Document:

Exhibit 10.4

 

STOCK PLEDGE AGREEMENT

(Southwest Casino and Hotel Corp.)

 

This PLEDGE AGREEMENT, dated as of October 20,
2005 (together with all amendments, if any, from time to time hereto, this “Agreement”)
between SOUTHWEST CASINO CORPORATION, a Nevada corporation (the “Pledgor”) and
CROWN BANK, a Minnesota state banking corporation (“Lender”).

 

W  I  T  N  E
S  S  E  T  H:

 

WHEREAS, pursuant to that certain Revolving Credit and
Term Loan Agreement of even date herewith by and among Southwest Casino and
Hotel Corp., a Minnesota corporation, (the “Borrower”) and Lender (including
all exhibits and schedules thereto, and as from time to time amended, restated,
supplemented or otherwise modified (the “Credit Agreement”) the Lender has
agreed to extend certain financial accommodations to the Borrower;

 

WHEREAS, Pledgor is the record and beneficial owner of
the common stock in the Pledged Entity (the “Stock”) listed in Schedule I hereto; and

 

WHEREAS, in order to induce Lender to extend the
financial accommodations provided for in the Credit Agreement, Pledgor has
agreed to pledge the Pledged Collateral to Lender in accordance herewith.

 

NOW, THEREFORE, in consideration of the premises and
the covenants hereinafter contained and to induce Lender to extend the
financial accommodations provided for in the Credit Agreement, it is agreed as
follows:

 

1.     Definitions.  Unless
otherwise defined herein, terms defined in the Credit Agreement are used herein
as therein defined, and the following shall have (unless otherwise provided
elsewhere in this Agreement) the following respective meanings (such meanings
being equally applicable to both the singular and plural form of the terms
defined):

 

“Bankruptcy Code” means title 11, United States
Code, as amended from time to time, and any successor statute thereto.

 

“Pledged Collateral” has the meaning assigned
to such term in Section 2 hereof.

 

“Pledged Entity” means an issuer of Pledged Interests.

 

“Pledged Interests” means those the Stock listed on Schedule I
hereto.

 

“Secured Obligations” has the meaning assigned
to such term in Section 3 hereof.

 

2.     Pledge.  Pledgor
hereby pledges to Lender, a first -priority security interest in all of
the following (collectively, the “Pledged Collateral”):

 

(a)   the Pledged
Interests and the certificates, if any, representing the Pledged Interests, and all dividends,
distributions, cash, instruments and other property or

 

 

proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged Interests; and

 

(b)   any additional Stock
of a Pledged Entity from time to time acquired by Pledgor in any manner (which Stock shall be deemed to be part of
the Pledged Interests), and the
certificates representing such additional Stock, and all dividends, distributions, cash, instruments and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such Stock.

 

3.     Security for Obligations. 
This Agreement secures, and the Pledged Collateral is security for, the
prompt payment in full when due, whether at stated maturity, by acceleration or
otherwise, and performance of all Obligations of any kind under or in
connection with the Credit Agreement and the other Loan Documents and all
obligations of Pledgor now or hereafter existing under this Agreement and under
that certain Guaranty by Corporation of even date herewith executed by the
Pledgor in favor of the Lender including, without limitation, all fees, costs
and expenses whether in connection with collection actions hereunder or
otherwise (collectively, the “Secured Obligations”).

 

4.     Delivery of Pledged Collateral. 
All certificates evidencing the Pledged Collateral shall be delivered to
and held by Lender, pursuant hereto.  All
Pledged Interests shall be
accompanied by duly executed instruments of transfer or assignment in blank,
all in form and substance satisfactory to Lender.

 

5.     Representations and Warranties. 
Pledgor represents and warrants to Lender that:

 

(a)   Pledgor is, and at the time of delivery of the Pledged Interests to Lender will be,
the sole holder of record and the sole beneficial owner of such Pledged
Collateral pledged by Pledgor free and clear of any lien or security interest
thereon or affecting the title thereto, except for the lien and security
interest created by this Agreement;

 

(b)   All of the Pledged
Interests have been duly authorized and validly issued;

 

(c)   Pledgor has the right and requisite authority to
pledge, assign, transfer, deliver, deposit and set over the Pledged Collateral
pledged by Pledgor to Lender as provided herein;

 

(d)   None of the Pledged
Interests has been issued or transferred in violation of the securities
registration, securities disclosure or similar laws of any jurisdiction to which
such issuance or transfer may be subject;

 

(e)   All of the Pledged
Interests are presently owned by Pledgor, and are presently represented
by the certificates listed on Schedule I hereto.  As of the date hereof, there are no existing
options, warrants, calls or commitments of any character whatsoever relating to
the Pledged Interests;

 

2

 

(f)    No consent, approval, authorization or other order or
other action by, and no notice to or filing with, any Governmental Authority or
any other Person is required (i) for the pledge by Pledgor of the Pledged
Collateral pursuant to this Agreement or for the execution, delivery or
performance of this Agreement by Pledgor, or (ii) for the exercise by
Lender of any rights provided for in this Agreement or the remedies in respect
of the Pledged Collateral pursuant to this Agreement, except as may be required
in connection with such disposition by laws affecting the offering and sale of
securities generally;

 

(g)   The pledge, assignment and delivery of the Pledged
Collateral pursuant to this Agreement will create a valid first priority lien
on and a first priority perfected security interest in favor of the Lender in
such Pledged Collateral and the proceeds thereof, securing the payment of the
Secured Obligations, subject to no other lien;

 

(h)   This Agreement has been duly authorized, executed and
delivered by Pledgor and constitutes a legal, valid and binding obligation of
Pledgor enforceable against Pledgor in accordance with its terms; and

 

(i)    The Pledgor
hereby authorizes the Lender to file all of the Lender’s financing statements
and amendments to financing statements, and all terminations of the filings of
other secured parties, all with respect to the Pledged Collateral, in such form
and substance as the Lender, in its sole discretion, may from time to time
determine.

 

The representations and warranties set forth in this Section 5
shall survive the execution and delivery of this Agreement.

