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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: (Date of earliest event reported): OCTOBER 29, 1999
LADY LUCK GAMING CORPORATION
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(Exact name of registrant as specified in its charter)
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DELAWARE 000-22436 880295602
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
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206 NORTH THIRD STREET
LAS VEGAS, NEVADA 89101
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(Address of principal executive offices) (Zip Code)
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(702) 477-3000
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(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 29, 1999, Lady Luck consummated the purchase (the "Miss
Marquette Purchase") of all of the outstanding capital stock of Gamblers Supply
Management Company ("GSMC"), a wholly-owned subsidiary of Sodak Gaming, Inc.
("Sodak"), from Sodak, a wholly-owned subsidiary of International Game
Technology, pursuant to a Stock Purchase Agreement dated as of July 30, 1999
(the "Miss Marquette Purchase Agreement"), by and among Lady Luck, Sodak, and
GSMC. GSMC owns the Miss Marquette riverboat casino located on the Mississippi
River in Marquette, Iowa and the associated real property and assets.
Isle of Capri Casinos, Inc. ("Isle of Capri") made a secured bridge loan
in the principal amount of $16.3 million to Lady Luck, pursuant to a Credit
Agreement dated as of October 29, 1999, between GSMC, as the Borrower, and Isle
of Capri, as the Lender (the "Miss Marquette Credit Agreement"), in order to
fund a portion of the purchase price of the Miss Marquette Purchase. The balance
of the purchase price for the Miss Marquette Purchase was funded out of Lady
Luck's working capital. Isle of Capri has taken a lien on substantially all of
the assets of the Miss Marquette riverboat gaming facility, excluding the gaming
licenses.
On November 1, 1999, Lady Luck and Sodak issued a joint press release
announcing the Miss Marquette Purchase. The press release is attached hereto as
Exhibit 99.1 and incorporated herein by reference.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Gamblers Supply Management Company
The required financial statements of Gamblers Supply Management Company are
currently being compiled. Such financial statements will be filed under cover of
a Current Report on Form 8-K/A as soon as practicable, but not later than 60
days after the date this Current Report on Form 8-K must be filed.
(b) Unaudited Pro Forma Information
The required pro forma information is currently being compiled. Such
information will be filed under cover of a Current Report on Form 8-K/A as soon
as practicable, but not later than 60 days after the date this Current Report on
Form 8-K must be filed.
(c) Exhibits.
EXHIBIT NO. DESCRIPTION
2.1 Stock Purchase Agreement dated as of July 30, 1999, among
Lady Luck, Sodak and GSMC, incorporated herein by reference
to Exhibit 2 of Lady Luck's Current Report on Form 8-K filed
with the Securities and Exchange Commission on August 9,
1999.
4.1 Security Agreement dated as of October 29, 1999, between
GSMC and Isle of Capri, filed herewith.
4.2 Mortgage, Security Agreement, Financing Statement and
Assignment of Leases and Rents, entered into as of
October 29, 1999, by GSMC to Isle of Capri, filed herewith.
4.3 First Preferred Mortgage dated as of October 29, 1999, by
GSMC and Isle of Capri, filed herewith.
10.1 Credit Agreement dated as of October 29, 1999, by and
between GSMC and Isle of Capri, incorporated herein by
reference to Exhibit 10.2 of Lady Luck's Current Report on
Form 8-K filed with the Securities and Exchange Commission
on October 18, 1999.
99.1 Joint Press Release dated November 1, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LADY LUCK GAMING CORPORATION
By: /s/ RORY J. REID
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Rory J. Reid
Senior Vice President, Secretary
and General Counsel
Date: November 10, 1999
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INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
2.1 Stock Purchase Agreement dated as of July 30, 1999, among Lady
Luck, Sodak and GSMC, incorporated herein by reference to Exhibit
2 of Lady Luck's Current Report on Form 8-K filed with the
Securities and Exchange Commission on August 9, 1999.
4.1 Security Agreement dated as of October 29, 1999, between
GSMC and Isle of Capri, filed herewith.
4.2 Mortgage, Security Agreement, Financing Statement and
Assignment of Leases and Rents, entered into as of
October 29, 1999, by GSMC to Isle of Capri, filed herewith.
4.3 First Preferred Mortgage dated as of October 29, 1999, by
GSMC and Isle of Capri, filed herewith.
10.1 Credit Agreement dated as of October 29, 1999, by and between
GSMC and Isle of Capri, incorporated herein by reference to
Exhibit 10.2 of Lady Luck's Current Report on Form 8-K filed with
the Securities and Exchange Commission on October 18, 1999.
99.1 Joint Press Release dated November 1, 1999.
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EXHIBIT 4.1
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "AGREEMENT") dated as of October 29, 1999 is
between GAMBLERS SUPPLY MANAGEMENT COMPANY, a South Dakota corporation (the
"COMPANY"), and ISLE OF CAPRI CASINOS, INC. (the "LENDER").
W I T N E S S E T H:
WHEREAS, the Lender may from time to time make loans, advances or other
financial accommodations to the Company;
WHEREAS, the obligations of the Company to the Lender are to be secured
pursuant to this Agreement;
NOW, THEREFORE, for and in consideration of any loan, advance or other
financial accommodation heretofore or hereafter made to the Company by the
Lender, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS. When used herein, (a) the terms CERTIFICATED SECURITY,
CHATTEL PAPER, DEPOSIT ACCOUNT, DOCUMENT, EQUIPMENT, FINANCIAL ASSET, FIXTURE,
GOODS, INVENTORY, INSTRUMENT, INVESTMENT PROPERTY, SECURITY, SECURITY
ENTITLEMENT and UNCERTIFICATED SECURITY shall have the respective meanings
assigned to such terms in the Uniform Commercial Code (as defined below) and (b)
the following terms have the following meanings (such definitions to be
applicable to both the singular and plural forms of such terms):
ACCOUNT DEBTOR means the party who is obligated on or under any Account
Receivable, Contract Right or General Intangible.
ACCOUNT RECEIVABLE means any right of the Company to payment for goods sold
or leased or for services rendered.
COLLATERAL means all property and rights of the Company in which a security
interest is granted hereunder.
COMPUTER HARDWARE AND SOFTWARE means all of the Company's rights (including
rights as licensee and lessee) with respect to (i) computer and other electronic
data processing hardware, including all integrated computer systems, central
processing units, memory units, display terminals, printers, computer elements,
card readers, tape drives, hard and soft disk drives, cables, electrical supply
hardware, generators, power equalizers, accessories, peripheral devices and
other related computer hardware; (ii) all software programs designed for use on
the computers and electronic data processing hardware described in CLAUSE
(i) above, including all operating system software, utilities and application
programs in whatsoever form (source code and object code in magnetic tape, disk
or hard copy format or any other listings whatsoever);
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(iii) any firmware associated with any of the foregoing; and (iv) any
documentation for hardware, software and firmware described in CLAUSES (i),
(ii) and (iii) above, including flow charts, logic diagrams, manuals,
specifications, training materials, charts and pseudo codes.
CONTRACT RIGHT means any right of the Company to payment under a contract
for the sale or lease of goods or the rendering of services, which right is at
the time not yet earned by performance.
DEFAULT means the occurrence of any Event of Default by the Company under
the Credit Agreement dated as of October 29, 1999 by and between the Company and
the Lender.
GENERAL INTANGIBLES means all of the Company's "general intangibles" as
defined in Uniform Commercial Code and, in any event, includes (without
limitation) all of the Company's trademarks, trade names, patents, copyrights,
trade secrets, customer lists, inventions, designs, software programs, mask
works, goodwill, registrations, licenses (except gaming licenses issued by the
State of Iowa), franchises, tax refund claims, guarantee claims, security
interests and rights to indemnification.
INTELLECTUAL PROPERTY means all past, present and future: trade secrets
and other proprietary information; trademarks, service marks, business names,
designs, logos, indicia and other source and/or business identifiers, and the
goodwill of the business relating thereto and all registrations or applications
for registrations which have heretofore been or may hereafter be issued thereon
throughout the world; copyrights (including copyrights for computer programs)
and copyright registrations or applications for registrations which have
heretofore been or may hereafter be issued throughout the world and all tangible
property embodying the copyrights; unpatented inventions (whether or not
patentable); patent applications and patents; industrial designs, industrial
design applications and registered industrial designs; license agreements
related to any of the foregoing and income therefrom; books, records, writings,
computer tapes or disks, flow diagrams, specification sheets, source codes,
object codes and other physical manifestations, embodiments or incorporations of
any of the foregoing; the right to sue for all past, present and future
infringements of any of the foregoing; and all common law and other rights
throughout the world in and to all of the foregoing.
LIABILITIES means all obligations (monetary or otherwise) of the Company to
the Lender, howsoever created, arising or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing, or due or to become due.
NON-TANGIBLE COLLATERAL means, collectively, the Company's Accounts
Receivable, Contract Rights and General Intangibles.
TRADEMARK - see SECTION 3.
UNIFORM COMMERCIAL CODE means the Uniform Commercial Code as in effect in
the State of New York on the date of this Agreement; provided that, as used in
SECTION 8 hereof, "Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect from time to time in the applicable jurisdiction.
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2. GRANT OF SECURITY INTEREST. As security for the payment of all
Liabilities, the Company hereby assigns to the Lender, and grants to the Lender
a continuing security interest in, the following, whether now or hereafter
existing or acquired:
All of the Company's:
(i) Accounts Receivable;
(ii) Certificated Securities;
(iii) Chattel Paper;
(iv) Computer Hardware and Software and all rights with respect
thereto, including, any and all licenses, options, warranties,
service contracts, program services, test rights, maintenance
rights, support rights, improvement rights, renewal rights and
indemnifications, and any substitutions, replacements,
additions or model conversions of any of the foregoing;
(v) Contract Rights;
(vi) Deposit Accounts;
(vii) Documents;
(viii) Financial Assets;
(ix) General Intangibles;
(x) Goods (including all of its Equipment, Fixtures and Inventory),
and all accessions, additions, attachments, improvements,
substitutions and replacements thereto and therefor;
(xi) Instruments;
(xii) Intellectual Property;
(xiii) Investment Property;
(xiv) money (of every jurisdiction whatsoever);
(xv) Security Entitlements;
(xvi) Uncertificated Securities; and
(xvii) to the extent not included in the foregoing, other personal
property of any kind or description;
together with all books, records, writings, data bases, information and
other property relating to, used or useful in connection with, or
evidencing, embodying,
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incorporating or referring to any of the foregoing, and all proceeds,
products, offspring, rents, issues, profits and returns of and from
any of the foregoing; PROVIDED that to the extent that the provisions
of any lease or license of Computer Hardware and Software or
Intellectual Property expressly prohibit (which prohibition is
enforceable under applicable law) the assignment thereof, and the
grant of a security interest therein, the Company's rights in such
lease or license shall be excluded from the foregoing assignment and
grant for so long as such prohibition continues, IT BEING UNDERSTOOD
that upon the reasonable request of the Lender, the Company will in
good faith use reasonable efforts to obtain consent for the creation
of a security interest in favor of the Lender in the Company's rights
under such lease or license.
3. WARRANTIES. The Company warrants that: (i) no financing statement
(other than any which may have been filed on behalf of the Lender or in
connection with liens expressly agreed to in writing by the Lender ("PERMITTED
LIENS")) covering any of the Collateral is on file in any public office; (ii)
the Company is and will be the lawful owner of all Collateral, free of all liens
and claims whatsoever, other than the security interest hereunder and Permitted
Liens, with full power and authority to execute this Agreement and perform its
obligations hereunder, and to subject the Collateral to the security interest
hereunder; (iii) all information with respect to Collateral and Account Debtors
set forth in any schedule, certificate or other writing at any time heretofore
or hereafter furnished by the Company to the Lender is and will be true and
correct in all material respects as of the date furnished; (iv) the Company's
chief executive office and principal place of business are as set forth on
SCHEDULE I hereto (and the Company has not maintained its chief executive office
and principal place of business at any other location at any time after December
31, 1998); (v) each other location where the Company maintains a place of
business is set forth on SCHEDULE II hereto; (vi) except as set forth on
SCHEDULE III hereto, the Company is not now known and during the five years
preceding the date hereof has not previously been known by any trade name;
(vii) except as set forth on SCHEDULE III hereto, during the five years
preceding the date hereof the Company has not been known by any legal name
different from the one set forth on the signature pages of this Agreement nor
has the Company been the subject of any merger or other corporate
reorganization; (viii) SCHEDULE IV hereto contains a complete listing of all of
the Company's Intellectual Property which is subject to registration statutes;
(ix) the Company is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation; (x) the execution and
delivery of this Agreement and the performance by the Company of its obligations
hereunder are within the Company's corporate powers, have been duly authorized
by all necessary corporate action, have received all necessary governmental
approval (if any shall be required), and do not and will not contravene or
conflict with any provision of law or of the charter or by-laws of the Company
or of any material agreement, indenture, instrument or other document, or any
material judgment, order or decree, which is binding upon the Company; (xi) this
Agreement is a legal, valid and binding obligation of the Company, enforceable
in accordance with its terms, except that the enforceability of this Agreement
may be limited by bankruptcy, insolvency, fraudulent conveyance, fraudulent
transfer, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and by general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity or
at law); and (xii) the Company is in compliance in all material respects with
the requirements of all applicable laws (including the provisions of the Fair
Labor Standards Act), rules, regulations and orders of every governmental
authority, the non-compliance with which would reasonably be expected to result
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in a material adverse effect on the Company's business, condition (financial or
otherwise), properties or prospects.
4. COLLECTIONS, ETC. Until such time during the existence of a
Default as the Lender shall notify the Company of the revocation of such
power and authority, the Company (a) may, in the ordinary course of its
business, at its own expense, sell, lease or furnish under contracts of
service any of the Inventory normally held by the Company for such purpose,
use and consume, in the ordinary course of its business, any raw materials,
work in process or materials normally held by the Company for such purpose,
and use, in the ordinary course of its business (but subject to the terms of
any agreement with the Lender), the cash proceeds of Collateral and other
money which constitutes Collateral, (b) will, at its own expense, endeavor to
collect, as and when due, all amounts due under any of the Non-Tangible
Collateral, including the taking of such action with respect to such
collection as the Lender may reasonably request or, in the absence of such
request, as the Company may deem advisable, and (c) may grant, in the
ordinary course of business, to any party obligated on any of the
Non-Tangible Collateral, any rebate, refund or allowance to which such party
may be lawfully entitled, and may accept, in connection therewith, the return
of Goods, the sale or lease of which shall have given rise to such
Non-Tangible Collateral. The Lender, however, may, at any time that a
Default exists, whether before or after any revocation of such power and
authority or the maturity of any of the Liabilities, notify any parties
obligated on any of the Non-Tangible Collateral to make payment to the Lender
of any amounts due or to become due thereunder and enforce collection of any
of the Non-Tangible Collateral by suit or otherwise and surrender, release or
exchange all or any part thereof, or compromise or extend or renew for any
period (whether or not longer than the original period) any indebtedness
thereunder or evidenced thereby. Upon the request of the Lender during the
existence of a Default, or prior thereto, the Company will, at its own
expense, notify any or all parties obligated on any of the Non-Tangible
Collateral to make payment to the Lender of any amounts due or to become due
thereunder.
