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Exhibit 99.1
MASTER SETTLEMENT AGREEMENT
THIS MASTER SETTLEMENT AGREEMENT (this "Agreement") is made
and entered into as of January 30, 1997, by and among Electronic Data Systems
Corporation, a Delaware corporation ("EDS"), EDS VLT Holdings, Inc., a Nevada
corporation and wholly owned subsidiary of EDS ("Holdings"), Video Lottery
Technologies, Inc., a Delaware corporation ("VLT"), and Automated Wagering
International, Inc., a Delaware corporation and wholly owned subsidiary of VLT
("AWI"), Video Lottery Consultants, Inc., a Montana corporation and wholly owned
subsidiary of VLT ("VLC"), and United Wagering Systems, Inc., a Delaware
corporation and wholly owned subsidiary of VLT ("UWS").
RECITALS
WHEREAS, pursuant to the terms of a certain Master Services
Agreement, dated as of January 20, 1994 (the "Master Services Agreement"), by
and between EDS and VLT, EDS was engaged by VLT to provide various services in
support of VLT's business of operating on-line lotteries and other games of
chance for various states and municipal governments;
WHEREAS, pursuant to the terms of a certain Stock Purchase and
Sale Agreement, dated as of January 20, 1994 (the "Stock Purchase Agreement"),
by and among VLT, Holdings and EDS, Holdings acquired, and continues to be the
owner of record of, (i) 545,454 shares of common stock, par value $.01 per share
("VLT Common Stock"), of VLT and (ii) 1,912,728 shares of Series A Junior
Preferred Stock, par value $.01 per share ("VLT Series A Preferred Stock"), of
VLT;
WHEREAS, certain disputes arose with respect to the
performance of the parties under the Master Services Agreement;
WHEREAS, on June 28, 1996, EDS terminated the Master Services
Agreement as a result of such disputes;
WHEREAS, on July 3, 1996, EDS filed suit against VLT and AWI,
styled Electronic Data Systems Corporation v. Video Lottery Technologies, Inc.
and Automated Wagering International, Inc., Cause No. ▇▇▇-▇▇▇-▇▇, in the 366th
Judicial District Court of Collin County, Texas, pursuant to which EDS requested
certain relief arising out of such disputes;
WHEREAS, EDS is currently providing certain of the services
previously contemplated by the Master Services Agreement pursuant to a
week-to-week arrangement between the parties;
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WHEREAS, the parties hereto desire to compromise all claims
and settle all disputes arising between or among them prior to the date hereof
and to execute a mutual general release with respect thereto;
WHEREAS, the parties desire to set forth in writing an
arrangement for the provision by EDS of certain transition services to AWI;
WHEREAS, (a) the parties desire to compromise amounts owed by
VLT to EDS under the Master Services Agreement, (b) EDS has agreed to sell
certain equipment to VLT pursuant to the Transition Agreement (as hereinafter
defined) and (c) Holdings has agreed to sell to VLT all of the shares of VLT
Common Stock and VLT Series A Preferred Stock currently held by Holdings
(collectively, the "VLT Shares") in exchange for a secured promissory note in
the aggregate amount of $27,000,000; and
WHEREAS, EDS has agreed to provide $1,000,000 of bonding
collateral support to VLT and AWI in respect of AWI's performance bond program.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing premises,
the mutual agreements contained in this Agreement and other consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties to this
Agreement hereby agree as follows:
1. Execution and Delivery of Certain Agreements and Instruments. Each
party hereto is hereby concurrently executing and delivering each of the
following agreements or instruments to which it is a party:
(a) Promissory Note. A Promissory Note,
substantially in the form attached hereto as Exhibit A.
(b) Security Agreement. A Security Agreement,
Pledge and Assignment: Equipment, Inventory, Securities and
Intellectual Property, substantially in the form attached hereto as
Exhibit B.
(c) Mortgage. A Deed of Trust, Assignment of
Leases and Rents, Security Agreement, Financing Statement and Fixture
Filing, substantially in the form attached hereto as Exhibit C.
(d) UCC Financing Statements. UCC financing
statements, substantially in the forms attached hereto as Exhibits ▇-▇,
▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇ and D-8.
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(e) Release. A Release, substantially in the
form attached hereto as Exhibit E.
(f) Pledged Stock Agreement. A Pledged Stock
Agreement, substantially in the form attached hereto as Exhibit F.
(g) Reimbursement Agreement. A Reimbursement
Agreement, substantially in the form attached hereto as Exhibit G.
(h) Transition Agreement. A Transition
Agreement, substantially in the form attached hereto as Exhibit H.
(i) Stock Powers. Stock Powers, substantially
in the forms attached hereto as Exhibits I-1 and I-2.
(j) Source Code Escrow Agreement. A Source Code
Escrow Agreement, substantially in the form attached hereto as Exhibit
J.
(k) Bank Documents. The Intercreditor
Agreement, the Stock Agreement, the Security Agreement, Pledge and
Assignment: Equipment, Inventory, Securities and Intellectual Property,
the Deed of Trust Parity Agreement and the Bank MasterLink Priority
Rights Addendum, each of even date herewith, to which First Bank
National Association is also a party.
2. Representations and Warranties. Each party to this
Agreement hereby represents and warrants to each of the other parties to this
Agreement as follows:
(a) Such party is validly incorporated and is in good
standing under the laws of the state in which it is organized, and is
duly authorized to transact business as a foreign corporation in each
state in which such authorization is required by its business or the
properties owned or leased by it.
(b) Such party has the requisite power and authority
to execute, deliver and carry out this Agreement, and has taken all
necessary action to authorize the execution, delivery and performance
of this Agreement and the transactions contemplated hereby.
(c) This Agreement has been duly and validly
authorized, executed and delivered by such party and constitutes a
valid and binding obligation of such party, enforceable in accordance
with its terms, except to the extent such enforcement may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws or equitable principles of general
application relating to or limiting creditors' rights.
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(d) Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby
will conflict with or constitute a violation of or default under any
law, rule, regulation, order, judgment, decree, contract, commitment,
agreement, arrangement or restriction of any kind to which such party
is a party or by which such party or its property is bound.
(e) No authorization, approval or other action by,
and no notice to or filing with, any governmental authority or other
third party is required for the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
3. Cooperation. Each of the parties to this Agreement
shall use commercially reasonable efforts to assist each of the other parties in
connection with any governmental or other consents, approvals or filings which
may be required concerning this Agreement and with the timely implementation of
any of the transactions arising out of or contemplated by this Agreement;
provided that VLT shall bear all costs and expenses associated with obtaining
any such consents and approvals and making any such filings.
4. Further Assurances. Each of the parties agrees to
execute and deliver such further documents and instruments and take all such
further action as may be necessary to consummate the transactions contemplated
hereby.
5. Transferability. This Agreement shall not be
assignable or otherwise transferable by any party hereto except by operation of
law or as otherwise explicitly stated herein, or in any document contemplated
herein or executed in connection herewith.
6. Expenses. Except as otherwise explicitly stated
herein, or in any document contemplated herein or executed in connection
herewith, all costs and expenses incurred in connection with the transactions
contemplated by this Agreement shall be paid by the party incurring such costs
or expenses.
7. Notice. Whenever any notice is required or permitted
hereunder, such notice must be in writing and either (i) personally delivered,
(ii) mailed by certified mail (return receipt requested), or (iii) delivered by
recognized next-day courier. Any notice required or permitted to be delivered
hereunder will be deemed to be delivered (i) if personally delivered, on the
date that it is actually delivered, (ii) if mailed, whether actually received or
not, on the fifth business day after it is deposited in the United States mail
addressed to the person who is to receive it at the address that such person has
theretofore specified by written notice delivered in accordance herewith, or
(iii) if delivered by courier, on the date it is actually delivered. Any party
may change, at any time and from time to time, by written notice to the other
parties, the address that it or he had previously specified for receiving
notices. Until changed in accordance herewith, the parties specify their
respective addresses as set forth below:
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VLT, AWI, VLC OR UWS:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
with copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
EDS OR HOLDINGS:
Electronic Data Systems Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
with copy to:
▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
8. Amendment. Notwithstanding any other provision
hereof, this Agreement may not be supplemented or amended from time to time
without the prior written consent of each of the parties hereto.
9. Governing Law. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of Delaware,
without regard to any conflicts of laws principles that would require the
application of the laws of any other jurisdiction.
10. Binding Effect. This Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the successors and
permitted assigns of the parties hereto. Nothing expressed or referred to in
this Agreement is intended or shall be construed to give any person other than
the parties to this Agreement, or their respective successors or permitted
assigns, any
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legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
11. Entire Agreement. This Agreement (including the Exhibits
and Schedules hereto) constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof. All Exhibits and Schedules hereto are
expressly made a part of this Agreement.
12. Severability. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law. If any term, provision
covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable efforts to find and employ a
valid, legal, nonvoid and enforceable alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
13. Specific Performance. The parties hereto acknowledge
that damages would be an inadequate remedy for breach of this Agreement and that
the obligations of the parties hereto shall be specifically enforceable.
14. Headings. The headings in this Agreement are for
purposes of convenience of reference only and shall not be deemed to affect the
interpretation of any provision hereof.
15. Counterparts. This Agreement may be executed in
multiple counterparts. The parties may sign any number of copies of this
Agreement. Each signed copy shall be an original, but all of them together
represent the same agreement.
16. Transactions. VLT, VLC, UWS and AWI hereby represent
and warrant to EDS and Holdings that, except as set forth on Schedule 1 attached
hereto, since October 1, 1996, there have been no discussions or negotiations
with, or inquiries from, any third party who has expressed an interest in a
tender or exchange offer, a merger, consolidation or other business combination
involving VLT, VLC, UWS or AWI or the acquisition in any manner of a substantial
equity interest in, or substantially all of the assets of, VLT, VLC, UWS or AWI.
17. Information. EDS acknowledges that it has had an
opportunity to ask questions of appropriate officials of VLT, AWI, UWS, and VLC
with respect to all such discussions, negotiations, or inquiries and has been
given answers to such questions and such information as EDS has requested in
connection therewith.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
ELECTRONIC DATA SYSTEMS
CORPORATION
By:
Name:
Title:
EDS VLT HOLDINGS, INC.
By:
Name:
Title:
VIDEO LOTTERY TECHNOLOGIES, INC.
By:
Name:
Title:
AUTOMATED WAGERING
INTERNATIONAL, INC.
By:
Name:
Title:
VIDEO LOTTERY CONSULTANTS, INC.
By:
Name:
Title:
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UNITED WAGERING SYSTEMS, INC.
By:
Name:
Title:
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EXHIBIT A
PROMISSORY NOTE
U.S.$27,000,000.00 January 30, 1997
FOR VALUE RECEIVED, the undersigned Video Lottery
Technologies, Inc., a Delaware corporation ("VLT"), and Automated Wagering
International, Inc., a Delaware corporation ("AWI") (VLT and AWI being referred
to herein collectively as the "Borrowers"), and each of them, hereby jointly and
severally promises to pay to the order of Electronic Data Systems Corporation, a
Delaware corporation ("EDS"), on December 31, 2003 or on such earlier date as
provided herein (the "Maturity Date"), the principal sum of Twenty-Seven Million
and No/100 Dollars (U.S. $27,000,000.00), and to pay interest on the unpaid
principal amount of such amount from the date hereof at the rate per annum
specified below, payable to EDS at the address or location identified in Annex 1
hereto, or at such other address or location as EDS may specify to Borrower in
writing.
The principal hereof outstanding from time to time shall bear
interest as follows: (i) commencing on January 1, 1997 and continuing through
December 31, 1997, at a rate of 1.30% per annum; (ii) commencing on January 1,
1998 and continuing through December 31, 1998, at a rate equal to (x) the "prime
rate" reported in the Money Rates section of The Wall Street Journal, Southwest
Edition, and as in effect on the first business day of 1998, plus (y) 4.25%;
provided, however, if The Wall Street Journal does not publish such a "prime
rate" on such day, such principal shall bear interest at a rate equal to (x) the
base rate (however designated) as announced by Chase Manhattan Bank, N.A., and
as in effect on the first business day of 1998, plus (y) 4.25%; and (iii) for
every calendar year thereafter through the maturity of such principal,
commencing on (and including) the first calendar day of such year and continuing
to (but not including) the first calendar day of the following calendar year, at
a rate equal to the "prime rate" reported in the Money Rates section of The Wall
Street Journal, Southwest Edition, and as in effect on the first business day of
such year; provided, however, if The Wall Street Journal does not publish such a
"prime rate" on such day, such principal shall bear interest at a rate equal to
the base rate (however designated) as announced by Chase Manhattan Bank, N.A.
and as in effect on the first business day of such year.
Accrued interest only shall be payable monthly, on the last
day of each month commencing January 31, 1997 to and including December 31,
1998. Commencing January 31, 1999, and continuing to the maturity of the
principal hereof, monthly payments of principal and accrued interest shall be
due and payable on the last day of each month during such period, calculated as
set out below. During each of the calendar years beginning after December 31,
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1998, combined monthly payments of principal and interest shall be made in equal
amounts for each month during such year, and the amount of such payments for
such year shall be determined on the first calendar day of such year by
amortizing the loan over the number of months remaining until the maturity of
the unpaid principal hereunder using the interest rate for such year (determined
in accordance with the immediately preceding paragraph); provided, however, that
when and if prepayments hereon during such year shall equal or exceed $500,000,
such amortization will be adjusted for the remainder of such year based on the
outstanding principal after giving effect to those prepayments. EDS will specify
to the Borrowers the dollar amount of such payments, and the computations
thereof, in writing, as soon as practical after such payments have been computed
as provided above, but in no event later than January 15 in any given year (or
in the case of an adjustment in amortization by reason of prepayments, as
provided above, within fifteen (15) days after the receipt by EDS of such
prepayments).
Payments of both principal and interest on this Note are to be
made to EDS in lawful money of the United States of America in immediately
available funds, without deduction, set off or counterclaim.
All indebtedness outstanding under this Note shall bear
interest (computed in the same manner as interest on this Note prior to
maturity) after maturity, whether at stated maturity, upon the occurrence of a
Mandatory Prepayment Event, by acceleration or otherwise, at the Post- Default
Rate (as defined below) and all such interest shall be payable on demand.
This Note may be prepaid in whole or at any time or from time
to time in part, without premium or penalty upon at least thirty (30) days'
prior written notice by either Borrower to EDS at its address set out in the
Master Settlement Agreement referred to below. In addition, this Note shall be
prepaid in cash in the following circumstances (each a "Mandatory Prepayment
Event") and in the following amounts:
(a) within five (5) days after the sale of all or substantially all of
the stock or assets of AWI, the Note shall be prepaid in an amount which is not
less than 50% of the Net Proceeds (defined below) of such sale for the portion
of total Net Proceeds of such stock or assets up to $30,000,000, and 70% of the
amount by which total Net Proceeds of such stock or assets exceed $30,000,000.
For purposes of this paragraph, if any portion of the consideration received or
receivable by VLT or AWI from such sale shall be in a form other than cash or a
Deferred Payment Obligation (defined below), such consideration shall be valued
at its Fair Market Value (defined below). All Deferred Payment Obligations will
be valued at their face amount and will be transferred and assigned (and hereby
are transferred and assigned) to EDS with EDS to be paid in accordance with the
terms of such Deferred Payment Obligations and, if applicable, the Intercreditor
Agreement dated January 30, 1997, between EDS and First Bank National
Association (the "Intercreditor Agreement"). Upon EDS's receipt of the full
amount of such prepayment, AWI shall be released from its obligations as a
Borrower under this Note (provided, however, that such release will not
discharge or impair any obligations of VLT as a Borrower under this Note or
under any Security Document (defined below) or any other obligation of VLT
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or AWI under the Master Settlement Agreement or any other document executed in
connection therewith) from and after the release of AWI as a Borrower hereunder,
the words "Borrower" and the "Borrowers" shall refer to VLT and its successors
and assigns.
(b) within five (5) days after receipt thereof, the Borrowers will pay
to EDS a cash amount equal to (i) 30% of the gross proceeds received by either
Borrower from the sale, lease, assignment or other disposition of inventory of
either Borrower that is a subject of a Security Document (defined below),
excluding the use of any such inventory in accordance with any state on-line
lottery contract and in a manner that does not involve the transfer of title to
such inventory, and including without limitation, an actual or constructive loss
of such property and any insurance payments in respect thereof, an agreed or
compromised loss of such property, or the taking of any property under the power
of eminent domain, minus (ii) such duties, transfer taxes, ad valorem taxes and
similar taxes imposed on and paid by a Borrower as a consequence of such a sale
or disposition of such property other than taxes measured by the net income of
either Borrower. For purposes of this paragraph, if any portion of the
consideration received or receivable by VLT or AWI from such sale shall be in a
form other than cash or a Deferred Payment Obligation, such consideration shall
be valued at its Fair Market Value (defined below). Notwithstanding the
foregoing, if such sale, lease, assignment or other disposition of inventory
combines the sale of inventory and the granting of a license of the MasterLink
Protections, then the required prepayment shall be the greater of (i) 30% of the
gross proceeds received by either Borrower (if the consideration for the sale of
inventory is separately stated and is greater than $500.00 per Excalibur or
Ovation computer terminal sold in such transaction) and (ii) the product arrived
at by multiplying $250.00 times the number of Excalibur or Ovation computer
terminals sold in such combined transaction. All Deferred Payment Obligations
will be valued at their face amount and will be transferred and assigned (and
hereby are transferred and assigned) to EDS with EDS to be paid in accordance
with the terms of such Deferred Payment Obligations and, if applicable, the
Intercreditor Agreement.
(c) within five (5) days after a Change of Control with respect to
VLT, the Borrowers will cause to be prepaid a principal amount equal to the
greater of: (i) $10,000,000; or (ii) the product obtained by multiplying
2,458,182 by the highest price per share (expressed in dollars whether such
price is paid in cash or non-cash consideration; in the case of non-cash
consideration, including, without limitation, Deferred Payment Obligations,
such price shall be calculated at the Fair Market Value of such consideration)
paid by the person or a person in the group of persons directly or indirectly
acquiring control or ownership of a majority of VLT's voting securities, but in
no event greater than $15,000,000.
(d) within five (5) days after a Change of Control with respect to
Video Lottery Consultants, Inc., a Montana corporation ("VLC"), the Borrowers
will cause to be prepaid the principal amount of $10,000,000.
(e) upon the occurrence of an event requiring a prepayment under
Section 4 of the Pledged Stock Agreement of even date herewith by VLT in favor
of EDS, the Borrowers will
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cause to be prepaid the amount that such Agreement requires to be prepaid, on
the terms set out in such Agreement.
(f) within five (5) days after either Borrower receives a payment
or payments under a license (or similar technology transfer) of any part of the
MasterLink(R) Protections (as defined in the Security Agreement referred to
below) for its use in operating on-line lottery systems, granted after the date
hereof, anywhere in the world, the Borrowers shall cause to be prepaid a
principal amount equal to 25% of the portion of such payments, which when
aggregated with all other prior payments under such license (or similar
technology transfer), exceed $7,500,000 for a given country.