 

6.     Covenants.  Pledgor covenants
and agrees that until the Termination Date:

 

(a)   Without the prior written consent of Lender, Pledgor
will not sell, assign, transfer, pledge, or otherwise encumber any of its
rights in or to the Pledged Collateral, or any unpaid dividends, interest or
other distributions or payments with respect to the Pledged Collateral or grant
a lien in the Pledged Collateral;

 

(b)   Pledgor will, at its expense, promptly execute,
acknowledge and deliver all such instruments and take all such actions as
Lender from time to time may request in order to ensure to Lender the benefits
of the lien in and to the Pledged Collateral intended to be created by this
Agreement, including stock powers and the filing of any necessary UCC financing
statements, which may be filed by Lender and will cooperate with Lender, at
Pledgor’s expense, in obtaining all necessary approvals and making all
necessary filings under federal, state, local or foreign law in connection with
such liens or any sale or transfer of the Pledged Collateral;

 

(c)   Pledgor has and will defend the title to the Pledged
Collateral and the liens of Lender in the Pledged Collateral against the claim
of any Person and will maintain and preserve such liens;

 

3

 

(d)   Pledgor will, upon obtaining ownership of any
additional Stock of a Pledged
Entity or Stock otherwise
required to be pledged to Lender pursuant to any of the Loan Documents which Stock, notes or instruments are not
already Pledged Collateral, promptly (and in any event within three (3) Business
Days) deliver to Lender a Pledge Amendment, duly executed by Pledgor, in
substantially the form of Schedule II hereto (a “Pledge Amendment”)
in respect of any such additional Stock,
pursuant to which Pledgor shall pledge to Lender all of such additional Stock, notes and instruments.  Pledgor hereby authorizes Lender to attach
each Pledge Amendment to this Agreement and agrees that all Pledged Interests and Pledged
Indebtedness listed on any Pledge Amendment delivered to Lender shall for all
purposes hereunder be considered Pledged Collateral; and

 

(e)           Pledgor
shall not collect or receive any cash dividends, interest, or other
distributions in respect of the Pledged collateral.

 

7.     Pledgor’s Rights.  As long as no
Default or Event of Default shall have occurred and be continuing and until
written notice shall be given to Pledgor in accordance with Section 8(a) hereof,
Pledgor shall have the right, from time to time, to vote and give consents with
respect to the Pledged Collateral, or any part thereof for all purposes not
inconsistent with the provisions of this Agreement, the Credit Agreement or any
other Loan Document; provided, however, that no vote shall be cast, and no
consent shall be given or action taken, which would have the effect of
impairing the position or interest of Lender in respect of the Pledged
Collateral or which would authorize, effect or consent to (unless and to the
extent expressly permitted by the Credit Agreement):

 

(a)            the dissolution or liquidation, in whole or in part,
of a Pledged Entity;

 

(b)            the consolidation or merger of a Pledged Entity with
any other Person;

 

(c)            the sale, disposition or encumbrance of all or
substantially all of the assets of a Pledged Entity, except for liens in favor
of Lender;

 

(d)            any change in the authorized number of membership or
economic interests in a Pledged Entity or the issuance of any additional Stock
unless such issuance is conditioned upon the recipient thereof pledging such
stock to Lender in accordance herewith; or

 

(e)            the alteration of the voting rights with respect to
the stock of a Pledged Entity.

 

8.     Defaults and Remedies; Proxy.

 

(a)   Upon the occurrence of an Event of Default and during
the continuation of such Event of Default, and concurrently with written notice
to Pledgor, Lender (personally or through an agent) is hereby authorized and
empowered to transfer and register in its name or in the name of its nominee
the whole or any part of the

 

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Pledged Collateral, to exchange certificates or instruments
representing or evidencing Pledged Collateral for certificates or instruments
of smaller or larger denominations to collect and receive all cash dividends,
interest and other distributions made thereon to sell in one or more sales
after ten (10) days’ notice of the time and place of any public sale or of
the time at which a private sale is to take place (which notice Pledgor agrees
is commercially reasonable) the whole or any part of the Pledged Collateral and
to otherwise act with respect to the Pledged Collateral as though Lender was
the outright owner thereof.  Any sale
shall be made at a public or private sale at Lender’s place of business, or at
any place to be named in the notice of sale, either for cash or upon credit or
for future delivery at such price as Lender may deem fair, and Lender may be
the purchaser of the whole or any part of the Pledged Collateral so sold and
hold the same thereafter in its own right free from any claim of Pledgor or any
right of redemption.  Each sale shall be
made to the highest bidder, but Lender reserves the right to reject any and all
bids at such sale which, in its discretion, it shall deem inadequate.  Demands of performance, except as otherwise
herein specifically provided for, notices of sale, advertisements and the
presence of property at sale are hereby waived and any sale hereunder may be
conducted by an auctioneer or any officer or agent of Lender.  PLEDGOR HEREBY IRREVOCABLY CONSTITUTES AND
APPOINTS LENDER AS THE PROXY AND ATTORNEY-IN-FACT OF PLEDGOR WITH RESPECT TO
THE PLEDGED COLLATERAL, INCLUDING THE RIGHT TO VOTE THE PLEDGED INTERESTS, WITH FULL POWER OF SUBSTITUTION TO DO SO.  THE APPOINTMENT OF LENDER AS PROXY AND
ATTORNEY-IN-FACT IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE
TERMINATION DATE.  IN ADDITION TO THE
RIGHT TO VOTE THE PLEDGED INTERESTS,
THE APPOINTMENT OF LENDER AS PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT
TO EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER
OF THE PLEDGED INTERESTS WOULD
BE ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN CONSENTS OF SHAREHOLDERS,
CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT SUCH MEETINGS). SUCH
PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION
(INCLUDING ANY TRANSFER OF ANY PLEDGED
INTERESTS ON THE RECORD BOOKS OF THE ISSUER THEREOF) BY ANY PERSON
(INCLUDING THE ISSUER OF THE PLEDGED
INTERESTS OR ANY OFFICER OR AGENT THEREOF), UPON THE OCCURRENCE OF AN
EVENT OF DEFAULT.  NOTWITHSTANDING THE
FOREGOING, LENDER SHALL NOT HAVE ANY DUTY TO EXERCISE ANY SUCH RIGHT OR TO
PRESERVE THE SAME AND SHALL NOT BE LIABLE FOR ANY FAILURE TO DO SO OR FOR ANY
DELAY IN DOING SO.

 

(b)   If, at the original time or times appointed for the
sale of the whole or any part of the Pledged Collateral, the highest bid, if
there be but one sale, shall be inadequate to discharge in full all the Secured
Obligations, or if the Pledged Collateral be offered for sale in lots, if at
any of such sales, the highest bid for the lot offered for sale would indicate
to Lender, in its discretion, that the proceeds of the sales of the whole of
the Pledged Collateral would be unlikely to be sufficient to discharge all the
Secured Obligations, Lender may, on one or more occasions and in its
discretion, postpone any of

 

5

 

said sales by public announcement at the time of sale or the
time of previous postponement of sale, and no other notice of such postponement
or postponements of sale need be given, any other notice being hereby waived;
provided, however, that any sale or sales made after such postponement shall be
after ten (10) days’ notice to Pledgor.