Upon request by the Lender during the existence of a Default, the Company
will forthwith, upon receipt, transmit and deliver to the Lender, in the form
received, all cash, checks, drafts and other instruments or writings for the
payment of money (properly endorsed, where required, so that such items may be
collected by the Lender) which may be received by the Company at any time in
full or partial payment or otherwise as proceeds of any of the Collateral.
Except as the Lender may otherwise consent in writing, any such items which may
be so received by the Company will not be commingled with any other of its funds
or property, but will be held separate and apart from its own funds or property
and upon express trust for the Lender until delivery is made to the Lender. The
Company will comply with the terms and conditions of any consent given by the
Lender pursuant to the foregoing sentence.
The Lender (or any designee thereof) is authorized to endorse, in the name
of the Company, any item, howsoever received by the Lender, representing any
payment on or other proceeds of any of the Collateral.
5. CERTIFICATES, SCHEDULES AND REPORTS. The Company will from time to
time, as the Lender may request, deliver to the Lender such schedules,
certificates and reports respecting all or any of the Collateral at the time
subject to the security interest hereunder, and the items or amounts received by
the Company in full or partial payment of any of the Collateral, as the Lender
may reasonably request. Any such schedule, certificate or report shall be
executed by a duly authorized officer of the Company and shall be in such form
and detail as the Lender may
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specify. The Company shall immediately notify the Lender of the occurrence
of any event causing any loss or depreciation in the value of its Inventory
or other Goods which is material to the Company and its subsidiaries taken as
a whole, and such notice shall specify the amount of such loss or
depreciation.
6. AGREEMENTS OF THE COMPANY. The Company (a) will, upon request of the
Lender, execute such financing statements and other documents (and pay the cost
of filing or recording the same in all public offices reasonably deemed
appropriate by the Lender) and do such other acts and things (including,
delivery to the Lender of any Instruments or Certificated Securities which
constitute Collateral), all as the Lender may from time to time reasonably
request, to establish and maintain a valid security interest in the Collateral
(free of all other liens, claims and rights of third parties whatsoever, other
than Permitted Liens) to secure the payment of the Liabilities; (b) will keep
all its Inventory at, and will not maintain any place of business at any
location other than, its address(es) shown on SCHEDULES I and II hereto or at
such other addresses of which the Company shall have given the Lender not less
than 10 business days' prior written notice, (c) will keep its records
concerning the Non-Tangible Collateral in such a manner as will enable the
Lender or its designees to determine at any time the status of the Non-Tangible
Collateral; (d) will furnish the Lender such information concerning the Company,
the Collateral and the Account Debtors as the Lender may from time to time
reasonably request; (e) will permit the Lender and its designees, from time to
time, on reasonable notice and at reasonable times and intervals during normal
business hours and without interfering with the Company's normal operation of
business (or at any time without notice during the existence of a Default) to
inspect the Company's Inventory and other Goods, and to inspect, audit and make
copies of and extracts from all records and other papers in the Company's
possession pertaining to the Collateral and the Account Debtors, and will, upon
request of the Lender during the existence of a Default, deliver to the Lender
all of such records and papers; (f) will, upon the reasonable request of the
Lender, stamp on its records concerning the Collateral, and add on all Chattel
Paper constituting a portion of the Collateral, a notation, in form satisfactory
to the Lender, of the security interest of the Lender hereunder; (g) except for
the sale or lease of Inventory in the ordinary course of its business and sales
of Equipment which is no longer useful in its business or which is being
replaced by similar Equipment, will not sell, lease, assign or create or permit
to exist any Lien on any Collateral other than Permitted Liens; (h) will at all
times keep all of its Inventory and other Goods insured under policies
maintained with reputable, financially sound insurance companies against loss,
damage, theft and other risks to such extent as is customarily maintained by
companies similarly situated, and cause all such policies to provide that loss
thereunder shall be payable to the Lender as its interest may appear (it being
understood that (A) so long as no Default exists, the Lender shall deliver any
proceeds of such insurance which may be received by it to the Company and (B)
whenever a Default exists, the Lender may apply any proceeds of such insurance
which may be received by it toward payment of the Liabilities, whether or not
due, in such order of application as the Lender may determine), and such
duplicate originals of policies or certificates thereof shall, if the Lender so
requests, be deposited with or furnished to the Lender; (i) will take such
actions as are reasonably necessary to keep its Inventory in good repair and
condition; (j) will take such actions as are reasonably necessary to keep its
Equipment in good repair and condition and in good working order, ordinary wear
and tear excepted; (k) will promptly pay when due all license fees, registration
fees, taxes, assessments and other charges which may be levied upon or assessed
against the ownership, operation, possession, maintenance or use of its
Equipment and other Goods; (l) will, upon request of the Lender, (i) cause to be
noted on the applicable certificate, in the event any of its Equipment is
covered by a certificate of title, the security interest of the Lender in the
Equipment covered thereby, and (ii) deliver all
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such certificates to the Lender or its designees; (m) will take all steps
reasonably necessary to protect, preserve and maintain all of its rights in
the Collateral; (n) except as listed on SCHEDULE V, will keep all of the
tangible Collateral in the United States; and (o) will reimburse the Lender
for all reasonable expenses, including reasonable attorney's fees and charges
(including time charges of attorneys who are employees of the Lender),
incurred by the Lender in seeking to collect or enforce any rights in respect
of the Collateral.
Any expenses incurred in protecting, preserving or maintaining any
Collateral shall be borne by the Company. Whenever a Default shall be existing,
the Lender shall have the right to bring suit to enforce any or all of the
Intellectual Property or licenses thereunder, in which event the Company shall
at the request of the Lender do any and all lawful acts and execute any and all
proper documents required by the Lender in aid of such enforcement and the
Company shall promptly, upon demand, reimburse and indemnify the Lender for all
costs and expenses incurred by the Lender in the exercise of its rights under
this SECTION 6. Notwithstanding the foregoing, the Lender shall have no
obligation or liability regarding the Collateral or any thereof by reason of, or
arising out of, this Agreement, unless arising out of the Lender's gross
negligence or willful misconduct.
7. DEFAULT. Whenever a Default shall be existing, the Lender may
exercise from time to time any right or remedy available to it under applicable
law. The Company agrees, in case of Default, (i) to assemble, at its expense,
all its Inventory and other Goods (other than Fixtures) at a convenient place or
places acceptable to the Lender, and (ii) at the Lender's request, to execute
all such documents and do all such other things which may be necessary or
desirable in order to enable the Lender or its nominee to be registered as owner
of the Intellectual Property with any competent registration authority. Any
notification of intended disposition of any of the Collateral required by law
shall be deemed reasonably and properly given if given at least ten days before
such disposition. Any proceeds of any disposition by the Lender of any of the
Collateral may be applied by the Lender to payment of reasonable expenses in
connection with the Collateral, including reasonable attorney's fees and charges
(including time charges of attorneys who are employees of the Lender), and any
balance of such proceeds may be applied by the Lender toward the payment of
such of the Liabilities, and in such order of application, as the Lender may
from time to time elect.
8. GENERAL. The Lender shall be deemed to have exercised reasonable
care in the custody and preservation of any of the Collateral in its possession
if it takes such action for that purpose as the Company requests in writing or
such action as it ordinarily takes with respect to similar property provided by
the Lender, but failure of the Lender to comply with any such request shall not
of itself be deemed a failure to exercise reasonable care, and no failure of the
Lender to preserve or protect any right with respect to such Collateral against
prior parties, or to do any act with respect to the preservation of such
Collateral not so requested by the Company, shall be deemed of itself a failure
to exercise reasonable care in the custody or preservation of such Collateral.
Any notice from the Lender to the Company, if mailed, shall be deemed given
five days after the date mailed, postage prepaid, addressed to the Company
either at the Company's address shown on SCHEDULE I hereto or at such other
address as the Company shall have specified in writing to the Lender as its
address for notices hereunder.
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The Company agrees to pay all reasonable expenses, including reasonable
attorneys' fees and charges (including time charges of attorneys who are
employees of the Lender) paid or incurred by the Lender in endeavoring to
collect the Liabilities, or any part thereof, and in enforcing this Agreement,
and such obligations will themselves be Liabilities.
No delay on the part of the Lender in the exercise of any right or remedy
shall operate as a waiver thereof, and no single or partial exercise by the
Lender of any right or remedy shall preclude other or further exercise thereof
or the exercise of any other right or remedy.
This Security Agreement shall remain in full force and effect until all
Liabilities have been paid in full and all commitments by the Lender to make
loans, advances or other financial accommodations to the Company have
terminated. If at any time all or any part of any payment theretofore applied
by the Lender to any of the Liabilities is or must be rescinded or returned by
the Lender for any reason whatsoever (including the insolvency, bankruptcy or
reorganization of the Company), such Liabilities shall, for the purposes of this
Agreement, to the extent that such payment is or must be rescinded or returned,
be deemed to have continued in existence, notwithstanding such application by
the Lender, and this Agreement shall continue to be effective or be reinstated,
as the case may be, as to such Liabilities, all as though such application by
the Lender had not been made.
This Agreement shall be construed in accordance with and governed by the
laws of the State of New York applicable to contracts made and to be fully
performed in such State, subject, however, to the applicability of the Uniform
Commercial Code of any jurisdiction in which any Goods may be located at any
given time. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this 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 Agreement.
The rights and privileges of the Lender hereunder shall inure to the
benefit of its successors and assigns.
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, and each such counterpart
shall be deemed to be an original, but all such counterparts shall together
constitute one and the same Agreement.
No interest of the Lender created or arising under this Agreement shall
attach to any gaming license issued by the State of Iowa.
This Agreement may only be amended in a writing signed by both parties.
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY INSTRUMENT, DOCUMENT OR AGREEMENT RELATED HERETO, SHALL BE
BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
OTHER PROPERTY MAY BE BROUGHT, AT THE LENDER'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH
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COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE COMPANY HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. THE COMPANY
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, TO THE ADDRESS SET FORTH ON SCHEDULE I HERETO (OR SUCH OTHER
ADDRESS AS IT SHALL HAVE SPECIFIED IN WRITING TO THE LENDER AS ITS ADDRESS
FOR NOTICES HEREUNDER) OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
NEW YORK. THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM.
EACH OF THE COMPANY AND THE LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
AGREEMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR
WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR
ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE
FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and
year first above written.
GAMBLERS SUPPLY MANAGEMENT COMPANY
By: /s/ RORY J. REID
----------------------------------------
Title: Vice President
-----------------------------------
ISLE OF CAPRI CASINOS, INC., as Lender
By: /s/ REXFORD A. YEISLEY
----------------------------------------
Title: Senior Vice President and
Chief Financial Officer
-----------------------------------
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EXHIBIT 4.2
This Mortgage Was Prepared By
And After Recordation This Mortgage
Should Be Returned To:
Jack Edelbrock, Esq.
c/o Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603-3441
MORTGAGE, SECURITY AGREEMENT, FINANCING STATEMENT
AND ASSIGNMENT OF LEASES AND RENTS
by
GAMBLERS SUPPLY MANAGEMENT COMPANY
as Mortgagor
to
ISLE OF CAPRI CASINOS, INC.
as Mortgagee
Property Known as
The Miss Marquette Gaming Facility
__________________________
<PAGE>
MORTGAGE, SECURITY AGREEMENT, FINANCING STATEMENT
AND ASSIGNMENT OF LEASES AND RENTS
THIS MORTGAGE, SECURITY AGREEMENT, FINANCING STATEMENT AND ASSIGNMENT OF
LEASES AND RENTS (this "MORTGAGE") entered into as of October 29, 1999 by
GAMBLERS SUPPLY MANAGEMENT COMPANY, a South Dakota corporation (hereinafter
called "MORTGAGOR"), having its principal place of business c/o Miss Marquette
Riverboat Casino, 30325 128th Street, Marquette, Iowa, in favor of ISLE OF CAPRI
CASINOS, INC., a Delaware corporation, having an office at 711 Washington Loop,
Biloxi, Mississippi 39530 (hereinafter called "MORTGAGEE"). Terms appearing in
this Mortgage with an initial capital letter that are not otherwise defined
herein, but that are defined in the Credit Agreement (defined below), shall have
the same respective meanings for purposes hereof as such terms have in the
Credit Agreement.
RECITALS
A. LOANS. Pursuant to that certain Credit Agreement dated as of
October 28, 1999 as the same may from time to time be amended, restated,
modified, supplemented or substituted from time to time, the "CREDIT
AGREEMENT"), the Mortgagee has agreed to make certain advances of credit in a
maximum principal amount not to exceed $16,300,000 from time to time to the
Mortgagor (the "LOAN").
B. NOTE. The Loan is evidenced by a certain promissory note of even date
with the Credit Agreement (together with all promissory notes given in
replacement, satisfaction or substitution thereof, and all amendments,
restatements or other modifications of any of the foregoing, the "NOTE"). The
Note and all other obligations of the Mortgagor with respect to the Credit
Agreement are secured by this Mortgage, the Ship Mortgage and the Security
Agreement of even date herewith (together with this Mortgage, the Note and the
Credit Agreement, collectively, as the same may from time to time be amended,
modified or restated, the "LOAN DOCUMENTS").
C. OBLIGATIONS; EXPENSES. This Mortgage secures the principal and
interest under the Note, all fees payable under the Credit Agreement, the
Expenses (as defined below), any additional advances made by Mortgagee in
connection with the Mortgaged Property (defined below) or the Loan, any future
advances made by the Mortgagee and all other amounts payable under the Loan
Documents (the "DEBT") and also secures both the timely payment of the Debt as
and when required and the timely performance of all other obligations and
covenants to be performed under the Loan Documents (the "OBLIGATIONS"). As used
in this Mortgage, the term "EXPENSES" means all fees and expenses incurred by
Mortgagee or that are otherwise payable in connection with the Loan or the
Mortgaged Property including reasonable attorneys' fees and expenses and any
fees and expenses relating to (i) the preparation, execution, acknowledgment,
delivery and recording or filing of the
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Loan Documents; (ii) except as otherwise provided by the Loan Documents, any
proceeding or other claim asserted against Mortgagee; (iii) except as
otherwise provided by the Loan Documents, any inspection, assessment, survey
and test permitted under the Loan Documents; (iv) any adjustment or
evaluation of insurance settlements in respect of a partial or total
destruction of the Mortgaged Property; (v) any participation in condemnation
proceedings related to the Mortgaged Property; (vi) the preservation of
Mortgagee's security and the exercise of any rights or remedies available at
law, in equity or otherwise; and (vii) the Leases (as defined below) and the
exercise of the Contract Rights (as defined below).
NOW, THEREFORE, the Mortgagor, for and in consideration of the aforesaid
Obligations and in order to secure the payment of the Obligations together with
any renewals or extensions or modifications thereof upon the same or different
terms or at the same or different rate of interest and also to secure: (i) all
future advances and readvances that may subsequently be made to Mortgagor by
Mortgagee evidenced by the aforesaid Note, or by other promissory notes, and all
renewals and extensions thereof; and (ii) all other indebtedness of Mortgagor to
Mortgagee now or hereafter existing, whether direct or indirect, the maximum
amount of all indebtedness outstanding at any one time secured hereby not to
exceed an amount equal to $16,300,000, plus interest thereon, all charges and
expenses of collection incurred by Mortgagee including court costs and
reasonable attorney's fees, has MORTGAGED, GRANTED, BARGAINED, SOLD, CONVEYED
AND RELEASED and by these presents does MORTGAGE, GRANT, BARGAIN, SELL, CONVEY
AND RELEASE unto the Mortgagee, its successors and assigns, the following
property:
All of Mortgagor's right, title and interest in and to that certain real
estate legally described in EXHIBIT A hereto (the "LAND"), together with all
after-acquired title in the Land, and together with all right, title and
interest, if any, which Mortgagor may now have or hereafter acquire in and to
all improvements, buildings and structures now or hereafter located thereon of
every nature whatsoever, is herein called the "PREMISES".