(g) upon the occurrence of an event requiring a prepayment under
Section 4.04 of the Mortgage, the Borrowers will cause to be prepaid the amount
that such Mortgage requires to be prepaid, on the terms set out in such
Mortgage.
For purposes of paragraphs (c) and (d) above, a "Change of
Control" is either (i) the direct or indirect acquisition by any person (or
group of persons acting in concert) of ownership or control of a majority of the
voting securities of VLT or VLC, respectively, or (ii) a transaction or series
of transactions through which the persons who collectively currently own or
control a majority of the voting securities (or the powers to vote same) of VLT
cease to own or control such a majority, or (iii) a transaction or series of
transactions through which VLT ceases to own or control a majority of the voting
stock or securities (or the powers to vote same) of VLC, or (iv) a sale of all
or substantially all of the assets of VLT or VLC, as the case may be.
In the event that any collateral under any Security Document
is sold or otherwise disposed of in compliance with the terms of that Security
Document and the prepayment provisions of this Note, upon request by and at the
expense of VLT or AWI, the Secured Party shall promptly release the lien of that
Security Document with respect to such collateral.
"Net Proceeds" means all proceeds realized from the
disposition of stock or assets of AWI after deducting: (i) any withholding taxes
arising from the disposition of assets located outside of the United States; and
(ii) the ordinary, actual, reasonable and customary out-of-pocket costs of the
disposition payable to non-affiliates of either of the Borrowers for legal,
accounting, investment banking, securities filing fees and printing and mailing
expenses for such transaction; and (iii) such duties, transfer taxes, ad valorem
and similar taxes imposed on and paid by a Borrower as a consequence of such
disposition, other than duties or taxes measured by the net income of either
Borrower, provided that in no event shall the aggregate deductions attributable
to (i), (ii) and (iii) exceed $2,000,000.
"Fair Market Value" of any non-cash consideration from the
sale of stock or assets of AWI shall be determined as follows:
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(1) any equity security for which there is an established
public market shall be valued at the established
trading price for such security on the date on which
it is deliverable to (or upon the order of) AWI or
VLT;
(2) any other non-cash consideration (excepting, where
applicable, Deferred Payment Obligations, defined
below) shall have the value established by an
appraisal prepared by an appraiser selected jointly
by VLT, AWI and EDS at least 30 days prior to the
date on which such consideration is deliverable to
VLT or AWI, or, if VLT, AWI and EDS do not agree on
an appraiser, by a panel of three appraisers, one of
which shall be selected by VLT and AWI, one of which
shall be selected by EDS and the third of which (the
"Third Appraiser") shall be selected by the two
appraisers previously selected. Such appraisers must
have experience in the appraisal of property of the
same type as the subject consideration, and each
appraiser shall submit a written estimate of value to
VLT, AWI and EDS, no later than seven (7) days prior
to the date on which a payment in respect of (or
based on the amount of) the non-cash consideration is
due to be paid to EDS. If there is more than one
written estimate and such estimates differ, the Fair
Market Value shall be the estimate submitted by the
Third Appraiser. VLT and AWI shall use their best
efforts to provide to all appraisers such access to
records of, and access to the physical consideration,
in order to permit the development of those
estimates. The cost of such appraisals shall be borne
equally by the Borrowers, on the one hand, and EDS,
on the other hand.
A "Deferred Payment Obligation" is any consideration received
from the sale of assets or stock of AWI or VLT that entails payments over time,
whether represented by a promissory note, bond, open account or otherwise,
including any interest accruing or to accrue thereon to the extent not in excess
of applicable law.
All interest accrued but unpaid on any principal amount hereof
prepaid shall be due and payable immediately upon the prepayment of such
principal amount.
If any payment of principal or interest on this Note shall
become due on a Saturday, Sunday, or public holiday on which Chase Manhattan
Bank, N.A. is not open for business in New York, New York, such payment shall be
made on the next succeeding business day and such extension of time shall in
such case be included in computing interest in connection with such payment.
In addition to all principal and accrued interest on this
Note, the Borrowers agree to pay (a) all reasonable costs and expenses incurred
by EDS and all owners and holders of this Note in collecting this Note through
any probate, reorganization, bankruptcy or any other
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proceeding and (b) reasonable attorneys' fees when and if this Note is placed in
the hands of an attorney for collection after default.
All payments received hereunder shall be applied first to the
payment of any expenses incurred by EDS in collecting or enforcing its rights
under this Note or the Security Documents (referred to below), then to the
payment of accrued unpaid interest, and then to principal.
All past due payments of principal and interest hereunder
(including, without limitation, payments in respect of a Mandatory Prepayment
Event shall bear interest at the lower of: (a) the greater of (i) the
then-applicable rate for principal amounts outstanding under this Note, or (ii)
the "prime rate" (as defined above) as then in effect, plus in either case 3%
per annum for the first thirty (30) days during which such amount(s) remain(s)
past due, such rate to increase by 1% per annum for each additional period of
thirty (30) days during which such amount(s) remain(s) past due; or (b) the
Highest Lawful Rate (as defined below) (the "Post-Default Rate"). The
Post-Default Rate shall apply to all principal and interest hereunder in the
event that Borrowers fail to replace, on or prior to July 31, 1997, the letter
of credit, in the amount of $1,000,000, which EDS has caused PNC Bank, National
Association to issue in favor of National Fire Insurance Company of Hartford
and/or Continental Casualty Company and/or American Casualty Company of Reading,
PA and/or Fireman's Insurance Company of Newark, NJ.
It is the intent of the Borrowers and EDS to comply with all
applicable usury laws and to limit all interest contracted for, reserved,
charged or received under this Note and the Security Documents to the maximum
nonusurious rate of interest permitted by applicable law. All agreements between
either or both of the Borrowers and EDS, whether now existing or hereafter
arising and whether written or oral, are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of demand being made on this
Note or otherwise, shall the amount paid, or agreed to be paid, to EDS for the
use, forbearance, or detention of the money to be loaned under and evidenced by
this Note or otherwise or for the payment or performance of any covenant or
obligation contained in this Note exceed the amount permissible at the highest
rate permitted by applicable law (the "Highest Lawful Rate"). If, as a result of
any circumstances whatsoever, fulfillment of any provision hereof or of any
Security Document, at the time performance of such provision shall be due, shall
involve transcending the limit of validity prescribed by applicable usury law,
then, ipso facto, the obligation to be fulfilled shall be reduced to the limit
of such validity, and if, from any such circumstance, EDS shall ever receive
interest or anything which might be deemed interest under applicable law which
would exceed the amount permissible at the Highest Lawful Rate, such amount
which would be excessive interest shall be applied to the reduction of the
principal amount owing on account of this Note or the amounts owing on other
obligations under the Security Documents and not to the payment of interest, or
if such excessive interest exceeds the unpaid principal balance of this Note and
the amounts owing on other obligations of the Borrowers to EDS under the
Security Documents, as the case may be, such excess shall be refunded to either
Borrower. In determining whether or not
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15
the interest paid or payable under any specific contingencies exceeds the
Highest Lawful Rate, the Borrowers and EDS shall, to the maximum extent
permitted under applicable law, (a) characterize any nonprincipal payment as an
expense, fee or premium rather than as interest; (b) exclude voluntary
prepayments and the effects thereof; and (c) amortize, prorate, allocate and
spread in equal parts during the period of the full stated term of this Note,
all interest at any time contracted for, charged, received or reserved in
connection with the indebtedness evidenced by this Note.
This Note is the Note referred to in the Master Settlement
Agreement dated as of January 30, 1997, between EDS, VLT, AWI, Video Lottery
Consultants, Inc., United Wagering Systems, Inc. and EDS VLT Holdings, Inc. (the
"Master Settlement Agreement") and is secured by the Security Agreement, Pledge
and Assignment: Equipment, Inventory, Securities and Intellectual Property, of
even date herewith, executed by the Borrowers in favor of EDS (the "Security
Agreement") and by a Deed of Trust, Assignment of Leases and Rents, Security
Agreement, Financing Statement and Fixture Filing, also dated as of the date
hereof, executed by VLT in favor of American Land Title Company of Montana,
Trustee for the benefit of EDS (the "Mortgage")(the Security Agreement and the
Mortgage being hereinafter referred to collectively as the "Security Documents"
and individually as a "Security Document").
In connection herewith and with the execution of the Security
Documents, each Borrower represents and warrants to EDS as follows:
(1) Such Borrower is validly incorporated and is in good
standing under the laws of the State of Delaware, and is duly
authorized to transact business as a foreign corporation in each state
in which such authorization is required by its business or the
properties owned or leased by it.
(2) Such Borrower has the requisite power and authority to
execute, deliver and carry out this Note and the Security Documents,
and has taken all necessary action to authorize the execution, delivery
and performance of this Note and the Security Documents and the
transactions contemplated hereby.
(3) This Note and the Security Documents have been duly and
validly authorized, executed and delivered by such Borrower and
constitute valid and binding obligations of such Borrower enforceable
in accordance with their terms, except to the extent such enforcement
may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws or equitable principles of
general application relating to or limiting creditors' rights.
(4) Neither the execution and delivery of this Note and the
Security Documents nor the consummation of the transactions
contemplated hereby and thereby will conflict with or constitute a
violation of or default under any law, rule, regulation, order,
judgment, decree, contract, commitment, agreement, arrangement or
restriction of any
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16
kind to which such Borrower is a party or by which such Borrower or its
property is bound.
(5) No authorization, approval or other action by, and no
notice to or filing with, any governmental authority or other third
party is required for the execution and delivery of this Note and the
Security Documents or the consummation of the transactions contemplated
hereby or thereby.
For purposes hereof a "Subsidiary" is a corporation or other
entity of which either Borrower directly or indirectly owns or controls a
majority of the voting shares or voting interests, or otherwise has the ability
to cause the election of a majority of the board of directors or managers.
So long as any obligation under this Note or any Security
Document is outstanding, the Borrowers agree that, unless EDS otherwise consents
in writing:
(1) Inspections, Etc. The Borrowers will permit any authorized
representative of EDS, upon reasonable prior notice and at the expense
of EDS, (i) to visit and discuss with either Borrower's officers and
the officers of either Borrower's Subsidiaries, the financial condition
of the Borrowers and their Subsidiaries and either Borrower's ability
to comply with its obligations hereunder, all at such reasonable times
and in such reasonable places and intervals as such holder may request
and (ii) during normal business hours to visit and inspect the
properties of either Borrower and either Borrower's Subsidiaries and to
inspect and make extracts from the books and records of either Borrower
and either Borrower's Subsidiaries. Until the occurrence of an Event of
Default, EDS may exercise such visitation and inspection rights no more
than four (4) times in any year. After the occurrence of an Event of
Default, such limitation on visitation and inspection shall not apply.
(2) Notice of Default. The Borrowers will promptly, but in no
event later than five business days after obtaining knowledge thereof,
notify EDS of the occurrence of any default or event of default that
would permit (immediately or with notice or the passage of time) the
acceleration of any other indebtedness for borrowed money of the
Borrowers or of any of their Subsidiaries.
(3) Financial Statements. VLT will deliver to EDS, within 45
days after the end of each fiscal quarter of VLT, an unaudited balance
sheet, income statement, and statement of changes in cash flow of VLT
and its consolidated Subsidiaries, and within 90 days after the end of
each fiscal year of VLT, an audited balance sheet, income statement and
statement of changes in cash flow of VLT and its consolidated
Subsidiaries, together with the report of independent auditors, and the
consolidating financial information related to AWI, used in preparing
the foregoing consolidated financial information. Borrowers
A-8
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will promptly report to EDS any material adverse change in the business
or financial affairs of either Borrower.
(4) Lender and Stockholder Information. Each Borrower will
concurrently deliver to EDS copies of all reports and information
furnished to any of its other lenders, in connection with any then
existing borrowing, and its stockholders.
(5) Notification of Prepayment Events. The Borrowers will, as
soon as practicable (but in any case at least five (5) business days
before any such transaction or, if such transaction is proposed to
involve the receipt of non-cash consideration other than Deferred
Payment Obligations, at least thirty-five (35) days prior to the date
scheduled for the consummation of that transaction), provide to EDS
written notice of any proposed transaction that, if consummated, would
require a partial prepayment hereon.
As used herein, "Event of Default" means the occurrence of any
of the following:
(a) any representation or warranty made by either Borrower in
connection herewith or with any Security Document is
materially inaccurate when made;
(b) either Borrower fails to make any payment of principal or
interest hereunder (including, without limitation, payments in
respect of a Mandatory Prepayment Event) when due or breaches
any of its obligations hereunder;
(c) an Event of Default occurs under any Security Document or any
party (other than EDS) defaults in any payment under, or
breaches any of its other obligations (and such breach remains
unremedied beyond the applicable cure period) under the Master
Settlement Agreement or any agreement executed in connection
therewith (including, without limitation, the Release, the
Pledged Stock Agreement, the Transition Agreement and the
Source Code Escrow Agreement referred to in the Master
Settlement Agreement);
(d) a judgment or judgments for the payment of money in excess of
$5,000,000 in the aggregate shall be rendered against either
Borrower and such judgment remains undischarged or unstayed
for thirty (30) days from the date of entry thereof, or is
executed upon; provided that within such thirty (30) day
period or such longer period during which execution of such
judgment is stayed, the judgment debtor maintains and is
prosecuting in good faith an appeal therefrom and the
execution thereof remains stayed during such appeal;
(e) the maturity of any indebtedness for borrowed money of either
Borrower (other than indebtedness under this Note or the
Security Documents) in the aggregate amount of more than
$1,000,000 for either Borrower shall be accelerated, or either
Borrower shall fail to pay any such indebtedness when due, or
in the case of such
A-9
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indebtedness payable on demand, when demanded, or any event
shall occur or condition shall exist and shall have the effect
of causing the holder of any such indebtedness or any trustee
or other person acting on behalf of such holder to cause such
indebtedness to become due prior to its stated maturity or to
realize upon any collateral given as security therefor;
(f) payment (by set-off or otherwise) by either Borrower of
liquidated damages under any Material Contract in excess of
$2,000,000 for any single occurrence, or $4,000,000 in the
aggregate for all occurrences in any fiscal year, unless such
liquidated damages are: (x) covered by insurance and the
insurer has agreed that its insurance policy insures the
payment of the relevant liquidated damages; or (y) being
contested in good faith by appropriate proceedings (a
"Material Contract" being any contract of a Borrower, breach
under which or termination of which would have a material
adverse effect on the business or financial condition of that
Borrower, and in any event including all lottery management
contracts with state governmental entities), and including any
Event of Default that would arise under this subparagraph
because of the imposition of liquidated damages under that
certain Minnesota State Lottery Contract dated May 25, 1990,
with the Minnesota State Lottery, as amended, in excess of
$2,000,000.00 for any single occurrence or $4,000,000.00 in
the aggregate for all occurrences in any fiscal year so long
as the amount of liquidated damages, net of recovered
insurance proceeds, does not exceed $3,400,000.00.;
(g) a failure by Borrower to replace, on or prior to July 31,
1997, the letter of credit, in the amount of $1,000,000, which
EDS has caused PNC Bank, National Association to issue in
favor of National Fire Insurance Company of Hartford and/or
Continental Casualty Company and/or American Casualty Company
of Reading, PA and/or Fireman's Insurance Company of Newark,
NJ;
(h) a material adverse change occurs in the business or financial
affairs of either Borrower; or
(i) either Borrower generally fails to pay its debts as they
become due, or becomes a debtor under any proceeding under any
bankruptcy, insolvency or similar law, or a receiver is
appointed for either Borrower or any of its Subsidiaries or
any of their assets (and, in the case of such a proceeding
commenced involuntarily against either Borrower or any
Subsidiary, that such Borrower or such Subsidiary indicates
its consent thereto, or such proceedings are not dismissed
within 60 days of their having been filed).
Upon the occurrence of any Event of Default, EDS may declare
all accrued and unpaid interest hereon and all other amounts payable under this
Note to be forthwith due and payable, whereupon this Note, all such interest and
all such amounts shall become and be forthwith due and payable in full, without
presentment, demand, protest, notice of intent to accelerate, notice of actual
acceleration or further notice of any kind, all of which are hereby expressly
waived by the Borrowers, and EDS shall have such further rights as are provided
at law
A-10
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and in the Security Documents; provided, however, that if an Event of
Default described in paragraph (i) of the definition thereof occurs, the
principal of and interest on this Note shall without further act immediately
become due and payable.
No delay on the part of EDS in exercising any power or right
under any Security Document or this Note or any other document or instrument
executed in connection therewith, shall operate as a waiver thereof; nor shall
any single or partial exercise of any power or right under any Security Document
or this Note or any other document or instrument executed in connection
therewith, or the failure to exercise the same in any instance preclude any
other or further exercise thereof, or the exercise of any other power or right;
nor shall EDS be liable for exercising or failing to exercise any such power or
right; the rights and remedies hereunder expressly specified are cumulative and
not exclusive of any rights or remedies which EDS or anyone on whose behalf any
of them has acted or shall act as herein provided, or their transferees, may or
will otherwise have. In addition to all rights and remedies granted herein, EDS
shall have all of the rights of a secured party under the Uniform Commercial
Code as in effect in the State of Delaware.
All payments hereunder shall be made without set-off or
counterclaim and shall be made free and clear of, and without deduction or
withholding for or on account of any present or future taxes (including levies,
imposts, duties or other similar charges or whatever nature imposed by any
government or any political subdivision or taxing authority thereof) except as
required by law. If the person making a payment hereunder shall be required by
law to deduct or withhold any amount on account of any taxes from or in respect
of any such payment, the amount of such payment shall be increased as may be
necessary so that after making all required deductions or withholdings
(including deductions or withholdings resulting from the additional sums payable
by reason of this sentence) EDS receives an amount equal to the sum it would
have received had no deduction or withholding been made.
All demands, communications and notices to be served hereunder
by EDS shall be effective five (5) days after deposit with the U.S. Postal
Service, postage prepaid, or, if delivered by courier or facsimile, when
received and shall be addressed to either Borrower at its address set out in the
Master Settlement Agreement or at such other address as shall be designated by
either Borrower in a written notice to EDS at least 30 days prior to the
effective date of such change of address.
This Note may be assigned (and participations may be sold
herein) by EDS or its successors or assigns, without the requirement of consent
of the Borrower, provided, however, that any such assignment prior to the
earlier of (a) an Event of Default or (b) December 31, 1997, shall require the
consent of VLT, which consent shall not be unreasonably withheld.
Except as otherwise specifically provided for herein, either
Borrower and any and all endorsers, guarantors and sureties severally waive
grace, demand, presentment for payment, notice of dishonor or default, protest,
notice of protest, notice of intent to accelerate, notice of acceleration and
diligence in collecting and bringing of suit against any party hereto, and agree
A-11
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to all renewals, extensions or partial payments hereon and to any release or
substitution of security hereof, in whole or in part, with or without notice,
before or after maturity.