 

(c)   Pledgor recognizes that Lender may be unable to effect
a public sale of any or all the Pledged Collateral and may be compelled to
resort to one or more private sales thereof in accordance with applicable law
and the terms of the Loan Documents. 
Pledgor also acknowledges that any such private sale may result in
prices and other terms less favorable to the seller than if such sale were a
public sale and, notwithstanding such circumstances, agrees that any such
private sale shall not be deemed to have been made in a commercially
unreasonable manner solely by virtue of such sale being private.  Lender shall be under no obligation to delay
a sale of any of the Pledged Collateral for the period of time necessary to
permit the Pledged Entity to register such securities for public sale under the
Securities Act of 1933, as amended (or any similar statute then in effect), or
under applicable state securities laws, even if Pledgor and the Pledged Entity
would agree to do so.

 

(d)   Pledgor agrees to the maximum extent permitted by
applicable law that following the occurrence and during the continuance of an
Event of Default it will not at any time plead, claim or take the benefit of
any appraisal, valuation, stay, extension, moratorium or redemption law now or
hereafter in force in order to prevent or delay the enforcement of this
Agreement, or the absolute sale of the whole or any part of the Pledged
Collateral or the possession thereof by any purchaser at any sale hereunder,
and Pledgor waives the benefit of all such laws to the extent it lawfully may
do so.  Pledgor agrees that it will not
interfere with any right, power and remedy of Lender provided for in this
Agreement or now or hereafter existing at law or in equity or by statute or
otherwise, or the exercise or beginning of the exercise by Lender of any one or
more of such rights, powers or remedies. 
No failure or delay on the part of Lender to exercise any such right,
power or remedy and no notice or demand which may be given to or made upon
Pledgor by Lender with respect to any such remedies shall operate as a waiver
thereof, or limit or impair Lender’s right to take any action or to exercise
any power or remedy hereunder, without notice or demand, or prejudice its
rights as against Pledgor in any respect.

 

(e)   Pledgor further agrees that a breach of any of the
covenants contained in this Section 8 will cause irreparable injury to
Lender, that Lender shall have no adequate remedy at law in respect of such
breach and, as a consequence, agrees that each and every covenant contained in
this Section 8 shall be specifically enforceable against Pledgor, and
Pledgor hereby waives and agrees not to assert any defenses against an action
for specific performance of such covenants except for a defense that the
Secured Obligations are not then due and payable in accordance with the
agreements and instruments governing and evidencing such obligations.

 

9.     Waiver.  No delay on
Lender’s part in exercising any power of sale, lien, option or other right
hereunder, and no notice or demand which may be given to or made upon Pledgor
by Lender with respect to any power of sale, lien, option or other right
hereunder, shall

 

6

 

constitute
a waiver thereof, or limit or impair Lender’s right to take any action or to
exercise any power of sale, lien, option, or any other right hereunder, without
notice or demand, or prejudice Lender’s rights as against Pledgor in any
respect.

 

10.   Assignment.  Lender may
assign, Endorse or transfer any instrument evidencing all or any part of the
Secured Obligations as provided in, and in accordance with, the Credit
Agreement, and the holder of such instrument shall be entitled to the benefits
of this Agreement.

 

11.   Termination.  Immediately
following the Termination Date, Lender shall deliver to Pledgor the Pledged
Collateral pledged by Pledgor at the time subject to this Agreement, and all
instruments of assignment executed in connection therewith, free and clear of
the liens hereof and, except as otherwise provided herein, all of Pledgor’s
obligations hereunder shall at such time terminate.

 

12.   Lien Absolute.  All rights of
Lender hereunder, and all obligations of Pledgor hereunder, shall be absolute
and unconditional irrespective of:

 

(a)   any lack of validity or enforceability of the Credit
Agreement, any other Loan Document or any other agreement or instrument
governing or evidencing any Secured Obligations;

 

(b)   any change in the time, manner or place of payment of,
or in any other term of, all or any part of the Secured Obligations, or any
other amendment or waiver of or any consent to any departure from the Credit
Agreement, any other Loan Document or any other agreement or instrument
governing or evidencing any Secured Obligations;

 

(c)   any exchange, release or non-perfection of any other
Collateral, or any release or amendment or waiver of or consent to departure
from any guaranty, for all or any of the Secured Obligations;

 

(d)   the insolvency of the Borrower or any Guarantor; or

 

(e)   any other circumstance which might otherwise
constitute a defense available to, or a discharge of, Pledgor.

 

13.   Release.  Pledgor
consents and agrees that Lender may at any time, or from time to time, in its
discretion:

 

(a)   renew, extend or change the time of payment, and/or
the manner, place or terms of payment of all or any part of the Secured Obligations;
and

 

(b)   exchange, release and/or surrender all or any of the
Collateral (including the Pledged Collateral), or any part thereof, by
whomsoever deposited, which is now or may hereafter be held by Lender in
connection with all or any of the Secured Obligations; all in such manner and
upon such terms as Lender may deem proper, and without notice to or further
assent from Pledgor, it being hereby agreed that Pledgor shall be and remain
bound upon this Agreement, irrespective of the value or condition of any

 

7

 

of the Collateral, and notwithstanding any such change,
exchange, settlement, compromise, surrender, release, renewal or extension, and
notwithstanding also that the Secured Obligations may, at any time, exceed the
aggregate principal amount thereof set forth in the Credit Agreement, or any
other agreement governing any Secured Obligations.  Pledgor hereby waives notice of acceptance of
this Agreement, and also presentment, demand, protest and notice of dishonor of
any and all of the Secured Obligations, and promptness in commencing suit
against any party hereto or liable hereon, and in giving any notice to or of
making any claim or demand hereunder upon Pledgor.  No act or omission of any kind on Lender’s
part shall in any event affect or impair this Agreement.

 

14.   Reinstatement.  This
Agreement shall remain in full force and effect and continue to be effective
should any petition be filed by or against Pledgor or any Pledged Entity for
liquidation or reorganization, should Pledgor or any Pledged Entity become
insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of Pledgor’s
or a Pledged Entity’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
Secured 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 Secured Obligations, whether as a “voidable preference”, “fraudulent
conveyance”, or otherwise, all as though such payment or performance had not
been made.  In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Secured Obligations shall be reinstated and deemed reduced only by such amount
paid and not so rescinded, reduced, restored or returned.