TOGETHER WITH all right, title and interest, if any, including any
after-acquired right, title and interest, and including any right of use or
occupancy, which Mortgagor may now have or hereafter acquire in and to (a)
all easements, rights of way, gores of land or any lands occupied by streets,
ways, alleys, passages, sewer rights, water courses, water rights and powers,
and public places adjoining said Land, and any other interests in property
constituting appurtenances to the Premises, or which hereafter shall in any
way belong, relate or be appurtenant thereto, and (b) all hereditaments, gas,
oil, minerals (with the right to extract, sever and remove such gas, oil and
minerals), and easements, of every nature whatsoever, located in or on the
Premises and all other rights and privileges thereunto belonging or
appertaining and all extensions, additions, improvements, betterments,
renewals, substitutions and replacements to or of any of the rights and
interests described in subparagraphs (a) and (b) above (hereinafter the
"PROPERTY RIGHTS").
TOGETHER WITH all right, title and interest, if any, including any
after-acquired right, title and interest, and including any right of use or
occupancy, which Mortgagor may now or hereafter
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acquire in and to all fixtures and appurtenances of every nature whatsoever
now or hereafter located in, on or attached to, and used or intended to be
used in connection with, or with the operation of, the Premises, including,
but not limited to (a) all apparatus, machinery and equipment of Mortgagor
(the "EQUIPMENT"); and (b) all extensions, additions, improvements,
betterments, renewals, substitutions and replacements to or of any of the
foregoing (the "FIXTURES"). It is mutually agreed, intended and declared
that the Premises and all of the Property Rights, Equipment and Fixtures
owned by Mortgagor (referred to collectively herein, together with the Land,
as the "REAL PROPERTY") shall, so far as permitted by law, be deemed for the
purpose of this Mortgage to be real estate and covered by this Mortgage.
TOGETHER WITH all the estate, right, title and interest of the Mortgagor in
and to (i) all judgments, insurance proceeds, awards of damages and settlements
resulting from condemnation proceedings or the taking of the Real Property, or
any part thereof, under the power of eminent domain or for any damage (whether
caused by such taking or otherwise) to the Real Property, or any part thereof,
or to any rights appurtenant thereto, and all proceeds of any sales or other
dispositions of the Real Property or any part thereof; and (except as otherwise
provided herein or in the Credit Agreement) the Mortgagee is hereby authorized
to collect and receive said awards and proceeds and to give proper receipts and
acquittance therefor, and to apply the same as provided in the Credit Agreement;
and (ii) all contract rights, general intangibles, actions and rights in action
relating to the Real Property including, without limitation, all rights to
insurance proceeds and unearned premiums arising from or relating to damage to
the Real Property (all of the foregoing being referred to as the "CONTRACT
RIGHTS"); and (iii) all proceeds, products, replacements, additions,
substitutions, renewals and accessions of and to the Real Property. (The rights
and interests described in this paragraph are called the "INTANGIBLES.")
TOGETHER WITH all right, title and interest, if any, including any
after-acquired right, title and interest that Mortgagor may now or hereafter
acquire in the Rents (as defined below) or the Leases.
BUT EXCLUDING any interest of the Mortgagor in any gaming license.
All of the property described above, and each item of property therein
described, not limited to but including the Mortgagor's fee simple interest in
the Land, the Premises, the Property Rights, the Fixtures, the Real Property,
the Intangibles, the Rents and the Leases, is herein referred to as the
"MORTGAGED PROPERTY."
TO HAVE AND TO HOLD all and singular the Mortgaged Property unto Mortgagee
and the successors or assigns of Mortgagee forever.
PROVIDED ALWAYS, nevertheless, and it is the true intent and meaning of
Mortgagor and the Mortgagee, that if Mortgagor pays or causes to be paid to the
Mortgagee all amounts due under the Obligations, and provided that Mortgagee is
not obligated to disburse any additional amounts
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<PAGE>
under the loans evidenced by the Note, the estate hereby granted shall cease,
determine, and be utterly null and void; otherwise said estate shall remain
in full force and effect.
IT IS AGREED that Mortgagor shall be entitled to hold and enjoy the
Mortgaged Property so long as no Event of Default (as defined below) exists.
It is also agreed that if any of the property herein mortgaged is of a
nature so that a security interest therein can be perfected under the Uniform
Commercial Code in effect in the State of Iowa (the "CODE"), this instrument
shall constitute a security agreement, fixture filing and financing statement,
and for that purpose, the following information is set forth:
(a) In addition to the foregoing grant of mortgage, Mortgagor hereby
grants a continuing security interest to the Mortgagee in that portion of the
Mortgaged Property with respect to which the creation and perfection of a lien
is governed by the Code;
(b) The "Debtor" is the Mortgagor and "Secured Party" is the Mortgagee.
(c) Name and Address of Debtor are as set forth in the Preamble to this
document.
(d) Name and address of Secured Party are as set forth in the Preamble to
this document.
(e) DESCRIPTION OF THE TYPES OR ITEMS OF PROPERTY COVERED BY THIS
FINANCING STATEMENT: all of the Mortgaged Property described or referred to
herein in which a security interest may be perfected pursuant to the Code.
(f) DESCRIPTION OF REAL ESTATE TO WHICH COLLATERAL IS ATTACHED OR UPON
WHICH IT IS LOCATED: Described in Exhibit A.
(g) THE TAXPAYER IDENTIFICATION NUMBER OF THE DEBTOR IS: 46-0423394.
(h) Mortgagee may file this Mortgage or a reproduction thereof, in the
real estate records or other appropriate index, as a financing statement for any
of the items specified herein as part of the mortgaged property. Any
reproduction of this Mortgage or of any other security agreement or financing
statement is sufficient as a financing statement.
Mortgagor agrees to execute, deliver and file or refile any financing
statement, continuation statement, or other instruments Mortgagee may reasonably
require from time to time to perfect or renew such security interest under the
Code. To the extent permitted by law, (i) all of the Equipment and Fixtures are
or are to become fixtures on the Land and (ii) this instrument, upon recording
or registration in the real estate records of the proper office, shall
constitute a "fixture-filing" within the meaning of Sections 9-313 and 9-402 of
the Code. Subject to the terms and conditions of the Credit Agreement, the
remedies for any violation of the covenants, terms and conditions of the
agreements
4
<PAGE>
herein contained shall be as prescribed herein or by general law, or, as to
that part of the security in which a security interest may be perfected under
the Code, by the specific statutory consequences now or hereafter enacted and
specified in the Code, all at the Mortgagee's sole election.
Additionally, Mortgagor (i) does hereby pledge and assign to Mortgagee from
and after the date hereof (including any period of redemption), primarily and on
a parity with the Real Property, and not secondarily, all the rents, issues and
profits of the Real Property and all rents, issues, profits, revenues,
royalties, bonuses, rights and benefits due, payable or accruing (including all
deposits of money as advance rent, for security or as earnest money or as down
payment for the purchase of all or any part of the Real Property) (the "RENTS")
under any and all present and future leases, contracts or other agreements
relative to the ownership or occupancy of all or any portion of the Real
Property, and (ii) except to the extent such a transfer or assignment is not
permitted by the terms thereof, does hereby transfer and assign to Mortgagee all
such leases and agreements (including all Mortgagor's rights under any contracts
for the sale of any portion of the Mortgaged Property and all revenues and
royalties under any oil, gas and mineral leases relating to the Real Property)
(the "LEASES"). Mortgagee hereby grants to Mortgagor the right to collect and
use the Rents as they become due and payable under the Leases, but not more than
one (1) month in advance thereof, unless an Event of Default shall exist;
PROVIDED that the existence of such right shall not operate to subordinate this
assignment to any subsequent assignment, in whole or in part, by Mortgagor, and
any such subsequent assignment shall be subject to the rights of the Mortgagee
under this Mortgage. Mortgagor further agrees to execute and deliver such
assignments of leases or assignments of land sale contracts as Mortgagee may
from time to time request, provided that such assignments do not grant the
Mortgagee any greater rights than those rights set forth in the Loan Documents.
If an Event of Default exists (1) the Mortgagor agrees, upon demand, to deliver
to the Mortgagee all of the Leases with such additional assignments thereof as
the Mortgagee may request and agrees that the Mortgagee may assume the
management of the Real Property and collect the Rents, applying the same upon
the Obligations in the manner provided in the Credit Agreement, and (2) the
Mortgagor hereby authorizes and directs all tenants, purchasers or other persons
occupying or otherwise acquiring any interest in any part of the Real Property
to pay the Rents due under the Leases to the Mortgagee upon request of the
Mortgagee. Mortgagor hereby appoints Mortgagee as its true and lawful attorney
in fact to manage said property and collect the Rents, with full power to bring
suit for collection of the Rents and possession of the Real Property, giving and
granting unto said Mortgagee and unto its agent or attorney full power and
authority to do and perform all and every act and thing whatsoever requisite and
necessary to be done in the protection of the security hereby conveyed;
PROVIDED, HOWEVER, that (i) this power of attorney and assignment of rents shall
not be construed as an obligation upon said Mortgagee to make or cause to be
made any repairs that may be needful or necessary and (ii) Mortgagee agrees that
so long as no Event of Default exists, Mortgagee shall permit Mortgagor to
perform the aforementioned management responsibilities. Upon Mortgagee's
receipt of the Rents, at Mortgagee's option, it may use the proceeds of the
Rents to pay: (1) reasonable charges for collection thereof, costs of necessary
repairs and other costs requisite and necessary during the continuance of this
power of attorney and assignment of rents, (2) general and special taxes,
insurance premiums, and (3) any or all of the Obligations pursuant to the
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provisions of the Credit Agreement. This power of attorney and assignment of
rents shall be irrevocable until this Mortgage shall have been satisfied and
released of record and the releasing of this Mortgage shall act as a
revocation of this power of attorney and assignment of rents. Mortgagee
shall have and hereby expressly reserves the right and privilege (but assumes
no obligation) to demand, collect, sue for, receive and recover the Rents, or
any part thereof, now existing or hereafter made, and apply the same in
accordance with the provisions of the Credit Agreement.
Nothing herein contained shall be construed as constituting the Mortgagee
a mortgagee-in-possession in the absence of the taking of actual possession of
the Mortgaged Property by the Mortgagee. Nothing contained in this Mortgage
shall be construed as imposing on Mortgagee any of the obligations of the lessor
under any Lease of the Mortgaged Property in the absence of an explicit
assumption thereof by Mortgagee. In the exercise of the powers herein granted
the Mortgagee, except as provided in the Credit Agreement, no liability shall be
asserted or enforced against the Mortgagee, all such liability being expressly
waived and released by Mortgagor except in cases of Mortgagee's gross negligence
or wilful misconduct.
Mortgagor hereby releases and waives all rights of redemption under and by
virtue of any of the laws, if any, of the State of Iowa (the "STATE"), and
Mortgagor hereby covenants, represents and warrants that, at the time of the
execution and delivery of this instrument, Mortgagor is well seised of a good
and valid fee simple interest in the Mortgaged Property and with lawful
authority to sell, assign, convey and mortgage the Mortgaged Property, and that
the title to the Mortgaged Property is free and clear of all encumbrances,
except as provided in the policy of title insurance delivered to Mortgagee in
connection with the Loan issued by Stewart Title Insurance Company, and that,
except for such encumbrances, Mortgagor will forever defend the same against all
lawful claims.
The following provisions shall also constitute an integral part of this
Mortgage:
1. PAYMENT OF TAXES. (a) Without limiting any of the provisions of the
Credit Agreement, Mortgagor agrees that, if the United States or any department,
agency or bureau thereof or if the State or any of its subdivisions having
jurisdiction shall at any time require documentary stamps to be affixed to this
Mortgage or shall levy, assess, or charge any tax, assessment or imposition upon
this Mortgage or the credit or indebtedness secured hereby or the interest of
Mortgagee in any of the Mortgaged Property or upon Mortgagee by reason of or as
holder of any of the foregoing then, Mortgagor shall pay for such documentary
stamps in the required amount and deliver them to Mortgagee or pay (or reimburse
Mortgagee for) such taxes, assessments or impositions. Mortgagor agrees to
exhibit to Mortgagee, at any time upon request, official receipts showing
payment of all taxes, assessments and charges which Mortgagor is required or
elects to pay under this paragraph. Mortgagor agrees to indemnify Mortgagee
against liability on account of such documentary stamps, taxes, assessments or
impositions, whether such liability arises before or after payment of the
Obligations and regardless of whether this Mortgage shall have been released.
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(b) Mortgagor shall pay promptly when due all taxes, assessments,
rates, dues, charges, fees, levies, fines, impositions, liabilities,
obligations, liens and encumbrances of every kind and nature whatsoever now or
hereafter imposed, levied or assessed upon or against the Mortgaged Property or
any part thereof, as well as all taxes, assessments and other governmental
charges levied and imposed by the United States of America or any state, county,
municipality or other taxing authority upon or in respect of the Mortgaged
Property or any part thereof; provided, however, that Mortgagor may in good
faith contest the validity, applicability or amount of any asserted tax,
assessment or other charge provided that such tax, assessment or other charge is
paid under protest prior to the date that such tax, assessment or other charge
becomes past due.
2. LEASES AFFECTING THE REAL PROPERTY. Mortgagor agrees faithfully to
perform all of its material obligations under all present and future Leases at
any time assigned to Mortgagee as additional security, and to refrain from any
action or inaction which would result in termination of any such Leases or in
the diminution of the value thereof or of the Rents due thereunder. All future
lessees under any Lease made after the date of recording of this Mortgage shall,
at Mortgagee's option and without any further documentation, attorn to Mortgagee
as lessor if for any reason Mortgagee becomes lessor thereunder, and, upon
demand, pay rent to Mortgagee, and Mortgagee shall not be responsible under such
Lease for matters arising prior to Mortgagee becoming lessor thereunder;
provided, however, Mortgagee shall not become lessor or obligated as lessor
under any such Leases unless or until it shall elect in writing to do so.
Mortgagee acknowledges that there are no Leases as of the date hereof.
3. USE OF THE REAL PROPERTY. Mortgagor agrees that it shall not permit
the public to use the Real Property in any manner that might tend, in
Mortgagee's reasonable judgment, to impair Mortgagor's title to such property or
any portion thereof, or to make possible any claim or claims of easement by
prescription or of implied dedication to public use.
4. COMPLIANCE WITH LAWS AND OTHER RESTRICTIONS. Mortgagor covenants and
represents that the Mortgaged Property and the use thereof presently comply in
all material respects with, and will during the full term of this Mortgage
continue to comply in all material respects with, all applicable restrictive
covenants, zoning and subdivision ordinances and building codes, licenses,
health and environmental laws and regulations and all other applicable laws,
ordinances, rules and regulations.