Each Borrower waives the right to interpose counterclaims or
set-offs of any kind and description in any litigation arising hereunder, and
waives the right in any litigation with EDS in connection with this Note or any
Security Document to trial by jury. Each Borrower and EDS confirm the foregoing
waiver is informed and voluntary. To the extent that either Borrower or any of
its property has or acquires immunity from the jurisdiction of any court or from
any suit pre- or post-judgment, attachment, execution or any legal process,
either Borrower hereby waives such immunity in respect to its obligations under
this Note and all of the Security Documents.
THE BORROWERS SHALL, TO THE FULLEST EXTENT PERMITTED BY LAW,
INDEMNIFY, DEFEND, PAY AND HOLD EDS HARMLESS FROM AND AGAINST ANY AND ALL
CLAIMS, DEMANDS, LIABILITIES, DAMAGES, LOSSES, COSTS, CHARGES AND EXPENSES
(INCLUDING REASONABLE ATTORNEYS' FEES) WHICH EDS MAY INCUR OR BE SUBJECT TO AS A
CONSEQUENCE, DIRECT OR INDIRECT, OF ANY BREACH BY EITHER BORROWER OF ANY
REPRESENTATION, WARRANTY, COVENANT, TERM OR CONDITION UNDER THIS NOTE OR ANY
SECURITY DOCUMENT.
This Note shall be governed by and construed in accordance
with the laws of the State of Delaware, and the Borrowers irrevocably submit to
the non-exclusive jurisdiction of any Texas state court located in Collin
County, Texas or any federal court sitting in Collin County, Texas for the
adjudication of any matter arising out of or relating to this Note or any of the
Security Documents, and consents to the Service of process by registered or
certified mail (sent to its address set forth below its signature below) out of
any such court.
THIS NOTE, TOGETHER WITH THE SECURITY DOCUMENTS AND THE MASTER
SETTLEMENT AGREEMENT (AND THE EXHIBITS THERETO) REFERRED TO ABOVE, REPRESENTS
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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VIDEO LOTTERY TECHNOLOGIES, INC.
By:
Name:
Title:
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
AUTOMATED WAGERING
INTERNATIONAL, INC
.
By:
Name:
Title:
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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ANNEX 1
WIRE TRANSFER INSTRUCTIONS
Bank Name: Chase Manhattan Bank
New York, NY
Account Name: Electronic Data Systems Corporation
Account: 321-029461
ABA Routing No.: ▇▇▇▇-▇▇▇▇-▇
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EXHIBIT B
SECURITY AGREEMENT, PLEDGE AND ASSIGNMENT: EQUIPMENT,
INVENTORY, SECURITIES AND INTELLECTUAL PROPERTY
THIS SECURITY AGREEMENT, PLEDGE AND ASSIGNMENT:
EQUIPMENT, INVENTORY , SECURITIES AND INTELLECTUAL PROPERTY (this
"Agreement"), dated as of January 30, 1997, is made by Video Lottery
Technologies, Inc., a Delaware corporation ("VLT"), and Automated Wagering
International, Inc., a Delaware corporation ("AWI") (VLT and AWI are
collectively referred to as the "Grantor") to Electronic Data Systems
Corporation, a Delaware corporation (the "Secured Party").
PRELIMINARY STATEMENT. The Grantor has issued to the Secured
Party a promissory note, of even date herewith, in the original principal amount
of US$27,000,000.00. (the "Note").
NOW, THEREFORE, in consideration of the premises and in order
to induce the Secured Party to accept the Note, to enter into a Master
Settlement Agreement (of even date herewith) with the Grantor (the "Master
Settlement Agreement"), and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Grantor hereby agrees
as follows:
SECTION 1. Defined Terms and Related Matters.
(a) "Collateral" means all Grantor's rights, title and
interests in and to each of the following, in each case whether now or
hereafter existing or now owned or hereafter acquired by Grantor and
whether or not the same is subject to the Uniform Commercial Code, and
wherever the same may be located:
(i) the Scheduled Equipment and Inventory;
(ii) all Trademarks, Goodwill, Copyrights and proprietary
rights, trade secrets, contract rights (other than
payments under Contracts or Covered Licenses, as
defined in that certain Intercreditor Agreement (the
"Intercreditor Agreement") of even date herewith,
between Secured Party and First Bank National
Association ("First Bank") and that are pledged to
First Bank pursuant to a Security Agreement (AWI)
dated as of August 19, 1996, executed by AWI, as such
Security Agreement is in effect on the date hereof
(the "AWI Security Agreement"), general intangibles
(including intellectual property), licenses (whether
as licensee or licensor) and other rights related to
and all rights to use, exclude and license the ▇▇▇▇
or software known as "MasterLink(R)," or used in
connection with the full network operation and use of
that software or ▇▇▇▇, however styled, and however
used or identified (including without limitation any
and all
B-1
24
enhancements, modifications, improvements or
derivative works thereof, regardless of the
developing party), and any renewal, extension or the
like with respect thereto (the "MasterLink
Protections") provided, that the MasterLink
Protections do not include the Copyright "MasterLink
Video Gaming Module" or any proprietary rights, trade
secrets, contract rights, general intangibles
(including intellectual property), licenses (whether
as licensee or licensor) or other rights related to
the "Master Video Gaming Module" or used in
connection with the full network operation and use of
that software, however styled, and however used and
identified (including without limitation any or all
enhancements, modifications, improvements, or
derivative works thereof, regardless of the
developing party), and any renewal, extension or the
like with respect thereto;
(iii) those 545,454 shares of common stock, par value $0.01
per share, evidenced by certificate number 00002697
and those 1,912,728 shares of Series A Junior
Preferred Stock of VLT, par value $0.01 per share,
evidenced by certificate number 1, which are the
subject of stock powers transferring the ownership of
same to VLT as treasury stock and which are the
subject of additional stock powers in favor of EDS
issued pursuant to this Agreement (the "Pledged
Shares"), together with all dividends and
distributions, whether in cash, stock or other
property, or which would be applicable to such shares
if the Pledged Shares were outstanding;
(iv) all proceeds and products of the foregoing (other
than such proceeds thereof that constitute payments
under Contracts and Covered Licenses, each as defined
in the Intercreditor Agreement and that are pledged
to First Bank pursuant to the AWI Security Agreement
together with all proceeds of any insurance covering
any portion of the Collateral.
The inclusion of "proceeds" of Collateral in the definition of
"Collateral" shall not be deemed a consent by the Secured Party to any
sale or other disposition of any Collateral not otherwise specifically
permitted by the terms hereof.
(b) "Copyright" means any copyright, copyright
registration and applications for such registration covering the names
and information specified on Schedule 5(c)-2, all subject matter
related to such copyrights, in any and all forms, and all copyrights
and applications for copyrights related to such copyrights.
(c) "Credit Documents" means the Note, this Agreement and
that certain Deed of Trust, Assignment of Leases and Rents, Security
Agreement, Financing Statement and Fixture Filing, of even date
herewith, executed by VLT in favor of American Land Title Company of
Montana, Trustee, for the benefit of the Secured Party, and any
amendments, replacements, substitutions, extensions or renewals thereof
or thereto.
▇-▇
▇▇
(▇) "▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇" means the occurrence of any of the
following:
(i) any representation or warranty by the
Grantor herein or in connection herewith proves to have been
materially incorrect when made;
(ii) Grantor fails to perform any of its
covenants or undertakings in or in connection with this
Agreement;
(iii) any Credit Document is held to be, or is
claimed by Grantor to be, unenforceable or void; or
(iv) any Event of Default as defined in the Note.
(e) "Goodwill" means the goodwill of the businesses
connected with the use of(or associated with) and symbolized by the
Trademarks.
(f) "Information" means data, certificates, reports,
statements (including financial statements), documents and other
information in form (including electronic media) acceptable to the
Secured Party.
(g) "Obligations" means the Grantor's obligations and
undertakings to pay and repay principal and interest and other charges
under the Note, and its undertakings and covenants hereunder and the
other Credit Documents.
(i) "Permitted Liens" means: (i) ad valorem taxes of VLT
or AWI for the current year, not past-due; (ii) liens of workers and
mechanics securing obligations that are not past due in payment or
performance, provided, in each case, VLT or AWI as the case may be, has
fully reserved for the payment of such taxes and obligations to workers
and mechanics, all in accordance with U.S. generally accepted
accounting principles consistently applied; (iii) liens in favor of
First Bank under the Credit Agreement among VLT, First Bank and the
bank parties thereto and related "Loan Documents" in accordance with
the terms in effect on the date hereof (the "First Bank Credit
Agreement"); (iv) other permitted liens under the First Bank Credit
Agreement; and (v) the licenses set forth on Annex B hereto.
(j) "Pledged Shares" means the shares of stock referred
to in clause (iii) of the definition of Collateral in this Agreement.
(k) "Scheduled Equipment and Inventory" means the
equipment, inventory (including parts and supplies and raw materials
and work in progress) and tangible personal property described on
Annex A hereto, and any insurance proceeds covering the same and any
accessions thereto.
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26
(l) "Trademarks" means all trademarks, all designs and
logotypes related to such trademarks, in any and all forms, and all
trademark registrations and applications for registration related to
such trademarks, covering the marks and information specified in
Schedule 5(c)-3, all designs and logotypes related to such trademarks,
in any and all forms, and all trademark registrations and applications
for registration related to such trademarks.
(m) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement.
(n) Unless otherwise defined herein, the terms defined in
Article 9 of the Uniform Commercial Code as enacted in the State of
Delaware (the "Code") are used herein as therein defined.
SECTION 2. Grant of Security Interest. Grantor hereby assigns
and pledges to Secured Party, and grants to the Secured Party a security
interest in, all of Grantor's right, title and interest in and to the
Collateral.
SECTION 3. Security for Obligations. This Agreement secures
the prompt and complete (a) payment of all Obligations, howsoever and whensoever
created, arising, evidenced or acquired, and (b) performance and observance of
all covenants, agreements and conditions of VLT or AWI contained in the Credit
Documents (including, without limitation, the covenants, agreements and
conditions contained herein) (all such Obligations, covenants, agreements and
conditions described in the foregoing clauses (a) and (b), whether for
principal, interest, fees, expenses or otherwise, being hereinafter collectively
referred to as the "Secured Obligations").
SECTION 4. Grantor Remains Liable. Anything herein to the
contrary notwithstanding, neither the grant by Grantor to the Secured Party of
the security interest granted herein nor the exercise by the Secured Party of
any of its rights shall relieve Grantor from the performance of any term,
covenant, condition or agreement on its part to be performed or observed, or
from any liability to any person or entity, under or in respect of any of the
Collateral or impose any obligation on the Secured Party for any act or omission
on the part of Grantor relative thereto.
SECTION 5. Representations and Warranties. Grantor hereby
represents and warrants as follows:
(a) Except with respect to Permitted Liens, no effective
financing statement, notice or other instrument similar in effect
covering all or any part of the Collateral is or will be on file in any
recording office or other governmental office, except as may be filed
in favor of the Secured Party.
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27
(b) Other than the filings and other actions described in
Section 5(c) herein to perfect the liens created by this Agreement, no
authorization, approval or other action by and no notice to or filing
with, any governmental entity is required (i) for the due execution,
delivery and performance of this Agreement by Grantor, (ii) for the
creation of the security interest hereunder by Grantor pursuant to this
Agreement or for the perfection of any thereof, or (iii) for the
exercise by the Secured Party of its rights hereunder.
(c) Upon the filing of the financing statements in the
respective offices or jurisdictions set forth on Schedule 5(c)-1,
executing and delivering the notice in the form of Schedule 5(c)-2, and
executing and delivering the notice in the form of Schedule 5(c)-3, and
delivering to EDS the certificate(s) evidencing the Pledged Shares, the
Secured Party will have a perfected lien in and to the Collateral and
this Agreement will create a valid first priority lien in and to the
Collateral (subject only to Permitted Liens), securing the payment of
the Secured Obligations.
(d) Grantor is the legal and beneficial owner of the
Collateral free and clear of any lien or other charge or encumbrance,
including, without limitation, pledges, assignments, licenses, shop
rights and covenants by Grantor not to ▇▇▇ any person or entity, except
for the security interests and assignment created by this Agreement and
Permitted Liens.
(e) The Pledged Shares, upon any foreclosure by the Secured
Party of its security interest hereunder will be duly authorized,
validly issued and outstanding and fully paid and non-assessable.
(f) VLT's principal place of business and its chief executive
office is located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and
AWI's principal place of business and its chief executive office is
located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇; and the
Scheduled Equipment and Inventory is located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇ and ▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and in the jurisdictions shown on Schedule
5(c)-1 hereto.
(g) The Trademarks and Copyrights include all trademarks and
copyrights that are includable within the MasterLink Protections. The
MasterLink Protections do not include any patent under state, federal
or foreign law and do not violate or infringe upon any trademark,
patent or copyright registered in the name of any other persons.
SECTION 6. Covenants: Grantor hereby covenants as follows:
(a) Grantor shall take all action that may be necessary or
that the Secured Party may reasonably request, so as at all times (i)
to maintain the validity, perfection, enforceability and first priority
of the Secured Party's security interest in the Collateral
B-5
28
granted hereunder subject to Permitted Liens, and (ii) to protect and
preserve, and to enable the exercise or enforcement of, the rights of
the Secured Party hereunder.
(b) Grantor shall protect, preserve, renew and maintain, in
each case in a manner consistent with reasonably responsible business
and legal practices, all rights of Grantor in the Collateral, including
the duty to prosecute and/or defend against any and all suits
concerning infringement or dilution of the Collateral where the failure
to so defend would have a material adverse effect on the Collateral or
on the Grantor or the Secured Party, any suits against Grantor
asserting the invalidity of the Collateral and any suits claiming
injury to the Goodwill associated with any of the Collateral. As to any
Collateral consisting of equipment or inventory, the Grantor will
maintain, protect and preserve such equipment and inventory in the
working order in which it was at the time that Grantor acquired the
same, and the Grantor shall promptly repair any malfunction of or
damage to any such equipment or inventory, so as to maintain its
working order and value. The Grantor shall cause the Collateral that
consists of equipment or inventory to be insured against loss or damage
under policies of insurance, covering such risks and issued by such
companies as are reasonably satisfactory to Secured Party, and the
operation of such equipment and inventory shall be covered by policies
of liability insurance covering such risks and issued by such companies
as are reasonably satisfactory to Secured Party; all policies of
liability insurance shall name the Secured Party as an additional
assured, and all policies of hazard insurance shall name the Secured
Party as loss payee as to proceeds payable with respect to such
equipment or inventory. As to Pledged Shares, the Grantor shall take
such action as is necessary or required under the Pledged Stock
Agreement of even date herewith between Grantor and Secured Party. Any
expenses incurred in protecting, preserving, renewing and maintaining
the Collateral shall be borne by Grantor. To the maximum extent
permitted by law, after an Event of Default shall have occurred and be
continuing, the Secured Party shall have the right, without taking
title to any Collateral, to bring suit to enforce any or all Collateral
or its security interest in any or all of the Collateral, in which
event Grantor shall, at the request of the Secured Party, do any and
all lawful acts and execute any and all proper documents required by
the Secured Party in aid of such enforcement. All costs, expenses and
other moneys advanced by the Secured Party in connection with the
foregoing shall, whether or not there are then outstanding any amounts
under any Credit Document, be treated as Obligations.
(c) VLT and AWI shall take all action (including, without
limitation, making any filings and prosecution thereof necessary to
renew, obtain or maintain each business authorization, approval or
registration) helpful or necessary for its business use of the
MasterLink Protections. As soon as reasonably practicable, but no later
than forty-five (45) days following the date of this Agreement, Grantor
shall file, if necessary to obtain copyright protections for software
that can be, but is not presently, the subject of a valid copyright
held by VLT, with the Register of Copyrights applications for
registration of copyrights to software that are not registered as of
the date hereof, and use its best efforts thereafter to obtain
registration of such copyrights from the Register of Copyrights. If at
B-6
29
any time the MasterLink Protections are expanded to include trademarks
or patents, or other forms of protection in which a security interest
can be perfected, or assignment can be effected, through record
assignment (including without limitation intellectual property
protections in any jurisdiction outside the United States), Grantor
shall cause the lien of the Secured Party hereunder to be extended to
such trademark, patent or other form of protection.
(d) Grantor will not change its name, identity or corporate
structure or location of its principal place of business or chief
executive office in any manner which might make any financing statement
or continuation statement filed hereunder seriously misleading within
the meaning of the Uniform Commercial Code in effect in any applicable
jurisdiction or other provision of law in effect in any applicable
jurisdiction, or which may result in the lapse of perfection of the
Secured Party's lien on any Collateral, unless Grantor shall have given
the Secured Party at least thirty (30) days' prior written notice
thereof and shall have taken all action (or made arrangements to take
such action substantially simultaneously with such change if it is
impossible to take such action in advance) necessary or reasonably
requested by the Secured Party to amend such financing statement or
continuation statement so that it is not seriously misleading and so
that the lien of the Secured Party in all Collateral remains fully
perfected as a first lien thereon, subject only to Permitted Liens.
(e) Except for Permitted Liens, neither VLT nor AWI shall
sell, assign or otherwise dispose of any of the Collateral or any
interest therein (other than the sale of inventory in the ordinary
course of business), or grant any license thereunder, or create or
suffer to exist any lien or other charge or encumbrance upon or with
respect to any of the Collateral, other than as permitted by the Credit
Documents (which permission includes sale or disposition of Collateral
in connection with prepayments as provided in the Note). Grantor shall
deliver to the Secured Party written notice every three (3) months
informing Secured Party of any change in the location of any equipment
or other personal property included within the Collateral.
Notwithstanding the foregoing, Grantor may grant licenses for the
MasterLink Protections for use anywhere in the world, provided that (i)
such licenses are limited to use of the MasterLink Protections in the
operation of on-line lottery systems, (ii) such licenses for use in the
United States must neither permit nor provide for sublicensing and
(iii) such licenses and the proceeds thereof and income therefrom are
subject to a lien in favor of the Secured Party hereunder. VLT and AWI
covenant that in transactions which involve both the licensing of the
MasterLink Protections (as permitted under this Section) and the
provision of other goods and services, the payments to be received by
VLT, AWI, and any of their affiliates will be allocated among the
components of such transaction in good faith and in relation to the
relative value of such components in the overall transaction and not
with a view to avoiding or reducing prepayments under prepayment
subparagraph (f) of the Note or reducing the value of EDS' collateral
under any Credit Document. In the event that any Collateral is sold or
otherwise disposed of in compliance with the terms of this Agreement
and the prepayment provisions of the Note, upon request by and at the
expense of Grantor the
B-7
30
Secured Party shall promptly release the lien of this Agreement with
respect to such Collateral.