 

15.   Miscellaneous.

 

(a)   Lender may execute any of its duties hereunder by or
through agents or employees and shall be entitled to advice of counsel
concerning all matters pertaining to its duties hereunder.

 

(b)   Pledgor agrees to promptly reimburse Lender for actual
out-of-pocket expenses, including, without limitation, reasonable counsel fees,
incurred by Lender in connection with the administration and enforcement of
this Agreement.

 

(c)   Neither Lender, nor any of its respective officers,
directors, employees, agents or counsel shall be liable for any action lawfully
taken or omitted to be taken by it or them hereunder or in connection herewith,
except for its or their own gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.

 

(d)   THIS AGREEMENT SHALL BE BINDING UPON AND INURE TO THE
BENEFIT OF PLEDGOR AND ITS SUCCESSORS AND ASSIGNS (INCLUDING A DEBTOR IN
POSSESSION ON BEHALF OF PLEDGOR), AND SHALL BE BINDING UPON AND INURE TO THE
BENEFIT OF, AND BE ENFORCEABLE BY, LENDER AND ITS SUCCESSORS AND ASSIGNS, AND
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN

 

8

 

ACCORDANCE WITH, THE LAWS OF THE STATE OF MINNESOTA
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE.

 

16.   Severability.  If for any
reason any provision or provisions hereof are determined to be invalid and
contrary to any existing or future law, such invalidity shall not impair the
operation of or effect those portions of this Agreement which are valid.

 

17.   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 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.

 

18.   Section Titles. 
The Section titles contained in this 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.

 

19.   Counterparts.  This
Agreement may be executed in any number of counterparts, which shall,
collectively and separately, constitute one agreement.

 

20.   Benefit of Lender.  All security
interests granted or contemplated hereby shall be for the benefit of the
Lender, and all proceeds or payments realized from the Pledged Collateral in
accordance herewith shall be applied to the Obligations in accordance with the
terms of the Credit Agreement.

 

21.   Amendment.  If a Pledged
Entity issues any Stock to
Pledgor after the date hereof, this Agreement may be amended by the execution
of a Pledge Amendment in the form of Schedule II hereto, without
the consent or approval of Pledgor.  All
other amendments, modifications and waivers with respect to this Agreement
shall be effective only if they are in writing and executed by Lender and the
Pledgor with an interest of the Pledged Collateral.

 

[Signature
Page Follows]

 

9

 

IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the date first written above.

 

 

	
   

  	
  SOUTHWEST
  CASINO CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Thomas E. Fox

  
	
   

  	
   

  	
  Its:

  	
    President

  
	
   

  	
   

  	
   

  
	
   

  	
  CROWN
  BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    Mark W. Lucke

  
	
   

  	
   

  	
  Mark W. Lucke

  
	
   

  	
   

  	
  Its: Vice
  President

  

 

 

[Signature Page to Stock Pledge Agreement]

 

 

SCHEDULE I

 

PLEDGED INTERESTS

 

	
  Name and Address of Pledgor

  	
   

  	
  Pledged Entity

  	
   

  	
  Certificate

  No.

  	
   

  	
  Number

  of

  Shares

  	
   

  	
  Percentage

  of

  Outstanding

  Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Southwest Casino
  Corporation

  	
   

  	
  Southwest Casino
  and Hotel Corp.

  	
   

  	
  433

  	
   

  	
  1,000

  	
   

  	
  100

  	
  %

  
	
  3155 East
  Patrick Lane

  Suite 1

  Las Vegas, NV 89120

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

I-1Exhibit 10.5

 

SECURITY
AGREEMENT

 

THIS SECURITY AGREEMENT
(this “Agreement”) is made as of this 20th day of October, 2005, by Southwest
Casino and Hotel Corp., a Minnesota corporation (the “Debtor”), in favor of
CROWN BANK, a Minnesota state banking corporation (the “Secured Party”).

 

In order to secure the
payment of the obligations of the Debtor to the Secured Party pursuant to that
certain Revolving Credit and Term Loan Agreement of even date herewith (the “Credit
Agreement”) by and between the Debtor and the Secured Party and as evidenced by
the Notes (as defined in the Credit Agreement) executed by Debtor, and each and
every other debt, liability and obligation of every type and description which
the Debtor may now or at any time hereafter owe to the Secured Party, (whether
such debt, liability or obligation now exists or is hereafter created or
incurred, whether it arises under or is evidenced by this Agreement, the Credit
Agreement, the Notes or any other present or future instrument or agreement or by
operation of law, and whether it is direct or indirect, due or to become due,
absolute or contingent, primary or secondary, liquidated or unliquidated, or
sole, joint or joint and several) (all such debts, liabilities and obligations
of the Debtor to the Secured Party are herein collectively referred to as the “Secured
Obligations”), the Debtor hereby agrees as follows:

 

1.             SECURITY
INTEREST AND COLLATERAL.  In order to secure the payment and
performance of the Secured Obligations, the Debtor hereby grants to the Secured
Party a security interest (herein called the “Security Interest”) in and to the
following property (hereinafter collectively referred to as the “Collateral”):

 

SEE
EXHIBIT A ATTACHED HERETO AND INCORPORATED

HEREIN
BY THIS REFERENCE.

 

2.             REPRESENTATIONS,
WARRANTIES AND AGREEMENTS.  The Debtor hereby represents and
warrants to, and covenants and agrees with, the Secured Party as follows:

 

(a)           The
Collateral will be used primarily for business purposes.  The Collateral shall be located on the real
property located at the locations listed on Schedule 4.1 of the Credit
Agreement.

 

(b)           The
Debtor is a Minnesota corporation and the address of the Debtor’s chief
executive office is 2001 Killebrew Drive, Suite 350, Minneapolis,
Minnesota, 55425, and it keeps and will keep all of its books and records with
respect to all of its accounts at such address, except for the books and
records with regard to Uncle Sam’s Casino, which are kept at 251 East Bennett
Avenue, Cripple Creek, Colorado, 80813. 
The Debtor shall not change its state of organization or chief executive
office without the Secured Party’s prior written consent.  The Debtor’s state of organization has been
its state of organization since the date of the Debtor’s organization.