Mortgagor shall preserve and maintain the Mortgaged Property in good
operating condition and repair. Mortgagor shall not, without the prior written
consent of Mortgagee, which shall not unreasonably be withheld or delayed,
permit, commit or suffer any waste, impairment or deterioration of the Mortgaged
Property or of any part thereof, and will not take any action which will
increase the risk of fire or other hazard to the Mortgaged Property or to any
part thereof. No new improvements shall be constructed on the Mortgaged
Property and no part of the Mortgaged Property shall be removed, demolished or
altered in any material manner without the prior written
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consent of Mortgagee, which shall not unreasonably be withheld or delayed.
Mortgagor shall cause the Mortgaged Property to be managed at all times in
accordance with sound business practice.
5. LITIGATION INVOLVING MORTGAGED PROPERTY. Mortgagor shall promptly
notify Mortgagee of any material litigation, administrative procedure or
proposed legislative action initiated against Mortgagor or the Mortgaged
Property or in which the Mortgaged Property is directly or indirectly affected
including any proceedings which seek to (i) enforce any lien against the
Mortgaged Property, (ii) correct, change or prohibit any existing condition,
feature or use of the Mortgaged Property, (iii) condemn or demolish the
Mortgaged Property, (iv) take, by the power of eminent domain, any portion of
the Mortgaged Property or any property which would damage the Mortgaged
Property, (v) modify the zoning applicable to the Mortgaged Property, or (vi)
otherwise adversely affect the Mortgaged Property. Except in the cases of
Mortgagee's gross negligence or wilful misconduct, Mortgagor shall initiate or
appear in any legal action or other appropriate proceedings when necessary to
protect the Mortgaged Property from damage. Mortgagor shall, upon written
request of Mortgagee, represent and defend the interests of Mortgagee in any
proceedings described in this Section or, in cases where Mortgagor's appointed
counsel is determined by Mortgagee, in its sole but reasonable discretion, to be
insufficient, pay the reasonable fees and expenses of any counsel retained by
Mortgagee to represent the interest of Mortgagee in any such proceedings, in
which event such fees and expenses shall bear interest at the Post-Maturity Rate
and such fees and expenses, together with interest, shall be added to the
Obligations.
6. INDEMNIFICATION. Mortgagor shall not use or permit the use of any
part of the Real Property for an illegal purpose, including, without limitation,
the material violation of any environmental laws, statutes, codes, regulations
or practices. Without limiting, but subject to, any indemnification Mortgagor
has granted in the Credit Agreement, Mortgagor agrees to indemnify and hold
harmless Mortgagee from and against any and all losses, suits, Obligations,
fines, damages, judgments, penalties, claims, charges, costs and expenses
(including reasonable attorneys' and paralegals' fees, court costs and
disbursements) which may be imposed on, incurred or paid by or asserted against
the Real Property by reason or on account of or in connection with: (i) the
construction, reconstruction or alteration of the Real Property, (ii) any
negligence or misconduct of Mortgagor, any lessee of the Real Property, or any
of their respective agents, contractors, subcontractors, servants, employees,
licensees or invitees, (iii) any accident, injury, death or damage to any person
or property occurring in, on or about the Real Property or any street, drive,
sidewalk, curb or passageway adjacent thereto, or (iv) any other transaction
arising out of or in any way connected with the Mortgaged Property except in
cases of Mortgagee's gross negligence or wilful misconduct.
7. INSURANCE. (a) Mortgagor shall, at its sole expense, obtain for,
deliver to, assign and maintain for the benefit of Mortgagee until the
Obligations are paid in full, insurance policies as specified in the Credit
Agreement. Such insurance policies and the assignment thereof shall be
evidenced by such certificates, endorsements and copies of policies as Mortgagee
shall reasonably require.
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(b) ADJUSTMENT OF LOSS. Mortgagee is hereby authorized and
empowered, at its option, to adjust or compromise any loss under any insurance
policies covering the Mortgaged Property and to collect and receive the proceeds
from any such policy or policies. Mortgagor hereby irrevocably appoints
Mortgagee as its attorney-in-fact for the purposes set forth in the preceding
sentence, which appointment is coupled with an interest. Each insurance company
is hereby authorized and directed to make payment of 100% of all such losses
directly to Mortgagee alone. After deducting from such insurance proceeds any
expenses incurred by Mortgagee in the collection and settlement thereof,
including without limitation reasonable attorneys' and adjusters' fees and
charges, Mortgagee shall apply the net proceeds as provided in clause (d) of
this Section. Mortgagee shall not be responsible for any failure to collect any
insurance proceeds due under the terms of any policy regardless of the cause of
such failure, except in cases of Mortgagee's gross negligence or wilful
misconduct.
(c) CONDEMNATION AWARDS. Mortgagee shall be entitled to all
compensation, awards, damages, claims, rights of action and proceeds of, or
on account of, (i) any damage or taking, pursuant to the power of eminent
domain, of the Mortgaged Property or any part thereof, (ii) damage to the
Mortgaged Property by reason of the taking, pursuant to the power of eminent
domain, of other property, or (iii) the alteration of the grade of any street
or highway on or about the Mortgaged Property. Mortgagee is hereby
authorized, at its option, to commence, appear in and prosecute in its own or
Mortgagor's name any action or proceeding relating to any such compensation,
awards, damages, claims, rights of action and proceeds and to settle or
compromise any claim in connection therewith. Mortgagor hereby irrevocably
appoints Mortgagee as its attorney-in-fact for the purposes set forth in the
preceding sentence, which appointment is coupled with an interest.
Mortgagee, after deducting from such compensation, awards, damages, claims,
rights of action and proceeds all its expenses, including reasonable
attorneys' fees, may apply such net proceeds (except as otherwise provided in
clause (d) of this Section of this Mortgage) to payment of the Obligations.
Mortgagor agrees to execute such further assignments of any compensation,
awards, damages, claims, rights of action and proceeds as Mortgagee may
require, provided such assignments are consistent with the provisions of the
Loan Documents.
(d) REPAIR; PROCEEDS OF CASUALTY INSURANCE AND EMINENT DOMAIN. If
all or any part of the Mortgaged Property shall be damaged or destroyed by fire
or other casualty or shall be damaged or taken through the exercise of the power
of eminent domain or other cause described in clause (c), Mortgagor shall
promptly and with all due diligence restore and repair the Mortgaged Property
whether or not the proceeds, award or other compensation are sufficient to pay
the cost of such restoration or repair. The entire amount of such proceeds,
award or compensation shall be applied to the Obligations in such order and
manner as Mortgagee may elect, whether or not Mortgagee has declared the
Obligations to be immediately due and payable pursuant to the Credit Agreement
or the Note. Such proceeds, award or other compensation shall be made available
to Mortgagor on such terms and conditions as Mortgagee may impose for the
purpose of financing the cost of restoration or repair with any excess to be
applied to the Obligations.
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8. REMEDIES. Subject to the provisions of the Credit Agreement, upon the
occurrence of an Event of Default under the terms of the Credit Agreement
("EVENT OF DEFAULT"), in addition to any rights and remedies provided for in the
Credit Agreement, and to the extent permitted by applicable law, the following
provisions shall apply:
(a) Mortgagee may, at its option and without notice to or demand upon
Mortgagor:
(i) Declare any or all indebtedness secured by this Mortgage to
be due and payable immediately.
(ii) Bring a court action to enforce the provisions of or any of
the indebtedness or obligations secured by this Mortgage.
(iii) Foreclose this Mortgage, either by judicial or
non-judicial proceedings, at Mortgagee's option.
(iv) Exercise all rights and remedies of a secured party under
the Iowa Uniform Commercial Code.
(v) Exercise any or all of the rights and remedies provided for
herein or under any of the other Loan Documents upon the occurrence of an Event
of Default hereunder.
(vi) Exercise any other right or remedy available under law or in
equity.
(b) APPOINTMENT OF RECEIVER. Mortgagor hereby consents to and agrees
that at any time after commencement of a judicial foreclosure action, through
and including the period of redemption, the court having jurisdiction of the
case shall, at the request of Mortgagee, appoint a receiver to take possession
of the Mortgaged Property and of the rents and profits accruing therefrom, and
Mortgagor hereby waives its right to possession, statutory or otherwise.
Mortgagor agrees that this Mortgage gives to Mortgagee the right to possession
before sale and termination of the right of redemption, pledges the rents and
profits, creates in favor of Mortgagee a lien upon and interest in the right of
possession given by Iowa statutes, and upon the revenue which arises from it,
and waives the right to challenge the appointment of a receiver.
(c) APPLICATION OF SALE PROCEEDS. To the extent permitted by law,
the proceeds of any sale under this Mortgage shall be applied in the following
manner:
FIRST: To payment of the costs and expenses of the sale, including,
without limitation, reasonable attorneys' fees and disbursements, title charges,
and transfer taxes, together with interest on all advances made from date of
disbursement at the Post-Maturity Rate from time to time or at the maximum rate
permitted to be charged under applicable law, if less.
10
<PAGE>
SECOND: To payment of all sums expended by Mortgagee under the terms
of this Mortgage and not yet repaid, together with interest on such sums from
the date of disbursement at the Post-Maturity Rate.
THIRD: To payment of all other Obligations secured by this Mortgage
(including, without limitation, any applicable prepayment penalty or fee) in any
order that Mortgagee chooses.
FOURTH: The remainder, if any, to the person or persons legally
entitled to it.
(d) WAIVER OF ORDER OF SALE AND MARSHALLING. Mortgagor waives all
rights to direct the order in which any of the Mortgaged Property will be sold
in the event of any sale under this Mortgage, and also any right to have any of
the Mortgaged Property marshaled upon any sale.
(e) NON-WAIVER OF DEFAULTS. The entering upon and taking possession
of the Property, the collection of any partial payment, Rents, the proceeds of
fire and other insurance policies, or compensation or awards for any taking or
damage of the Mortgaged Property, and the application or release thereof as
herein provided, shall not cure or waive any default or notice of default
hereunder or invalidate any act done pursuant to such notice.
(f) REDEMPTION PERIOD; EXPENSES DURING REDEMPTION PERIOD.
(i) Mortgagor hereby agrees that, in the event of judicial
foreclosure of this Mortgage, the Mortgagee may, at its sole option, elect:
(1) Pursuant to Iowa Code Section 628.26 as now enacted or
hereafter modified, amended or replaced, to reduce the period of redemption
after sale and foreclosure to six months; or
(2) Pursuant to Iowa Code Section 628.27 as now enacted or
hereafter modified, amended or replaced, to reduce the period of redemption
after sale and foreclosure to 60 days; or
(3) Pursuant to Iowa Code Section 628.28 as now enacted or
hereafter modified, amended or replaced, or any other Iowa Code Section, to
reduce the period of redemption after sale and foreclosure to such time as may
then be applicable and provided by law; or
(4) Pursuant to Iowa Code Section 654.20 as now enacted or
hereafter modified, amended or replaced, to foreclose without redemption.
(ii) If the Mortgaged Property is sold at a foreclosure sale, the
purchaser may, during any redemption period allowed, make such repairs or
alterations to the Mortgaged Property as may be reasonably necessary for the
proper operation, care, preservation, protection, and
11
<PAGE>
insuring thereof. Any sums so paid, together with interest thereon from the
time of such expenditure at the rate of 18 percent per annum or the highest
rate permitted by applicable law, if less, shall be added to and become a
part of the amount required to be paid for redemption from such sale.
(g) FORECLOSURE SUBJECT TO TENANCIES. Mortgagee shall have the
right, at its option, to foreclose this Mortgage subject to the rights of any
tenant or tenants of the Mortgaged Property.
(h) REMEDIES CUMULATIVE. To the extent permitted by law, every right
and remedy provided in this Mortgage is distinct and cumulative to all other
rights or remedies under this Mortgage or afforded by law or equity or any other
agreement between Mortgagee and Mortgagor, and may be exercised concurrently,
independently, or successively, in any order whatsoever. Mortgagee may exercise
any of its rights and remedies at its option without regard to the adequacy of
its security.
(i) MORTGAGEE'S EXPENSES. Mortgagor shall pay all of Mortgagee's
reasonable expenses incurred in any effort to enforce any terms of this
Mortgage, whether or not any suit is filed, including, without limitation,
reasonable attorneys' fees and disbursements, foreclosure costs, and title
charges. All such sums, with interest thereon, shall be additional
indebtedness of Mortgagor secured by this Mortgage. Such sums shall be
immediately due and payable and shall bear interest from the date of
disbursement at the Post-Maturity Rate.
9. MORTGAGEE'S REMEDIES AGAINST MULTIPLE PARCELS. If more than one
property, lot or parcel is covered by this Mortgage, and if this Mortgage is
foreclosed upon, or judgment is entered upon any Obligations secured hereby
execution may be made upon any one or more of the properties, lots or parcels
and not upon the others, or upon all of such properties or parcels, either
together or separately, and at different times or at the same time, and
execution sales or sales by advertisement may likewise be conducted separately
or concurrently, in each case at Mortgagee's election.
10. NO MERGER. In the event of a foreclosure of this Mortgage or any
other mortgage securing the Obligations, the Obligations then due the Mortgagee
shall, at Mortgagee's option, not be merged into any decree of foreclosure
entered by the court, and Mortgagee may concurrently or subsequently seek to
pursue Mortgagee's remedies under one or more of the other Loan Documents, that
also secure said Obligations, and the validity and enforceability of the lien of
this Mortgage shall not be affected by the order in which this Mortgage may be
foreclosed (or a power of sale exercised) relative to any other proceeding
instituted with respect to any other Loan Document.
11. NOTICES. All notices and other communications provided to any party
hereto under this Mortgage shall be given in the manner provided in the Credit
Agreement and addressed or delivered to such party at its address set forth
below or at such other address as may be designated by such party in a notice to
the other parties.
12
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if to Mortgagor:
c/o Lady Luck Gaming Corp.
206 N. Third St.
Las Vegas, Nevada 89101
if to Mortgagee:
Isle of Capri Casinos, Inc.
711 Washington Loop
Biloxi, Mississippi 39530
Attention: Chief Executive Officer
Facsimile No.: (228) 436-5998
with a copy to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Attn: Paul W. Theiss
Facsimile No.: (312) 701-7711
Mortgagor or Mortgagee shall, from time to time, have the right to specify as
the proper addressee and/or address for the purposes of this Mortgage any other
party or address in the United States upon giving five (5) days' written notice
thereof.
12. EXTENSION OF PAYMENTS. Mortgagor agrees that, without affecting the
liability of any person for payment of the Obligations secured hereby or
affecting the lien of this Mortgage upon the Mortgaged Property or any part
thereof (other than persons or property explicitly released as a result of the
exercise by Mortgagee of its rights and privileges hereunder), Mortgagee may at
any time and from time to time, on request of the Mortgagor, without notice to
any person liable for payment of any Obligations secured hereby, but otherwise
subject to the provisions of the Credit Agreement, extend the time, or agree to
alter or amend the terms of payment of such Obligations. Mortgagor further
agrees that any part of the security herein described may be released with or
without consideration without affecting the remainder of the Obligations or the
remainder of the security.
13. GOVERNING LAW. Mortgagor agrees that this Mortgage is to be
construed, governed and enforced in accordance with the laws of the State.
Wherever possible, each provision of this Mortgage shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Mortgage shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Mortgage.
