Exhibit 10.2
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of June 22, 2006, among LAKES GAMING AND
RESORTS, LLC, a Minnesota limited liability company (the "Borrower"), LAKES
ENTERTAINMENT, INC., a Minnesota corporation ("Holdings"), each of the entities
listed on Schedule II hereto (the "Subsidiary Grantors" and, together with
Holdings and the Borrower, the "Grantors"), and BANK OF AMERICA, N.A., in its
capacity as collateral agent for the Secured Parties (in such capacity,
"Agent").
WITNESSETH:
WHEREAS, pursuant to that certain Credit Agreement dated as of the
date hereof by and among the Borrower, Holdings, Agent and Lenders (including
all annexes, exhibits and schedules thereto, as from time to time amended,
restated, supplemented or otherwise modified, the "Credit Agreement"), Lenders
have agreed to make the Loans on behalf of the Borrower;
WHEREAS, Holdings and the Subsidiary Grantors have executed guarantees
to the Lenders in respect of the obligations of the Borrower;
WHEREAS, in order to induce Agent and Lenders to enter into the Credit
Agreement and the other Loan Documents and to induce Lenders to make the Loans
as provided for in the Credit Agreement, the Grantors have agreed to grant a
continuing Lien on the Collateral (as hereinafter defined) to secure the
Obligations;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINED TERMS. The following terms shall have the following respective
meanings:
"Accounts" means, as to any Grantor, all of such Grantor's now owned
or hereafter acquired or arising accounts, as defined in the UCC, including any
rights to payment for the sale or lease of goods or rendition of services,
whether or not they have been earned by performance, and all medical
receivables.
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person or which owns, directly or indirectly, five percent (5%) or
more of the outstanding equity interest of such Person. A Person shall be deemed
to control another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of the other Person, whether through the ownership of voting
securities, by contract, or otherwise.
"Assigned Contracts" means, as to any Grantor, collectively, all of
such Grantor's rights and remedies under, and all moneys and claims for money
due or to become due to the Borrower under Material Contracts, and any and all
amendments, supplements, extensions, and renewals thereof including all rights
and claims of such Grantor now or hereafter existing: (i) under any insurance,
indemnities, warranties, and guarantees provided for or arising out of or in
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connection with any of the foregoing agreements; (ii) for any damages arising
out of or for breach or default under or in connection with any of the foregoing
contracts; (iii) to all other amounts from time to time paid or payable under or
in connection with any of the foregoing agreements; or (iv) to exercise or
enforce any and all covenants, remedies, powers and privileges thereunder.
"Assigned Contracts" shall not include any Excluded Assigned Contracts.
"Chattel Paper" means, as to any Grantor, all of such Grantor's now
owned or hereafter acquired chattel paper, as defined in the UCC, including
electronic chattel paper.
"Commercial Tort Claims" means, as to any Grantor, all commercial tort
claims as defined in the UCC including, without limitation, all commercial tort
claims listed and described on Schedule IV.
"Copyright Security Agreement" means the Copyright Security Agreement
dated as of the date hereof among certain Grantors and the Agent.
"Copyrights" has the meaning given to that term in the Copyright
Security Agreement.
"Deposit Accounts" means all "deposit accounts" as such term is
defined in the UCC, now or hereafter held in the name of any Grantor, including,
without limitation, the Interest Reserve Account.
"Documents" means, as to any Grantor, all documents as such term is
defined in the UCC, including bills of lading, warehouse receipts or other
documents of title, now owned or hereafter acquired by such Grantor.
"Equipment" means, as to any Grantor, all of such Grantor's now owned
and hereafter acquired machinery, equipment, furniture, furnishings, fixtures,
and other tangible personal property (except Inventory), including embedded
software, motor vehicles with respect to which a certificate of title has been
issued, aircraft, dies, tools, jigs, molds and office equipment, as well as all
of such types of property leased by such Grantor and all of such Grantor's
rights and interests with respect thereto under such leases (including, without
limitation, options to purchase); together with all present and future additions
and accessions thereto, replacements therefor, component and auxiliary parts and
supplies used or to be used in connection therewith, and all substitutes for any
of the foregoing, and all manuals, drawings, instructions, warranties and rights
with respect thereto; wherever any of the foregoing is located.
"Excluded Accounts" means, (i) Deposit Accounts specially and
exclusively used for xxxxx cash (provided that the aggregate balance of the
funds on deposit in all such xxxxx cash Deposit Accounts shall not exceed
$2,500,000), payroll, payroll taxes and other employee wage and benefit payments
to or for the benefit of a Grantor's salaried employees, and (ii) the Pokagon
Account.
"General Intangibles" means, as to any Grantor, all of such Grantor's
now owned or hereafter acquired general intangibles, choses in action and causes
of action and all other intangible personal property of such Grantor of every
kind and nature (other than Accounts), including, without limitation, all
contract rights, payment intangibles, Proprietary Rights,
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corporate or other business records, inventions, designs, blueprints, plans,
specifications, patents, patent applications, trademarks, service marks, trade
names, trade secrets, goodwill, copyrights, computer software, customer lists,
registrations, licenses, franchises, tax refund claims, any funds which may
become due to such Grantor in connection with the termination of any employee
benefit plan or any rights thereto and any other amounts payable to such Grantor
from any employee benefit plan, rights and claims against carriers and shippers,
rights to indemnification, business interruption insurance and proceeds thereof,
property, casualty or any similar type of insurance and any proceeds thereof,
proceeds of insurance covering the lives of key employees on which such Grantor
is beneficiary, rights to receive dividends, distributions, cash, Instruments
and other property in respect of or in exchange for pledged equity interests or
Investment Property and any letter of credit, guarantee, claim, security
interest or other security held by or granted to such Grantor.
"Goods" means, as to any Grantor, all "goods" as defined in the UCC,
now owned or hereafter acquired by such Grantor, wherever located, including
embedded software to the extent included in "goods" as defined in the UCC,
manufactured homes, standing timber that is cut and removed for sale and unborn
young of animals.
"Instruments" means, as to any Grantor, all instruments as such term
is defined in the UCC, now owned or hereafter acquired by such Grantor.
"Inventory" means, as to any Grantor, all of such Grantor's now owned
and hereafter acquired inventory, goods and merchandise, wherever located, to be
furnished under any contract of service or held for sale or lease, all returned
goods, raw materials, work-in-process, finished goods (including embedded
software), other materials and supplies of any kind, nature or description which
are used or consumed in such Grantor's business or used in connection with the
packing, shipping, advertising, selling or finishing of such goods, merchandise,
and all documents of title or other Documents representing them.
"Investment Property" means, as to any Grantor, all of such Grantor's
right title and interest in and to any and all: (a) securities whether
certificated or uncertificated; (b) securities entitlements; (c) securities
accounts; (d) commodity contracts; or (e) commodity accounts.
"Letter-of-Credit Rights" means, as to any Grantor, "letter-of-credit
rights" as such term is defined in the UCC, now owned or hereafter acquired by
such Grantor, including rights to payment or performance under a letter of
credit, whether or not such Grantor, as beneficiary, has demanded or is entitled
to demand payment or performance.
"Material Contracts" has the meaning giving to that term in the Credit
Agreement.
"Patent Security Agreement" means the Patent Security Agreement dated
as of the date hereof among certain Grantors and the Agent.