 

(c)           If
any part or all of the Collateral will become so related to particular real
estate as to become a fixture, the Debtor will promptly advise the Secured
Party as to real estate concerned and the record owner thereof and execute and
deliver any and all instruments necessary to perfect the Security Interest therein
and to assure that such Security Interest

 

 

will be prior to the
interest therein of the owner of the real estate unless the Secured Party has a
Security Interest in such fixture pursuant to another financing statement.

 

(d)           During
the preceding one (1) year, the Debtor has not changed its name or
operated or conducted business under any trade name or “d/b/a” which is
different from its corporate name other than “Uncle Sam’s Casino.”  The Debtor shall promptly notify the Secured
Party of any change in such name or if it operates or conducts business under
any trade name or “d/b/a” which is different from such name.

 

(e)           The
Debtor has (or will have at the time the Debtor acquires rights in Collateral
hereafter acquired or arising) and will maintain absolute title to each item of
Collateral free and clear of all security interests, liens and encumbrances,
except the Security Interest, and such other security interests as are
permitted under the Credit Agreement (the Security Interest and the security
interests permitted under the Credit Agreement are hereinafter collectively
referred to as the “Permitted Interests”), and will defend the Collateral
against all claims or demands of all persons other than the Secured Party and
those holding Permitted Interests. 
Except as permitted in the Credit Agreement, the Debtor will not sell or
otherwise dispose of the Collateral or any interest therein.

 

(f)            The
Debtor will not permit any Collateral to be located in any state (and, if a
county filing is required, in any county) in which a financing statement
covering such Collateral is required to be, but has not in fact been, filed.

 

(g)           The
Debtor authorizes the Secured Party to file all of the Secured Party’s
financing statements and amendments to financing statements, and all
terminations of the filings of other secured parties, all with respect to the
Collateral, in such form and substance as the Secured Party, in its sole
discretion, may determine.

 

(h)           All
rights to payment and all instruments, documents, chattel paper and other
agreements constituting or evidencing Collateral are (or will be when arising
or issued) the valid, genuine and legally enforceable obligation, subject to no
defense, set-off or counterclaim (other than those arising in the ordinary
course of business) of each account debtor or other obligor named therein or in
the Debtor’s records pertaining thereto as being obligated to pay such
obligation.  The Debtor will not agree to
any modification, amendment or cancellation of any such obligation without the
Secured Party’s prior written consent, and will not subordinate any such right
to payment to claims of other creditors of such account debtor or other
obligor.

 

(i)            The
Debtor will (i) keep all Collateral in good repair, working order and
condition, normal depreciation excepted, and will, from time to time, replace
any worn, broken or defective parts thereof; (ii) other than taxes and
other governmental charges contested in good faith and by appropriate proceedings,
promptly pay all taxes and other governmental charges levied or assessed upon
or against any Collateral or upon or against the creation, perfection or
continuance of the Security Interest; (iii) keep all Collateral free and
clear of all security interests, liens and encumbrances except the Permitted
Interests; (iv) at all reasonable times, permit the Secured Party or its
representatives to examine or inspect any Collateral, wherever located, and to
examine,

 

2

 

inspect and copy the
Debtor’s books and records pertaining to the Collateral and its business and
financial condition and to discuss with account debtors and other obligors
requests for verifications of amounts owed to the Debtor; (v) keep
accurate and complete records pertaining to the Collateral and pertaining to
the Debtor’s business and financial condition and will submit to the Secured
Party such periodic reports concerning the Collateral and the Debtor’s business
and financial condition as the Secured Party may from time to time reasonably
request; (vi) promptly notify the Secured Party of any loss or material
damage to any Collateral or of any material adverse change, known to the
Debtor, in the prospect of payment of any sums due on or under any instrument,
chattel paper or account constituting Collateral; (vii) if the Secured
Party at any time so requests promptly deliver to the Secured Party any
instrument, document or chattel paper constituting Collateral, duly endorsed or
assigned by the Debtor to the Secured Party; (viii) at all times keep all
Collateral insured against risks of fire (including so called extended
coverage), theft, collision (in case of collateral consisting of motor
vehicles) and such other risks and in such amounts as the Secured Party may
reasonably request, with any loss payable to the Secured Party to the extent of
its interest and notify the Secured Party in writing of any loss or damage to
the Collateral or any part; (ix) from time to time execute such financing
statements or other forms, including, without limitation, patent and trademark
recordation forms, as the Secured Party may reasonably deem required to be
filed in order to perfect the Security Interest and, if any Collateral is
covered by a certificate of title, execute such documents as may be required to
have the Security Interest properly noted on a certificate of title;
(x) pay when due or reimburse the Secured Party on demand for all costs of
collection of any of the Secured Obligations and all other out-of-pocket
expenses (including in each case all reasonable attorneys’ fees) incurred by
the Secured Party in connection with the creation, perfection, satisfaction or
enforcement of the Security Interest or the execution or creation, continuance
or enforcement of this Agreement or any or all of the Secured Obligations
including expenses incurred in any litigation or bankruptcy or insolvency
proceedings; (xi) execute, deliver or endorse any and all instruments,
documents, assignments, security agreements and other agreements and writings
which the Secured Party may at any time reasonably request in order to secure,
protect, perfect or enforce the Security Interest and the Secured Party’s
rights under this Agreement, including, without limitation, an assignment of
claim with respect to any account which is a government receivable;
(xii) not use or keep any Collateral, or permit it to be used or kept, for
any unlawful purpose or in violation of any federal, state or local law,
statute or ordinance; (xiii) permit the Secured Party at any time and from
time to time to send requests (both before and after the occurrence of an Event
of Default) to account debtors or other obligors for verification of amounts
owed to Debtor; and (xiv) not permit any Collateral to become part of or
to be affixed to any real property, without first assuring to the reasonable
satisfaction of the Secured Party that the Security Interest will be prior and
senior to any interest or lien then held or thereafter acquired by any mortgagee
of such real property or the owner or purchaser of any interest therein.  If the Debtor at any time fails to perform or
observe any agreement contained in this Section 2(i), and if such failure
shall continue for a period of ten (10) calendar days after the Secured
Party gives the Debtor written notice thereof (or, in the case of the
agreements contained in clauses (viii) and (ix) of this Section 2(i),
immediately upon the occurrence of such failure, without notice or lapse of

 