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14. SATISFACTION OF MORTGAGE. Upon full payment of all the Obligations,
at the time and in the manner provided in the Credit Agreement, or upon
satisfaction of the conditions set forth in the Credit Agreement for release of
the Mortgaged Property from this Mortgage, this conveyance or lien shall be null
and void and, upon demand therefor following such payment or satisfaction of the
conditions set forth in the Credit Agreement for release of the Mortgaged
Property, as the case may be, a satisfaction of mortgage or reconveyance of the
Mortgaged Property shall promptly be provided by Mortgagee to Mortgagor.
15. SUCCESSORS AND ASSIGNS INCLUDED IN PARTIES. This Mortgage shall be
binding upon the Mortgagor and upon the successors, assigns and vendees of the
Mortgagor and shall inure to the benefit of the Mortgagee's successors and
assigns; all references herein to the Mortgagor and to the Mortgagee shall be
deemed to include their respective successors and assigns. Mortgagor's
successors and assigns shall include, without limitation, a receiver, trustee or
debtor in possession of or for the Mortgagor. Wherever used, the singular
number shall include the plural, the plural shall include the singular, and the
use of any gender shall be applicable to all genders.
16. WAIVER OF APPRAISEMENT, VALUATION, STAY, EXTENSION AND REDEMPTION
LAWS. Mortgagor agrees, to the full extent permitted by law, that at all times
during the existence of an Event of Default, neither Mortgagor nor anyone
claiming through or under it shall or will set up, claim or seek to take
advantage of any appraisement, valuation, stay, or extension laws now or
hereafter in force, in order to prevent or hinder the enforcement or foreclosure
of this Mortgage or the absolute sale of the Mortgaged Property or the final and
absolute putting into possession thereof, immediately after such sale, of the
purchaser thereat; and Mortgagor, for itself and all who may at any time claim
through or under it, hereby waives, to the full extent that it may lawfully so
do, the benefit of all such laws and any and all right to have the assets
comprising the Mortgaged Property marshaled upon any foreclosure of the lien
hereof and agrees that Mortgagee or any court having jurisdiction to foreclose
such lien may sell the Mortgaged Property in part or as an entirety. To the
full extent permitted by law, Mortgagor hereby waives any and all statutory or
other rights of redemption from sale under any order or decree of foreclosure of
this Mortgage, on its own behalf and on behalf of each and every person
acquiring any interest in or title to the Mortgaged Property subsequent to the
date hereof. Mortgagor further waives, to the full extent it may lawfully do
so, all statutory or other rights in its favor, limiting concurrent actions to
foreclose this Mortgage and exercising other rights with respect to the
Obligations.
17. INTERPRETATION WITH OTHER DOCUMENTS. Notwithstanding anything in this
Mortgage to the contrary, in the event of a conflict or inconsistency between
the Mortgage and the Credit Agreement, the provisions of the Credit Agreement
shall govern.
18. FUTURE ADVANCES. This Mortgage is given for the purpose of securing
loan advances which the Mortgagee has made and may make to or for Mortgagor
pursuant and subject to the terms and provisions of the Credit Agreement. The
parties hereto intend that, in addition to any other debt or obligation secured
hereby, this Mortgage shall secure unpaid balances of loan advances made by
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<PAGE>
the Mortgagee to the Mortgagor after this Mortgage is delivered to the office
of the County Recorder of Clayton County, Iowa, whether made pursuant to an
obligation of Mortgagee or otherwise, and in such event, such advances shall
be secured to the same extent as if such future advances were made on the
date hereof, although there may be no advance made at the time of execution
hereof and although there may be no indebtedness outstanding at the time any
advance is made. Such loan advances may or may not be evidenced by notes
executed pursuant to the Credit Agreement.
19. NO VIOLATION OF USURY LAWS. Interest, fees, and charges collected or
to be collected in connection with the indebtedness secured hereby shall not
exceed the maximum, if any, permitted by applicable law. If any such law is
interpreted so that such interest, fees, or charges would exceed any such
maximum and Mortgagor is entitled to the benefit of such law, then (a) such
interest, fees, or charges shall be reduced to the permitted maximum; and (b)
any sums already paid to Mortgagee which exceeded the permitted maximum shall be
refunded. Mortgagee may choose to make the refund either by treating the
payments, to the extent of the excess, as prepayments of principal (without
application of any prepayment fee) or by making a direct payment to the
person(s) entitled thereto. The provisions of this Section 19 shall control
over any inconsistent provision of this Mortgage, the Credit Agreement, or any
other Loan Documents. Notwithstanding any reference to the highest lawful rate,
maximum interest rate permitted to be charged by relevant law, or other like
references or terms, such references or terms shall not be construed to
establish a maximum lawful rate of interest as contemplated by Iowa Code Section
535.2 since the parties have agreed in writing to a rate of interest pursuant to
Iowa Code Section 535.2.2. There shall be no automatic reduction to the highest
lawful rate or any other like term as to any Mortgagor or other party barred by
law from availing itself in any action or proceeding of the defense of usury, or
any Mortgagor or other party barred or exempted from the operation of any law
limiting the amount of interest that may be paid for the loan or use of money,
or in the event this transaction, because of its amount or purpose or for any
other reason, is exempt from the operation of any statute limiting the amount of
interest that may be paid for the loan or use of money. Mortgagor agrees that
any late payment fee, late fee, late charge, delinquency charge, or other like
charge shall be interest for the purposes of Iowa law.
20. INVALID PROVISIONS TO AFFECT NO OTHERS. In the event that any of the
covenants, agreements, terms or provisions contained in this Mortgage shall be
invalid, illegal or unenforceable in any respect, the validity of the remaining
covenants, agreements, terms or provisions contained herein or in the Credit
Agreement shall not be in any way affected, prejudiced or disturbed thereby. In
the event that the application of any of the covenants, agreements, terms or
provisions of this Mortgage is held to be invalid, illegal or unenforceable,
those covenants, agreements, terms and provisions shall not be in any way
affected, prejudiced or disturbed when otherwise applied.
21. CHANGES. Neither this Mortgage nor any term hereof may be changed,
waived, discharged or terminated orally, or by any action or inaction, but only
by an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. To the extent permitted by
law, any agreement hereafter made by Mortgagor and Mortgagee
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<PAGE>
relating to this Mortgage shall be superior to the rights of the holder of
any intervening lien or encumbrance.
22. TIME OF ESSENCE. Time is of the essence with respect to the
provisions of this Mortgage.
23. NO STRICT CONSTRUCTION. The parties hereto have participated jointly
in the negotiation and drafting of this Mortgage. In the event an ambiguity or
question of intent or interpretation arises, this Mortgage 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 Mortgage.
24. STATUTORY NOTICE. IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS
MORTGAGE SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE
ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS MORTGAGE MAY
BE LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS MORTGAGE ONLY BY ANOTHER
WRITTEN AGREEMENT. THIS NOTICE IS ALSO EFFECTIVE WITH RESPECT TO ALL OTHER
CREDIT AGREEMENTS BETWEEN THE PARTIES HERETO.
NOTICE: THIS MORTGAGE SECURES CREDIT IN THE AMOUNT OF $16,300,000. LOANS
AND ADVANCES UP TO THIS AMOUNT, TOGETHER WITH INTEREST, ARE SENIOR TO
INDEBTEDNESS TO OTHER CREDITORS UNDER SUBSEQUENTLY RECORDED OR FILED MORTGAGES
AND LIENS.
[Signature Page Follows]
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IN WITNESS WHEREOF, this instrument is executed as of the day and year
first above written by the person or persons identified below on behalf of
Mortgagor (and said person or persons hereby represent that they possess full
power and authority to execute this instrument).
GAMBLERS SUPPLY MANAGEMENT COMPANY, a South
Dakota corporation
By: /s/ RORY J. REID
-------------------------------------
Name: Rory J. Reid
-----------------------------------
Title: Secretary
----------------------------------
<PAGE>
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, ___________________, a notary public of and for the aforesaid State and
County do hereby certify that there appeared before me
_________________________, the ____________________ of GAMBLERS SUPPLY
MANAGEMENT COMPANY, a South Dakota corporation, on behalf of said corporation as
its act and deed, for the uses and purposes therein mentioned.
_____________________________
Notary Public
SWORN TO before me this
____ day of October, 1999.
_____________________________
Notary Public for ______________
My Commission Expires:________
<PAGE>
EXHIBIT 4.3
FIRST PREFERRED MORTGAGE
dated as of October 29, 1999
GAMBLERS SUPPLY MANAGEMENT COMPANY
as Owner
and
ISLE OF CAPRI CASINOS, INC.
as Mortgagee
in respect of the United States flag vessel
MISS MARQUETTE
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Amount of Mortgage - $16,300,000 together with interest, expenses, and fees
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
SECTION 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . .3
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
SECTION 2.1. Payment of Indebtedness and Performance by Owner . . . . . . . .3
SECTION 2.2. Authority of Owner . . . . . . . . . . . . . . . . . . . . . . .3
SECTION 2.3. Ownership and Mortgaging of Vessel . . . . . . . . . . . . . . .4
SECTION 2.4. Compliance with Law; Citizenship . . . . . . . . . . . . . . . .4
SECTION 2.5. No Power to Create or Permit Liens . . . . . . . . . . . . . . .5
SECTION 2.6. Notice of Mortgage . . . . . . . . . . . . . . . . . . . . . . .5
SECTION 2.7. Release of Liens . . . . . . . . . . . . . . . . . . . . . . . .5
SECTION 2.8. Maintaining the Vessel . . . . . . . . . . . . . . . . . . . . .5
SECTION 2.9. Inspection by Mortgagee. . . . . . . . . . . . . . . . . . . . .6
SECTION 2.10. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . .6
SECTION 2.11. No Sale, Mortgage or Charter . . . . . . . . . . . . . . . . . .7
SECTION 2.12. Requisition. . . . . . . . . . . . . . . . . . . . . . . . . . .7
SECTION 2.13. Further Assurances . . . . . . . . . . . . . . . . . . . . . . .7
SECTION 2.14. Mortgagee's Costs. . . . . . . . . . . . . . . . . . . . . . . .7
SECTION 2.15. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
SECTION 2.15.1. Basic Requirements . . . . . . . . . . . . . . . . . .8
SECTION 2.15.2. Lapse of Insurance and Liability for Premium . . . . .8
SECTION 2.15.3. Loss Payable Clause. . . . . . . . . . . . . . . . . .9
SECTION 2.15.4. Compliance with Policy and Pollution Requirements. . 10
SECTION 2.15.5. Total Loss . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.15.6. Broker's Report and Policies . . . . . . . . . . . . 10
SECTION 2.15.7. Furnishing of Security on Arrest, etc. of Vessel . . 10
SECTION 2.15.8. Compromise of Claim. . . . . . . . . . . . . . . . . 11
SECTION 2.16. Charter Parties. . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE III. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.1. Defaults and Effects . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.1.1. Events of Default and Related Remedies. . . . . . . . . . 11
SECTION 3.1.2. Effect of Sale. . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.1.3. Mortgagee's Right to Receiver and Decree of Sale. . . . . 13
SECTION 3.1.4. Consent to Jurisdiction . . . . . . . . . . . . . . . . . 14
SECTION 3.2. Mortgagee Appointed Attorney-in-Fact of Owner. . . . . . . . . 14
SECTION 3.3. Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.4. Return to Former Position. . . . . . . . . . . . . . . . . . . 16
SECTION 3.5. Application of Proceeds. . . . . . . . . . . . . . . . . . . . 16
SECTION 3.6. Performance by Mortgagee . . . . . . . . . . . . . . . . . . . 17
<PAGE>
<S> <C>
SECTION 3.7. Owner's Rights Before Event of Default . . . . . . . . . . . . 18
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.1. Endorsement. . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.2. Agents of Mortgagee. . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.3. General. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.3.1. Amendments. . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.3.2. Cross-References. . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.3.3. Loan Document Pursuant to Credit Agreement. . . . . . . . 19
SECTION 4.3.4. Survival of Representations and Warranties. . . . . . . . 19
SECTION 4.3.5. Severability. . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.3.6. Successors and Assigns. . . . . . . . . . . . . . . . . . 19
SECTION 4.3.7. Effect of Credit Agreement. . . . . . . . . . . . . . . . 19
SECTION 4.3.8. Addresses for Notices. . . . . . . . . . . . . . . . 19
</TABLE>
-ii-
<PAGE>
FIRST PREFERRED MORTGAGE
This FIRST PREFERRED MORTGAGE, made as of October 29, 1999 by GAMBLERS
SUPPLY MANAGEMENT COMPANY, a South Dakota corporation having its principal
office at 30325 128th Street, Highway 18 West, Marquette, Iowa 52158 (herein
called "Owner"), in favor of ISLE OF CAPRI CASINOS, INC., a Delaware corporation
having its principal office at 711 Washington Loop, Biloxi, Mississippi 39530
(herein called "Mortgagee"),
W I T N E S S E T H
WHEREAS, Owner is the sole owner of the whole of the vessel Miss Marquette
having Official No. 950558 of approximately 99.96 gross and 67 net tons and with
dimensions of approximately 228.4 feet by 55 feet, built in 1989 at Freeport,
Florida, by Freeport Ship Builders and Marine Repair, Inc. (herein called
"Builder"), which is duly documented in the name of Owner under the laws of the
United States at the National Vessel Documentation Center at Falling Waters,
West Virginia; and
WHEREAS, Owner is executing and delivering this First Preferred Mortgage
(as the same may from time to time be amended, modified, supplemented or
assigned, herein called the "Mortgage") pursuant to a Credit Agreement dated as
of October 29, 1999 (herein, together with all amendments, if any, called the
"Credit Agreement") by and among Owner (as Borrower) and Mortgagee under which
Mortgagee made a loan (the "Loan") to Owner in the principal amount of Sixteen
Million Three Hundred Thousand Dollars ($16,300,000); and
WHEREAS, in consideration of the Loan made to the Owner, the Owner is
willing to execute and deliver the Mortgage; and
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and to secure the due and punctual (a) payment of all sums that
may now or hereafter be or become secured by or payable under this Mortgage in
accordance herewith or with or under the Credit Agreement and other Loan
Documents or in accordance therewith (all such sums the "Indebtedness Secured
Hereby") and (b) performance and observance of and compliance with the
covenants, terms and conditions of this Mortgage and the other Loan Documents,
Owner for itself, its successors and assigns does by these presents:
1. GRANT, CONVEY, MORTGAGE, PLEDGE AND CONFIRM UNTO MORTGAGEE, its
successors and assigns, the whole of the said vessel Miss Marquette
including, without being limited to, all of the boilers, engines,
machinery, masts, spars, rigging, boats, pumps, anchors, cables, chains,
tackle, apparel, furniture,
<PAGE>
fittings, equipment and other appurtenances appertaining or
belonging thereto, whether now owned or hereafter acquired, and all
additions, improvements and replacements hereafter made in or to
such vessel, including any of the foregoing, or any part thereof
(such vessel, including all of the foregoing, herein called the
"Vessel");
TO HAVE AND TO HOLD the same unto and for the proper use and benefit
of Mortgagee, its successors and assigns, forever, upon the terms herein
set forth;
PROVIDED, HOWEVER, and these presents are upon the condition that, if
Owner or its successors or assigns shall duly and punctually (a) pay
finally and in full to Mortgagee (i) the Indebtedness Secured Hereby as and
when the same becomes due and payable according to the terms hereof and of
the Credit Agreement and other Loan Documents, and (b) perform, observe and
comply with the covenants, terms and conditions, express or implied, of
this Mortgage, the Credit Agreement and other Loan Documents, then this
Mortgage and the rights hereunder shall cease, terminate and be void, but
otherwise shall remain in full force and effect; and
2. FURTHER COVENANT, DECLARE AND AGREE with Mortgagee and its
successors and assigns that the Vessel is to be held subject to the further
covenants, terms and conditions hereinafter set forth.