(f) Prior to the application for, use or acquisition of
any interest in any property which is within the definition of
"Collateral" or modification, reformulation or other alteration to any
such interest, Grantor shall execute and deliver to the Secured Party
all documents and instruments the Secured Party may require to grant to
the Secured Party a perfected first priority lien thereon and security
interest therein (subject to Permitted Liens) and to subject all of
such interest to this Agreement, including but not limited to any new,
supplementary or additional filings in the form of Schedules 5(c)-2 or
5(c)-3.
(g) VLT and AWI will permit Secured Party access to (and
permit copying of) its properties, books, records and personnel to
determine information regarding the Note and the Collateral, subject to
such limitations as are provided in the Note.
(h) VLT and AWI will cause to be deposited, from time to time,
such materials and information, at the times and in the manner set out
in, and as more particularly provided in that certain Source Code
Escrow Agreement of even date herewith, executed in connection with the
Master Settlement Agreement, and will comply with their obligations
under that Source Code Escrow Agreement.
SECTION 7. Further Assurances.
(a) Grantor authorizes the Secured Party to file notices in
the forms of Schedules 5(c)-2 and 5(c)-3 with the appropriate
governmental offices shown therein.
(b) Grantor authorizes the Secured Party to file financing
statements (including, without limitation, Form UCC-1 and Form UCC-3,
as applicable) and such other security documents to be executed by
Grantor in such offices and locations as are necessary in the
reasonable opinion of the Secured Party to perfect the liens granted
herein. Grantor further agrees that, from time to time and at the
expense of Grantor, Grantor will promptly execute and deliver all
further instruments and documents, and take all further action that may
be reasonably necessary or desirable, or that the Secured Party may
reasonably request, in order to perfect and protect any security
interests renewed and extended or granted or purported to be granted
hereby or to enable the Secured Party to exercise and enforce its
rights hereunder with respect to any of the Collateral. Without
limiting the generality of the foregoing, Grantor will, at the request
of the Secured Party, execute and file such financing statements and
continuation statements, and amendments thereto, and such other
instruments and notices, as may be reasonably necessary or desirable,
or as the Secured Party may reasonably request, in order to perfect and
preserve the liens and security interests granted or purported to be
granted hereby.
(c) In addition to such other Information as shall be
specifically provided for herein, Grantor shall furnish to the Secured
Party such other Information with respect to
B-8
31
the Collateral as the Secured Party may reasonably request from time to
time in connection with the Collateral, or the protection,
preservation, maintenance or enforcement of the security interest
granted herein or the Collateral including, without limitation, all
documents and things in Grantor's possession, or subject to its demand
for possession, related to the production and sale by Grantor, or any
Subsidiary, licensee or subcontractor thereof, of products or services
sold by or under the authority of Grantor in connection with the
Collateral, including by way of example, without limiting the interest
granted by this Agreement: (i) all lists and ancillary documents which
identify and describe any of Grantor's customers or licensees for
products sold or services rendered under or in connection with the
Collateral, including without limitation, such existing lists and
ancillary documents which contain each customer's full name and
address, the full name and address of all of its warehouses and
branches, the identity of the person or persons having the principal
responsibility on each customer's behalf for ordering products or
services of the kind supplied by Grantor, the credit, payment,
discount, delivery and other sale terms applicable to such customer,
together with detailed information setting forth the total purchases,
by brand, product, style and size, and the patterns of such purchases;
(ii) all product and service specification documents and production and
quality of services sold under or in connection with the Collateral;
(iii) all documents which reveal the names and addresses of all sources
of supply, and all terms of purchase and delivery, for all materials
and components used in the production of products or provision of
services, sold under or in connection with the Collateral; and (iv) all
documents constituting or concerning the then current or proposed
advertising and promotion by Grantor, licensees or subcontractors of
products or services sold under or in connection with the Collateral,
including, by way of example and not in limitation, all documents which
reveal the media used or to be used and the cost for all such
advertising conducted within the described period or planned for such
products or services. In connection with its enforcement of its
security interest, the Secured Party may use such Information or
transfer it to any assignee or sublicensee permitted hereunder for such
assignee's or sublicensee's use.
SECTION 8. Secured Party Appointed Attorney-in-Fact. Grantor
hereby appoints the Secured Party and any officer or agent thereof Grantor's
true and lawful agent and attorney-in-fact, with full power of substitution and
with, after the occurrence and during the continuance of an Event of Default,
full authority in the place and stead of Grantor and in the name of Grantor, the
Secured Party, or otherwise, from time to time in the Secured Party's
discretion, to carry out the provisions of this Agreement and to take any action
and to execute any instrument or document which the Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement, which
appointment is irrevocable and coupled with an interest and any proxy or proxies
heretofore given by Grantor to any other person or entity (other than the
appointment of First Bank as Grantor's attorney-in-fact in Section 8 of the
Security Agreement, Pledge and Assignment: Equipment, Inventory, Securities and
Intellectual Property dated as of January 30, 1997 by VLT and AWI for the
benefit of First Bank so long as such powers and grants are subject to the
Intercreditor Agreement and Section 3.15 of the AWI Security Agreement) are
hereby revoked. Without limiting the generality of the foregoing, the Secured
Party shall have the right, upon the occurrence and during the continuance of an
Event of Default:
B-9
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(a) to ask, demand, collect, ▇▇▇ for, recover, compound,
receive and give acquittance and receipts for amounts due and to become
due under or in respect of any of the Collateral, including without
limitation amounts payable under policies of insurance that cover
Collateral (whether or not such policies of insurance also cover other
property that is not Collateral),
(b) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clause (a)
above, and
(c) to file any claims or take any action or institute any
proceedings which the Secured Party may deem necessary or desirable for
the collection of any of the Collateral or otherwise to enforce the
rights of the Secured Party, including, without limitation, the
collection of royalties or other compensation due under any license or
agreement, with respect to any of the Collateral.
SECTION 9. The Secured Party's Duties. The powers conferred on
the Secured Party hereunder are solely to protect its interest in the Collateral
and shall not impose any duty upon the Secured Party to exercise any such
powers. Except for the reasonable care in the custody and preservation of any
Collateral in its possession and the accounting for amounts actually received by
it hereunder, the Secured Party shall have no duty as to any Collateral or as to
the taking of any necessary steps to preserve rights against any person or
entity or any other rights pertaining to any Collateral.
SECTION 10. Remedies. If any Event of Default shall have
occurred and be continuing:
(a) The Secured Party may exercise in respect of the
Collateral, in addition to other rights provided for herein or
otherwise available to it, all the rights of a secured party after
default provided for under the Code (whether or not the Code applies to
the affected Collateral) and in addition thereto and cumulative
thereof, the following rights: the right to sell, lease or otherwise
dispose of the Collateral; the right to enter onto any premises where
any of the Collateral is or may be located, and take possession thereof
or render the same inoperable; the Secured Party may require Grantor
to, and Grantor hereby agrees that it will, at its expense and upon the
request of the Secured Party, forthwith assemble all Collateral and all
documents relating to the Collateral as directed by the Secured Party
and make such documents available to the Secured Party at a place to be
designated by the Secured Party; without notice except as specified
below, sell the Collateral in one or more parcels at public or private
sale or at a broker's board, at any of the Secured Party's offices or
elsewhere as directed by Secured Party, for cash, on credit or for
future delivery, and upon such other terms as the Secured Party may
deem commercially reasonable; buy the Collateral, or any part thereof,
at any private sale if the Collateral is of a type customarily sold in
a recognized market or is of a type which is the subject of widely
distributed standard price quotations; apply by appropriate judicial
proceedings for appointment of a receiver for the Collateral, or any
part thereof, and
▇-▇▇
▇▇
▇▇▇▇▇▇▇ hereby consents to any such appointment; and, at its
discretion, retain the Collateral in satisfaction of the Secured
Obligations whenever the circumstances are such that Secured Party is
entitled to do so under the Code or otherwise, provided that Secured
Party shall in no circumstances be deemed to have retained the
Collateral in satisfaction of the Secured Obligations in the absence of
an express notice by Secured Party to Grantor that Secured Party has
either done so or intends to do so. Grantor agrees that, to the extent
notice of sale shall be required by law, at least ten (10) days' notice
to Grantor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification. The Secured Party shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given. The
Secured Party may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it
was so adjourned.
(b) Any cash held by the Secured Party as Collateral and all
cash proceeds received by the Secured Party in respect of any sale of,
collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Secured Party, be held by the
Secured Party as collateral for, and then or at any time thereafter
applied in whole or in part by the Secured Party against, the Secured
Obligations in such order and manner as Secured Party may determine in
accordance with the provisions of the Note. Any surplus of such cash or
cash proceeds and interest accrued thereon, if any, held by the Secured
Party and remaining after payment in full of the Secured Obligations
shall be promptly and completely paid over to Grantor or to whomsoever
may be lawfully entitled to receive such surplus; provided that the
Secured Party shall have no obligation to invest or otherwise pay
interest on any amounts held by it in connection with or pursuant to
this Agreement.
(c) All rights of the Secured Party expressed herein are in
addition to all other rights possessed by the Secured Party in the
Credit Documents or otherwise available at law or in equity.
SECTION 11. Amendments, Etc. No amendment or waiver of any
provision of this Agreement nor consent to any departure by Grantor herefrom,
shall be effective unless the same is in writing and signed by the Secured Party
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
SECTION 12. Addresses for Notices. Except as otherwise
expressly provided herein, all notices and other communications provided for
hereunder shall be in writing and delivered to the parties entitled thereto in
the manner and at the address and with the effect provided in the Master
Settlement Agreement.
SECTION 13. Security Interest Absolute. All rights of the
Secured Party hereunder, all obligations of Grantor hereunder and the liens and
security interests granted
B-11
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hereunder shall, to the extent permitted by applicable law, be absolute and
unconditional, irrespective of:
(a) any lack of validity or enforceability of this Agreement,
the Note, the Master Settlement Agreement, or the Reimbursement
Agreement, the Pledged Stock Agreement, or the Source Code Escrow
Agreement referred to in the Master Settlement Agreement;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations or any
other amendment or waiver of or any consent to any departure from this
Agreement or the Note;
(c) any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations;
or
(d) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, Grantor, or any other person
or entity that is a party to any Credit Document in respect of the
Secured Obligations.
SECTION 14. Continuing Security Interest. This Agreement
creates a continuing security interest in the Collateral and shall (a) remain in
full force and effect until the payment in full of the Secured Obligations, (b)
be binding upon Grantor, its successors and assigns, and inure to the benefit of
and be enforceable by the Secured Party, and its successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), the
Secured Party may assign or otherwise transfer any of its rights under this
Agreement to any assignee of the Note and, to the extent of such assignment or
transfer, such person or entity shall thereupon become vested with all the
benefits in respect thereof granted herein or otherwise to the Secured Party.
Upon payment in full of the Secured Obligations, Grantor shall be entitled to
the prompt and complete return, upon its request and at its expense, of such of
the Collateral as shall not have been sold or otherwise applied pursuant to the
terms hereof.
SECTION 15. Waiver of Marshaling. All rights of marshaling of
assets of Grantor, including any such right with respect to the Collateral, are
hereby waived by Grantor.
SECTION 16. Limitation by Law. All rights, remedies and powers
provided in this Agreement may be exercised only to the extent that the exercise
thereof does not violate any applicable provision of law and all the provisions
of this Agreement are intended to be subject to all applicable mandatory
provisions of law which may be controlling and to be limited to the extent
necessary so that they will not render this Agreement invalid, unenforceable, in
whole or in part, or not entitled to be recorded, registered or filed under the
provisions of any applicable law.
B-12
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SECTION 17. Severability. Should any clause, sentence,
paragraph, subsection or Section of this Agreement be judicially declared to be
invalid, unenforceable or void, such decision will not have the effect of
invalidating or voiding the remainder of this Agreement, and the parties hereto
agree that the part or parts of this Agreement so held to be invalid,
unenforceable or void will be deemed to have been stricken herefrom by the
parties hereto, and the remainder will have the same force and effectiveness as
if such stricken part or parts had never been included herein.
SECTION 18. Captions. The captions in this Agreement have been
inserted for convenience only and shall be given no substantive meaning or
significance whatever in construing the terms and provisions of this Agreement.
SECTION 19. No Waiver. No failure on the part of the Secured
Party to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right.
SECTION 20. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
SECTION 21. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware without
regard to principles of conflict of laws, except to the extent that the validity
or perfection of the assignment and security interest hereunder, or remedies
hereunder, in respect of any particular Collateral are governed by the laws of a
jurisdiction other than the State of Delaware.
SECTION 22. Entirety. THIS AGREEMENT, TOGETHER WITH THE OTHER
CREDIT DOCUMENTS, AND THE MASTER SETTLEMENT AGREEMENT (AND ALL EXHIBITS
THERETO), REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
SECTION 23. Assignability. The Secured Party may assign its
rights hereunder, without the requirement of additional consent from any person,
to any assignee of the Note or other Obligations.
B-13
36
IN WITNESS WHEREOF, Grantor has caused this Agreement to be
duly executed as of the date first above written.
VIDEO LOTTERY TECHNOLOGIES,
INC.
By:
Name:
Title:
AUTOMATED WAGERING
INTERNATIONAL, INC.
By:
Name:
Title:
Each of the undersigned, VIDEO LOTTERY
CONSULTANTS, INC. and UNITED WAGERING
SYSTEMS, INC. consents to the foregoing
and joins in the foregoing documents for
purposes of subjecting any interest it
may have in the Collateral to the
provisions thereof, and also grants to
EDS a security interest in the Collateral
to secure the Obligations.
VIDEO LOTTERY CONSULTANTS, INC.
By:
Name:
Title:
UNITED WAGERING SYSTEMS, INC.
By:
Name:
Title:
ADDRESS:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
B-14
37
Schedule 5(c)-1
Financing Statement Filing Locations
Delaware Secretary of State
Superior Court Clerk for DeKalb County, Georgia
Florida Department of State
Maryland State Department of Assessments and Taxation
Minnesota Secretary of State
Montana Secretary of State
County Clerk of Gallatin County, Montana
New Jersey Secretary of State
Pennsylvania Secretary of State
South Dakota Secretary of State
California Secretary of State
B-15
38
Schedule 5(c)-2
NOTICE OF SECURITY INTEREST IN U.S. COPYRIGHTS
United States Copyright Office:
Please be advised that pursuant to a Security Agreement, Pledge and
Assignment: Equipment, Inventory, Securities and Intellectual Property (the
"Security Agreement") dated as of January 30, 1997, by Video Lottery
Technologies, Inc. ("Grantor") for the benefit of Electronic Data Systems
Corporation ("Secured Party"), Grantor has granted to Secured Party a continuing
security interest in, and a continuing lien upon, all of the copyrights and
copyright applications described below:
COPYRIGHTS
Registration Number Title of Copyrighted Item Date of Registration
------------------- ------------------------- --------------------
TX4-332-718 MASTERLINK On-Line July 5, 1996
Gaming Module
COPYRIGHT APPLICATIONS
Copyright Application Copyright Application
Number Title Date of Filing
--------------------- --------------------- --------------
Not Available MASTERLINK Instant July 24, 1996
Gaming Module
Secured Party's security interest in the described copyright and
copyright applications can be terminated only in accordance with the terms of
the Security Agreement.
Very truly yours,
VIDEO LOTTERY TECHNOLOGIES, INC.
By:
Acknowledged by:
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39
Schedule 5(c)-3
NOTICE OF SECURITY INTEREST IN U.S. TRADEMARKS
United States Trademark Office:
Please be advised that pursuant to a Security Agreement, Pledge and
Assignment: Equipment, Inventory, Securities and Intellectual Property (the
"Security Agreement") dated as of January 30, 1997, by Video Lottery
Technologies, Inc.("Grantor") for the benefit of Electronic Data Systems
Corporation ("Secured Party"), Grantor has granted to has granted to Secured
Party a continuing security interest in, and a continuing lien upon, all of the
trademarks and trademark applications described below:
TRADEMARKS
Trademark Description of Date of
Registration Number Trademark Registration
------------------- --------- ------------
74/437,318 MASTERLINK September 5, 1995
TRADEMARK APPLICATIONS
Trademark Application Description of
Serial Number Trademark Date of Filing
--------------------- -------------- --------------
74/547,506 MASTERLINK July 11, 1994
Secured Party's security interest in the described trademark and
trademark applications can be terminated only in accordance with the terms of
the Security Agreement.
Very truly yours,
VIDEO LOTTERY TECHNOLOGIES, INC.
By:
Acknowledged by:
B-17
40
Annex A
Scheduled Equipment and Inventory
B-18
41
Annex B
Licenses
Licenses:
Korea:
Korea Lottery Services Co.
Korea Electronics Technology Institute
Taiwan:
ACME Technology International Corp.
(Pacific Development Services)
Atlantic Lottery Corp.
Norway:
Norsk Tipping
Maryland:
B-19
42
EXHIBIT C
DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING
DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT, FINANCING
STATEMENT AND FIXTURE FILING, dated as of January 30, 1997 (as amended and
supplemented and in effect from time to time, this "Deed of Trust"), made by
VIDEO LOTTERY TECHNOLOGIES, INC., a Delaware corporation having its principal
office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Grantor"), to American
Land Title Company of Montana, having an address of West Brook Center, ▇▇▇▇ ▇.
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇- 0396 ("Trustee"), for the benefit of Electronic
Data Systems Corporation, a Delaware corporation, having its principal office at
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("Beneficiary"). All capitalized terms
used herein and not separately defined in the body of this Deed of Trust shall
have the meanings provided in Appendix A attached to this Deed of Trust.
TO SECURE THE PAYMENT of the Obligations in accordance with
the terms thereof and to secure the due performance of and compliance with all
of the Obligations, GRANTOR HEREBY GRANTS, TRANSFERS AND CONVEYS TO TRUSTEE, IN
TRUST WITH POWER OF SALE, for the benefit of Beneficiary, all of its estate,
right, title and interest, whether now owned or hereafter acquired:
In and to that property, not in excess of 30 acres, described
on Annex 1 including all tenements, hereditaments and appurtenances of any
nature whatsoever, in any way belonging, relating to or pertaining thereto
(collectively, the "Land") and in the buildings and improvements now or
hereafter on the Land (collectively, the "Improvements") and all personal
property, including, without limitation, fixtures now or hereafter attached to
or located on the Improvements or the Land (hereinafter collectively referred to
as the "Equipment");
TOGETHER with all agreements affecting the use, enjoyment or
occupancy of the Land and the Improvements heretofore or hereafter entered into
(the "Leases") and all income, rents, issues, profits and revenues from the Land
and the Improvements (the "Rents");
TOGETHER with all proceeds from any of the foregoing (the
"Proceeds") (the Land, the Improvements, the Equipment, the Leases, the Rents
and the Proceeds, being referred to collectively as "this Property" as well as
the "Mortgaged Property").