3

 

time) the Secured Party
may (but need not) perform or observe such agreement on behalf and in the name,
place and stead of the Debtor (or, at the Secured Party’s option, in the
Secured Party’s own name) and may (but need not) take any and all other actions
which the Secured Party may reasonably deem necessary to cure or correct such
failure (including, without limitation, the payment of taxes, the satisfaction
of security interests, liens or encumbrances (other than Permitted Interests),
the performance of obligations under contracts or agreements with account
debtors or other obligors, the procurement and maintenance of insurance, the
execution of financing statements, the endorsement of instruments, and the
procurement of repairs, transportation or insurance); and, except to the extent
that the effect of such payment would be to render any loan or forbearance of
money usurious or otherwise illegal under any applicable law, the Debtor shall
thereupon pay the Secured Party on demand the amount of all moneys expended and
all costs and expenses (including reasonable attorneys’ fees) incurred by the
Secured Party in connection with or as a result of the Secured Party’s
performing or observing such agreements or taking such actions, together with
interest thereon from the date expended or incurred by the Secured Party at the
rate provided for in the Revolving Note. 
To facilitate the performance or observance by the Secured Party of such
agreements of the Debtor, the Debtor hereby irrevocably appoints (which
appointment is coupled with an interest) the Secured Party, or its delegate, as
the attorney-in-fact of the Debtor with the right (but not the duty) from time
to time to create, prepare, complete, execute, deliver, endorse or file, in the
name and on behalf of the Debtor, any and all instruments, documents, financing
statements, forms, applications for insurance and other agreements and writings
required to be obtained, executed, delivered or endorsed by the Debtor under
this Section 2.

 

3.             ASSIGNMENT
OF INSURANCE.  The Debtor hereby assigns to the Secured Party, as
additional security for the payment of the Secured Obligations, any and all
moneys (including but not limited to proceeds of insurance and refunds of
unearned premiums) due or to become due under, and all other rights of the
Debtor under or with respect to, any and all policies of insurance covering the
Collateral, and the Debtor hereby directs the issuer of any such policy to pay
any such moneys to the Secured Party. 
Before and upon the occurrence of an Event of Default, and at any time
thereafter, the Secured Party may (but need not) in its own name or in the
Debtor’s name, execute and deliver proofs of claim, receive all such moneys
(subject to the Debtor’s rights), endorse checks and other instruments
representing payment of such monies, and adjust, litigate, compromise or
release any claim against the issuer of any such policy.

 

4.             COLLECTION
OF ACCOUNTS.  Except as otherwise provided in this Section 4,
the Debtor shall continue to collect, at its own expense, all amounts due or to
become due to Debtor under the Accounts. 
At any time after the occurrence of a Default or an Event of Default,
the Secured Party may, and at the request of the Secured Party the Borrower
shall, promptly notify any account debtor, issuer or obligor of any Account,
instrument, Investment Property, chattel paper, letter of credit right, other
right to payment or General Intangible constituting Collateral that the same
has been assigned to the Secured Party and direct such account debtor, issuer
or obligor to make all future payments to the Secured Party.  In addition to its rights under the preceding
sentence in this Section 4, Secured Party, at any time after the
occurrence of a Default or an Event of Default, may require that Debtor
instruct all current and future account debtors and obligors on other
Collateral to make all payments directly to a Lock Box (the “Lock Box”)

 

4

 

controlled by the Secured
Party.  All payments received in the Lock
Box shall be transferred to a special bank account (the “Collateral Account”)
maintained for the benefit of the Secured Party subject to withdrawal by the
Secured Party only.  After the Secured
Party’s exercise of its right to direct account debtors or other obligors on
any Collateral to make payments directly to Secured Party or to require Debtor
to establish a Lock Box, Debtor shall immediately deliver all full and partial
payments on any Collateral received by Debtor to Secured Party in their
original form, except for endorsements where necessary.  Secured Party, at its sole discretion, may
hold any collections on the Collateral delivered to it or deposited in the
Collateral Account as cash collateral or may apply such collection to the
payment of the Secured Obligations in such order as Secured Party may
elect.  Until such payments are so
delivered to Secured Party, such payments shall be held in trust by Debtor for
and as Secured Party’s property, and shall not be commingled with any funds of
Debtor.  Any application of any
collection to the payment of the Secured Obligations is conditioned upon final
payment of any check or other instrument. 
The Debtor shall execute any and all such documents as the Secured Party
may reasonably require in connection with the establishment of the Lock Box and
the Collateral Account, the form of such documents to be conclusively
determined by the Secured Party in its sole and absolute discretion.  Without limiting the generality of the
foregoing, the Debtor shall have no right to withdraw any funds from the
Collateral Account, and the Debtor shall have no control over such Collateral
Account.  Such Collateral Account and all
funds at any time therein shall constitute Collateral under this
Agreement.  All items credited to the
Collateral Account and subsequently returned and all other costs, fees and
charges of or charged to the Secured Party in connection with the Lock Box
and/or the Collateral Account may be charged to any account of the Debtor, and
the Debtor shall pay the Secured Party all such amounts on demand.

 

5.             REMEDIES.  Upon
the occurrence of an Event of Default, and at any time thereafter, the Secured
Party may exercise any one or more of the following rights or remedies if any
or all of the Secured Obligations are not paid when due: (i) exercise and
enforce any or all rights and remedies available after default to a secured
party under the Uniform Commercial Code, including but not limited to the right
to take possession of any Collateral, proceeding without judicial process or by
judicial process (without a prior hearing or notice thereof, which the Debtor
hereby expressly waives), and the right to sell, lease or otherwise dispose of
or use any or all of the Collateral; (ii) the Secured Party may require
the Debtor to assemble the Collateral and make it available to the Secured
Party at a place to be designated by the Secured Party which is reasonably
convenient to both parties; (iii) exercise its rights under any lessors’
agreements regardless of whether or not the Debtor is in default under such
leases; and (iv) exercise or enforce any or all other rights or remedies
available to the Secured Party by law or agreement against the Collateral,
against the Debtor or against any other person or property.  The Secured Party is hereby granted a
non-exclusive, worldwide and royalty-free license to use or otherwise exploit
all trademarks, franchises, copyrights and patents of the Debtor that the Secured
Party deems necessary or appropriate to the disposition of any Collateral.  If notice to the Debtor of any intended
disposition of Collateral or any other intended action is required by law in a
particular instance, such notice shall be deemed commercially reasonable if
given (in the manner specified in Section 6 below) at least ten (10) calendar
days prior to the date of intended disposition or other action.