Anything else in this Mortgage notwithstanding, the mortgage by the Owner
hereunder of the Vessel owned by the Owner shall secure the Indebtedness Secured
Hereby only for the maximum amount that can be incurred without rendering this
Mortgage, as it relates to the Owner, void or voidable under applicable law
relating to fraudulent obligations, fraudulent conveyance or fraudulent
transfer, and not any greater amount.
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. Terms for which meanings are provided in
the Credit Agreement are, unless otherwise defined herein or the context
otherwise requires, used in this Mortgage with such meanings.
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ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS OF OWNER
Owner represents, warrants and covenants unto Mortgagee as follows:
SECTION 2.1. PAYMENT OF INDEBTEDNESS AND PERFORMANCE BY OWNER. Owner
will
(a) duly and punctually pay the Indebtedness Secured Hereby as and
when the same becomes due and payable according to the terms hereof and of
the Credit Agreement and other Loan Documents, and
(b) duly perform, observe and comply with the covenants, terms and
conditions, express or implied, of this Mortgage, the Credit Agreement and
other Loan Documents.
SECTION 2.2. AUTHORITY OF OWNER. Owner is a corporation duly
organized and validly existing under the laws of the State of South Dakota and
shall so remain during the life of this Mortgage, and has all requisite power,
authority and legal right to own, operate and charter the Vessel, to mortgage
the Vessel to Mortgagee pursuant to this Mortgage and to execute and deliver
this Mortgage. All corporate and other required action necessary for the
execution and delivery by Owner of this Mortgage have been duly and effectively
taken, and this Mortgage, the Credit Agreement and other Loan Documents
constitute and will continue to constitute the legal, valid and binding
obligations of Owner enforceable in accordance with their respective terms.
This Mortgage is given in good faith and with no intent to hinder or defraud any
existing or future creditor of the Owner or lienor of the Vessel. The
representations and warranties of Owner set forth in and made pursuant to
Article VI of the Credit Agreement are hereby made and repeated as of the date
hereof.
SECTION 2.3. OWNERSHIP AND MORTGAGING OF VESSEL. Owner lawfully owns
and is lawfully possessed of the Vessel, free from any Lien whatsoever, except
those Liens described in Exhibit I and except the Lien of this Mortgage, and it
will warrant and defend the title and such possession thereto and to every part
thereof for the benefit of Mortgagee and its successors and assigns against the
claims and demands of all persons whomsoever. The Vessel is duly documented in
the name of Owner under the laws and flag of the United States at the Port of
St. Louis, and Owner will at its own expense cause the Vessel to remain so
documented. Owner will cause this Mortgage immediately to be duly filed and
recorded in accordance with Chapter 313 of Title 46, United States Code (said
Chapter 313, as the same may from time to time be amended hereafter, or any
reenactment or recodification thereof, "Chapter 313"), and will comply with and
satisfy all of the other provisions of Chapter 313 and all other provisions and
requirements of law from time to time in force so as to establish
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and maintain this Mortgage as a first preferred ship mortgage lien under
Chapter 313 and such laws upon the Vessel and upon all additions,
improvements and replacements hereafter made on or to the Vessel or any part
thereof.
SECTION 2.4. COMPLIANCE WITH LAW; CITIZENSHIP. Owner will not cause
or permit the Vessel to:
(a) be operated in any manner contrary to applicable law;
(b) engage in any unlawful trade or any trade other than the Great
Lakes trade or coastwise trade; or
(c) violate any law or carry any cargo that would expose the Vessel
to penalties, forfeiture or capture.
Owner will not do, or suffer or permit to be done, anything which could or
might injuriously affect the documentation of the Vessel under the laws and
regulations of the United States. Owner is and will at all times remain during
the life of this Mortgage a citizen of the United States within the meaning of
Section 2 of the Shipping Act of 1916, as amended (46 United States Code Section
802), and of all rules and regulations promulgated thereunder, qualified to
engage in, and entitled to own and operate vessels engaged in, the Great Lakes
and coastwise trade.
SECTION 2.5. NO POWER TO CREATE OR PERMIT LIENS. Neither Owner, any
charterer, the master of the Vessel nor any other Person has or shall have any
right, power or authority to create, incur or permit to be placed or imposed
upon the Vessel any Liens whatsoever, other than the Lien of this Mortgage and
Liens for crew's wages and salvage without the consent of Mortgagee. Owner will
not permit to be continued any Lien whatsoever upon the Vessel (other than this
Mortgage) for a period in excess of thirty (30) days after the claim giving rise
to such lien or encumbrance shall become due and payable and, within fourteen
(14) days after being requested to do so by the Mortgagee, Owner will pay or
cause to be discharged all claims, or will cause the Vessel to be released or
discharged from any Lien.
SECTION 2.6. NOTICE OF MORTGAGE. A properly certified copy of this
Mortgage shall be carried on board the Vessel with its papers and shall be
exhibited, on demand, to any Person having business with the Vessel which might
give rise to a Lien on the Vessel, or to any representative of Mortgagee. A
notice, reading as follows, printed in plain type of such size that the
paragraph of reading matter shall be at least six inches wide by nine inches
high, shall be framed under glass, and kept prominently displayed in the chart
room and in the master's cabin of the Vessel:
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"NOTICE OF MORTGAGE
This Vessel, owned by Gamblers Supply Management Company, a South
Dakota corporation, is subject to a First Preferred Mortgage dated October
29, 1999, as the same may be amended, modified or supplemented, in favor of
Isle of Capri Casinos, Inc., Mortgagee, under authority of Chapter 313 of
Title 46, United States Code, and under the terms of said Mortgage neither
Owner, any charterer, the Master of this Vessel nor any other person has
the right, power or authority to create, incur or permit to exist upon this
Vessel any liens or encumbrances whatsoever other than liens for crew's
wages or salvage and the lien of said Mortgage."
SECTION 2.7. RELEASE OF LIENS. If a libel or complaint shall be filed
against the Vessel, or if the Vessel shall be otherwise attached, levied upon or
taken into custody or detained by any proceeding in any court or tribunal or by
any government or other authority whatsoever, Owner shall:
(a) within five (5) days thereafter cause the Vessel to be released
and any Lien thereon, other than this Mortgage, to be discharged; and
(b) forthwith notify Mortgagee thereof by telex or facsimile
transmission confirmed by letter.
SECTION 2.8. MAINTAINING THE VESSEL.
(a) The Vessel is, and Owner will at all times, without cost or expense to
Mortgagee, maintain and preserve it, tight, staunch, strong, in good seaworthy
condition, working order and repair and fit for its intended service. Owner
will keep the Vessel in such condition as would entitle it to the highest
classification and rating for vessels of the same age and type in the American
Bureau of Shipping, or another classification society of like standing approved
by the Mortgagee. The Vessel shall, and Owner covenants that the Vessel shall,
at all times comply with all laws, treaties and conventions, and rules and
regulations issued thereunder, applicable to the Vessel, its operation and
trade, and shall have on board as and when required thereby, valid certificates
showing compliance therewith.
(b) Owner will not make, or permit to be made, any substantial change in
the structure, type or speed of the Vessel or change its rig without the prior
written approval of Mortgagee, which shall not be unreasonably withheld or
delayed.
(c) Owner will notify Mortgagee within two (2) business days of any
casualty in excess of $500,000 or deemed a Total Loss (as defined in SECTION
2.15.5), average or salvage
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incurred by, or arrest of, the Vessel and shall thereafter provide to the
Mortgagee full information with respect thereto.
(d) Owner will not, without the prior written consent of Mortgagee, which
shall not be unreasonably withheld or delayed, put the Vessel into the
possession of any repair yard or dry-dock for the purpose of survey, dry-dock or
repairs if the costs of such survey, dry-dock or repairs shall be in an amount
exceeding or likely to exceed five hundred thousand dollars ($500,000).
SECTION 2.9. INSPECTION BY MORTGAGEE. Mortgagee or its authorized
representatives may at any reasonable time, on reasonable notice, which shall
not interfere with the Owner's business, and at the reasonable expense of Owner:
(a) inspect the Vessel's cargo, logs and papers and any and all
contracts and other documents relating to the Vessel, whether on board or
not; and
(b) inspect or survey the Vessel to ascertain its condition and to
satisfy itself that the Vessel is being properly repaired and maintained.
Owner shall cause to be made all such repairs, without expense to
Mortgagee, or its authorized representatives, as such inspection or survey may
show to be required, to the satisfaction of the Vessel's classification society,
salvage society and/or the United States Coast Guard.
SECTION 2.10. PAYMENT OF TAXES. Owner will pay and discharge, or cause
to be paid and discharged, when due and payable from time to time, all taxes,
assessments, governmental charges, fines and penalties lawfully imposed on the
Vessel or any income therefrom or upon Owner or any of its property, or upon
Mortgagee, as mortgagee of the Vessel hereunder, provided that Owner shall not
be required to pay any such tax, assessment or charge which is concurrently
contested in good faith by appropriate proceedings and in respect of which
adequate reserves are maintained in accordance with generally accepted
accounting principles in the United States consistently applied, and provided
further that the nonpayment thereof will not subject the Vessel to arrest,
detention, attachment, forfeiture or loss. In any event, Owner will pay or
cause to be paid all such taxes, assessments or charges forthwith upon the
commencement of proceedings to foreclose any Lien which is attached as security
therefor.
SECTION 2.11. NO SALE, MORTGAGE OR CHARTER. Owner will not, without
the prior written consent of Mortgagee, in any manner sell, transfer, demise
charter, change the management of, or mortgage the Vessel, or agree to do any of
the foregoing. Any written consent given for any one of the foregoing
transactions shall not be construed to be a waiver of this provision in respect
of any subsequent such transaction. Any such transaction with
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respect to the Vessel shall be subject to the provisions of this Mortgage and
the Lien it creates.
SECTION 2.12. REQUISITION. If title to or ownership of the Vessel
shall be requisitioned, purchased or taken by any government of any nation or
any department, agency or representative thereof, or any authority acting or
purporting to act under color of government ("Requisition of Title") the Lien of
this Mortgage shall be deemed to attach to, and to Owner's claim for, any
compensation, purchase price, reimbursement or award therefor payable from any
source (including any insurance proceeds in respect thereof), and such
compensation, purchase price, reimbursement or award is hereby declared payable
to Mortgagee, who shall apply the same as provided in SECTION 3.5. Owner shall
promptly execute and deliver to Mortgagee such documents and do and perform such
acts as in the opinion of Mortgagee may be necessary or useful to facilitate or
expedite the collection by Mortgagee of such compensation, purchase price,
reimbursement or award.
SECTION 2.13. FURTHER ASSURANCES. If this Mortgage, or any provisions
hereof, shall be deemed invalid in whole or in part for any reason, or if the
documents at any time held by Mortgagee shall be deemed by Mortgagee for any
reason insufficient to carry out the true intent and spirit of this Mortgage,
then from time to time Owner will duly execute and deliver, on its own behalf,
any and all such other and further assurances and documents as in the judgment
of Mortgagee may be necessary, useful or desirable more effectually to subject
the Vessel to the Lien of this Mortgage or to obtain or maintain the full
benefits of this Mortgage. Upon the failure of Owner so to do, Mortgagee may
execute any and all such other and further assurances and documents for and in
the name and stead of Owner.
SECTION 2.14. MORTGAGEE'S COSTS.
(a) Owner shall promptly pay or reimburse to Mortgagee all costs,
fees and expenses ("Mortgagee's Costs") suffered, incurred or made by
Mortgagee after the occurrence of a Default in exercising, protecting or
pursuing its rights or remedies under the Mortgage, the Credit Agreement or
other Loan Documents (including, but not limited to, expenses of any sale
or taking of the Vessel, reasonable attorneys' fees and court costs) with
interest thereon at the rate provided in Section 3.2.1 of the Credit
Agreement.
(b) If Owner shall default in the observance or performance of any of
the covenants, conditions or agreements in this Mortgage on its part to be
performed or observed, Mortgagee may in its discretion do all acts and make
all expenditures necessary to remedy such default, including, but not
limited to, the procurement of insurance on the Vessel, making repairs,
discharge or purchase of Liens, and payment of taxes, dues, assessments,
governmental charges, fines, penalties and attorney's fees, provided that
Mortgagee shall be under no obligation to Owner to do such acts or make
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any such expenditures nor shall the doing or making thereof relieve
Owner of any default in that respect. All reasonable costs, fees
and expenses of such acts and the making of such expenditures shall
constitute Mortgagee's Costs and shall promptly be paid or
reimbursed to Mortgagee together with interest as provided in
CLAUSE (a) above.
(c) All Mortgagee's Costs and interest thereon shall be debts due
from Owner to Mortgagee payable on demand, and shall be secured by the Lien
of this Mortgage.
SECTION 2.15. INSURANCE.
SECTION 2.15.1. BASIC REQUIREMENTS. Owner shall, at its own expense,
cause insurance on and with respect to the Vessel to be carried, maintained and
renewed (at least fifteen (15) full business days prior to the expiration date
thereof), in such amounts (with such deductibles or franchises), payable in
United States dollars, with such named assureds (including, without limitation,
Mortgagee) against such risks (including, without limitation, hull and
machinery, protection and indemnity (both clauses), off-shore hire and pollution
(including spillage or leakage of cargo), in such form (including, without
limitation, the form of loss payable clause) and with such insurance companies,
underwriters, funds, clubs or associations, and through such brokers, if any, as
shall be acceptable to Mortgagee. For the purposes of insurance against total
loss, the Vessel shall at all times be insured for and valued at its full
commercial value.
SECTION 2.15.2. LAPSE OF INSURANCE AND LIABILITY FOR PREMIUM. Owner will
cause all insurance companies, underwriters, funds, clubs or associations to
agree promptly to advise Mortgagee:
(a) of any lapse of any insurance or insurance coverage, by
expiration, failure to renew or any other act or omission on the part of
Owner, of which it has knowledge and which might invalidate or render
unenforceable, in whole or in part, any insurance or insurance coverage on
the Vessel; and
(b) by telex, facsimile or cable, at least ten (10) full business
days prior to the expiration date of any insurance carried pursuant to this
SECTION 2.15, if such insurance has not been renewed or replaced with new
insurance which complies with the provisions of this SECTION 2.15.
Notwithstanding that Mortgagee may be named under any insurance as an
assured, assignee or loss payee thereunder, there shall be, and the relevant
policies or entries shall provide that there shall be, no recourse against it,
and it shall not be liable, for payment of premiums, calls or assessments.
