUED FORCE AND EFFECT. This Agreement may not be
invalidated by and may not be made subject to any order of any
domestic relations or family law court without the express
written consent of Lender.
(g) EFFECT OF WAIVER. The waiver by either party of a
breach of any provision of this Assignment shall not operate or
be construed as a waiver of any subsequent breach thereof.
(h) ENTIRE AGREEMENT. This Assignment contains the entire
agreement between the parties and cannot be changed or terminated
unless in an express writing, executed by the parties hereto.
(i) GENDER. Masculine or feminine pronouns shall be
substituted for the neuter form and vice versa and the plural
shall be substituted for the singular form and vice versa in any
place or places herein in which the context requires such
substitution or substitutions.
(j) GOVERNING LAW. This Assignment shall be governed by
and construed in accordance with the laws of the State of Nevada
in effect on the date of this Assignment without resort to any
conflict of laws principles, and the courts of the State of
Nevada shall have sole and exclusive jurisdiction over any matter
brought under, or by reason of, this Assignment.
(k) INCORPORATION. The Collateral Documents are
incorporated herein by reference, and in the event any provision
thereof is inconsistent with the provisions of this Assignment,
then this Assignment shall be deemed paramount unless the rights
and remedies of the Lender would be adversely affected or
diminished thereby.
(l) NEUTRAL INTERPRETATION. The provisions contained
herein shall not be construed in favor of or against any party
because that party or its counsel drafted this Assignment, but
shall be construed as if all parties prepared this Assignment,
and any rules of construction to the contrary are hereby
specifically waived. The terms of this Assignment were
negotiated at arm's length by the parties hereto.
(m) NOTICE. Any and all notices required under this
Assignment shall be in writing and shall be either (i) hand-
delivered; (ii) mailed, first-class postage prepaid, certified
mail, return receipt requested; (iii) transmitted via telecopier
provided that confirmation is obtained; or (iv) delivered via a
nationally recognized overnight courier service, addressed to:
LENDER: Xxxx X. Xxxx, Xx.,
Chairman of the Board and Chief
Executive Officer
Xxxx-Son Gaming Corporation
0000 X. Xxxxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
COPY TO: Xxxxxxxx X. Xxxxxxx, Esq.
0000 X. Xxxxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
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BORROWER: Xxxxxx X. Xxxxxx
00000 Xxxxxxxx Xxxx
Xxxxxx Xxxx, Xxxx 00000
All notices hand-delivered shall be deemed delivered as of
the date actually delivered. All notices mailed or delivered
via overnight courier shall be deemed delivered as of three
(3) business days after the date postmarked. Any changes
in any of the addresses listed herein shall be made by notice as
provided in this Section 8(m).
(n) PARTIAL INVALIDITY. If any term, condition, covenant,
or provision of this Assignment, or any application thereof,
shall be held by a court of competent jurisdiction to be invalid,
void or unenforceable, all provision, covenants, and conditions
of this Lease and applications thereof, not held invalid, void or
unenforceable, shall continue in full force and effect and shall
in no way be affected, impaired or invalidated thereby.
(o) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained in this Assignment shall
survive the execution and delivery of this Assignment.
IN WITNESS WHEREOF, the undersigned have executed this
Assignment on the date first written above.
Borrower:
/s/ Xxxxxx X. Xxxxxx
By: Xxxxxx X. Xxxxxx
Lender:
Xxxx-Son Gaming Corporation, a Nevada corporation
/s/ Xxxx X. Xxxx, Xx.
By: Xxxx X. Xxxx, Xx.
Chairman of the Board and Chief Executive Officer
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COLLATERAL UNDERTAKING AGREEMENT
This Collateral Undertaking Agreement (this "Agreement") is
made as of the 19th day of November 1996, by and between Xxxx X.
Xxxx, Xx. individually and as Trustee of the Xxxx X. Xxxx, Xx.
Living Trust (hereinafter collectively referred to as "Xxxx") and
Xxxx-Son Gaming Corporation, a Nevada corporation (hereinafter
referred to as the "Company").
RECITALS
X. Xxxx affirms and acknowledges the continuing validity
and enforceability of the Stock Option Agreement (the "Option
Agreement") by and between Xxxx and Xxxxxx X. Xxxxxx (hereinafter
referred to as "Borrower") on the 1st day of July, 1996;
B. This Agreement is being executed in connection with the
Company's grant of a line of credit loan to Borrower in the
original principal amount of ONE-HUNDRED FIFTY THOUSAND AND
NO/100THS DOLLARS ($150,000.00 U.S.) (the "Loan");
C. The Loan is evidenced by series of documents and
agreements executed by Borrower, including, but not limited to a
Line of Credit Loan Agreement ("Loan Agreement"), Line of Credit
Promissory Note (including any amendments or modifications
thereto or restatements thereof, the "Note"), Security Agreement,
Assignment Agreement, Power of Attorney Agreement, Uniform
Commercial Code Financing Statements and the relating documents
thereunder (hereinafter collectively referred to as the
"Collateral Documents"); and
D. Company requires as a condition and an inducement to
the making of the Loan to Borrower that Xxxx execute and deliver
this Agreement.
Now, Therefore, in consideration of the several and mutual
promises, agreements, covenants, understandings, undertakings,
representations and warranties hereinafter set forth, and for
other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Xxxx agrees that
the Recitals are true and correct and by this reference
incorporated herein as if fully set forth and further covenants
and agrees as follows:
In the event of (a) a Default Event under the Loan
Agreement, or (b) the filing of a voluntary petition for
bankruptcy by Borrower or an involuntary petition for bankruptcy
by Borrower's creditors or any similar proceeding and in the
event of any outstanding indebtedness of Borrower under the Loan,
Xxxx hereby agrees as follows:
(1) Xxxx hereby agrees to immediately transfer to the
Company (the "Transfer") that certain number of shares of common
stock of the Company (the "Transfer Shares"), strictly limited to
the shares which are the subject of the Option Agreement, only to
the extent necessary to satisfy the outstanding indebtedness
under the Loan Agreement plus ten percent due to the Company.
This agreement is made with the understanding that Xxxx may be
subject to claims of third parties, including, but not limited
to, certain bankruptcy estates or trustees, who may attempt to
assert interests in shares under the Option.
(2) Xxxx hereby agrees to indemnify, defend and hold
harmless the Company with respect to any and all bankruptcy-
related actions and liabilities as they relate to the Transfer.
The bankruptcy-related actions and liabilities shall include, but
are not limited to, the turnover of property to the bankruptcy
estate, the attempt to avoid the Transfer on fraudulent
conveyance grounds, and the attempt to avoid the Transfer on
improper set-off grounds.
In Witness Whereof, the undersigned has executed this
Agreement as of the day first above written.
Xxxx:
Xxxx X. Xxxx, Xx.
/s/ Xxxx X. Xxxx, Xx.
By: Xxxx X. Xxxx, Xx.
and
Xxxx X. Xxxx, Xx. Living Trust
/s/ Xxxx X. Xxxx, Xx.
By: Xxxx X. Xxxx, Xx., Trustee
The Company:
Xxxx-Son Gaming Corporation, a Nevada corporation
By: /s/ Xxxx X. Xxxx, Xx.
Its:
Consented to by:
/s/ Xxxxxx X. Xxxxxx
By: Xxxxxx X. Xxxxxx
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