"Patents" has the meaning given to that term in the Patent Security
Agreement.
"Payment Account" means each bank account established pursuant to this
Security Agreement, to which the proceeds of Accounts and other Collateral are
deposited or
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credited, and which is maintained in the name of the Agent or a Grantor, as the
Agent may determine, on terms acceptable to the Agent.
"Proprietary Rights" means, as to any Grantor, all of such Grantor's
now owned and hereafter arising or acquired: licenses, franchises, permits,
patents, patent rights, copyrights, works which are the subject matter of
copyrights, trademarks, service marks, trade names, trade styles, patent,
trademark and service xxxx applications, and all licenses and rights related to
any of the foregoing, and all other rights under any of the foregoing, all
extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing, and all rights to xxx for past,
present and future infringement of any of the foregoing.
"Software" means, as to any Grantor, all "software" as such term is
defined in the UCC, now owned or hereafter acquired by such Grantor, other than
software embedded in any category of Goods, including all computer programs and
all supporting information provided in connection with a transaction related to
any program.
"Supplement" means any amendment or supplement to any schedule hereto
delivered pursuant to a notice by a Grantor in accordance with Section 4.
"Supporting Obligations" means all supporting obligations as such term
is defined in the UCC.t
"Trademark Security Agreement" means the Trademark Security Agreement
dated as of the date hereof among certain Grantors and the Agent.
"Trademarks" has the meaning given to that term in the Trademark
Security Agreement.
"UCC" means the Uniform Commercial Code, as in effect from time to
time, of the State of New York or of any other state the laws of which are
required as a result thereof to be applied in connection with the issue of
perfection of security interests.
"Uniform Commercial Code jurisdiction" means any jurisdiction that has
adopted "Revised Article 9" of the UCC on or after July 1, 2001.
All other capitalized terms used but not otherwise defined herein have
the meanings given to them in the Credit Agreement. All other undefined terms
contained in this Security Agreement, unless the context indicates otherwise,
have the meanings provided for by the UCC to the extent the same are used or
defined therein.
2. GRANT OF LIEN.
(a) As security for all Obligations, each Grantor hereby grants to the
Agent, for the benefit of the Agent and the Lenders, a continuing security
interest in, lien on, assignment of and right of set-off against, all of the
following property and assets of such Grantor, whether now owned or existing or
hereafter acquired or arising, regardless of where located:
(i) all Accounts (excepting Excluded Accounts);
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(ii) all Inventory;
(iii) all contract rights, including Assigned Contracts;
(iv) all Chattel Paper;
(v) all Documents;
(vi) all Instruments;
(vii) all Supporting Obligations and Letter-of-Credit Rights;
(viii) all General Intangibles (including payment intangibles and
Software);
(ix) all Goods;
(x) all Equipment;
(xi) all Investment Property;
(xii) all money, cash, cash equivalents, securities and other property
of any kind of such Grantor held directly or indirectly by the Agent or any
Lender;
(xiii) all of such Grantor's Deposit Accounts, credits, and balances
with and other claims against the Agent or any Lender or any of their Affiliates
or any other financial institution with which such Grantor maintains deposits,
including any Payment Accounts;
(xiv) all books, records and other property related to or referring to
any of the foregoing, including books, records, account ledgers, data processing
records, computer software and other property and General Intangibles at any
time evidencing or relating to any of the foregoing;
(xv) all Commercial Tort Claims in which a Grantor is a plaintiff; and
(xvi) all accessions to, substitutions for and replacements, products
and proceeds of any of the foregoing, including, but not limited to, proceeds of
any insurance policies, claims against third parties, and condemnation or
requisition payments with respect to all or any of the foregoing.
All of the foregoing, together with the real property covered by the
Mortgage(s), all equity interests in Subsidiaries pledged to the Agent and all
other property of the Grantors in which the Agent or any Lender may at any time
be granted a Lien as collateral for the Obligations, is herein collectively
referred to as the "Collateral."
(b) Notwithstanding the above Section 2(a), the Collateral shall not
include:
(i) Excluded Debt;
(ii) Excluded Accounts;
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(iii) the Capital Stock of any Excluded Subsidiary;
(iv) any World Poker Shares;
(v) the Corporate Aircraft Lease Agreement;
(vi) any rights or interests in any existing or future contract with
an Indian tribe, the valid grant or enforcement of the rights and interests
granted under section 2(a) to Agent (A) would give such Indian Tribe a legally
enforceable right to terminate its obligations thereunder, (B) is prohibited by
the terms thereof and such prohibition has not been waived or cannot be waived
under applicable law, (C) requires the consent of the other party to such
contract and such consent, to the extent required by the terms thereof, has not
been obtained, or (D) requires the review or approval of the National Indian
Gaming Commission which has not been obtained (but, for the avoidance of doubt,
it is understood that the Lien granted therein on such Grantor's rights to
receive payments with respect to any such rights or interests (the "Payment
Rights") shall be included as Collateral whether or not the grant of such right
is permitted under such contract with such Indian Tribe, provided that in no
event will the Agent be permitted to assume any other rights of a Grantor under
any such contract, and provided further that such Lien in the Payment Rights
shall not be enforceable against or otherwise impose any duty or obligation on
such Indian Tribe; and
(vii) any rights or interests in any Assigned Contract hereafter held
by any Grantor to the extent that (such excluded Assigned Contract is referred
to herein as "Excluded Assigned Contracts"): (i) as a result of the security
interest granted under Section 2.1(a) herein, such Grantor's right in or with
respect to such Assigned Contract would be forfeited or invalidated or such
Grantor would be deemed to have materially breached or defaulted under the
applicable Assigned Contract pursuant to restrictions contained therein; and
(ii) to the extent any such restriction is effective and enforceable under
applicable law (including, without limitation, after giving effect to the
provisions of Sections 9.406, 9.407, 9.408 or 9.409 of the UCC (or any successor
provision or provisions) of any relevant jurisdiction); provided, however, that
in no event shall the foregoing be construed to exclude from the grant of
security interest provided herein: (X) any and all proceeds of such Assigned
Contract s, or (Y) such Assigned Contract at any time that the restrictions in
the Assigned Contract are no longer effective and enforceable or at any time
that the consent of the other party to the Assigned Contract is obtained to the
assignment provided herein, in each case, the security interest of the Agent in
such Assigned Contract shall attach immediately at such time.
(c) All of the Obligations shall be secured by all of the Collateral.
3. PERFECTION AND PROTECTION OF SECURITY INTEREST.
(a) Each Grantor shall, at its expense, perform all steps requested by
the Agent at any time to perfect, maintain, protect, and enforce the Agent's
Liens, including: (i) executing, delivering and/or filing and recording of the
Mortgage(s), the Copyright Security Agreements, Patent Security Agreements and
Trademark Security Agreements and executing and filing financing or continuation
statements, and amendments thereof, in form and substance reasonably
satisfactory to the Agent; (ii) delivering to the Agent warehouse receipts
covering any
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portion of the Collateral located in warehouses and for which warehouse receipts
are issued and certificates of title covering any portion of the collateral for
which certificates of title have been issued; (iii) when an Event of Default has
occurred and is continuing, transferring Inventory to warehouses or other
locations designated by the Agent; (iv) placing notations on such Grantor's
books of account to disclose the Agent's security interest; and (v) taking such
other steps as are deemed necessary or desirable by the Agent to maintain and
protect the Agent's Liens. Each Grantor agrees that a carbon, photographic,
photostatic, or other reproduction of this Security Agreement or of a financing
statement is sufficient as a financing statement.