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SECTION 2.15.3. LOSS PAYABLE CLAUSE. Unless otherwise required by
Mortgagee by notice to the relevant company, underwriter, fund, club or
association, all insurance shall be payable to Mortgagee for distribution by it
to itself and Owner as their interests may appear. Policies or certificates
shall provide, however, that:
(a) payments in respect of any loss under any insurance for
protection and indemnity risks may be paid directly to Owner to reimburse
it for any loss, damage or expense incurred by it and covered by such
insurance, or directly to the Person to whom any liability covered by such
insurance has been incurred; and
(b) payments in respect of any loss (other than a loss covered by
CLAUSE (A) or SECTION 2.15.5) under any insurance covering damage to the
Vessel may be paid directly for the repair, salvage or other charges, or as
reimbursement to Owner if it shall have first paid repair, salvage or other
charges, incurred as a result of such damage, provided that (i) if such
damage involves a loss in excess of five hundred thousand dollars
($500,000), no payment shall be made to Owner without the insurer first
obtaining the written consent of Mortgagee (which consent shall not be
unreasonably withheld or delayed), and (ii) no payment shall be made to
Owner if there has occurred an Event of Default (as defined in SECTION
3.1.1) or a Default.
Payments in respect of any loss covered by this SECTION 2.15.3 which:
(c) are paid to Mortgagee which might have been paid, in accordance
with the provisions of this SECTION 2.15.3, directly to Owner or others,
shall, provided no Event of Default or Unmatured Event of Default has
occurred, be paid by Mortgagee to, or as directed by, Owner; or
(d) are paid to Owner after Mortgagee gives notice as above provided
or after there has occurred an Event of Default or Unmatured Event of
Default, shall be deemed received by Owner, and held in trust by Owner, for
the benefit of Mortgagee, and shall be promptly paid over to Mortgagee for
application in accordance with SECTION 3.5.
SECTION 2.15.4. COMPLIANCE WITH POLICY AND POLLUTION REQUIREMENTS. Owner
shall:
(a) not do or permit to be done any act, or omit to take any action,
which might cause any insurance or insurance coverage on or in respect of
the Vessel to be suspended, impaired or cancelled, and shall not permit the
Vessel to undertake any voyage, run any risk or transport any cargo which
may not be permitted by the insurance in effect; and
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(b) comply with and satisfy all of the provisions of any applicable
law, regulation, proclamation or order concerning financial responsibility
for liabilities imposed on Owner or the Vessel with respect to pollution by
any applicable state or nation or political subdivision thereof, including,
without being limited to, the United States Water Pollution Control Act, as
at any time amended, or by any applicable international treaty or
convention, and will maintain all certificates or other evidence of
financial responsibility as may be required by any such applicable law,
regulation, proclamation, order, treaty or convention with respect to the
Vessel's cargo or the trade in which the Vessel is from time to time
engaged.
SECTION 2.15.5. TOTAL LOSS. All payments for an actual or constructive
total loss or a compromised, agreed or arranged constructive total loss of the
Vessel ("Total Loss") shall be paid to Mortgagee and shall be applied by
Mortgagee as provided in SECTION 3.5. Owner may not declare, or agree with
insurers, that the Vessel is a constructive or compromised, agreed or arranged
constructive total loss without the prior written consent of Mortgagee, which
shall not be unreasonably withheld or delayed.
SECTION 2.15.6. BROKER'S REPORT AND POLICIES. Owner shall:
(a) furnish Mortgagee concurrently with the execution hereof, and of
any supplement hereto adding a vessel to the Lien hereof, and thereafter at
intervals of not more than twelve (12) calendar months, a detailed report
signed by a firm of independent marine insurance brokers acceptable to
Mortgagee regarding the insurance coverage carried on the Vessel including,
as to each policy or entry in a club or association, the amount, insurer,
reinsurer (or club or association), type of risk covered and expiration
date; and
(b) deliver to Mortgagee all available, or if unavailable, certified
copies of, original cover notes, binders, evidences of insurance, policies
and certificates of entry in protection and indemnity clubs or
associations, and all endorsements and orders amendatory thereof in respect
of insurance maintained under this Mortgage.
SECTION 2.15.7. FURNISHING OF SECURITY ON ARREST, ETC. OF VESSEL. In the
event that any claim or Lien is asserted against the Vessel for loss, damage or
expense which is covered by insurance required hereunder and it is necessary for
Owner to obtain a bond or supply other security to prevent arrest of the Vessel
or to release the Vessel from arrest on account of such claim or Lien,
Mortgagee, on request of Owner, may, in the sole discretion of Mortgagee, assign
to any Person executing a surety or guarantee bond or other agreement to save or
release the Vessel from such arrest, all rights, title and interests of
Mortgagee in and to said insurance covering said loss, damage or expense, as
collateral security to indemnify against liability under said bond or other
agreement.
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SECTION 2.15.8. COMPROMISE OF CLAIM. In case any underwriter proposes to
pay less on any claim than the amount thereof, the Owner shall forthwith inform
the Mortgagee and either (a) prior to the occurrence of a Default, (x) if the
claim relates to a loss that is less than or equal to $1,000,000 and does not
constitute a Total Loss, Owner shall have the right to negotiate and agree to
any compromise and (y) if the claim relates to a loss in excess of $1,000,000 or
a Total Loss, Owner shall have the right to negotiate and agree, with the prior
written consent of the Mortgagee which consent shall not be unreasonably
withheld or delayed, to any compromise, or (b) after the occurrence of a
Default, the Mortgagee shall have the sole right to negotiate and agree to any
compromise.
SECTION 2.16. CHARTER PARTIES. The Owner will fully perform any and
all charter parties which may, pursuant to the terms hereof, be entered into
with respect to the Vessel.
ARTICLE III
DEFAULTS AND REMEDIES
SECTION 3.1. DEFAULTS AND EFFECTS.
SECTION 3.1.1. EVENTS OF DEFAULT AND RELATED REMEDIES. If any one or
more of the following events (each an "Event of Default"), shall occur:
(a) an Event of Default as defined in the Credit Agreement shall
occur or default shall be made by Owner in the due and punctual performance
or observance of SECTION 2.1 (subject to any applicable cure period
provided in the Credit Agreement), 2.3, 2.5, 2.8(b), (c) or (d), or of any
other provision of ARTICLE II the default of which cannot be cured;
(b) default shall be made by Owner in the due and punctual
performance or observance of any other provision of this Mortgage and such
default shall continue for a period of thirty (30) days;
(c) any representation or warranty made in this Mortgage or in any
certificate of Owner furnished in connection herewith shall prove at any
time to have been incorrect in any material respect at the time of
execution hereof or shall prove at any time thereafter to be incorrect in
any material respect; or
(d) the Vessel shall become a Total Loss, and Mortgagee shall not
have received (i) within sixty (60) days after the date thereof (with
respect to an actual total loss) or (ii) within ninety (90) days after the
date thereof (with respect to a constructive
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total loss or a compromised, agreed or arranged constructive total
loss) (but in any event not later than two (2) days after the
receipt of insurance proceeds therefor), the outstanding principal
amount of all amounts otherwise due or owing by Owner to Mortgagee
under this Mortgage, the Credit Agreement, other Loan Documents or
otherwise to be immediately due and payable, together with accrued
interest thereon to the date of payment and payment in full of all
other Indebtedness Secured Hereby;
then at any time thereafter Mortgagee may do any one or more of the following:
(e) declare, by giving written, telex or facsimile notice to Owner,
the outstanding principal amount of all amounts otherwise due or owing by
Owner to Mortgagee under this Mortgage, the Credit Agreement, other Loan
Documents or otherwise to be immediately due and payable, whereupon the
same, together with interest thereon and all additional amounts as may be
necessary to compensate Mortgagee for Mortgagee's Costs, accrued to the
date of declaration, shall become and be immediately due and payable,
without presentment, demand, protest or notice of any kind, all of which
are hereby waived by Owner, and Owner agrees that upon such declaration
Owner will immediately pay the same to Mortgagee, and thereafter such total
amount shall bear interest at the rate provided for in Section 3.2.1 of the
Credit Agreement;
(f) exercise all of the rights and remedies in foreclosure and
otherwise given to mortgagees by the laws of the United States; and
exercise all of the rights and remedies in foreclosure and otherwise given
to mortgagees by the laws of any other jurisdiction;
(g) bring suit at law, in equity or in admiralty in any court of any
nation to foreclose, including foreclosure by seizure, arrest and sale of
the Vessel, this Mortgage, or to recover judgment for any or all amounts
due to Mortgagee from Owner, and collect the same out of any and all
property of Owner whether covered by this Mortgage or otherwise;
(h) take the Vessel, at any time, wherever the same may be, without
legal process and without being responsible for loss or damage; and Owner
or other person in possession thereof forthwith upon demand of Mortgagee
shall surrender possession of the Vessel to Mortgagee, and Mortgagee may
hold, lay up, manage, lease, charter, operate or otherwise use the Vessel,
for such time and upon such terms as it may deem to be for its best
advantage, and demand, collect and retain all hire, freights, earnings,
issues, revenues, income, profits, return premiums, salvage awards or
recoveries, recoveries in general average, and all other sums due or to
become due in respect of such Vessel or in respect of any insurance thereon
from any Person whomsoever, accounting only for the net profits, if any,
arising from such use of the Vessel and
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charging upon all receipts from the use of the Vessel or from the
sale thereof, by court proceedings or pursuant to clause (i) below,
all costs, expenses, charges, damages or losses by reason of such
use; and if at any time the Mortgagee shall avail itself of the
right herein given it to take the Vessel, the Mortgagee shall have
the right to dock the Vessel, for a reasonable time, at any dock,
pier or other premises of the Owner without charge or to dock the
Vessel at any other place at the cost and expense of the Owner;
and/or
(i) sell the Vessel upon such terms and conditions as the Mortgagee
deems best, without being responsible for loss or damage, free from any
claim of or by Owner at law, in equity, in admiralty or by statute, public
or private sale, by sealed bids or otherwise; in the case of public sale,
notice thereof shall be published for ten (10) consecutive days in a
newspaper published in the City of Chicago, State of Illinois, and if the
place of sale should not be the City of Chicago, then also by publication
of similar notice in a daily newspaper, if any, published at the place of
sale; in the case of private sale, no newspaper publication of notice of
sale shall be required; in case of either a public or private sale, notice
thereof shall be mailed to Owner at its last known address fourteen (14)
days prior to the date fixed for entering into the contract of sale; any
sale may be held at such place and at such time as Mortgagee by notice may
specify, may be adjourned by Mortgagee from time to time by announcement at
the time and place appointed for such sale or for such adjourned sale, and
without further notice or publication Mortgagee may make any such sale at
the time and place to which the same shall be so adjourned; and any sale
may be conducted without bringing the Vessel to the place designated for
such sale and in such manner as Mortgagee may deem to be for its best
advantage.
SECTION 3.1.2. EFFECT OF SALE. Any sale of the Vessel made under this
Mortgage, whether under the power of sale hereby granted or any judicial
proceedings, shall operate to divest all right, title and interest of any nature
whatsoever of Owner therein and thereto, and shall forever bar Owner, its
successors or assigns, and all Persons claiming by, through or under them. No
purchaser shall be bound to inquire whether notice has been given, or whether
any default has occurred, or as to the propriety of the sale, or as to the
application of the proceeds thereof. At any such sale, Mortgagee or any other
Person to whom other amounts secured by this Mortgage are otherwise due and
owing may bid for and purchase the Vessel and may make payment on account
thereof by applying all amounts remaining due and unpaid under the Credit
Agreement and such other amounts otherwise due or owing to it as a credit
against the net purchase price of the Vessel (after allowing for the costs and
expenses of sale and other charges).
SECTION 3.1.3. MORTGAGEE'S RIGHT TO RECEIVER AND DECREE OF SALE. Owner
covenants and agrees that in addition to any and all other rights, powers and
remedies elsewhere in this Mortgage granted to and conferred upon Mortgagee,
Mortgagee in any suit
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to enforce any of its rights, powers or remedies shall be entitled
as a matter of right and not as a matter of discretion to:
(a) the appointment of a receiver or receivers of Owner's interest in
the Vessel and Owner's interest in the hire, earnings, issues, revenues,
freights, incomes and profits due or to become due and arising from the
operation thereof; and
(b) a decree ordering and directing the sale and disposal of the
Vessel.
SECTION 3.1.4. CONSENT TO JURISDICTION. Owner hereby expressly and
irrevocably consents to the jurisdiction of any court in any nation whatsoever
wherein the Vessel may at any time be located for the foreclosure of this
Mortgage, the sale of Owner's interest in the Vessel or the enforcement of any
other remedy or right hereunder, and hereby expressly and irrevocably submits
the person of Owner and its interest in the Vessel to the jurisdiction of any
such court in any nation in any such action or proceeding.
SECTION 3.2. MORTGAGEE APPOINTED ATTORNEY-IN-FACT OF OWNER.
(a) Owner hereby authorizes and empowers Mortgagee and hereby
appoints Mortgagee the true and lawful attorney-in-fact of Owner:
(i) to make all necessary transfers of the Vessel permitted
under this Mortgage, and for that purpose Mortgagee may execute all
necessary instruments of assignment and transfer, Owner hereby
ratifying and confirming all that its said attorney shall lawfully do
by virtue hereof; nevertheless Owner shall, if so requested by
Mortgagee, ratify and confirm such sale by executing and delivering to
the purchaser of the Vessel such proper bill of sale, conveyance,
instrument of transfer and release as may be designated in such
request;
(ii) upon the happening of an Event of Default, to demand,
collect, receive, compromise and sue for, so far as may be permitted
by law, Owner's interest in all freights, hire, earnings, issues,
revenues, income and profits of the Vessel and Owner's interest in all
amounts due from insurers under any insurance or insurance coverage
thereon as payments of partial losses, actual or constructive, or
compromised, agreed or arranged constructive total losses, or as
return of premiums or otherwise, salvage awards and recoveries,
recoveries in general average or otherwise, and Owner's interest in
all other sums, due or to become due at or after the time of the
happening of any Event of Default, in respect of the Vessel, or in
respect of any insurance or insurance coverage thereon from any Person
whomsoever, and to make, give, and execute in the name of Owner
acquittances, receipts, releases, or other discharges for the
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same, whether under seal or otherwise, and to endorse and accept in
the name of Owner all checks, notes, drafts, warrants, agreements
and all other instruments in writing with respect to the foregoing;
(iii) if the Vessel shall be arrested or detained by a
Marshall or other officer of any court of law, equity or admiralty
jurisdiction in any nation or by any government or other authority and
shall not be released from arrest or detention within fifteen (15)
days from the date of arrest or detention, to apply for and receive
possession of and to take possession of the Vessel with all the rights
and powers that Owner, or its successors or assigns, might have,
possess or exercise in any such event;
(iv) to appear in the name of Owner, its successors or
assigns, in any court of any nation where a suit is pending against
the Vessel because of or on account of any alleged lien against the
Vessel from which the Vessel has not been released and to take such
proceedings as to it may seem proper towards the defense of such suit
and the purchase or discharge of such lien; and
(v) to execute and deliver further assurances and documents in
the name and stead of Owner as provided in SECTION 2.13.
(b) Any and all reasonable costs or expenditures made, suffered or
incurred by Mortgagee after the occurrence of a Default pursuant to the
exercise by Mortgagee of any of the powers or remedies set forth in the
immediately preceding CLAUSE (a) shall be a debt due from Owner to
Mortgagee payable on demand, and shall be secured by the Lien of the
Mortgage.
(c) All authorizations, powers and powers of attorney granted under
this Mortgage shall empower Mortgagee to act in the name and stead of
Owner, its successors and assigns, shall be irrevocable and may be
exercised not only by Mortgagee and its successors and assigns but also by
an appointee or appointees, with full power of substitution, to the same
extent as if the said appointee or appointees had been named as one of the
attorneys by express designation.