 

5

 

6.             SURETY
PROVISIONS.  Debtor hereby:

 

(a)           waives
(i) presentment, demand, notice of nonpayment, protest and notice of
protest on the Secured Obligations; and (ii) notice of the creation or
incurrence of the Secured Obligations;

 

(b)           agrees
that Secured Party may from time to time, without notice to Debtor, which
notice is hereby waived by Debtor, extend, renew or compromise the Secured
Obligations, in whole or in part, without releasing, extinguishing or affecting
in any manner whatsoever the security interest granted hereunder, the foregoing
acts being hereby consented to by Debtor;

 

(c)           agrees
that Secured Party shall not be required to first resort for payment to any
other person, entity or corporation, their properties or estates, or any other
right or remedy whatsoever, prior to enforcing this Security Agreement;

 

(d)           agrees
that this Security Agreement shall be construed as a continuing, absolute and
unconditional agreement without regard to (i) the validity, regularity or
enforceability of the Secured Obligations, or the disaffirmance thereof in any
insolvency or bankruptcy proceeding relating to the Debtor, or (ii) any
event or any conduct or action of the Secured Party or any other party, which
might otherwise constitute a legal or equitable discharge of a surety or of the
security interest granted hereunder but for this provision;

 

(e)           agrees
that this Security Agreement shall remain in full force and effect and be
binding upon Debtor until the credit expires and the Secured Obligations are
paid in full;

 

(f)            agrees
that Secured Party is expressly authorized to renew, extend, compromise,
exchange, release or surrender any or all collateral and security pledged by
the Debtor or any other party to Secured Party to secure all or any part of the
Secured Obligations, with or without consideration and without notice to Debtor
and without in any manner affecting the security interest granted hereunder;
and that the security interest granted hereunder shall not be affected or
impaired by any failure, neglect or omission on the part of Secured Party to
realize upon the Secured Obligations, or upon any collateral or security
therefor, not by the taking by Secured Party of any other security agreement or
guaranty to secure the Secured Obligations of any other indebtedness of the
Debtor to Secured Party, nor by any act or failure to act whatsoever which but
for this provision might or could in law or in equity act to release the
security interest granted hereunder;

 

(g)           agrees
that the security interest granted hereunder shall not be affected or impaired
by the existence or creation from time to time, with or without notice to
Debtor, which notice is hereby waived, of indebtedness from the Debtor to
Secured Party in addition to the Secured Obligations, the creation or existence
of such additional indebtedness being hereby consented to by Debtor;

 

(h)           agrees
that the possession of this security interest by Secured Party shall be
conclusive evidence of due execution and delivery hereof by Debtor;

 

6

 

(i)            agrees
that Debtor may be joined in any action or proceeding commenced in connection
with or based upon the Secured Obligations and this Security Agreement may be
enforced in any such action or proceeding or in any independent action or
proceeding against Debtor should the Debtor fail to duly and punctually pay any
of the principal of or interest on the Secured Obligations, without any
requirement that Secured Party first assert, prosecute or exhaust any remedy or
claim against any other party;

 

(j)            agrees
that no waiver by Secured Party of any Event of Default shall be a waiver of
any other Event of Default or of the same Event of Default on a later occasion;
no delay or failure by Secured Party to exercise any right or remedy hereunder
or under applicable law shall be a waiver of such right or remedy; and no
single or partial exercise by Secured Party of any such right or remedy shall
preclude other or further exercise thereof or the exercise of any other right
or remedy at any other time; and

 

(k)           agrees
that each remedy of the Secured Party hereunder is distinct and cumulative to
every other right or remedy under this Security Agreement, the documents
related hereto, or afforded by law, and may be exercised concurrently or
independently.

 

7.             MISCELLANEOUS.  This
Agreement does not contemplate a sale of accounts or chattel paper, and, as
provided by law, the Debtor is entitled to any surplus and shall remain liable
for any deficiency.  This Agreement can
be waived, modified, amended, terminated or discharged, and the Security
Interest can be released, only explicitly in a writing signed by the Secured
Party.  A waiver signed by the Secured
Party shall be effective only in the specific instance and for the purpose
given. Mere delay or failure to act shall not preclude the exercise or
enforcement of any of the Secured Party’s rights or remedies.  All rights and remedies of the Secured Party
shall be cumulative and may be exercised singularly or concurrently, at the
Secured Party’s option, and the exercise or enforcement of any one such right
or remedy shall neither be a condition to nor bar the exercise or enforcement
of any other.  All notices to be given to
the Debtor shall be deemed sufficiently given if deposited in the United States
mails, registered or certified, postage prepaid, or personally delivered to the
Debtor at its address set forth herein. 
The Secured Party’s duty of care with respect to Collateral in its
possession (as imposed by law) shall be deemed fulfilled if the Secured Party
exercises reasonable care in physically safe keeping such Collateral or, in the
case of Collateral in the custody or possession of a bailee or other third
person, exercises reasonable care in the selection of the bailee or other third
person, and the Secured Party need not otherwise preserve, protect, insure or
care for any Collateral.  The Secured
Party shall not be obligated to preserve any rights the Debtor may have against
any other party, to realize on the Collateral at all or in any particular
manner or order, or following the occurrence of a Default or an Event of
Default, to apply any cash proceeds of Collateral in any particular order of
application.  This Agreement shall be
binding upon and inure to the benefit of the Debtor and the Secured Party and
their respective heirs, representatives, successors and assigns and shall take
effect when signed by the Debtor and delivered to the Secured Party, and the
Debtor waives notice of the Secured Party’s acceptance hereof.  Except to the extent otherwise required by
law, this Agreement shall be governed by the laws of the State of Minnesota
and, unless the context otherwise requires, all terms used herein which are
defined in Articles 1 and 9 of the Uniform Commercial Code, as in effect in
said state, shall have the meanings therein stated and all capitalized terms used
herein which are defined in the Credit Agreement shall have the meanings
therein stated.  If any provision or
application of this Agreement is held unlawful

 

7

 

or unenforceable in any
respect, such illegality or unenforceability shall not affect other provisions
or applications which can be given effect, and this Agreement shall be
construed as if the unlawful or unenforceable provision or application had
never been contained herein or prescribed hereby.  All representations and warranties contained
in this Agreement shall survive the execution, delivery and performance of this
Agreement and the creation and payment of the Secured Obligations.

 

IN WITNESS WHEREOF, the
Debtor has executed and delivered to the Secured Party this Security Agreement
as of the day and year first above written.