(b) Unless Agent shall otherwise consent in writing (which consent may
be revoked), each Grantor shall deliver to Agent all Collateral consisting of
certificated securities (accompanied by stock powers executed in blank) promptly
after such Grantor receives the same. Whenever a Default or Event of Default has
occurred and is continuing, each Grantor shall deliver to Agent all Collateral
consisting of negotiable Documents, Chattel Paper and Instruments promptly after
such Grantor receives the same. Each Grantor hereby agrees to take any or all
other action that the Agent may reasonably request in order for the Agent to
obtain control of any Collateral in accordance with the Pledge Agreement, this
Agreement and Sections 9-104, 9-105, 9-106 and 9-107 of the UCC. If no Event of
Default has occurred and is continuing, such Collateral delivered pursuant to
this subsection, 3(b), held by the Agent in respect of a Project in accordance
with the Terms of the Loan Documents shall be returned to the applicable Loan
Party within two (2) Business Days from the date such Loan Party notifies the
Agent that an Amendment to such Collateral is to be made, it being understood
that such Loan Party shall, within two (2) Business Days of receipt thereof,
return the amended Collateral to the Agent.
(c) Each Grantor shall obtain or use its best efforts to obtain
waivers or subordinations of Liens from landlords and mortgagees, and such
Grantor shall in all instances obtain signed acknowledgements of Agent's Liens
from bailees having possession of any Collateral that they hold for the benefit
of the Agent.
(d) Unless waived by the Agent in writing (which waiver may be
revoked), each Grantor shall obtain authenticated control agreements from each
issuer of uncertificated securities, securities intermediary, or commodities
intermediary issuing or holding any financial assets or commodities to or for
such Grantor.
(e) If any Grantor is or becomes the beneficiary of a letter of credit
such Grantor shall promptly notify Agent thereof and enter into a tri-party
agreement with Agent and the issuer and/or confirmation bank with respect to
Letter-of-Credit Rights assigning such Letter-of-Credit Rights to Agent and
directing all payments thereunder to the Payment Account, all in form and
substance reasonably satisfactory to Agent.
(f) Each Grantor shall take all steps necessary to grant the Agent
control of all electronic chattel paper in accordance with the Code and all
"transferable records" as defined in the Uniform Electronic Transactions Act.
(g) Each Grantor hereby irrevocably authorizes the Agent at any time
and from time to time to file in any filing office in any Uniform Commercial
Code jurisdiction any
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initial financing statements and amendments thereto that (a) indicate the
Collateral (i) as all assets of such Grantor or words of similar effect,
regardless of whether any particular asset comprised in the Collateral falls
within the scope of Article 9 of the UCC of the State of New York or such
jurisdiction, or (ii) as being of an equal or lesser scope or with greater
detail, and (b) contain any other information required by part 5 of Article 9 of
the UCC of the State of New York for the sufficiency or filing office acceptance
of any financing statement or amendment, including (i) whether such Grantor is
an organization, the type of organization and any organization identification
number issued to such Grantor, and (ii) in the case of a financing statement
filed as a fixture filing or indicating Collateral as as-extracted collateral or
timber to be cut, a sufficient description of real property to which the
Collateral relates. Each Grantor agrees to furnish any such information to the
Agent promptly upon request. Each Grantor also ratifies its authorization for
the Agent to have filed in any Uniform Commercial Code jurisdiction any like
initial financing statements or amendments thereto if filed prior to the date
hereof.
(h) Each Grantor shall promptly notify Agent of any Commercial Tort
Claim acquired by it.
(i) From time to time, each Grantor shall, upon the Agent's request,
execute and deliver confirmatory written instruments pledging to the Agent, for
the ratable benefit of the Agent and the Lenders, the Collateral, but such
Grantor's failure to do so shall not affect or limit any security interest or
any other rights of the Agent or any Lender in and to the Collateral with
respect to such Grantor. So long as the Credit Agreement is in effect and until
all Obligations have been fully satisfied, the Agent's Liens shall continue in
full force and effect in all Collateral.
(j) Not less frequently than once during each calendar quarter, each
Grantor shall, unless Agent shall otherwise consent, provide to Agent a
certificate of good standing from its state of incorporation or organization.
(k) Without limiting the prohibitions on mergers involving any Grantor
contained in the Credit Agreement, no Grantor shall reincorporate or reorganize
itself under the laws of any jurisdiction other than the jurisdiction in which
it is incorporated or organized as of the date hereof or change its type of
entity as identified on Schedule II without the prior written consent of Agent.
(l) Each Grantor acknowledges that it is not authorized to file any
financing statement or amendment or termination statement with respect to any
financing statement without the prior written consent of Agent and agrees that
it will not do so without the prior written consent of Agent, subject to such
Grantor's rights under Section 9-509(d)(2) of the UCC.
(m) No Grantor shall enter into any Contract that restricts or
prohibits the grant of a security interest in Accounts, Chattel Paper,
Instruments or payment intangibles or the proceeds of the foregoing to Agent.
4. LOCATION OF COLLATERAL. (a) Each Grantor represents and warrants to the
Agent and the Lenders that: (A) Schedule I is a correct and complete list of the
location of such Grantor's chief executive office, the location of its books and
records, the locations of the Collateral, and
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the locations of all of its other places of business; and (b) Schedule I
correctly identifies any of such facilities and locations that are not owned by
such Grantor and sets forth the names of the owners and lessors or sublessors of
such facilities and locations. Each Grantor covenants and agrees that it will
not (i) maintain any Collateral at any location other than those locations
listed for such Grantor on Schedule I, (ii) otherwise change or add to any of
such locations, or (iii) change the location of its chief executive office from
the location identified in Schedule I, unless in each case it gives the Agent at
least thirty (30) days' prior written notice thereof and executes any and all
financing statements and other documents that the Agent reasonably requests in
connection therewith.
5. JURISDICTION OF ORGANIZATION. Schedule II hereto identifies each
Grantor's name as of the Closing Date as it appears in official filings in the
state of its incorporation or other organization, the type of entity of such
Grantor (including corporation, partnership, limited partnership or limited
liability company), organizational identification number issued by such
Grantor's state of incorporation or organization or a statement that no such
number has been issued and the jurisdiction in which such Grantor is
incorporated or organized. Each Grantor has only one state of incorporation or
organization.
6. TITLE TO, LIENS ON, AND SALE AND USE OF COLLATERAL. Each Grantor
represents and warrants to the Agent and the Lenders and agrees with the Agent
and the Lenders that: (a) such Grantor has rights in and the power to transfer
all of the Collateral free and clear of all Liens whatsoever, except for
Permitted Liens; (b) the Agent's Liens in the Collateral will not be subject to
any prior Lien except for those Liens identified in clause (b) of the definition
of Permitted Liens (as set forth in the Credit Agreement); and (c) such Grantor
will use, store, and maintain the Collateral with all reasonable care and will
use such Collateral for lawful purposes only.