TO HAVE AND TO HOLD the above granted and described Mortgaged
Property unto Beneficiary and Trustee and to their respective successors and
assigns forever, and Grantor hereby binds itself and its successors and assigns
to warrant and forever defend the Mortgaged Property unto Beneficiary and
Trustee and their respective successors and assigns against the claim
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or claims of all persons claiming or to claim the same, or any part thereof
(subject to the Permitted Encumbrances).
This Deed of Trust constitutes a Fixture Filing and Financing
Statement as those terms are used in the Montana Uniform Commercial Code.
Grantor covenants and agrees as follows:
ARTICLE I
REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF GRANTOR
1.01 Title to this Property. Grantor represents and warrants
(a) that it has fee simple title to this Property, free and clear of any liens
and encumbrances other than Permitted Encumbrances; (b) that this Deed of Trust
is a valid first lien upon this Property subject only to the Permitted
Encumbrances; and (c) that Grantor has full power and lawful authority to
encumber this Property in the manner set forth herein.
1.02 Required Insurance. Grantor will, at its expense,
maintain a standard policy of property insurance, insuring the Property against
loss due to fire or other similar occurrence, having such terms, coverages,
deductibles and issuer as are identical to that currently covering the Property,
with the Beneficiary named as loss payee and additional assured.
1.03 Impositions. Grantor will pay or cause to be paid when
due all Impositions.
1.04 Inspections. Grantor hereby authorizes Beneficiary, its
agents, representatives or workmen, to enter upon or in any part of this
Property for the purpose of inspecting the same, and for the purpose of
performing any of the acts which Beneficiary is authorized to perform under the
terms of this Deed of Trust.
1.05 Certain Environmental Matters. Grantor will not cause,
commit, permit or allow to continue any violation of any Environmental
Requirement by Grantor or by or with respect to the Mortgaged Property or any
use or activity on the Mortgaged Property, or the attachment or existence of any
environmental lien to the Mortgaged Property. (1) "Environmental Requirement"
means any legal requirement which pertains to pollution or contamination,
storage tanks, health or the environment, including without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"), the Resource Conservation and Recovery Act of 1976, as
amended ("RCRA"), and any Montana law regulating pollution or contamination of
or by water, air, noise, or Hazardous Substances; (2) "Hazardous Substance"
means any substance, which is listed, defined or regulated as a "hazardous
substance", "hazardous waste" or "solid waste", or otherwise classified as
hazardous or toxic, in or pursuant to any Environmental Requirement; and (3)
"release" means release as defined in CERCLA.
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1.06 Fixture Filing and Financing Statement. This Deed of
Trust, to the extent that it relates to items of personal property which may
become fixtures, shall be a security agreement and shall constitute a financing
statement filed as a fixture filing as those terms are used in the Code and,
accordingly: (i) the address of Beneficiary as "secured party" is: Electronic
Data Systems Corporation, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇; (ii) the
mailing address of Grantor, as "debtor" is ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇; (iii) the types of collateral that now or hereafter may become
fixtures are described in the recitals of the preamble hereof; and (iv) the Tax
I.D. number of Grantor is ▇▇-▇▇▇▇▇▇▇.
ARTICLE II
ASSIGNMENT OF LEASES, RENTS AND PROFITS
2.01 Assignment. Grantor hereby sells, assigns and transfers
unto Beneficiary all the Rents, it being the intention hereby to establish an
absolute, unconditional and present transfer and assignment of all such Leases,
Rents and agreements, to Beneficiary, and Beneficiary shall be entitled upon the
occurrence of an Event of Default to all Rents, whether or not Beneficiary takes
possession of the Mortgaged Property or any part thereof. So long as there shall
exist no Event of Default, Grantor shall have a revocable exclusive license to
collect the Rents and to deal with the Leases to the extent permitted by this
Deed of Trust. Upon the occurrence of an Event of Default, the license
hereinabove granted shall automatically terminate without notice to Grantor.
Nothing herein contained shall be construed as constituting Beneficiary a
mortgagee-in-possession in the absence of the taking of actual possession of
this Property by Beneficiary pursuant to Section 3.01(a) hereof.
ARTICLE III
REMEDIES UPON EVENTS OF DEFAULT
3.01 Remedies Upon Default. If an Event of Default shall occur
and be continuing, Beneficiary or Trustee may:
(a) either in person or by agent with or without bringing any
action or proceeding, or by a receiver appointed by a court and without
regard to the adequacy of its security, enter upon and take possession
of this Property or any part thereof, in its own name or in the name of
Grantor, and do or cause to be done any acts which it deems necessary
or desirable to preserve the value of this Property;
(b) ▇▇▇ to (i) protect and enforce Beneficiary's or Trustee's
rights, (ii) collect any sum then due hereunder, (iii) aid the
execution of any power herein granted, or (iv) fore close this Deed of
Trust, judicially or nonjudicially, without prejudice to the right of
Beneficiary or Trustee thereafter to pursue and enforce any other
appropriate remedy against Grantor;
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(c) exercise any or all of the remedies available to a secured
party under the Montana Uniform Commercial Code;
3.02 Right of Foreclosure. If an Event of Default shall occur
and be continuing, Beneficiary or Trustee shall have the right, at its option,
to proceed at law or in equity to foreclose fully or partially this Deed of
Trust. Beneficiary or Trustee may, to the extent permitted by law, adjourn from
time to time any sale by it to be made under or by virtue of this Deed of Trust
by announcement at the time and place appointed for such sale or for such
adjourned sale or sales; and, except as otherwise provided by an applicable
provision of law, Beneficiary or Trustee may make such sale at the time and
place to which the same shall be so adjourned.
3.03 Remedies Not Exclusive. Beneficiary (or Trustee) shall be
entitled to enforce this Deed of Trust and any other security now or hereafter
held by Beneficiary (or Trustee) in such order and manner as it may in its
absolute discretion determine. Every power or remedy given by this Deed of Trust
to Beneficiary or Trustee, or to which it may be otherwise entitled, may be
exercised, concurrently or independently, from time to time and as often as may
be deemed expedient by Beneficiary or Trustee, and Beneficiary or Trustee may
pursue inconsistent remedies, to the extent permitted by applicable law.
3.07 Waiver of Redemption, Notice, Etc. Notwithstanding
anything herein contained to the contrary, to the extent permitted by law,
Grantor hereby waives any and all rights of redemption or reinstatement in
connection with the sale under any judgment of foreclosure of this Deed of
Trust.
ARTICLE IV
MISCELLANEOUS
4.01 Governing Law This Deed of Trust shall be governed by,
and construed in accordance with, the internal laws of the State of Delaware,
provided, however, that the applicable provisions of this Deed of Trust relating
to the creation, validity, perfection, priority and enforceability of the lien
created by this Deed of Trust and any warranties of title contained in this Deed
of Trust, and the provisions hereof which relate to realizing upon the security
covered by this Deed of Trust, shall be governed by, and interpreted in
accordance with, the laws of the State of Montana (except for rights of recourse
against Grantor to the extent provided herein which shall be governed by
Delaware law).
4.02 Notices. All notices and other communications hereunder
shall be in writing and shall be addressed, (a) if to Grantor, at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other address as Grantor shall have
furnished to Beneficiary in writing, or (b) if to Beneficiary, at ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: General Counsel, or at such other
address as Beneficiary shall have furnished to Grantor in writing, or (c) if to
Trustee, at the address set forth in the opening paragraph of this Deed of
Trust. Any notice so addressed
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and mailed or delivered shall be deemed to be given (1) five (5) business days
after being mailed by registered, certified or first-class mail, or (2) when
received, if delivered by other means.
4.03 Trustee. Beneficiary may, for any reason, appoint a
substitute trustee(s) in succession who shall succeed to all the estates,
rights, powers, and duties of the aforenamed Trustee. Upon filing a written
substitution of trustee for record in the office of the clerk and recorder of
each county in which the Mortgaged Property, or some part thereof, is situated,
any substitute trustee appointed pursuant to any of the provisions hereof shall,
without any further act, deed, or conveyance, become vested with all the
estates, properties, rights, powers and trusts of its or his predecessor in the
rights hereunder with like effect as if originally named as Trustee herein.
4.04 Subordination. If, after the date hereof, a party (other
than an affiliate of Grantor and/or Automated Wagering International, Inc.)
providing additional funds to Grantor and/or Automated Wagering International,
Inc. requires a lien on the Mortgaged Property superior to that of this Deed of
Trust, the Beneficiary will subordinate the lien hereof pursuant to the
customary terms of subordination that are reasonably acceptable to Beneficiary
and such lender but only upon the prepayment of the Obligations in an amount no
less than 25% of funds advanced by such lender, which prepayment shall in no
event be less than 15% of the Appraised Value of the Mortgaged Property. For
purposes of this section, a person or entity is an "affiliate" of Grantor or
Automated Wagering International, Inc., if it controls, is controlled by, or
under common control with Grantor or Automated Wagering International, Inc., or
any of their officers or directors; and "control" means the power, directly or
indirectly, to vote or direct the voting of 50% or more of the outstanding
voting interests thereof of any class of voting interests thereof. "Appraised
Value" means a value agreed to by Beneficiary and Grantor, provided, however,
that if no such agreement is reached at least thirty (30) days prior to the
scheduled effective date of such requested subordination, such value shall be
the "fair market value" of the Mortgaged Property as determined by a real estate
appraiser licensed to appraise real property in Montana, selected and instructed
jointly by Beneficiary and Grantor; provided further, that if Beneficiary and
Grantor shall fail to make such a joint selection, each of Beneficiary and
Grantor may engage its own real estate appraiser licensed to appraise real
property in Montana, and the "Appraised Value" shall be the arithmetical average
of the resulting appraised values. The cost of such appraisal(s) shall be borne
equally by Beneficiary and Grantor.
4.05 Montana Small Tract Financing Act. This Deed of Trust
shall be construed as a trust indenture under the Montana Small Tract Financing
Act, subject, nevertheless, to the provisions of paragraph 4.01 expressing the
agreement and intention of the parties respecting the law governing its
construction, operation and effect.
4.06 Deed of Trust Parity Agreement. This Deed of Trust is
subject to that certain Deed of Trust Parity Agreement dated as of the date
hereof (as amended, modified, supplemented or restated from time to time being
the "Parity Agreement") among, Grantor, Beneficiary, and First
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Bank National Association (the "Bank"). The provisions of the Parity Agreement
are incorporated herein by reference.
4.07 Assignability. The Beneficiary may assign its rights
hereunder, without the requirement of additional consent from any person, to any
assignee of the Note or other Obligations.
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IN WITNESS WHEREOF, Grantor has executed this Deed of Trust.
VIDEO LOTTERY TECHNOLOGIES, INC.
By:
Name:
Title:
STATE OF ____________ )
)
COUNTY OF )
This instrument was acknowledged before me on this _____ day
of January, 1997, by _____________________________________,
_________________________ of Video Lottery
Technologies, Inc.
Notary Public for the State of ___________
Residing at ______________, ______________
My commission expires
(Seal)
C-7
▇▇
▇▇▇▇▇ ▇
▇▇▇▇
▇▇▇▇▇ ▇▇ of Certificate of Survey No. 1393A, located in the NE1/4 of
Section 24, Township 2 South, Range 5 East, P.M.M., City of Bozeman,
Gallatin County, Montana, according to the official plat thereof on
file and of record in the office of the County Clerk and Recorder,
Gallatin County, Montana
and
Tract 2B of Certificate of Survey No. 1393A, a tract being a portion
of Tracts 1A and 2A of Certificate of Survey No. 1393, located in the
NE1/4 of Section 24, Township 2 South, Range 5 East, P.M.M., Gallatin
County, Montana
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Appendix A
DEFINITIONS
As used herein the following terms have the following
respective meanings:
Event of Default: any Event of Default under, and as defined
in, the Note, the Security Agreement or the Deed of Trust.
Impositions: all taxes, assessments, fees, and other charges,
of every character, which at any time may be assessed, levied, confirmed or
imposed on or in respect of or be a lien upon the Mortgaged Property.
Note: the promissory note of Video Lottery Technologies, Inc.
and Automated Wagering International, Inc., of even date with the Deed of Trust,
payable to the order of the Beneficiary in the original principal amount of
US$27,000,000.00, which is finally due and payable on December 31, 2003, and any
renewals, replacements, or extensions thereof.
Obligations:
(i) (x) the principal of and interest on the Note,
the Deed of Trust or the Security Agreement;
(ii) any and all sums advanced by the Beneficiary in
accordance with the terms of the Deed of Trust or the Security
Agreement in order to preserve the security thereof or preserve its
security interest in that security, together with interest thereon at
the Post-Default Rate (as defined in the Note); and
(iii) in the event of any proceeding for the
collection or enforcement of any indebtedness, obligations, or
liabilities of the Grantor and the other parties referred to in clauses
(i) and (ii) above, after an Event of Default shall have occurred and
be continuing, the expenses of re-taking, holding, preparing for sale
or lease, selling or otherwise disposing or realizing on the collateral
or mortgaged property, or of any exercise by the Beneficiary of its
rights under the Deed of Trust or the Security Agreement, together with
attorneys' fees and court costs and all amounts paid by the Beneficiary
thereunder.
Permitted Encumbrances: with respect to the Mortgaged
Property, (a) liens for Impositions not yet due and payable or being contested
and for which an adequate reserve or other appropriate provision shall have been
made, (b) liens of mechanics, materialmen, suppliers or vendors, or rights
thereto, incurred in the ordinary course of business for sums which under the
terms of the related contracts are not yet due and payable or being contested in
good faith and for
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which an adequate reserve or other appropriate provision shall have been made,
(c) leases, easements, exceptions, encumbrances or reservations in the Mortgaged
Property, granted or reserved for the purpose of railroads, utilities,
pipelines, plants, roads, telecommunication lines, electrical, water and
pipeline transmission facilities, ditches, canals, surface operations,
agricultural operations, the removal of oil, gas, coal or other minerals or
timber and other like purposes, or for the joint or common use of real property,
facilities and equipment, including covenants and conditions appurtenant to the
Land, and (d) liens in favor of First Bank National Association granted pari
passu status with the lien created hereby, pursuant to that certain Deed of
Trust Parity Agreement among Grantor, Beneficiary and First Bank National
Association, dated the date hereof.
Security Agreement: that certain Security Agreement, Pledge
and Assignment: Equipment, Inventory, Securities and Intellectual Property, of
even date with the Deed of Trust, executed by Video Lottery Technologies, Inc.,
and Automated Wagering International, Inc. in favor of the Beneficiary to
secure, among other things, the Note, and any modifications, amendments,
renewals, replacements or extensions of such Security Agreement.
▇-▇-▇
▇▇
▇▇▇▇▇▇▇ E
RELEASE
THIS RELEASE (this "Release") is made and entered into as of
January 30, 1997, by and among Electronic Data Systems Corporation, a Delaware
corporation ("EDS"), EDS VLT Holdings, Inc., a Nevada corporation ("Holdings"),
Video Lottery Technologies, Inc., a Delaware corporation ("VLT"), Automated
Wagering International, Inc., a Delaware corporation ("AWI"), Video Lottery
Consultants, Inc., a Montana corporation ("VLC"), and United Wagering Systems,
Inc., a Delaware corporation ("UWS").
RECITALS
WHEREAS, EDS, Holdings, VLT, AWI, VLC and UWS have entered
into that certain Master Settlement Agreement, dated as of January 30, 1997 (the
"Master Agreement"); and
WHEREAS, the Master Agreement provides for, among other
things, the parties to release one another from all claims and causes of action
whatsoever arising from events that occurred prior to the date of this Release,
subject to certain limited exceptions set forth below in Section l, including,
among other things, the agreements contemplated by (whether executed as of the
date hereof or hereafter) and executed concurrently with the Master Agreement.
NOW, THEREFORE, in consideration of the premises, the
respective covenants and commitments of the parties hereto set forth in this
Release and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties to this Release hereby agree as
follows:
1. Definition of Released Claims. As used herein, the term
"Released Claims" means any and all charges, complaints, claims, causes of
action, promises, agreements, rights to payment, rights to any equitable remedy,
rights to any equitable subordination, demands, debts, liabilities, express or
implied contracts, obligations of payment or performance, rights of offset or
recoupment, accounts, damages, costs, losses or expenses (including attorneys'
and other professional fees and expenses) held by any party hereto, whether
known or unknown, suspected or unsuspected, liquidated or unliquidated, absolute
or contingent, direct or derivative (collectively, "Claims") that arose, or
whose underlying events occurred, prior to the date of this Release, whether
asserted prior to or after the date of this Release. The Released Claims shall
include, without limitation, any and all claims or causes of action asserted by
the parties in Cause No. ▇▇▇-▇▇▇-▇▇, Electronic Data Systems Corporation v.
Video Lottery Technologies, Inc. and Automated Wagering International, Inc.,
pending in the 366th Judicial District Court of Collin County, Texas (the "Texas
Lawsuit"), together with any and all claims or causes of action that could have
been included in the Texas Lawsuit. Notwithstanding the foregoing, "Released
Claims" do not include any actual or potential Claims held by the parties hereto
(or any rights or duties related to such
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Claims) which arise out of or relate to or are otherwise provided for in (i) any
agreements contemplated by (whether executed as of the date hereof or hereafter)
and executed by the parties hereto concurrently with the Master Agreement,
including, without limitation, the Transition Agreement of even date herewith,
among EDS, VLT and AWI or (ii) Claims involving knowing acts of criminal
misconduct, in each case which Claims are expressly reserved.
2. Representations and Warranties. Each party to this Release
hereby represents and warrants to each of the other parties to this Release as
follows:
(a) Such party has the requisite power and authority
to execute, deliver and carry out this Release, and has taken all
necessary action to authorize the execution, delivery and performance
of this Release and the transactions contemplated hereby.
(b) This Release has been duly and validly
authorized, executed and delivered by such party and constitutes a
valid and binding obligation of each of the parties hereto, enforceable
in accordance with its terms, except to the extent such enforcement may
be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws or equitable principles of
general application relating to or limiting creditors' rights.
(c) Neither the execution and delivery of this
Release nor the consummation of the transactions contemplated hereby
will conflict with or constitute a violation of or default under any
law, rule, regulation, order, judgment, decree, contract, commitment,
agreement, arrangement or restriction of any kind to which such party
is a party or by which such party or its property is bound.
(d) No authorization, approval or other action by,
and no notice to or filing with, any governmental authority or other
third party is required for the execution and delivery or performance
of this Release.
(e) As of the date on which this Release is executed
on its behalf, such party has the sole right, power, capacity and
authority to execute this Release and that it has not assigned,
conveyed, sold, transferred or otherwise disposed any of its rights in
and to the Released Claims.
Other than as expressly set forth above, this Release is entered into without
any further representation or warranty on the part of any party.