(d) Upon exercising any of the powers or powers of attorney
authorized under this Section 3.2 (other than CLAUSE (ii) hereof), the
Mortgagee shall promptly notify Owner of such exercise, PROVIDED, HOWEVER,
that any delay or failure to provide such notice shall not impair the right
of the Mortgagee to exercise such power or power of attorney nor the
effectiveness of such exercise.
SECTION 3.3. REMEDIES CUMULATIVE. Each and every power and remedy
herein granted to Mortgagee shall be cumulative and shall be in addition to
every other power and
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remedy herein given or now or hereafter existing at law, in equity, in
admiralty or by statute, and each and every power and remedy, whether
specifically herein given or otherwise existing, may be exercised from time
to time and as often and in such order as may be deemed expedient by
Mortgagee and the exercise or the beginning of the exercise of any power or
remedy shall not be construed to be a waiver of the right to exercise at the
same time or thereafter any other power or remedy. No notice to or demand on
Owner in any instance shall entitle Owner to any other or further notice or
demand in similar or other circumstances. No delay or omission by Mortgagee
in the exercise of any right or power or in the pursuance of any remedy
occurring upon an Event of Default shall impair any such right, power or
remedy or be construed to be a waiver of any default on the part of Owner or
to be an acquiescence therein, nor shall the acceptance by Mortgagee of any
security or of any payment of or on account of any past Event of Default or
any advances after any past Event of Default be construed to be a waiver of
any right to take advantage of any future Event of Default or of any past
Event of Default not completely cured thereby.
SECTION 3.4. RETURN TO FORMER POSITION.
(a) If, at any time after an Event of Default and prior to the actual
sale of the Vessel by Mortgagee or prior to any foreclosure proceedings,
Owner offers completely to cure all Events of Default and to pay all
expenses, advances and damages to Mortgagee as a consequence of and
subsequent to such Event of Default (including all Mortgagee's Costs) with
interest thereon from and including the date of such Event of Default up to
the date of actual payment at the rate provided in Section 3.2.1 of the
Credit Agreement, then Mortgagee shall accept such offer and payment and
restore Owner to its former position, but such action shall not affect any
subsequent Event of Default or impair any rights consequent thereon.
(b) If Mortgagee shall have proceeded to enforce any right, power or
remedy under this Mortgage by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or
shall have been determined adversely to Mortgagee, then and in every such
case Owner and Mortgagee shall be restored to their former positions and
rights hereunder with respect to the property subject or intended to be
subject to this Mortgage, and all rights, remedies and powers of Mortgagee
shall continue as if no such proceedings had been taken.
SECTION 3.5. APPLICATION OF PROCEEDS. The proceeds of the sale of the
Vessel, the proceeds of any insurance received by Mortgagee hereunder (unless
otherwise specifically set forth herein), any moneys received by Mortgagee
hereunder as a result of Requisition of Title of the Vessel, the proceeds of any
judgment collected by Mortgagee for any default hereunder, and the net earnings
from any management, lease, charter, operation or other use of the Vessel by
Mortgagee under any of the powers above specified, including the proceeds of any
claims for damages in respect of the Vessel and of any proceeds of insurance
received
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by Mortgagee in respect of the Vessel while exercising any such powers, and
any and all other moneys received by Mortgagee pursuant to or under the terms
of this Mortgage the application of which has not elsewhere herein been
specifically provided for, shall be applied by Mortgagee as follows:
FIRST: To the payment of all Mortgagee's Costs, including but not
limited to the expenses of any sale or any taking of the Vessel, reasonable
attorneys' fees and court costs, together with interest as provided herein,
and to provide adequate indemnity to Mortgagee against Liens claiming
priority over or equality with the Liens created under this Mortgage;
SECOND: To the payment of accrued interest on, and then principal of,
any amounts owing under the Credit Agreement, whether due or not, and if
such principal cannot be paid in full then to the payment of principal then
due and thereafter to the prepayment of the remaining installments of
principal of any amounts owing under the Credit Agreement, such prepayment
to be applied to reduce pro-rata the remaining principal installments
unless an Event of Default or Unmatured Event of Default shall have
occurred and be continuing, in which event such prepayment shall be applied
to the remaining principal installments in inverse order of maturities;
THIRD: To the payment of the remaining Indebtedness Secured Hereby
and all other sums payable by Owner to Mortgagee hereunder whether then due
or not, together with interest thereon as provided herein or in the Credit
Agreement, and of all damages, liquidated or otherwise; and
FOURTH: To the payment of any surplus thereafter remaining to Owner
or to whomsoever may be entitled thereto.
In the event that such proceeds, net earnings or other monies are insufficient
to pay the amounts specified in paragraphs "FIRST", "SECOND", and "THIRD" above,
Mortgagee shall be entitled to collect the balance from Owner or from any other
Person liable therefor.
SECTION 3.6. PERFORMANCE BY MORTGAGEE. If Owner shall default in the
observance or performance of any of the conditions or agreements of this
Mortgage on its part to be performed or observed, Mortgagee may in its
discretion do all acts and make all reasonable expenditures reasonably necessary
to remedy such default, including, without limitation of the foregoing,
procurement of insurance on the Vessel, making of repairs, discharge or purchase
of Liens and payment of taxes, dues, assessments, governmental charges, fines,
penalties and attorneys' fees, and Owner shall promptly reimburse Mortgagee for
any and all expenditures so made or incurred, with interest thereon on a daily
basis for the period from and including the date of such Event of Default up to
the date of actual payment at the default rate specified in Section 3.2.1 of the
Credit Agreement, and until Owner has so
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reimbursed Mortgagee for such expenditures, the amount thereof shall be a
debt due from Owner to Mortgagee, payable on demand, and payment thereof
shall be secured by the Lien of this Mortgage in like manner and extent as if
the amount and description thereof were written herein, but Mortgagee, though
entitled so to do, shall be under no obligation to Owner to make any such
expenditures nor shall the making thereof relieve Owner of any default in
that respect. Owner shall also reimburse Mortgagee promptly with interest at
the rate provided above for any and all advances reasonably made or incurred
by Mortgagee at any time in taking the Vessel or otherwise protecting its
rights hereunder, and for any and all losses sustained by Mortgagee from or
by reason of any action or inaction taken by Owner hereunder.
SECTION 3.7. OWNER'S RIGHTS BEFORE EVENT OF DEFAULT. Until an Event
of Default shall occur, Owner shall:
(a) be suffered and permitted to retain actual possession and use of
the Vessel; and
(b) have the right, from time to time, in its discretion and without
application to Mortgagee and without obtaining a release thereof by
Mortgagee, to dispose of, free from the Lien hereof, its interest in any
boilers, engines, machinery, masts, spars, rigging, boats, pumps, anchors,
cables, chains, tackle, apparel, furniture, fittings, equipment, or
appurtenances appertaining or belonging to the Vessel that are no longer
useful, necessary, profitable or advantageous in the operation of the
Vessel, provided that Owner shall first or simultaneously replace the same
by such new items of substantially equal value, which shall forthwith
become subject to the Lien of this Mortgage as a first preferred mortgage
thereon.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1. ENDORSEMENT. For the purpose of recording this Mortgage
as required by Chapter 313, (1) the total amount of this Mortgage is Sixteen
Million Three Hundred Thousand Dollars ($16,300,000), together with interest,
expenses, and fees and performance of Mortgage covenants, (2) the maturity date
is the earliest to occur of the following: (i) the Isle Merger Agreement shall,
in whole or in part, terminate, cease to be effective or cease to be the legally
valid, binding and enforceable obligation of Parent and (a) such termination or
cessation shall continue for two Business Days if resulting from the Parent's
acceptance of a Superior Proposal (as defined in the Isle Merger Agreement) to
be acquired by another Person other than the Lender or (b) such termination or
cessation shall continue for 180 days if resulting for any other reason under
the Isle Merger Agreement; (ii)
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the Parent or any Affilidate of the Parent shall, directly or indirectly,
contest in any manner such effectiveness, validity, binding nature or
enforceability or (iii) consummation of the Isler Merger and (3) the
discharge amount is the same as the total amount.
SECTION 4.2. AGENTS OF MORTGAGEE. Wherever and whenever herein any
right, power or authority is granted or given to Mortgagee, such right, power
and authority may be exercised in all cases by Mortgagee or such agent or agents
or official or officials as it may appoint or authorize, and the act or acts of
such agent or agents or official or officials when taken shall constitute the
act of Mortgagee.
SECTION 4.3. GENERAL.
SECTION 4.3.1. AMENDMENTS. This Mortgage may not be amended or
supplemented except in writing executed by Owner and Mortgagee.
SECTION 4.3.2. CROSS-REFERENCES. References in this Mortgage to any
Section or Article are, unless otherwise specified, to such Section or Article
of this Mortgage.
SECTION 4.3.3. LOAN DOCUMENT PURSUANT TO CREDIT AGREEMENT. This
Mortgage is a Loan Document executed pursuant to the Credit Agreement, and shall
(unless otherwise expressly indicated herein) be construed, administered and
applied in accordance with the terms and provisions thereof.
SECTION 4.3.4. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in any certificate furnished in connection
herewith shall be considered representations and warranties by Owner and shall
survive the execution and delivery of this Mortgage.
SECTION 4.3.5. SEVERABILITY.
(a) If any terms or provisions of this Mortgage shall be determined to
be invalid or unenforceable for any reason by any court of competent
jurisdiction, governmental authority, statute or otherwise, such
determination shall not adversely affect any other term or provision of
this Mortgage which will otherwise remain in full force and effect, and the
effect of such determination shall be limited to the jurisdiction in which
made.
(b) If any term or provision of this Mortgage shall be determined to
affect adversely the preferred status of this Mortgage for any reason by
any court of competent jurisdiction, governmental authority, statute or
otherwise, such term or provision shall be void and of no effect and shall
cease to be a part of this Mortgage without affecting the remaining
provisions, which shall remain in full force and effect.
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SECTION 4.3.6. SUCCESSORS AND ASSIGNS. This Mortgage shall be binding
upon the Owner and its successors and assigns and shall inure to the benefit of
the Mortgagee and its successors and the assigns.
SECTION 4.3.7. EFFECT OF CREDIT AGREEMENT. In the event of any conflict
between the provisions of this Mortgage and any Loan Document, the provisions of
the Credit Agreement shall govern, but any such conflict will not invalidate any
provisions of this Mortgage other than those which are inconsistent.
SECTION 4.3.8. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be in writing (including telegraphic
or facsimile communication) and, if to the Owner, mailed or telegraphed or faxed
or delivered by messenger or overnight courier to it, addressed to it at the
address set forth below its signature hereto (with a copy thereof to be sent to
Swidler Berlin Shereff Friedman, LLP, 919 Third Avenue, New York, New York 10022
(fax: 212-758-9526), if to the Mortgagee, mailed or faxed or delivered by
messenger or overnight courier to it, addressed to it at the address set forth
in the preamble hereto, or as to either party at such other address as shall be
designated by such party in a written notice to each other party complying as to
delivery with the terms of this Section. All such notices and other
communications shall, when mailed, delivered by messenger or overnight courier
or telegraphed, respectively, be effective when deposited in the mails,
delivered to the courier service or delivered to the telegraph company,
respectively, or when faxed, be effective when confirmation thereof shall have
been received (but without regard to delivery of or confirmation of receipt, if
any, of the notice copied to Swidler Berlin Shereff Friedman, LLP, 919 Third
Avenue, New York, New York 10022 (fax: 212-758-9526), in each case where such
notices are addressed as aforesaid.
SECTION 4.3.9. GOVERNING LAW. This Mortgage shall be construed in
accordance with and governed by the laws of the State of New York applicable to
contracts made and to be fully performed in such State, subject, however, to the
applicability of the Uniform Commercial Code of any jurisdiction in which any
Goods may be located at any given time. Whenever possible, each provision of
this Mortgage shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Mortgage 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 Mortgage.
SECTION 4.3.10. IOWA GAMING LICENSES. No interest of the Mortgagee
created or arising under this Mortgage shall attach to any gaming license issued
by the State of Iowa.
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IN WITNESS WHEREOF, Owner has caused this Mortgage to be executed by its
officers hereunto duly authorized the day and year first above written.
GAMBLERS SUPPLY MANAGEMENT COMPANY
[CORPORATE SEAL]
By /s/ RORY J. REID
------------------------------------------
Name: Rory J. Reid
Title: Senior Vice President
Address: 30325 128th Street
Highway 18 West
Marquette, Iowa 52158
Attention: General Manager
---------------------------------
Facsimile: (605) 355-5068
---------------------------------
<PAGE>
STATE OF )
) SS.
COUNTY OF )
On this __th day of [___________], before me personally appeared
[_______________], to me known, who, being by me duly sworn, did depose and say
that he resides at [____________________], [_____________], that he is
[________] of Gamblers Supply Management Company, the corporation described in
and which executed the foregoing instrument, and that he signed his name thereto
pursuant to authority granted to him by the Board of Directors of said
corporation.
______________________________
Notary Public
<PAGE>
Exhibit 99.1
For further information contact:
Lawrence P. Tombari, VP/CFO or
Robert Walsh, Director of Corp. PR
(800) 634-6580 or (702) 477-3000
LADY LUCK ANNOUNCES COMPLETION OF PURCHASE OF MISS
MARQUETTE RIVERBOAT CASINO
Nov. 1, 1999 - - Lady Luck Gaming Corporation (Nasdaq: LUCK) today announced it
has completed the purchase of all of the stock of Gamblers Supply Management
Company, the company that owns the Miss Marquette riverboat gaming facility
including the Miss Marquette casino and associated real property and assets,
from Sodak Gaming, Inc., a wholly-owned subsidiary of International Game
Technology (NYSE: IGT) for a purchase price of $41.67 million and the assumption
of certain liabilities.
In 1998 the Miss Marquette generated net revenues of $35.9 million and
EBITDA of $8.7 million. The riverboat gaming and entertainment complex includes
a 914-position riverboat casino, including 698 slot machines, with approximately
18,747 square feet of gaming space; 590-space parking lot; land-based
restaurant/buffet; live entertainment showroom; 24-room hotel; full service
marina with 32 slip spaces; and off-site facilities including administrative
office space and laundry facilities.
The Miss Marquette is located in Marquette, Iowa on the Mississippi River,
approximately 60 miles south of LaCrosse, Wisconsin and 70 miles north of
Dubuque, Iowa. It is the northernmost riverboat on the Mississippi River.
Isle of Capri Casinos, Inc. provided a purchase money loan of $16.3 million
to Gamblers Supply Management Company which was used to pay a portion of the
purchase price to Sodak. Isle of Capri Casinos, Inc. has taken a lien on
substantially all of the assets of the Miss Marquette riverboat gaming facility,
excluding the gaming licenses.
On October 6, 1999, Lady Luck Gaming Corporation and Isle of Capri Casinos,
Inc. announced that they had signed a definitive agreement to acquire Lady Luck
Gaming Corporation in a merger transaction. Under the terms of the agreement,
Lady Luck's common shareholders will receive cash in the amount of $12 per
share. Isle of Capri stated in its October 6, 1999 press release that closing of
the transaction is expected to take place in the first half of the year 2000.
Closing is contingent on the approval of Lady Luck's stockholders, the necessary
regulatory approvals, and financing.
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