7. APPRAISALS. Whenever a Default or Event of Default exists, and at such
other times as the Agent requests, each Grantor shall, at its expense and upon
the Agent's request, provide the Agent with appraisals or updates thereof of any
or all of the Collateral from an appraiser, and prepared on a basis,
satisfactory to the Agent, such appraisals and updates to include, without
limitation, information required by applicable law and regulation and by the
internal policies of the Lenders.
8. ACCESS AND EXAMINATION. The Agent, accompanied by any Lender which so
elects, may at all reasonable times during regular business hours (and at any
time when a Default or Event of Default exists and is continuing) have access
to, examine, audit, make extracts from or copies of and inspect any or all of
each Grantor's records, files, and books of account and the Collateral, and
discuss such Grantor's affairs with such Grantor's officers and management. Each
Grantor will deliver to the Agent any instrument necessary for the Agent to
obtain records from any service bureau maintaining records for such Grantor. The
Agent may, and at the direction of the Required Lenders shall, at any time when
a Default or Event of Default exists, and at such Grantor's expense, make copies
of all of such Grantor's books and records, or require such Grantor to deliver
such copies to the Agent. The Agent may, without expense to the Agent, use such
of such Grantor's respective personnel, supplies, and real property as may be
reasonably necessary for maintaining or enforcing the Agent's Liens. The Agent
shall have the right, at any time, in the Agent's name or in the name of a
nominee of the Agent, to verify the
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validity, amount or any other matter relating to the Accounts, Inventory, or
other Collateral, by mail, telephone, or otherwise.
9. COLLATERAL REPORTING. Each Grantor shall provide the Agent with the
following documents at the following times in form satisfactory to the Agent:
(a) at any time requested by the Agent, a schedule of such Grantor's Accounts
created, credits given, cash collected and other adjustments to Accounts since
the last such schedule; (b) on a quarterly basis by the 20th day of the
following fiscal quarter, or more frequently if requested by the Agent, an aging
of such Grantor's accounts payable; (c) upon request, a statement of the balance
of any intercompany accounts; (d) such other reports as to the Collateral of
such Grantor as the Agent shall reasonably request from time to time; and (e)
with the delivery of each of the foregoing, a certificate of such Grantor
executed by an officer thereof certifying as to the accuracy and completeness of
the foregoing. If any of such Grantor's records or reports of the Collateral are
prepared by an accounting service or other agent, such Grantor hereby authorizes
such service or agent to deliver such records, reports, and related documents to
the Agent, for distribution to the Lenders.
10. ACCOUNTS.
Each Grantor shall notify the Agent promptly of all disputes and
claims in excess of $100,000 with any Account Debtor, and agrees to settle,
contest, or adjust such dispute or claim at no expense to the Agent or any
Lender. No discount, credit or allowance shall be granted to any such Account
Debtor without the Agent's prior written consent, except for discounts, credits
and allowances made or given in the ordinary course of such Grantor's business
when no Event of Default exists hereunder. Such Grantor shall send the Agent a
copy of each credit memorandum in excess of $100,000 as soon as issued. The
Agent may at all times when an Event of Default exists hereunder, settle or
adjust disputes and claims directly with Account Debtors for amounts and upon
terms which the Agent or the Required Lenders, as applicable, shall consider
advisable and, in all cases, the Agent will credit such Grantor's Loan Account
with the net amounts received by the Agent in payment of any Accounts.
11. COLLECTION OF ACCOUNTS; PAYMENTS.
(a) Until the Agent notifies the Grantors to the contrary, each
Grantor shall make collection of all Accounts and other Collateral for the
Agent, shall receive all payments as the Agent's trustee, and shall immediately
deliver all payments in their original form duly endorsed in blank into a
Payment Account established for the account of such Grantor at a Clearing Bank
acceptable to the Agent, subject to a blocked account agreement. On or prior to
the date hereof, each Grantor shall establish a lock-box service for collections
of Accounts at a clearing bank acceptable to the Agent and subject to a blocked
account agreement and other documentation acceptable to the Agent. Each Grantor
shall instruct all Account Debtors, that upon the occurrence and during the
continuance of a Default or an Event of Default, Account Debtors are to make all
payments directly to the address established for such service. If,
notwithstanding such instructions, a Grantor receives any proceeds of Accounts,
it shall receive such payments as the Agent's trustee, and shall immediately
deliver such payments to the Agent in their original form duly endorsed in blank
or deposit them into a Payment Account, as the Agent may direct. All collections
received in any lock-box or Payment Account or directly by a Grantor or the
Agent, and all funds in any Payment Account or other account to which such
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collections are deposited shall be subject to the Agent's sole control and
withdrawals by such Grantor shall not be permitted. The Agent or the Agent's
designee may, at any time after the occurrence of an Event of Default, notify
Account Debtors that the Accounts have been assigned to the Agent and of the
Agent's security interest therein, and may collect them directly. So long as an
Event of Default has occurred and is continuing, each Grantor, at the Agent's
request, shall execute and deliver to the Agent such documents as the Agent
shall require to grant the Agent access to any post office box in which
collections of Accounts are received.
(b) If services are rendered for cash, each Grantor shall immediately
deliver to the Agent or deposit into a Payment Account the cash which such
Grantor receives.
(c) All payments including immediately available funds received by the
Agent at a bank account designated by it, will be the Agent's sole property for
its benefit and the benefit of the Lenders.
12. EQUIPMENT.
(a) Each Grantor represents and warrants to the Agent and the Lenders
and agrees with the Agent and the Lenders that all of the Equipment owned by
such Grantor is and will be used or held for use in such Grantor's business, and
is and will be fit for such purposes. Each Grantor shall keep and maintain its
Equipment in good operating condition and repair (ordinary wear and tear
excepted) and shall make all necessary replacements thereof.
(b) Each Grantor shall promptly inform the Agent of any material
additions to or deletions from the Equipment. No Grantor shall permit any
Equipment to become a fixture with respect to any real property or to become an
accession with respect to other personal property with respect to which real or
personal property the Agent does not have a Lien. No Grantor will, without the
Agent's prior written consent, alter or remove any identifying symbol or number
on any of such Grantor's Equipment constituting Collateral.
(c) Except as set forth in the Credit Agreement, no Grantor shall,
without the Agent's prior written consent, sell, license, lease as a lessor, or
otherwise dispose of any of such Grantor's Equipment.