3. VLT, AWI, VLC and UWS Release EDS and Holdings. VLT,
AWI, VLC and UWS on their own behalf and on behalf of all persons and entities
controlled by them, each hereby irrevocably and unconditionally releases,
acquits and discharges forever EDS and Holdings (and each of them) and each of
their respective directors, officers, professionals, agents, representatives,
assigns and affiliates (corporate or otherwise) from any and all Released
Claims,
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including, without limitation, all Released Claims based upon any right or
interest that arises from or relates in any way to the terms of that certain
Master Services Agreement, dated as of January 20, 1994, between EDS and VLT
(the "Master Services Agreement"), that certain Stockholders Agreement dated as
of January 20, 1994, between VLT and EDS (the "Stockholders Agreement"), or that
certain Stock Purchase and Sale Agreement dated as of January 20, 1994, by and
among EDS, VLT and Holdings (the "Purchase Agreement").
4. EDS and Holdings Release VLT, AWI, VLC and UWS. EDS and
Holdings, on their own behalf and on behalf of all persons and entities
controlled by them, each hereby irrevocably and unconditionally releases,
acquits and discharges forever VLT, AWI, VLC AND UWS (and each of them) and each
of their respective directors, officers, professionals, agents, representatives,
assigns and affiliates (corporate or otherwise) from any and all Released
Claims, including, without limitation, all Released Claims based upon any right
or interest that arises from or relates in any way to the terms of the Master
Services Agreement, the Stockholders Agreement or the Purchase Agreement.
5. Dismissal of the Texas Lawsuit. Upon the execution and
delivery of this Release, the parties to the Texas Lawsuit shall, through their
respective attorneys of record, (a) file a joint motion to dismiss the Texas
Lawsuit in the form attached hereto as Exhibit A, and (b) cause to be entered in
the Texas Lawsuit an agreed order of dismissal in form attached hereto as
Exhibit B.
6. No Admission; Admissibility. Nothing contained in this
Release shall be deemed an admission of guilt or liability by or against any
party hereto. Neither this Release nor any of its terms shall be offered or
received in any action or proceeding or utilized in any manner whatsoever as an
admission or concession of liability or wrongdoing of any nature on the part of
the parties hereto. Nothing contained herein, however, shall prevent this
Release or any of its terms from being used, authorized, offered or received in
evidence at any proceeding to enforce any or all of the terms hereof.
7. Attorney's Fees. If any party to this Release breaches or
fails to honor any of the terms and conditions of this Release, then such party
shall pay reasonable attorneys' fees, costs and expenses incurred by any other
party or parties to this Release in the prosecution and enforcement of the terms
and conditions of this Release.
8. Governing Law. THIS RELEASE SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF DELAWARE AND FOR ALL PURPOSES SHALL
BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED WITHIN SAID STATE WITHOUT CONSIDERATION OF ANY
CONFLICTS OF LAW PROVISIONS THEREOF.
9. Headings. The headings contained in this Release are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Release.
▇-▇
▇▇
▇▇. Entire Agreement. This Release evidences the entire
understanding and agreement of the parties hereto relative to the matters
discussed herein. This Release supersedes any and all other agreements and
understandings, whether written or oral, relative to the matters discussed
herein.
11. Severability. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law. If any term, provision
covenant or restriction of this Release is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable efforts to find and employ a
valid, legal, nonvoid and enforceable alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
12. Assignment. This Release and the rights and obligations of
the parties hereunder shall not be assignable, in whole or in part, by any party
hereto without the written consent of the parties hereto except by operation of
law.
13. Binding Effect. This Release shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors, assigns, spouses, heirs and personal and legal
representatives.
14. Counterparts. This Release may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
15. Amendments and Waivers. No supplement, modification or
amendment of this Release shall be binding unless executed in writing by the
parties hereto. No waiver of any of the provisions of this Release shall be
deemed or shall constitute a waiver of any other provision hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
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56
IN WITNESS WHEREOF, the parties hereto have caused this
Release to be executed as of the date first above written.
ELECTRONIC DATA SYSTEMS
CORPORATION
By:
Name:
Title:
EDS VLT HOLDINGS, INC.
By:
Name:
Title:
VIDEO LOTTERY TECHNOLOGIES, INC.
By:
Name:
Title:
AUTOMATED WAGERING
INTERNATIONAL, INC.
By:
Name:
Title:
VIDEO LOTTERY CONSULTANTS, INC.
By:
Name:
Title:
E-5
57
UNITED WAGERING SYSTEMS, INC.
By:
Name:
Title:
E-6
58
EXHIBIT A TO
RELEASE
NO. ▇▇▇-▇▇▇-▇▇
ELECTRONIC DATA SYSTEMS ) IN THE DISTRICT COURT
CORPORATION, )
)
Plaintiff, )
)
VS. ) COLLIN COUNTY, TEXAS
)
VIDEO LOTTERY TECHNOLOGIES, )
INC. and AUTOMATED WAGERING )
INTERNATIONAL, INC., )
)
Defendants. ) 366TH JUDICIAL DISTRICT
JOINT MOTION TO DISMISS
TO THE HONORABLE JUDGE OF SAID COURT:
Plaintiff Electronic Data Systems Corporation and Defendants
Video Lottery Technologies, Inc. and Automated Wagering International, Inc., all
of the parties herein, file this Joint Motion to Dismiss, and in support thereof
would respectfully show as follows:
I.
The parties to this action have recently compromised and
settled all matters in dispute between them. Accordingly, the parties no longer
desire to prosecute their respective claims or causes of action asserted herein
and hereby move that this case be dismissed in its entirety with prejudice to
the future refilling of same.
WHEREFORE, PREMISES CONSIDERED, Plaintiff Electronic Data
Systems Corporation and Defendants Video Lottery Technologies, Inc. and
Automated Wagering
▇-▇-▇
▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, Inc. move that this case be dismissed in its entirety with
prejudice and request that the Court enter the Agreed Order accompanying this
motion which would effectuate such dismissal.
Respectfully submitted,
FIGARI & ▇▇▇▇▇▇▇▇▇, L.L.P.
By:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
State Bar No. 12481600
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
State Bar No. 22204050
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (telecopy)
ATTORNEYS FOR DEFENDANTS VIDEO
LOTTERY TECHNOLOGIES, INC.
AND AUTOMATED WAGERING
INTERNATIONAL, INC.
▇-▇-▇
▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.
By:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
State Bar No. 00784524
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (telecopy)
ATTORNEYS FOR PLAINTIFF
ELECTRONIC DATA SYSTEMS
CORPORATION
▇-▇-▇
▇▇
▇▇▇▇▇▇▇▇▇▇▇ OF SERVICE
I hereby certify that a true and correct copy of the foregoing
instrument has been sent via certified mail, return receipt requested, to ▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, on this ____ day of __________, 1997.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇-▇-▇
▇▇
▇▇▇▇▇▇▇ ▇ TO
RELEASE
No. ▇▇▇-▇▇▇-▇▇
ELECTRONIC DATA SYSTEMS ) IN THE DISTRICT COURT
CORPORATION, )
)
Plaintiff, )
)
VS. ) COLLIN COUNTY, TEXAS
)
VIDEO LOTTERY TECHNOLOGIES, )
INC. and AUTOMATED WAGERING )
INTERNATIONAL, INC., )
)
Defendants. ) 366TH JUDICIAL DISTRICT
AGREED FINAL ORDER OF DISMISSAL
Came on to be considered the Joint Motion to Dismiss filed
herein by Plaintiff Electronic Data Systems Corporation and Defendants Video
Lottery Technologies, Inc. and Automated Wagering International, Inc., all of
the parties herein, and the Court, having been advised that all parties have
settled and compromised all matters in dispute of dismissal should be entered.
It is therefore,
ORDERED, ADJUDGED, AND DECREED that all claims asserted by the
parties herein are dismissed with prejudice to the refiling of same; it is
further
ORDERED, ADJUDGED, AND DECREED that all costs incurred herein
are hereby taxed against the party incurring same.
E-B-1
63
SIGNED this _______ day of ____________________, 1997.
JUDGE PRESIDING
ACCEPTED AND AGREED TO:
FIGARI & ▇▇▇▇▇▇▇▇▇, L.L.P.
By:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
State Bar No. 12481600
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
State Bar No. 22204050
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (telecopy)
ATTORNEYS FOR DEFENDANTS VIDEO
LOTTERY TECHNOLOGIES, INC.
AND AUTOMATED WAGERING
INTERNATIONAL, INC.
▇▇▇▇▇▇ ▇▇▇▇▇, P.C.
By:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
State Bar No. 00784524
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (telecopy)
ATTORNEYS FOR PLAINTIFF
ELECTRONIC DATA SYSTEMS
CORPORATION
E-B-2
64
EXHIBIT F
PLEDGED STOCK AGREEMENT
THIS PLEDGED STOCK AGREEMENT (this "Agreement") is made and
entered into as of January 30, 1997, by and among Electronic Data Systems
Corporation, a Delaware corporation ("EDS"), and Video Lottery Technologies,
Inc., a Delaware corporation ("VLT").
RECITALS
WHEREAS, EDS, VLT, EDS VLT Holdings, Inc., a Nevada
corporation and wholly owned subsidiary of EDS ("Holdings"), Automated Wagering
International, Inc., a Delaware corporation ("AWI"), Video Lottery Consultants,
Inc., a Montana corporation, and United Wagering Systems, Inc., have entered
into that certain Master Settlement Agreement, dated as of January 30, 1997 (the
"Master Agreement");
WHEREAS, pursuant to the Master Agreement and a certain
Security Agreement, Pledge and Assignment: Equipment, Inventory, Securities and
Intellectual Property, dated as of January 30, 1997 (the "Security Agreement"),
VLT is pledging to EDS (i) 545,454 shares of common stock, par value $.01 per
share ("VLT Common Stock"), of VLT (the "Common Shares") and (ii) 1,912,728
shares of Series A Junior Preferred Stock, par value $.01 per share ("VLT Series
A Preferred Stock"), of VLT (the "Preferred Shares;" collectively, those Common
Shares and Preferred Shares subject to the Security Agreement, as may be
adjusted from time to time pursuant to Section 2 hereof, are referred to as the
"Pledged Shares"), all of which shares have been indorsed and delivered by
Holdings to VLT, have become treasury stock of VLT and have been reindorsed,
delivered and pledged by VLT to EDS as collateral for purposes of securing VLT's
obligations under that certain Promissory Note, dated as of January 30, 1996
(the "Note"), executed by VLT and AWI in favor of EDS; and
WHEREAS, the Master Agreement provides for, among other
things, the parties to enter into this Agreement to protect certain rights of
EDS in the Pledged Shares until all of the obligations of VLT and AWI under the
Note have been fully performed and discharged;
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing premises,
the mutual agreements contained in this Agreement and other consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties to this
Agreement hereby agree as follows:
F-1
65
1. Registration Rights. In the event that EDS forecloses on
the Pledged Shares pursuant to the terms of the Security Agreement, the
following registration and related rights shall become applicable:
(a) Demand Registration Rights. At any time there has
not been an offering of any Common Shares registered under the
Securities Act of 1933, as amended (the "1933 Act"), during the
immediately preceding 90 days, upon written request by EDS, VLT will
prepare and file with the Securities and Exchange Commission (the
"Commission") as promptly as reasonably practicable (and in any event
within 45 days after receiving such request) a registration statement
under the 1933 Act covering the Common Shares owned or hereafter
acquired by EDS (by conversion of the Preferred Shares or
otherwise)(all such Common Shares being referred to as the "Subject
Securities") included in such request, and VLT shall use its best
efforts to cause such registration statement to become effective as
expeditiously as practicable; provided, however, that VLT shall not be
obligated to file more than one registration statement pursuant to this
Section 1 during any six month period. Any request by EDS pursuant to
this Section 1 may cover Subject Securities which are owned by EDS, any
of its affiliates, or any transferee of Subject Securities derived
ultimately from EDS or its affiliates who received Subject Securities
in a transaction or series of transactions, all of which were effected
without registration under the 1933 Act (any such affiliate or
transferee being referred to as a "Covered Transferee"). Such request
shall: (i) express EDS' or other person's present intent to offer
Subject Securities for distribution; (ii) describe in reasonable detail
the nature or method of the proposed offer and sale thereof; (iii)
specify the type and amount of Subject Securities intended to be
offered and sold; and (iv) contain an undertaking to furnish all such
information and materials and take all such action as may be required
in order to permit VLT to comply with all applicable requirements of
the Commission and to obtain acceleration of the effective date of the
registration statement. EDS shall be entitled to two requests for
registration pursuant to this Section 1(a). VLT's obligations under
this section shall be subject to any contractual right, in existence as
of the date hereof, of other stockholders not party to this Agreement
to have their Common Shares included in a registration statement
prepared by VLT. VLT represents and warrants that such contractual
rights consist only of those rights held by the group of investors
headed by ▇▇▇▇▇▇▇ ▇▇▇▇▇ and those lenders that are a party to that
certain Credit Agreement of even date herewith among VLT, First Bank
and the bank parties thereto.
(b) Other Registration. If VLT shall at any time
propose to file a registration statement (on its own behalf or on
behalf of any selling stockholders) under the 1933 Act for an offering
of shares of its capital stock (or securities convertible into or
representing the right to purchase or otherwise acquire such capital
stock) for cash, VLT shall give written notice as promptly as
practicable of such registration statement to EDS and will use all
reasonable efforts to include such Subject Securities owned by EDS or
Covered Transferees in such offering as EDS shall request within 20
days after receipt of such notice from VLT; provided, however, that VLT
shall not be required to include such
F-2
66
Subject Securities in any such registration statement if it relates
solely to capital stock to be issued pursuant to a stock option or
other employee benefit plan, an exchange offer, a merger or
consolidation with another corporation or an acquisition of assets. EDS
shall have the right to demand inclusion of Subject Securities pursuant
to this Section 1(b) two times; provided, that if an offering is not
completed or if EDS withdraws from the offering after being advised by
VLT's investment bankers that a reduction in the number of Subject
Securities that EDS requested be included in the offering is reasonably
necessary (as provided in Section 1(e)), then a demand for inclusion in
such offering shall not be counted as a demand permitted by this
Section 1(b). VLT's obligations under this Section 1(b) shall be
subject to any contractual right, in existence as of the date hereof,
of other stockholders not party to this Agreement to have their Common
Shares included in a registration statement prepared by VLT.
(c) Expenses. VLT shall pay all out-of-pocket
expenses (other than underwriting discounts and fees and the fees and
expenses of the counsel and accountants of EDS and Covered
Transferees), incurred in connection with the registration statements
requested pursuant to Section 1(a), which expenses shall include,
without limitation, all Commission and blue sky registration and filing
fees, printing expenses, fees and disbursements of legal counsel and
accountants for VLT (including fees in connection with any special
audits required solely in connection with such registration) and blue
sky counsel, transfer agents' and registrars' fees, and fees and
disbursements of experts used by VLT in connection with such
registration. In connection with any registration pursuant to Section
1(b), EDS and any other holder of Subject Securities whose securities
are included in such registration statement shall pay all Commission
and blue sky registration and filing fees and underwriting discounts,
commissions and expenses (in each case insofar as they are attributable
to Common Shares being sold by EDS or Covered Transferee whose Common
Shares are included in such registration statement) and fees and
disbursements of EDS' and such Covered Transferee's counsel and
accountants (if EDS or such Covered Transferees retain counsel or
accountants separately from VLT). VLT will pay all other expenses of
the offering, including without limitation Commission and blue sky
registration and filing fees and underwriting discounts, commissions
and expenses (in each case other than those attributable to Subject
Securities being sold by EDS or other holder of Subject Securities
whose securities are included in such registration statement), printing
expenses, fees and disbursements of legal counsel and accountants for
VLT and blue sky counsel, transfer agents' and registrars' fees, fees
and disbursements of experts used by VLT in connection with such
registration, expenses of any special audits of VLT incidental to or
required by such registration, and expenses incidental to any
post-effective amendment to any such registration statement.
(d) VLT's Obligations in Connection with Registrations. In
connection with any registration by VLT pursuant to this Section 1, VLT
shall:
F-3
67
(a) Use its best efforts to prepare and file
with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration
statement effective, remain current and otherwise to comply
with the provisions of the 1933 Act with respect to the
disposition of all Subject Securities covered by such
registration statement for the period required to effect the
distribution of such securities, but in no event shall VLT be
required to do so for a period of more than 90 days following
the effective date of such registration statement; provided,
however, that if VLT is eligible to use a registration
statement on Form S-3 (or any successor form), then EDS may
request VLT to keep such registration statement effective for
a period of up to 180 days following the effective date of
such registration statement.
(b) Furnish to EDS, any other holder of
Subject Securities covered by such registration statement, and
any underwriter such number of copies of a summary prospectus
or other prospectus, including a preliminary prospectus, in
conformity with the requirements of the 1933 Act, and such
other documents as EDS or such other holder may reasonably
request in order to facilitate the offering and sale of their
Subject Securities, but only while VLT is required under the
provisions hereof to cause the registration statement to
remain current.
(c) Use its best efforts to register or
qualify the Subject Securities covered by such registration
statement under such other securities or blue sky laws of such
jurisdictions in the United States as EDS or its managing
underwriter shall request, and do any and all other acts and
things which may be reasonably necessary or advisable to
enable EDS and each other holder of Subject Securities covered
by such registration statement to consummate the disposition
in such jurisdiction of the Subject Securities owned by them;
provided, however, that VLT shall in no event be required to
qualify to do business as a foreign corporation or as a dealer
in any jurisdiction where it is not so qualified, to conform
the composition of its assets at the time to the securities or
blue sky laws of such jurisdiction, to execute or file any
general consent to service of process in suits other than
those arising out of the offer and sale of the Subject
Securities covered by such registration statement or to
subject itself to taxation in any jurisdiction where it has
not theretofore done so.
(d) To the extent not specifically deemed
improper under any statement or Auditing Procedure issued by
the American Institute of Certified Public Accountants, Inc.,
or any successor to such organization, obtain and deliver a
"comfort" letter from VLT's independent public accountants in
customary form and covering such matters of the type
customarily covered by "comfort" letters in connection with
public offerings of securities as EDS shall reasonably
request, dated within five days of the date of effectiveness
of the registration statement or post-effective amendment or
supplements, as the case may be, addressed to EDS, such
F-4
68
other holders of Subject Securities covered by such
registration statement, amendment or supplement, and any
underwriter.
(e) Deliver an opinion of counsel for VLT,
dated the effective date of such registration statement or any
post-effective amendment or supplement thereto, addressed to
EDS and any underwriter, in the form usual and customary in
connection with secondary public offerings of securities.