 

 

	
   

  	
  SOUTHWEST CASINO AND
  HOTEL CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Thomas E. Fox

  
	
   

  	
   

  	
  Thomas E. Fox

  
	
   

  	
   

  	
  Its: President and
  Chief Financial Officer

  

 

8

 

EXHIBIT A

 

(Description of
Collateral)

 

1.             All assets of the
Debtor including, without limitation, all of the Debtor’s Accounts, chattel
paper (including, without limitation, electronic chattel paper and tangible
chattel paper), deposit accounts, documents, Equipment, General Intangibles,
goods, instruments, Inventory, Investment Property, letter-of-credit rights,
letters of credit, patents, patent rights, copyrights, trademarks, trade names,
goodwill, royalty rights, franchise rights, license rights, software, payment
intangibles, and Receivables; together with (i) all substitutions and
replacements for and products of any of the foregoing; (ii) proceeds of
any and all of the foregoing; (iii) in the case of all tangible goods, all
accessions; (iv) all accessories, attachments, parts, equipment and
repairs now or hereafter attached or affixed to or used in connection with any
tangible goods; (v) all warehouse receipts, bills of lading and other
documents of title now or hereafter covering such goods; (vi) all
collateral subject to the lien of any Security Document; (vii) any money,
or other assets of the Debtor, that now or hereafter come into the possession,
custody or control of the Secured Party; all supporting obligations.

 

2.             Without limiting the generality of the
foregoing, the fifty percent (50%) Membership Interest owned by the Debtor in
North Metro Harness Initiative, LLC, a Minnesota limited liability company, the
Debtor’s one hundred percent (100%) Membership Interest in Gold Rush I, LLC, a
Minnesota limited liability company, The Debtor’s one hundred percent (100%)
Membership Interest in Southwest Casino Deadwood, LLC and the Debtor’s one
hundred percent (100%) Membership Interest in SW Missouri, LLC, a Minnesota
limited liability company (collectively, the “Pledged Interest”) and the
certificates, if any, representing the Pledged
Interests, and all dividends, distributions, cash, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged Interests; and any additional membership interests of North Metro
Harness Initiative, LLC, Gold Rush I, LLC, Southwest Casino Deadwood and SW
Missouri from time to time acquired by Debtor in any manner (which membership interest shall be deemed to
be part of the Pledged Interests),
and the certificates representing such additional Membership Interests, and all dividends, distributions, cash,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such Membership Interests.

 

3.             Without limiting the
generality of the foregoing, the Debtor’s 10,000 shares of common stock in
Southwest Entertainment, Inc., a Minnesota corporation, represented by
Certificate No. 1 (the “Pledged Interest”) and the Pledged Interests and
the certificates, if any, representing the Pledged Interests, and all
dividends, distributions, cash, instruments and other property or proceeds from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Interests; and any additional stock of a
Southwest Entertainment, Inc., a Minnesota corporation, from time to time
acquired by Pledgor in any manner (which stock shall be deemed to be part of
the Pledged Interests), and the certificates representing such additional
stock, and all dividends, distributions, cash, instruments and other

 

 

property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
stock.

 

4.     Without limiting the
generality of the foregoing, all of the Debtor’s right, title and interest in
and any and all rights to payments from and receive payments under, and all of
the Debtor’s Accounts arising under that certain Third Amended and Restated
Gaming Management Agreement (the “Casino Management Agreement”) dated June 16,
1995, by and between the Debtor and the Cheyenne and Arapaho Tribes of
Oklahoma, a federally recognized tribe, (the “Tribe”) as amended from time to
time, and a security interest in all collateral agreements, documents and
negotiable instruments entered into by and between the Debtor and the Tribe in
connection therewith, including payments due and to become due thereunder,
provided that the Secured Party shall have no obligations under such
agreements, documents and negotiable instruments or rights to manage the “Gaming
Facility” as defined in the Casino Management Agreement, upon the occurrence of
an Event of Default.

 

5.             Capitalized terms
used herein and not otherwise defined herein shall have the meanings assigned
thereto in Exhibit B attached hereto.

 

 

EXHIBIT B

 

(Definitions)

 

“Accounts” means
all of the Debtor’s accounts, as such term is defined in the Uniform Commercial
Code in effect in the State of Minnesota (the “UCC”), including without
limitation the aggregate unpaid obligations of customers and other account
debtors to the Debtor arising out of the sale or lease of goods or rendition of
services by the Debtor on an open account or deferred payment basis.

 

“Equipment” means
all of the Debtor’s equipment, as such term is defined in the UCC, whether now
owned or hereafter acquired, including but not limited to all present and future
machinery, vehicles, furniture, fixtures, manufacturing equipment, shop
equipment, office and recordkeeping equipment, parts, tools, supplies, and
including specifically (without limitation) the goods described in any
equipment schedule or list herewith or hereafter furnished to the Secured
Party by the Debtor.

 

“General
Intangibles” means all of the Debtor’s general intangibles, as such term is
defined in the UCC, whether now owned or hereafter acquired, including (without
limitation) all present and future patents, patent applications, copyrights,
trademarks, trade names, trade secrets, customer or supplier lists and
contracts, manuals, operating instructions, permits, franchises, the right to
use the Debtor’s name, and the goodwill of the Debtor’s business.

 

“Inventory” means
all of the Debtor’s inventory, as such term is defined in the UCC, whether now
owned or hereafter acquired, whether consisting of whole goods, finished goods,
raw materials, spare parts or components, supplies or materials, whether
acquired, held or furnished for sale, for lease or under service contracts or
for manufacture or processing, and wherever located.

 

“Investment
Property” means all of the Debtor’s investment property, as such term is
defined in the UCC, whether now owned or hereafter acquired, including but not
limited to all securities, security entitlements, securities accounts,
commodity contracts, commodity accounts, stocks, bonds, mutual fund shares,
money market shares and U.S. Government securities.

 

“Receivables” means
each and every right of the Debtor to the payment of money, whether such right
to payment now exists or hereafter arises, whether such right to payment arises
out of a sale, lease or other disposition of goods or other property, out of a
rendering of services, out of a loan, out of the overpayment of taxes or other
liabilities, or otherwise arises under any contract or agreement, whether such
right to payment is created, generated or earned by the Debtor or by some other
person who subsequently transfers such person’s interest to the Debtor, whether
such right to payment is or is not already earned by performance, and howsoever
such right to payment may be evidenced, together with all other rights and
interests (including all liens and security interests) which the Debtor may at
any time have by law or agreement against any account debtor or other obligor
obligated to make any such payment or against any property of such account
debtor or other obligor; all including but not limited to all present and future
accounts, contract rights, loans and obligations receivable, chattel papers,
bonds, notes and other debt instruments, tax refunds and rights to payment in
the nature of general intangibles.

 

 

“Security Documents”
shall have the meaning assigned thereto in the Credit Agreement.

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