13. ASSIGNED CONTRACTS. Each Grantor shall fully perform all of its
obligations under each of the Assigned Contracts, and shall enforce all of its
rights and remedies thereunder, in each case, as it deems appropriate in its
business judgment; provided, however, that such Grantor shall not take any
action or fail to take any action with respect to its Assigned Contracts which
would cause the termination of a material Assigned Contract. Without limiting
the generality of the foregoing, each Grantor shall take all action necessary or
appropriate to permit, and shall not take any action which would have any
materially adverse effect upon, the full enforcement of all indemnification
rights under its Assigned Contracts. Each Grantor shall notify the Agent and the
Lenders in writing, promptly after such Grantor becomes aware thereof, of any
event or fact which could give rise to a material claim by it for
indemnification under any of its Assigned Contracts, and shall diligently pursue
such right and report to the Agent on all further developments with respect
thereto. Each Grantor shall deposit into the Payment Account or remit directly
to the Agent for application to the Obligations in such order as the Required
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Lenders shall determine, all amounts received by such Grantor as indemnification
or otherwise pursuant to its Assigned Contracts. If a Grantor shall fail after
the Agent's demand to pursue diligently any right under its Assigned Contracts,
or if an Event of Default then exists, the Agent may, and at the direction of
the Required Lenders shall, directly enforce such right in its own or such
Grantor's name and may enter into such settlements or other agreements with
respect thereto as the Agent or the Required Lenders, as applicable, shall
determine. In any suit, proceeding or action brought by the Agent for the
benefit of the Lenders under any Assigned Contract for any sum owing thereunder
or to enforce any provision thereof, the Grantors, jointly and severally, shall
indemnify and hold the Agent and Lenders harmless from and against all expense,
loss or damage suffered by reason of any defense, setoff, counterclaims,
recoupment, or reduction of liability whatsoever of the obligor thereunder
arising out of a breach by such Grantor of any obligation thereunder or arising
out of any other agreement, indebtedness or liability at any time owing from
such Grantor to or in favor of such obligor or its successors. All such
obligations of such Grantor shall be and remain enforceable only against such
Grantor and shall not be enforceable against the Agent or the Lenders.
Notwithstanding any provision hereof to the contrary, each Grantor shall at all
times remain liable to observe and perform all of its duties and obligations
under its Assigned Contracts, and the Agent's or any Lender's exercise of any of
their respective rights with respect to the Collateral shall not release such
Grantor from any of such duties and obligations. Neither the Agent nor any
Lender shall be obligated to perform or fulfill any of such Grantor's duties or
obligations under its Assigned Contracts or to make any payment thereunder, or
to make any inquiry as to the nature or sufficiency of any payment or property
received by it thereunder or the sufficiency of performance by any party
thereunder, or to present or file any claim, or to take any action to collect or
enforce any performance, any payment of any amounts, or any delivery of any
property.
14. DOCUMENTS, INSTRUMENTS, AND CHATTEL PAPER. Each Grantor represents and
warrants to the Agent and the Lenders that (a) all Documents, Instruments, and
Chattel Paper describing, evidencing, or constituting Collateral, and all
signatures and endorsements thereon, are and will be complete, valid, and
genuine, and (b) all goods evidenced by such Documents, Instruments, Letter of
Credit Rights and Chattel Paper are and will be owned by such Grantor, free and
clear of all Liens other than Permitted Liens. If any Grantor retains possession
of any Chattel Paper or Instruments with Agent's consent, such Chattel Paper and
Instruments shall be marked with the following legend: "This writing and the
obligations evidenced or served hereby are subject to the security interest of
Bank of America, N.A., as Agent, for the benefit of Agent and certain Lenders."
15. RIGHT TO CURE. The Agent may, in its discretion, and shall, at the
direction of the Required Lenders, pay any amount or do any act required of any
Grantor hereunder or under any other Loan Document in order to preserve,
protect, maintain or enforce the Obligations, the Collateral or the Agent's
Liens therein, and which such Grantor fails to pay or do, including payment of
any judgment against such Grantor, any insurance premium, any warehouse charge,
any finishing or processing charge, any landlord's or bailee's claim, and any
other Lien upon or with respect to the Collateral. All payments that the Agent
makes under this Section 15 and all out-of-pocket costs and expenses that the
Agent pays or incurs in connection with any action taken by it hereunder shall
be charged to such Grantor. Any payment made or other action taken by the Agent
under this Section 15 shall be without prejudice to any right to assert an Event
of Default hereunder and to proceed thereafter as herein provided.
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16. POWER OF ATTORNEY. Each Grantor hereby appoints the Agent and the
Agent's designee as such Grantor's attorney, with power, upon the occurrence and
during the continuance of a Default or an Event of Default: (a) to endorse such
Grantor's name on any checks, notes, acceptances, money orders, or other forms
of payment or security that come into the Agent's or any Lender's possession;
(b) to sign such Grantor's name on any invoice, xxxx of lading, warehouse
receipt or other negotiable or non-negotiable Document constituting Collateral,
on drafts against customers, on assignments of Accounts, on notices of
assignment, financing statements and other public records and to file any such
financing statements by electronic means with or without a signature as
authorized or required by applicable law or filing procedure; (c) so long as any
Event of Default has occurred and is continuing, to notify the post office
authorities to change the address for delivery of such Grantor's mail to an
address designated by the Agent and to receive, open and dispose of all mail
addressed to such Grantor; (d) to send requests for verification of Accounts to
customers or Account Debtors; (e) to complete in the Grantor's name or the
Agent's name, any order, sale or transaction, obtain the necessary Documents in
connection therewith, and collect the proceeds thereof; (f) to the extent that
the authorization given by such Grantor in Section 3(g) of this Security
Agreement is not sufficient, to file such financing statements with respect to
this Security Agreement, with or without such Grantor's signature, or to file a
photocopy of this Security Agreement in substitution for a financing statement,
as the Agent may deem appropriate and to execute in such Grantor's name such
financing statements and amendments thereto and continuation statements which
may require such Grantor's signature; and (g) to do all things necessary to
carry out the Credit Agreement and this Security Agreement. Each Grantor
ratifies and approves all acts of such attorney. None of the Lenders or the
Agent nor their attorneys will be liable for any acts or omissions or for any
error of judgment or mistake of fact or law except for their willful misconduct.
This power, being coupled with an interest, is irrevocable until the Credit
Agreement has been terminated and the Obligations have been fully satisfied.
17. THE AGENT'S AND LENDERS' RIGHTS, DUTIES AND LIABILITIES.
(a) Each Grantor assumes all responsibility and liability arising from
or relating to the use, sale, license or other disposition of the Collateral.
The Obligations shall not be affected by any failure of the Agent or any Lender
to take any steps to perfect the Agent's Liens or to collect or realize upon the
Collateral, nor shall loss of or damage to the Collateral release such Grantor
from any of the Obligations. Following the occurrence and during the
continuation of an Event of Default, the Agent may (but shall not be required
to), and at the direction of the Required Lenders shall, without notice to or
consent from the Grantor, xxx upon or otherwise collect, extend the time for
payment of, modify or amend the terms of, compromise or settle for cash, credit,
or otherwise upon any terms, grant other indulgences, extensions, renewals,
compositions, or releases, and take or omit to take any other action with
respect to the Collateral, any security therefor, any agreement relating
thereto, any insurance applicable thereto, or any Person liable directly or
indirectly in connection with any of the foregoing, without discharging or
otherwise affecting the liability of the Grantor for the Obligations or under
the Credit Agreement or any other agreement now or hereafter existing between
the Agent and/or any Lender and any Grantor(s).