(e) Limitations, Conditions and Qualifications of VLT
Under Registration Rights. The obligations of VLT to use all reasonable
efforts to cause Subject Securities to be registered under the 1933 Act
are subject to the following limitations:
(a) VLT shall be entitled to postpone for a
reasonable period of time not to exceed 90 days from the date
it receives the written request of EDS pursuant to Section 1
of this Agreement the filing of any registration statement
otherwise required to be prepared and filed by it pursuant to
Section 1(a) of this Agreement, if at the time it receives a
request for registration pursuant to such Section VLT
determines, in its reasonable judgment, that such registration
and offering would adversely affect or interfere with any
financing, acquisition, corporate reorganization or other
material transaction involving VLT and as promptly as
practicable gives EDS written notice of such determination. If
VLT shall so postpone the filing of a registration statement
EDS shall within 60 days after receipt of the notice of
postponement advise VLT in writing whether or not it has
determined to withdraw its request for registration, and, in
the event of a withdrawal, neither EDS nor any other holder of
Subject Securities shall be required to pay any out-of-pocket
expenses incurred by VLT in connection with such registration
statement and such request for registration shall not be
counted for purposes of determining the number of requests for
registration to which EDS are entitled pursuant to Section
1(a). Failure by EDS to timely notify VLT of its determination
shall for all purposes be treated as a withdrawal of its
request for registration. In the event that EDS does not
withdraw its request for registration, VLT shall be obligated
to file a registration statement by the later of (i) the date
to which VLT determined to postpone the filing of such
registration statement and (ii) 45 days after the date on
which EDS advises VLT that it has determined not to withdraw
its request for registration, less the number of days that had
elapsed from the date EDS requested registration and the date
VLT advised EDS that it had determined to postpone the filing
of the registration statement.
(b) VLT may, at its option, require that the
amount of Subject Securities offered for sale by EDS, its
affiliates and the Covered Transferees pursuant to a request
for registration under Section 1(b) hereof be decreased if, in
the written opinion of VLT's investment banking firm, such
reduction is reasonably necessary in order to permit the
orderly distribution and sale of the securities being
F-5
69
offered by VLT; provided, however, that the amount of Subject
Securities or other securities of VLT, if any, offered for
sale pursuant to such registration by any other sellers (other
than VLT) shall be reduced proportionately; and provided,
further, that if the total price to the public of the
securities being offered by VLT is at least $50 million and
the offering price of Common Shares is at least $29 per share,
then EDS shall not be required to reduce the amount of Subject
Securities to be sold in such offering by EDS to less than 20%
of the aggregate amount of Subject Securities being offered to
the public. If VLT shall require such a reduction, any
participant in such registration shall have the right to
withdraw from the offering.
(c) If EDS requests registration pursuant to
Section 1(a) hereof, if requested by EDS, VLT shall enter into
an underwriting agreement containing representations,
warranties and agreements not substantially different from
those customarily included by an issuer in underwriting
agreements with respect to secondary distributions; provided,
however, that VLT shall not be obligated to enter into an
agreement with respect to indemnification of the underwriters
different in any material respect from that set forth in
Section 1(f)(i).
(d) VLT shall not be obligated to prepare
and file a registration statement otherwise required pursuant
to Section 1(a) or to include Subject Securities owned by EDS
or Covered Transferees in a registration statement pursuant to
Section 1(b), if counsel to VLT, reasonably satisfactory to
EDS, delivers an opinion addressed to EDS or a Covered
Transferee, in form reasonably satisfactory to EDS or such
Covered Transferee, stating that a sale, transfer or other
disposition of all such Subject Securities without
registration under the 1933 Act will comply in all respects
with the 1933 Act and the rules promulgated thereunder (by
reason of the ability to sell all such Subject Securities
within a three-month period in accordance with Rule 144 or
otherwise). In such event, the request for registration shall
not be counted for purposes of determining the number of
requests for registration to which EDS is entitled pursuant to
Section 1(a).
(f) Indemnification.
(a) By VLT. In the case of each registration
effected by VLT pursuant to this Section 1, VLT will indemnify
and hold harmless EDS and any Covered Transferee whose Subject
Securities are included in such registration statement (for
the purpose of this Section, EDS and such Covered Transferees
shall be referred to individually as a "Seller" and
collectively as "Seller"), any underwriter and each other
person, if any, who controls such Seller or underwriter within
the meaning of the 1933 Act, against any losses, claims,
damages or liabilities (or actions in respect thereof) which
arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in such
registration statement or final or summary prospectus
contained therein (if used
F-6
70
during the period VLT is required to keep the registration
statement effective), or any amendment or supplement thereto,
or which arise out of or are based upon the omission or
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements made
therein not misleading, and will reimburse each such Seller,
underwriter and controlling person for any legal or any other
expenses reasonably incurred by them in connection with
investigating or defending any such action or claim, excluding
any amounts paid in settlement of any litigation, commenced or
threatened, if such settlement is effected without the prior
written consent of VLT; provided, however, that VLT will not
be liable to a particular Seller or underwriter in any such
case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue
statement or omission or alleged omission made in said
registration statement or said final or summary prospectus or
any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to VLT by that
Seller or its affiliates, or by that underwriter, as the case
may be, specifically for use in the preparation thereof.
(b) By Sellers. In the case of each such
registration, each Seller shall indemnify and hold harmless
VLT, each of its directors, each of its officers who have
signed such registration statement, any underwriter and each
other person, if any, who controls VLT or underwriter within
the meaning of the 1933 Act, against any losses, claims,
damages or liabilities, joint or several, to which VLT or any
such director, officer, underwriter or controlling person may
become subject under the 1933 Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of, or are based upon, any untrue
statement or alleged untrue statement of any material fact
contained in such registration statement or final or summary
prospectus contained therein, or any amendment or supplement
thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements made
therein not misleading, and will reimburse VLT, each such
director, officer, underwriter and controlling person for any
legal or other expenses reasonably incurred by them in
connection with investigating or defending any such action or
claim, excluding any amounts paid in settlement of any
litigation, commenced or threatened, if such settlement is
effected without the prior written consent of the Seller; but
in all such cases only if, and to the extent that, any such
loss, claim, damage, liability or expense arises out of or is
based upon an untrue statement or alleged untrue statement or
omission or alleged omission therein made in reliance upon and
in conformity with written information furnished to VLT by the
Seller or its affiliates specifically for use in the
preparation thereon.
(c) Actions Commenced. Promptly after
receipt by an indemnified party under Sections 1(f)(i) or
1(f)(ii) of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be
made
F-7
71
against the indemnifying party, notify the indemnifying party
in writing of the commencement thereof. If any such action is
brought against the indemnified party and it shall so notify
the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in, and,
to the extent that it so chooses, to assume the defense
thereof with counsel reasonably satisfactory to such
indemnified party, and, after notice from the indemnifying
party to such indemnified party that it so chooses, such
indemnifying party shall not be liable for expenses of defense
incurred by such indemnified party in connection with the
defense thereof; provided, however, that if the indemnifying
party fails to take reasonable steps necessary to diligently
defend such claim within 20 days after receiving notice from
the indemnified party that the indemnified party believes the
indemnifying party has failed to take such steps, the
indemnifying party shall be liable for any expenses therefor.
The indemnity agreements in this Section 1(f) shall be in
addition to any liabilities which the indemnifying parties may
have pursuant to law.
2. Adjustments. In the event that, at any time prior to the
full performance and discharge by VLT and AWI of their respective obligations
under the Note and the release by EDS of the Pledged Shares as security
thereunder, VLT shall (i) declare any dividend or other distribution on any VLT
Common Stock payable in shares of VLT Common Stock, (ii) subdivide the
outstanding VLT Common Stock, or (iii) cause any other recapitalization that
results in the issuance of additional shares of VLT Common Stock without
consideration paid by the recipients thereof, then in each such case (A) the
number of Preferred Shares constituting the Pledged Shares shall be increased as
appropriate, in accordance with the terms of the certificate of designations of
the VLT Series A Preferred Stock as though such Preferred Shares were
outstanding at the time of such dividend, distribution, subdivision or other
recapitalization and (B) the number of Common Shares constituting the Pledged
Shares shall be increased as appropriate, as though such Common Shares were
outstanding at the time of such dividend, distribution, subdivision or other
recapitalization and entitled to like treatment. Any additional Common Shares or
Preferred Shares issued as a result of the immediately preceding sentence shall,
upon issuance, be deemed to be Pledged Shares and shall be deposited with EDS in
accordance with the Security Agreement. Except as provided in this Agreement,
VLT shall not cause or permit any change in the number of Preferred Shares
outstanding or in the number of Preferred Shares that constitute the Pledged
Shares. In the event that securities of other classes are distributed to holders
of Common Shares or Preferred Shares, such number of such additional securities
shall be pledged in an amount equal to that which would have been distributed in
respect of the Pledged Shares had the Pledged Shares been at such time
outstanding.
3. Additional Rights. In the event that, at any time prior to
the full performance and discharge by VLT and AWI of their respective
obligations under the Note and the release by EDS of the Pledged Shares as
security thereunder, VLT shall offer any interest in shares of VLT Common Stock
(by sale or grant of shares, rights, options or warrants or otherwise) to
stockholders of VLT, EDS shall have the right to participate proportionately in
such offer together with such stockholders as though EDS owned the Pledged
Shares immediately prior to such offer.
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4. Negative Covenants. Until the full performance and
discharge by VLT and AWI of their respective obligations under the Note and the
release by EDS of the Pledged Shares as security thereunder, without the prior
written consent of EDS, VLT shall not (i) cause or allow the number of Preferred
Shares or Common Shares held in treasury and pledged pursuant to the Security
Agreement to be decreased (whether through retirement, reissuance or otherwise)
to a number of shares that is less than the number of such shares constituting
the Pledged Shares; (ii) cause, through amendment, by merger or otherwise, any
amendment or modification of the provisions of the certificate of incorporation
of VLT (including, without limitation, the certificate of designations relating
to the VLT Series A Preferred Stock) that would alter or change the
designations, powers, preferences or special rights of the Preferred Shares to
affect them adversely; (iii) repurchase or redeem any of the issued and
outstanding capital stock of VLT; or (iv) declare or pay any dividend or
distribution in cash or other property (other than shares of VLT Common Stock or
VLT Series A Preferred Stock, which is addressed by Section 2) on any of the
capital stock of VLT. Notwithstanding the limitations of clause (iii) of the
preceding sentence, prior to an Event of Default under the Note, VLT may
repurchase issued and outstanding capital stock of VLT (i) in amounts necessary
to fulfill its current year obligations under its qualified employee stock
purchase plan and (ii) for aggregate consideration, during the term of the Note,
not to exceed $5,000,000, provided that, in the case of this clause (ii), the
Note is prepaid at the time of any such repurchase in an amount equal to 50% of
the consideration expended in connection with such repurchase.
5. Cooperation. Each of the parties to this Agreement shall
use commercially reasonable efforts to assist each of the other parties in
connection with any governmental or other consents or filings which may be
required concerning this Agreement and with the timely implementation of any of
the transactions arising out of or contemplated by this Agreement.
6. Further Assurances. Each of the parties agrees to execute
and deliver such further documents and instruments and take all such further
action as may be necessary to consummate the transactions contemplated hereby.
7. Expenses. Except as otherwise explicitly stated herein, all
costs and expenses incurred in connection with the transactions contemplated by
this Agreement shall be paid by the party incurring such costs or expenses.
8. Notice. Whenever any notice is required or permitted
hereunder, such notice must be in writing and either (i) personally delivered,
(ii) mailed by certified mail (return receipt requested), or (iii) delivered by
recognized next-day courier. Any notice required or permitted to be delivered
hereunder will be deemed to be delivered (i) if personally delivered, on the
date that it is actually delivered, (ii) if mailed, whether actually received or
not, on the third business day after it is deposited in the United States mail
addressed to the person who is to receive it at the address that such person has
theretofore specified by written notice delivered in accordance herewith, or
(iii) if delivered by courier, on the date it is actually delivered. Any party
may change, at any time and from time to time, by written notice to the other
parties, the address that
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it or he had previously specified for receiving notices. Until changed in
accordance herewith, the parties specify their respective addresses as set forth
below:
VLT:
Video Lottery Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
with copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
EDS:
Electronic Data Systems Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
with copy to:
▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
9. Amendment. Notwithstanding any other provision hereof, this
Agreement may not be supplemented or amended from time to time without the prior
written consent of each of the parties hereto.
10. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware,
without regard to any conflicts of laws principles that would require the
application of the laws of any other jurisdiction.
11. Binding Effect. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by the successors and permitted
assigns of the parties hereto. Nothing expressed or referred to in this
Agreement is intended or shall be construed to give any person other
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74
than the parties to this Agreement, or their respective successors or permitted
assigns, any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision contained herein. EDS' rights hereunder may be
assigned by EDS or its successors or assigns, without the requirement of consent
of VLT.
12. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof.
13. Severability. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law. If any term, provision
covenant or restriction of this Release is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable efforts to find and employ a
valid, legal, nonvoid and enforceable alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
14. Specific Performance. The parties hereto acknowledge that
damages would be an inadequate remedy for breach of this Agreement and that the
obligations of the parties hereto shall be specifically enforceable.
15. Headings. The headings in this Agreement are for purposes
of convenience of reference only and shall not be deemed to affect the
interpretation of any provision hereof.
16. Counterparts. This Agreement may be executed in multiple
counterparts. The parties may sign any number of copies of this Agreement. Each
signed copy shall be an original, but all of them together represent the same
agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
ELECTRONIC DATA SYSTEMS
CORPORATION
By:
Name:
Title:
VIDEO LOTTERY TECHNOLOGIES, INC.
By:
Name:
Title:
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EXHIBIT G
REIMBURSEMENT AGREEMENT
This Reimbursement Agreement (this "Agreement") dated as of
January 30, 1997, is by and among Electronic Data Systems Corporation, a
Delaware corporation ("EDS"), Video Lottery Technologies, Inc., a Delaware
corporation ("VLT"), and Automated Wagering International, Inc., a Delaware
corporation and wholly owned subsidiary of VLT ("AWI").
WHEREAS, at the joint request of VLT and AWI, EDS has caused
PNC Bank, National Association ("Bank") to issue its letter of credit (as
extended or otherwise amended or supplemented from time to time, the "Letter of
Credit") in the amount of One Million Dollars U.S. ($1,000,000) in favor of
National Fire Insurance Company of Hartford and/or Continental Casualty Company
and/or American Casualty Company of Reading, PA and/or Fireman's Insurance
Company of Newark, NJ (the "Bond Issuer") to secure the payment and performance
of the obligations (the "Obligations") of VLT and AWI to the Bond Issuer to
indemnify the Bond Issuer for any payments it makes, and any costs and expenses
it incurs, under the performance bonds listed on Appendix I hereto (the
"Bonds").
WHEREAS, EDS is obligated to reimburse Bank for any drawing
made under the Letter of Credit; and
WHEREAS, in order to induce EDS to provide support for the
Obligations, VLT and AWI have entered into this Agreement;
NOW, THEREFORE, in consideration of the foregoing, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
REIMBURSEMENT AND OTHER PAYMENTS
Section 1.01. Reimbursement and Indemnity.
(a) VLT and AWI, jointly and severally, unconditionally and
irrevocably agree to pay to, and reimburse, EDS upon demand any amounts EDS has
agreed to reimburse, or has reimbursed, Bank for in connection with any drawing
made under the Letter of Credit, or any other amounts paid by EDS (including,
but not limited to, any expenses, costs or fees) in connection with the Letter
of Credit or any drawing made under the Letter of Credit.
(b) The reimbursement obligation of VLT and AWI hereunder
shall be unconditional and absolute notwithstanding, and EDS shall have no
liability, and AWI and VLT
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shall have no defense against its obligations hereunder, by reason of, (i) any
draft, certificate or other document presented under or in connection with the
Letter of Credit, including any instrument purporting to transfer or assign the
Letter of Credit or any rights thereunder, proving to be forged, fraudulent,
inaccurate, invalid or insufficient in any respect, (ii) the existence of any
claim, setoff or other rights which VLT, AWI or any of their affiliates may have
at any time against the beneficiary of the Letter of Credit or any of the Bonds,
EDS, the Bond Issuer, any of their respective affiliates or any other person,
whether arising under the Letter of Credit, the Bonds or any documents executed
in connection therewith, or otherwise, (iii) the failure of any drawing to
conform to the terms of the Letter of Credit, (iv) the misapplication of the
proceeds of any drawing under the Letter of Credit by the beneficiary or any
other person or (v) the illegality, invalidity or unenforceability of any act,
omission or circumstance that would, but for the provisions of this subsection
(b), constitute a legal or equitable discharge of any obligation of VLT or AWI
hereunder.
(c) VLT AND AWI JOINTLY AND SEVERALLY AGREE TO PROTECT,
INDEMNIFY AND HOLD HARMLESS EDS FROM AND AGAINST ALL CLAIMS, ACTIONS, SUITS AND
OTHER PROCEEDINGS, AND ALL LOSS, DAMAGES AND COSTS (INCLUDING FEES AND EXPENSES
OF COUNSEL) WHICH EDS MAY SUFFER OR INCUR BY REASON OF THIS AGREEMENT OR ANY ACT
OR OMISSION IN RESPECT OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, THOSE
SUFFERED OR INCURRED BY REASON OF NEGLIGENCE OF EDS, EXCEPT TO THE EXTENT
RESULTING FROM THE BAD FAITH OR WILLFUL MISCONDUCT OF EDS.
Section 1.02. Interest, Computations and Payments. (a) All
payments under this Agreement shall be payable in lawful money of the United
States of America and in immediately available funds. Any amount not paid within
two (2) business days of the date when due hereunder shall bear interest,
payable on demand, for each day until payment in full at a rate per annum equal
to the Maximum Lawful Rate (as defined herein). All computations of interest
hereunder shall be made on the basis of a year of 360 days, for the actual
number of days elapsed (including the first day but excluding the last day).
"Maximum Lawful Rate" means, as of a particular date, the maximum nonusurious
interest rate that may under applicable law then be contracted for, taken,
reserved, charged or received by EDS in connection with any amounts due and
owing hereunder, or if there is no such rate, 18% per annum.
(b) All payments under this Agreement will be payable to EDS
free and clear of any and all present and future taxes, levies, imposts, duties,
deductions, withholdings, fees, liabilities and similar charges other than those
imposed on the overall net income of EDS ("Taxes"). If any Taxes are required to
be withheld or deducted from any amount payable under this Agreement, then the
amount payable under this Agreement will be increased to the amount which, after
deduction from such increased amount of all Taxes required to be withheld or
deducted therefrom, will yield to EDS the amount stated to be payable under this
Agreement. If any of the Taxes specified in this subsection (b) are paid by EDS,
VLT and AWI will jointly and severally
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reimburse, upon demand of EDS, EDS for such payments, together with any interest
and penalties which may be imposed by the governmental agency or taxing
authority.
(c) Upon the request of EDS, VLT and AWI shall execute and
deliver a demand promissory note evidencing the joint and several obligation of
VLT and AWI to pay to the order of EDS any amounts payable hereunder. VLT and
AWI shall execute and deliver to EDS any agreements or other documentation
reasonably requested by EDS to create and perfect a security interest in favor
of EDS with respect to the collateral securing that certain Secured Promissory
Note dated January 30, 1997 in the aggregate principal amount of $27,000,000
executed by VLT and AWI and payable to the order of EDS.