(b) It is expressly agreed by each Grantor that, anything herein to
the contrary notwithstanding, such Grantor shall remain liable under each of its
contracts and each of its
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licenses to observe and perform all the conditions and obligations to be
observed and performed by it thereunder. Neither Agent nor any Lender shall have
any obligation or liability under any contract or license by reason of or
arising out of this Security Agreement or the granting herein of a Lien thereon
or the receipt by Agent or any Lender of any payment relating to any contract or
license pursuant hereto. Neither Agent nor any Lender shall be required or
obligated in any manner to perform or fulfill any of the obligations of such
Grantor under or pursuant to any contract or license, or to make any payment, or
to make any inquiry as to the nature or the sufficiency of any payment received
by it or the sufficiency of any performance by any party under any contract or
license, or to present or file any claims, or to take any action to collect or
enforce any performance or the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
(c) Agent may at any time after a Default or an Event of Default has
occurred and be continuing (or if any rights of set-off (other than set-offs
against an Account arising under the contract giving rise to the same Account)
or contra accounts may be asserted with respect to the following), without prior
notice to any Grantor, notify Account Debtors, and other Persons obligated on
the Collateral that Agent has a security interest therein, and that payments
shall be made directly to Agent, for itself and the benefit of Lenders. Upon the
request of Agent, each Grantor shall so notify Account Debtors and other Persons
obligated on Collateral. Once any such notice has been given to any Account
Debtor or other Person obligated on the Collateral, such Grantor shall not give
any contrary instructions to such Account Debtor or other Person without Agent's
prior written consent.
(d) Agent may at any time, after the occurrence and during the
continuance of a Default or an Event of Default, in Agent's own name or in the
name of any Grantor communicate with Account Debtors, parties to Contracts and
obligors in respect of Instruments to verify with such Persons, to Agent's
satisfaction, the existence, amount and terms of Accounts, payment intangibles,
Instruments or Chattel Paper. If a Default or Event of Default shall have
occurred and be continuing, each Grantor, at its own expense, shall cause the
independent certified public accountants then engaged by such Grantor to prepare
and deliver to Agent and each Lender at any time and from time to time promptly
upon Agent's request the following reports with respect to such Grantor: (i) a
reconciliation of all Accounts; (ii) an aging of all Accounts; (iii) trial
balances; and (iv) a test verification of such Accounts as Agent may request.
Each Grantor, at its own expense, shall deliver to Agent the results of each
physical verification, if any, which such Grantor may in its discretion have
made, or caused any other Person to have made on its behalf, of all or any
portion of its Inventory.
18. PATENT, TRADEMARK AND COPYRIGHT COLLATERAL.
(a) Schedule III sets forth all Patent registrations and applications,
Trademark registrations and applications, and Copyright registrations and
applications owne by Grantors. This Security Agreement is effective to create a
valid and continuing Lien on and, upon filing of the Copyright Security
Agreement with the United States Copyright Office and filing of the Patent
Security Agreements and Trademark Security Agreements with the United States
Patent and Trademark Office, perfected Liens in favor of Agent on each Grantor's
Patents, Trademarks and Copyrights set forth in Schedule III and the schedules
attached to the respective security agreements and such perfected Liens are
enforceable as such as against any and all creditors of
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and purchasers from such Grantor. Upon filing of the Copyright Security
Agreements with the United States Copyright Office and filing of the Patent
Security Agreements and Trademark Security Agreements with the United States
Patent and Trademark Office and the filing of appropriate financing statements,
all action necessary or desirable to protect and perfect Agent's Lien on each
Grantor's Patents, Trademarks or Copyrights set forth in Schedule III shall have
been duly taken.
(b) Each Grantor shall notify Agent immediately if it knows or has
reason to know that any application or registration relating to any Patent,
Trademark or Copyright (now or hereafter existing) may become abandoned or
dedicated, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, the United States Copyright
Office or any court) regarding such Grantor's ownership of any Patent, Trademark
or Copyright, its right to register the same, or to keep and maintain the same.
(c) Each Grantor, shall notify Agent of any application filed by it
for the registration of any material Patent, Trademark or Copyright with the
United States Patent and Trademark Office, the United States Copyright Office or
any similar office or agency, and, upon request of Agent, such Grantor shall
execute and deliver any and all copyright security agreements (each a "COPYRIGHT
SECURITY AGREEMENT SUPPLEMENT"), Patent Security Agreements (each a "PATENT
SECURITY AGREEMENT SUPPLEMENT") or Trademark Security Agreements (each a
"TRADEMARK SECURITY AGREEMENT SUPPLEMENT") as Agent may reasonably request to
evidence Agent's Lien on such Patent, Trademark or Copyright, and the General
Intangibles of such Grantor relating thereto or represented thereby.
(d) Each Grantor shall take all commercially reasonable actions
necessary or requested by Agent to maintain and pursue each application, to
obtain the relevant registration and to maintain the registration of each of its
material Patents, Trademarks and Copyrights (now or hereafter existing),
including the filing of applications for renewal, affidavits of use, affidavits
of noncontestability and opposition and interference and cancellation
proceedings.
(e) In the event that any of the material patent, trademark or
copyright Collateral is infringed upon, or misappropriated or diluted by a third
party, each Grantor shall notify Agent promptly after such Grantor learns
thereof. Each Grantor shall, unless it shall reasonably determine that such
patent, trademark or copyright Collateral is in no way material to the conduct
of its business or operations, promptly xxx for infringement, misappropriation
or dilution and to recover any and all damages for such infringement,
misappropriation or dilution, and shall take such other commercially reasonable
actions as Agent shall reasonably deem appropriate under the circumstances to
protect such patent, trademark or copyright Collateral.
19. INDEMNIFICATION. In any suit, proceeding or action brought by Agent or
any Lender relating to any Collateral for any sum owing with respect thereto or
to enforce any rights or claims with respect thereto, the Grantors, jointly and
severally, will save, indemnify and keep Agent and Lenders harmless from and
against all expense (including reasonable attorneys' fees and expenses), loss or
damage suffered by reason of any defense, setoff, counterclaim, recoupment or
reduction of liability whatsoever of the Account Debtor or other Person
obligated on the Collateral, arising out of a breach by any Grantor of any
obligation thereunder or arising
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out of any other agreement, indebtedness or liability at any time owing to, or
in favor of, such obligor or its successors from any Grantor, except in the case
of Agent or any Lender, to the extent such expense, loss, or damage is
attributable solely to the gross negligence or willful misconduct of Agent or
such Lender as finally determined by a court of competent jurisdiction. All such
obligations of the Grantors shall be and remain enforceable against and only
against the Grantors and shall not be enforceable against Agent or any Lender.
20. LIMITATION ON LIENS ON COLLATERAL. No Grantor will create, permit or
suffer to exist, and each Grantor will defend the Collateral against, and take
such other action as is necessary to remove, any Lien on the Collateral except
Permitted Liens, and each Grantor will defend the right, title and interest of
Agent and Lenders in and to any of such Grantor's rights under the Collateral
against the claims and demands of all Persons whomsoever.
21. NOTICE REGARDING COLLATERAL. Each Grantor will advise Agent promptly,
in reasonable detail, (i) of any Lien (other than Permitted Liens) or claim made
or asserted against any of the Collateral, and (ii) of the occurrence of any
other event which would have a Material Adverse Effect.
22. REMEDIES; RIGHTS UPON DEFAULT.
(a) In addition to all other rights and remedies granted to it under
this Security Agreement, the Credit Agreement, the other Loan Documents and
under any other instrument or agreement securing, evidencing or relating to any
of the Obligations, if any Event of Default shall have occurred and be
continuing, Agent may exercise all rights and remedies of a secured party under
the UCC (subject to--in the case of certain equipment--the Xxxxxxx Act, 15
U.S.C. Sections 1171 et seq., tribal-state class III gaming compacts, and other
laws or regulations applicable to the possession, transportation use and sale of
gaming equipment). Without limiting the generality of the foregoing, each
Grantor expressly agrees that in any such event Agent, without demand of
performance or other demand, advertisement or notice of any kind (except the
notice specified below of time and place of public or private sale) to or upon
such Grantor or any other Person (all and each of which demands, advertisements
and notices are hereby expressly waived to the maximum extent permitted by the
UCC and other applicable law), may forthwith enter upon the premises of such
Grantor where any Collateral is located through self-help, without judicial
process, without first obtaining a final judgment or giving such Grantor or any
other Person notice and opportunity for a hearing on Agent's claim or action and
may collect, receive, assemble, process, appropriate and realize upon the
Collateral, or any part thereof, and may forthwith sell, lease, license, assign,
give an option or options to purchase, or sell or otherwise dispose of and
deliver said Collateral (or contract to do so), or any part thereof, in one or
more parcels at a public or private sale or sales, at any exchange at such
prices as it may deem acceptable, for cash or on credit or for future delivery
without assumption of any credit risk. Agent or any Lender shall have the right
upon any such public sale or sales and, to the extent permitted by law, upon any
such private sale or sales, to purchase for the benefit of Agent and Lenders,
the whole or any part of said Collateral so sold, free of any right or equity of
redemption, which equity of redemption each Grantor hereby releases. Such sales
may be adjourned and continued from time to time with or without notice. Agent
shall have the right to conduct such sales on any Grantor's premises or
elsewhere and shall have the right to use any Grantor's premises without charge
for such time or times as Agent deems necessary or advisable.
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(b) Each Grantor further agrees, at Agent's request, to assemble the
Collateral and make it available to Agent at a place or places designated by
Agent which are reasonably convenient to Agent and such Grantor, whether at such
Grantor's premises or elsewhere. Until Agent is able to effect a sale, lease, or
other disposition of Collateral, Agent shall have the right to hold or use
Collateral, or any part thereof, to the extent that it deems appropriate for the
purpose of preserving Collateral or its value or for any other purpose deemed
appropriate by Agent. Agent shall have no obligation to any Grantor to maintain
or preserve the rights of such Grantor as against third parties with respect to
Collateral while Collateral is in the possession of Agent. Agent may, if it so
elects, seek the appointment of a receiver or keeper to take possession of
Collateral and to enforce any of Agent's remedies (for the benefit of Agent and
Lenders), with respect to such appointment without prior notice or hearing as to
such appointment. Agent shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale to the Obligations as
provided in the Credit Agreement, and only after so paying over such net
proceeds, and after the payment by Agent of any other amount required by any
provision of law, need Agent account for the surplus, if any, to such Grantor.
To the maximum extent permitted by applicable law, each Grantor waives all
claims, damages, and demands against Agent or any Lender arising out of the
repossession, retention or sale of the Collateral except such as arise solely
out of the gross negligence or willful misconduct of Agent or such Lender as
finally determined by a court of competent jurisdiction. Each Grantor agrees
that ten (10) days prior notice by Agent of the time and place of any public
sale or of the time after which a private sale may take place is reasonable
notification of such matters. Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all Obligations, including any attorneys' fees or other
expenses incurred by Agent or any Lender to collect such deficiency.
(c) Except as otherwise specifically provided herein, each Grantor
hereby waives presentment, demand, protest or any notice (to the maximum extent
permitted by applicable law) of any kind in connection with this Security
Agreement or any Collateral.
(d) To the extent that applicable law imposes duties on the Agent to
exercise remedies in a commercially reasonable manner, each Grantor acknowledges
and agrees that it is not commercially unreasonable for the Agent (a) to fail to
incur expenses reasonably deemed significant by the Agent to prepare Collateral
for disposition or otherwise to complete raw material or work in process into
finished goods or other finished products for disposition, (b) to fail to obtain
third party consents for access to Collateral to be disposed of, or to obtain
or, if not required by other law, to fail to obtain governmental or third party
consents for the collection or disposition of Collateral to be collected or
disposed of, (c) to fail to exercise collection remedies against Account Debtors
or other Persons obligated on Collateral or to remove Liens on or any adverse
claims against Collateral, (d) to exercise collection remedies against Account
Debtors and other Persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (e) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (f) to contact other
Persons, whether or not in the same business as the Grantor, for expressions of
interest in acquiring all or any portion of such Collateral, (g) to hire one or
more professional auctioneers or liquidators to assist in the disposition of
Collateral, whether or not the Collateral is of a specialized nature, (h) to
dispose of Collateral by utilizing internet sites that provide for the auction
of assets of the types included in the Collateral or that have the reasonable
capacity of
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doing so, or that match buyers and sellers of assets, (i) to dispose of assets
in wholesale rather than retail markets, (j) to disclaim disposition warranties,
such as title, possession or quiet enjoyment, (k) to purchase insurance or
credit enhancements to insure the Agent against risks of loss, collection or
disposition of Collateral or to provide to the Agent a guaranteed return from
the collection or disposition of Collateral, or (l) to the extent deemed
appropriate by the Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist the Agent in the
collection or disposition of any of the Collateral. Each Grantor acknowledges
that the purpose of this Section 22(d) is to provide non-exhaustive indications
of what actions or omissions by the Agent would not be commercially unreasonable
in the Agent's exercise of remedies against the Collateral and that other
actions or omissions by the Agent shall not be deemed commercially unreasonable
solely on account of not being indicated in this Section 22(d). Without
limitation upon the foregoing, nothing contained in this Section 22(d) shall be
construed to grant any rights to any of the Grantors or to impose any duties on
Agent that would not have been granted or imposed by this Security Agreement or
by applicable law in the absence of this Section 22(d).
23. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY. For the purpose of
enabling Agent to exercise rights and remedies under Section 22 hereof
(including, without limiting the terms of Section 22 hereof, in order to take
possession of, hold, preserve, process, assemble, prepare for sale, market for
sale, sell or otherwise dispose of Collateral) at such time as Agent shall be
lawfully entitled to exercise such rights and remedies, each Grantor hereby
grants to Agent, to be effective at such time as Agent is lawfully entitled to
exercise its rights with respect to the Collateral under this Agreement, and
only to the extent permitted, for the benefit of Agent and Lenders, an
irrevocable, nonexclusive license (exercisable without payment of royalty or
other compensation to such Grantor) to use, license or sublicense any
Intellectual Property now owned or hereafter acquired by such Grantor, and
wherever the same may be located, and including in such license access to all
media in which any of the licensed items may be recorded or stored and to all
computer software and programs used for the compilation or printout thereof.
24. LIMITATION ON AGENT'S AND LENDERS' AND LENDERS' DUTY IN RESPECT OF
COLLATERAL. Agent and each Lender shall use reasonable care with respect to the
Collateral in its possession or under its control. Neither Agent nor any Lender
shall have any other duty as to any Collateral in its possession or control or
in the possession or control of any agent or nominee of Agent or such Lender, or
any income thereon or as to the preservation of rights against prior parties or
any other rights pertaining thereto.
25. MISCELLANEOUS.
(a) REINSTATEMENT. This Security Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against any Grantor for liquidation or reorganization, should such Grantor
become insolvent or make an assignment for the benefit of any creditor or
creditors or should a receiver or trustee be appointed for all or any
significant part of such Grantor's assets, and shall continue to be effective or
be reinstated, as the case may be, if at any time payment and performance of the
Obligations, or any part thereof, is, pursuant to applicable law, rescinded or
reduced in amount, or must otherwise be restored or returned by any obligee of
the Obligations, whether as a "voidable preference," "fraudulent conveyance," or
otherwise, all as though such payment or performance had not been made. In
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the event that any payment, or any part thereof, is rescinded, reduced, restored
or returned, the Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
(b) NOTICES. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other party, or whenever any of the parties desires to give and
serve upon any other party any communication with respect to this Security
Agreement, each such notice, demand, request, consent, approval, declaration or
other communication shall be in writing and shall be given in the manner, and
deemed received, as provided for in the Credit Agreement.
(c) SEVERABILITY. Whenever possible, each provision of this Security
Agreement shall be interpreted in a manner as to be effective and valid under
applicable law, but if any provision of this Security Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating
the remainder of such provision or the remaining provisions of this Security
Agreement. This Security Agreement is to be read, construed and applied together
with the Credit Agreement and the other Loan Documents which, taken together,
set forth the complete understanding and agreement of Agent, Lenders and the
Grantors with respect to the matters referred to herein and therein.
(d) NO WAIVER; CUMULATIVE REMEDIES. Neither Agent nor any Lender shall
by any act, delay, omission or otherwise be deemed to have waived any of its
rights or remedies hereunder, and no waiver shall be valid unless in writing,
signed by Agent and then only to the extent therein set forth. A waiver by Agent
of any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy which Agent would otherwise have had on any future
occasion. No failure to exercise nor any delay in exercising on the part of
Agent or any Lender, any right, power or privilege hereunder, shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or future exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
hereunder provided are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights and remedies provided by law. None of the
terms or provisions of this Security Agreement may be waived, altered, modified
or amended except by an instrument in writing, duly executed by Agent and the
Grantors.
(e) LIMITATION BY LAW. All rights, remedies and powers provided in
this Security Agreement may be exercised only to the extent that the exercise
thereof does not violate any applicable provision of law, and all the provisions
of this Security Agreement are intended to be subject to all applicable
mandatory provisions of law that may be controlling and to be limited to the
extent necessary so that they shall not render this Security Agreement invalid,
unenforceable, in whole or in part, or not entitled to be recorded, registered
or filed under the provisions of any applicable law.
(f) TERMINATION OF THIS SECURITY AGREEMENT. Subject to Section 25(a)
hereof, this Security Agreement shall terminate upon the payment in full of all
other Obligations (other than indemnification Obligations as to which no claim
has been asserted).
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(g) SUCCESSORS AND ASSIGNS. This Security Agreement and all
obligations of the Grantors hereunder shall be binding upon the successors and
assigns of each Grantor (including any debtor-in-possession on behalf of any
Grantor) and shall, together with the rights and remedies of Agent, for the
benefit of Agent and Lenders, hereunder, inure to the benefit of Agent and
Lenders, all future holders of any instrument evidencing any of the Obligations
and their respective successors and assigns. No sales of participations, other
sales, assignments, transfers or other dispositions of any agreement governing
or instrument evidencing the Obligations or any portion thereof or interest
therein shall in any manner affect the Lien granted to Agent, for the benefit of
Agent and Lenders, hereunder. No Grantor may assign, sell, hypothecate or
otherwise transfer any interest in or obligation under this Security Agreement.
(h) COUNTERPARTS. This Security Agreement may be authenticated in any
number of separate counterparts, each of which shall collectively and separately
constitute one and the same agreement. This Security Agreement may be
authenticated by manual signature, facsimile or, if approved in writing by
Agent, electronic means, all of which shall be equally valid.
(i) GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS SECURITY AGREEMENT AND THE OBLIGATIONS ARISING
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
THAT STATE, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THE
GRANTORS HEREBY CONSENT AND AGREE THAT THE STATE OR FEDERAL COURTS LOCATED IN
NEW YORK COUNTY, CITY OF NEW YORK, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY GRANTOR, AGENT AND LENDERS
PERTAINING TO THIS SECURITY AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO
ANY MATTER ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS, PROVIDED, THAT AGENT, LENDERS AND THE GRANTORS ACKNOWLEDGE
THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE OF NEW YORK COUNTY, CITY OF NEW YORK, AND, PROVIDED, FURTHER, NOTHING IN
THIS SECURITY AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH GRANTOR EXPRESSLY SUBMITS
AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN
ANY SUCH COURT, AND EACH GRANTOR HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS
AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY SUCH COURT. EACH GRANTOR HEREBY WAIVES PERSONAL SERVICE OF
THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER
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Lakes Security Agreement
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH GRANTOR AT
THE ADDRESS REFERRED TO IN SECTION 11.02 OF THE CREDIT AGREEMENT AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT
THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE
PREPAID.
(j) WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT DISPUTES
ARISING HEREUNDER OR RELATING HERETO BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF
THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG AGENT, LENDERS, AND
GRANTOR ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED IN CONNECTION WITH, THIS SECURITY AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO.
(k) SECTION TITLES. The Section titles contained in this Security
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
(l) NO STRICT CONSTRUCTION. The parties hereto have participated
jointly in the negotiation and drafting of this Security Agreement. In the event
an ambiguity or question of intent or interpretation arises, this Security
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Security Agreement.
(m) ADVICE OF COUNSEL. Each of the parties represents to each other
party hereto that it has discussed this Security Agreement and, specifically,
the provisions of Section 25(i) and Section 25(j), with its counsel.
(n) BENEFIT OF LENDERS. All Liens granted or contemplated hereby shall
be for the benefit of Agent and Lenders, and all proceeds or payments realized
from Collateral in accordance herewith shall be applied to the Obligations in
accordance with the terms of the Credit Agreement.
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Lakes Security Agreement
IN WITNESS WHEREOF, each of the parties hereto has caused this
Security Agreement to be executed and delivered by its duly authorized officer
as of the date first set forth above.
LAKES GAMING AND RESORTS, LLC
LAKES ENTERTAINMENT, INC.
BORDERS LAND COMPANY, LLC
GREAT LAKES GAMING OF MICHIGAN, LLC
LAKES CLOVERDALE, LLC
LAKES GAME DEVELOPMENT, LLC
LAKES GAMING - MISSISSIPPI, LLC
LAKES IOWA CONSULTING, LLC
LAKES IOWA MANAGEMENT, LLC
LAKES JAMUL DEVELOPMENT, LLC
LAKES JAMUL, INC.
LAKES KAR SHINGLE SPRINGS, LLC
LAKES KEAN ARGOVITZ RESORTS -CALIFORNIA, LLC
LAKES KICKAPOO CONSULTING, LLC
LAKES KICKAPOO MANAGEMENT, LLC
LAKES NIPMUC, LLC
LAKES PAWNEE CONSULTING, LLC
LAKES PAWNEE MANAGEMENT, LLC
LAKES POKER TOUR, LLC
LAKES SHINGLE SPRINGS, INC.
By: /s/ Xxxxxxx Xxxx
----------------------------------------
Name: Xxxxxxx Xxxx
Title:President and Chief Financial Officer
--------------------------------------
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Lakes Security Agreement
BANK OF AMERICA, N.A.,
as Agent
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Assistant Vice President
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Lakes Security Agreement