ARTICLE II
MISCELLANEOUS
Section 2.01. Amendments and Waivers. No failure or delay on
the part of EDS in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power preclude any other or further exercise thereof or the exercise of any
other right or power hereunder. No amendment or waiver of any provision of this
Agreement nor consent to any departure by VLT and AWI herefrom shall in any
event be effective unless the same shall be in writing and signed by EDS, VLT
and AWI, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No notice to or demand on
VLT or AWI in any case shall, of itself, entitle VLT or AWI to any other or
further notice or demand in similar or other circumstances.
Section 2.02. Notices. Whenever any notice is required or
permitted hereunder, such notice must be in writing and either (i) personally
delivered, (ii) mailed by certified mail (return receipt requested), or (iii)
delivered by recognized next-day courier. Any notice required or permitted to be
delivered hereunder will be deemed to be delivered (i) if personally delivered,
on the date that it is actually delivered, (ii) if mailed, whether actually
received or not, on the fifth business day after it is deposited in the United
States mail addressed to the person who is to receive it at the address that
such person has theretofore specified by written notice delivered in accordance
herewith, or (iii) if delivered by courier, on the date it is actually
delivered. Any party may change, at any time and from time to time, by written
notice to the other parties, the address that it or he had previously specified
for receiving notices. Until changed in accordance herewith, the parties specify
their respective addresses as set forth below:
VLT and AWI:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
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with copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
2700 ▇▇▇▇ Tower
Atlanta, Georgia
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
EDS:
Electronic Data Systems Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
with copy to:
▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Section 2.03. Successors and Assigns. This Agreement shall
inure to the benefit of, and shall be enforceable by, EDS and its successors and
assigns.
Section 2.04. COSTS, EXPENSES AND TAXES. VLT AND AWI JOINTLY
AND SEVERALLY AGREE TO PAY ON DEMAND ALL COSTS AND EXPENSES OF EDS, INCLUDING
REASONABLE FEES AND EXPENSES OF COUNSEL, IN CONNECTION WITH THE ENFORCEMENT
AGAINST IT OF THIS AGREEMENT AND THE PROTECTION OF EDS' RIGHTS HEREUNDER,
INCLUDING ANY BANKRUPTCY, INSOLVENCY AND OTHER ENFORCEMENT PROCEEDINGS WITH
RESPECT TO VLT OR AWI. IN ADDITION, VLT AND AWI SHALL JOINTLY AND SEVERALLY PAY
ANY AND ALL STAMP AND OTHER TAXES AND FEES PAYABLE OR DETERMINED TO BE PAYABLE
IN CONNECTION WITH THE EXECUTION, DELIVERY, FILING AND RECORDING OF THIS
AGREEMENT AND THE LETTER OF CREDIT, AND AGREES TO SAVE EDS HARMLESS FROM AND
AGAINST ANY AND ALL LIABILITIES WITH RESPECT TO OR RESULTING FROM ANY DELAY IN
PAYING OR OMISSION TO PAY SUCH TAXES AND FEES.
Section 2.05. Limitation on Interest. Nothing contained in
this Agreement or any other document executed in connection with this Agreement
is intended to require VLT or AWI to
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pay interest (including fees, charges or expenses or any other amounts which,
under applicable law, are deemed interest) for the account of EDS at a rate
exceeding the Maximum Lawful Rate.
Section 2.07. Governing Law.. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES);
Section 2.08. FINAL AGREEMENT. THIS REIMBURSEMENT AGREEMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 2.09. Counterparts. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if all signatures thereon were upon the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
VIDEO LOTTERY TECHNOLOGIES, INC.
By:
Name:
Title:
AUTOMATED WAGERING INTERNATIONAL, INC.
By:
Name:
Title:
ELECTRONIC DATA SYSTEMS CORPORATION
By:
Name:
Title:
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EXHIBIT H
TRANSITION AGREEMENT
THIS TRANSITION AGREEMENT (this "Agreement") is made and
entered into as of January 30, 1997, by and among Electronic Data Systems
Corporation, a Delaware corporation ("EDS"), Video Lottery Technologies, Inc., a
Delaware corporation ("VLT"), and Automated Wagering International, Inc., a
Delaware corporation ("AWI").
RECITALS
WHEREAS, pursuant to the terms of a certain Master Services
Agreement, dated as of January 20, 1994 (the "Master Services Agreement"), by
and between EDS and VLT, EDS was engaged by VLT to provide various services in
support of VLT's business of operating on-line lotteries and other games of
chance for various states and municipal governments;
WHEREAS, certain disputes arose with respect to the
performance of the parties under the Master Services Agreement;
WHEREAS, on June 28, 1996, EDS terminated the Master Services
Agreement as a result of such disputes;
WHEREAS, EDS is currently providing certain services
previously contemplated by the Master Services Agreement pursuant to a
week-to-week arrangement and a Limited Transition Agreement dated October 22,
1996, between VLT and EDS (collectively, the "Current Arrangements"); and
WHEREAS, the parties are, concurrently with the execution
hereof, entering into that certain Master Settlement Agreement (the "Master
Settlement Agreement") which provides, among other things, for the parties to
enter into this Agreement regarding the transition of responsibility for
services heretofore provided by EDS to VLT and AWI.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing premises,
the mutual agreements contained in this Agreement and other consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties to this
Agreement hereby agree as follows:
1. Termination of Current Arrangement. Effective January 1,
1997 (the "Effective Date"), the Current Arrangements will be superseded in all
respects and all matters regarding the provision of services by EDS to VLT, AWI
and their affiliates heretofore contemplated under the Master Services
Agreement, all authorization letters and any other
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authorizations thereunder and under the Current Arrangements (the services
provided under all such agreements, authorization letters, other authorizations
and arrangements being collectively referred to herein as the "Terminated
Services") shall be governed exclusively by the terms and provisions of this
Agreement. From and after the date hereof, except to the extent otherwise
specified herein, VLT and AWI shall have full direction and control with respect
to provision of the Terminated Services. Notwithstanding anything to the
contrary herein, VLT and AWI shall remain responsible to EDS for all outstanding
amounts due EDS under the Current Arrangements.
2. Term. The term of this Agreement shall be for the period
commencing as of the Effective Date and ending on (a) August 31, 1997 or (b)
such earlier date upon which this Agreement is terminated in accordance with the
provisions of Section 11 (the "Termination Date"); provided that Sections 8,
11(d), 13, 14 and 15 shall survive any termination of this Agreement and that
the last sentence of Section 5(a) shall survive for the specified period.
3. Coordinators. During the term of this Agreement, the
coordinator for the VLT and AWI transition team shall be ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and
the coordinator for the EDS transition team shall be ▇▇▇▇ ▇▇▇▇▇. Each party's
coordinator may be replaced at any time upon notice to the other party or
parties given in accordance with Section 12 hereto. The coordinators and the
General Counsel of EDS shall have monthly transition status conference calls at
a mutually selected time.
4. Transition Period Services. From the Effective Date through
April 15, 1997 (the "Transition Period"), (a) EDS shall provide the information
technology services set forth on Schedule A which generally consist of the
provision of personnel for systems maintenance and development,
telecommunications, computer operation and field service functions with respect
to AWI's on-line lottery contracts in existence as of the date hereof (the
"Schedule A Services") and (b) VLT and AWI will fulfill the obligations
specified as VLT and AWI obligations on Schedule A. EDS, VLT and AWI will
cooperate with each other in good faith to provide for the orderly transition of
the responsibility for the Schedule A Services to VLT and AWI as promptly as
practicable but in no event later than April 16, 1997. VLT and AWI acknowledge
and agree that EDS will not be responsible for any consequences arising from
VLT's and AWI's inability or failure to provide such Schedule A Services for
themselves from and after the Transition Period or to perform, in any respect,
such Services upon their transition from EDS to VLT and AWI pursuant to this
Agreement. If any Transfer Employees (as hereinafter defined) resign from
employment with EDS during the Transition Period, EDS shall nevertheless be
considered to have fulfilled its obligations under this Section, with respect to
the services provided by such Transfer Employees. EDS will provide VLT and AWI
with prompt notice of any applicable employee attrition.
5. Personnel.
(a) Transfer Employees. On or prior to March 14,
1997, VLT and AWI will offer employment opportunities, with
compensation and benefits comparable to current compensation and
benefits, to the persons listed on Schedule B (the "Transfer
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84
Employees"). Such offer of employment shall remain open for at least 14
days and such employment will be effective as of April 16, 1997. EDS
will terminate its employment of all Transfer Employees effective as of
the close of business on April 15, 1997. To the extent requested by VLT
and AWI, EDS will provide to VLT and AWI, on or prior to February 7,
1997, information regarding each Transfer Employee's compensation and
benefit packages since the later of (i) January 20, 1994 or (ii) such
Transfer Employee's hire date. In addition, EDS will provide VLT and
AWI with reasonable access to two EDS Transition Services personnel
during the Transition Period to address VLT's and AWI's questions
regarding the foregoing information. From the date hereof through
December 31, 1997, EDS shall not solicit, offer employment to, offer to
retain, or retain any Transfer Employee for post-Transition Period
employment.
(b) Post-Transition Services.
(i) External System Development Services.
VLT and AWI will notify EDS, in writing, prior to March 15,
1997, if VLT and AWI want EDS to continue providing the system
development services currently provided to VLT and AWI by EDS'
Development Center in Camp Hill, Pennsylvania (the "External
System Development Services") after April 15, 1997. As part of
the foregoing notice, VLT and AWI will specify the period of
such requested service, which shall in no event extend beyond
August 31, 1997.
(ii) Executive Management Services. If
requested by VLT and AWI by February 7, 1997, EDS will provide
EDS executive management consisting of ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇
▇▇▇▇▇, to the extent they remain EDS employees, to VLT and AWI
from the Effective Date through June 30, 1997, to fulfill, AWI
executive management positions (the "Executive Management
Services"). If either of Messrs. Beach and ▇▇▇▇▇ resigns from
employment with EDS, EDS shall nevertheless be considered to
have fulfilled its obligations under this Section. EDS will
provide VLT and AWI with prompt notice of any applicable
attrition.
(iii) Terminated Services and Schedule A
Services. From and after April 16, 1997 (the "Post-Transition
Period"), without exception, VLT and AWI shall have full
direction and control with respect to provision of the
Terminated Services and the Schedule A Services.
(c) EDS Position Information. For the period
commencing April 16, 1997, and ending on July 15, 1998, EDS shall make
available, at reasonable times and on a non-exclusive basis, a member
of its technical staffing group who will assist Transfer Employees who
were hired by VLT or AWI as of April 16, 1997, and who are either (i)
subsequently terminated without cause or (ii) otherwise released by VLT
or AWI, as the case may be, to seek employment with EDS, in determining
what EDS job openings there
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are, if any, for persons having comparable skills. EDS shall have no
obligation, whatsoever, to hire any of such persons.
6. Access to Premises. During the Transition Period, VLT and
AWI will continue to afford to EDS such prompt access to their personnel,
facilities and operational records as is reasonably necessary to provide the
Schedule A Services and to otherwise carry out the transition of the Schedule A
Services on a timely and effective basis.
7. Transfer of Assets. During the Transition Period, but in no
event later than the end of the Transition Period, EDS shall transfer to VLT and
AWI all of EDS' right, title and interest in and to each item of equipment
described in Schedule C (the "Transfer Equipment"), except: (a) to the extent
such transfer is legally or contractually prohibited, or (b) for unutilized
equipment representing an insubstantial portion of the equipment listed on
Schedule C which prior to the date hereto has either been transferred to other
EDS accounts or sold to third parties. To the extent that any assignment
requires the consent of a third party, EDS shall use commercially reasonable
efforts to obtain such consents, provided that in no event will EDS be
responsible for (and VLT and AWI will be responsible for) any costs and expenses
associated with obtaining such consents. VLT and AWI will pay all sales and
other transfer taxes associated with the assignment of the Transfer Equipment to
VLT and AWI. VLT and AWI take all of the Transfer Equipment subject to any
liability relating to such Transfer Equipment. VLT AND AWI ACKNOWLEDGE AND AGREE
THAT, EXCEPT AS SET FORTH HEREIN, NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, HAVE BEEN OR WILL BE MADE WITH RESPECT TO ANY OF THE TRANSFER
EQUIPMENT, INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATIONS OR WARRANTIES AS
TO THE MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ALL
SUCH REPRESENTATIONS AND WARRANTIES EXPRESSLY BEING DENIED BY EDS. VLT AND AWI
FURTHER ACKNOWLEDGE AND AGREE THAT THEY HAVE EXAMINED THE TRANSFER EQUIPMENT TO
THE EXTENT THEY DEEM NECESSARY OR APPROPRIATE AND HAVE AGREED TO ACCEPT THE
TRANSFER EQUIPMENT AT ITS PRESENT LOCATION AND IN ITS PRESENT CONDITION "AS IS."
EDS does hereby represent and warrant to VLT and AWI that the Transfer Equipment
represents all of the equipment, in addition to equipment supplied by VLT or
AWI, used by EDS in providing the Schedule A Services, except for such equipment
the failure of which to be included within the Transfer Equipment would not
reasonably be expected to have a material adverse effect on the ability of EDS
to perform the Schedule A Services.
8. Payments to EDS.
(a) During the Transition Period, EDS' fee for all
services performed shall be the EDS Costs (as defined and described in
Schedule D). VLT and AWI will make weekly payments to EDS in accordance
with the timetable and amounts set forth on Schedule D, such amounts
representing the estimated EDS Costs. On February 15, 1997 (with
respect to the month of January), March 15, 1997 (with respect to the
month of February), April 15, 1997 (with respect to the month of
March), and May 15, 1997 (with
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86
respect to that part of the Transition Period included in the month of
April), EDS will provide VLT a reconciliation of estimated EDS Costs to
actual EDS Costs. Whichever party is shown to owe the other party money
as a result of each such reconciliation shall pay such amount no later
than the close of business on the seventh day following delivery of
such reconciliation. All cash payments hereunder shall be made by wire
transfer of same day funds to an account specified either in Schedule D
or by the applicable party in a notice given to the other applicable
party or parties in accordance with Section 12 hereof. EDS may elect to
reduce subsequent payments due from VLT and AWI hereunder, in the order
in which they will be paid, in lieu of making a cash payment to VLT and
AWI. All past due amounts hereunder shall bear interest at the
Post-Default Rate (as defined in that certain Promissory Note, of even
date herewith, issued by VLT and AWI to EDS).
(b) During the Post-Transition Period:
(i) EDS will invoice VLT and AWI weekly in
arrears commencing on April 21, 1997, through the date
requested by VLT and AWI for the External System Development
Services provided by EDS. EDS' fee for such services will be
as set forth in Schedule D; and
(ii) EDS will invoice VLT and AWI weekly in
arrears commencing on April 21, 1997, through June 30, 1997,
for the provision of Executive Management Services provided by
EDS. EDS' fee for such services will be as set forth in
Schedule D.
All travel and other non-personnel costs and expenses paid by
EDS related to the Post-Transition Period services will be
invoiced by EDS on a weekly in arrears basis at EDS actual
cost and will be in addition to the weekly fees described in
(i) and (ii) above. All weekly invoices for EDS services
during the Post-Transition Period will be due and payable by
VLT and AWI seven calendar days after the date of delivery
thereof. All cash payments hereunder shall be made by wire
transfer of same day funds to an account specified either in
Schedule D or by the applicable party in a notice given to the
other applicable party or parties in accordance with Section
12 hereof. All past due amounts hereunder shall bear interest
at the Post-Default Rate.
(c) During the Transition Period and the
Post-Transition Period, unless VLT and AWI provide EDS with appropriate
exemption certificates, there will be added to any amounts due under
this Agreement, and VLT and AWI will promptly pay to EDS, or promptly
reimburse EDS for the payment of, amounts equal to any taxes, however
designated or levied, based upon (i) such amounts due, (ii) the gross
revenue, (iii) this Agreement or (iv) the services or items provided
pursuant to this Agreement, or their use, including in each case (A)
state and local sales, use, privilege or excise taxes, (B) service,
sales and use taxes and (C) any taxes or amounts in lieu thereof paid
or payable by EDS in
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respect of the foregoing, exclusive in each case, however, of EDS'
franchise taxes and taxes based upon the net worth or net income of
EDS.
9. Expenses. Except as otherwise explicitly stated in this
Agreement and the Schedules hereto, all costs and expenses incurred in
connection with the transactions contemplated by this Agreement shall be paid by
the party incurring such costs and expenses.
10. Representations and Warranties. Each party to this
Agreement hereby represents and warrants to the other party to this Agreement as
follows:
(a) Such party is validly incorporated and is in good
standing under the laws of the state in which it is organized, and is
duly authorized to transact business as a foreign corporation in each
state in which such authorization is required by its business or the
properties owned or leased by it.
(b) Such party has the requisite power and authority
to execute, deliver and carry out this Agreement, and has taken all
necessary action to authorize the execution, delivery and performance
of this Agreement and the transactions contemplated hereby.
(c) This Agreement has been duly and validly
authorized, executed and delivered by such party and constitutes a
valid and binding obligation of such party, enforceable in accordance
with its terms, except to the extent such enforcement may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws or equitable principles of general
application relating to or limiting creditors' rights.
(d) Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby
will conflict with or constitute a violation of or default under any
law, rule, regulation, order, judgment, decree, contract, commitment,
agreement, arrangement or restriction of any kind to which such party
is a party or by which such party or its property is bound.
(e) No authorization, approval or other action by,
and no notice to or filing with, any governmental authority or other
third party is required for the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
11. Termination of Agreement.
(a) Termination for Cause. Except as provided for in
subsection (b) below, if VLT or AWI, on the one hand, or EDS, on the
other hand, materially or repeatedly defaults in the performance of any
of its duties or obligations under this Agreement and the Schedules
hereto (except for a default in payments to EDS), which default shall
not be substantially cured within ten days after written notice is
given to the
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defaulting party (or parties) specifying the default, then the
nondefaulting party (or parties) may, by giving written notice thereof
to the defaulting party (or parties), terminate this Agreement as of a
future date specified in such notice of termination.
(b) Termination for Nonpayment. If VLT and AWI
default in the payment when due of any amount due to EDS hereunder,
then EDS may, by giving written notice thereof to VLT and AWI,
terminate this Agreement as of a future date specified in such notice
of termination.
(c) Termination for Bankruptcy. If any party is
declared bankrupt, is the subject of any proceedings relating to its
liquidation, insolvency or for the appointment of a receiver of similar
officer for such party, makes an assignment for the benefit of all or
substantially all of its creditors or enters into an agreement for the
composition, extension or readjustment of all or substantially all of
its obligations, the liquidator, trustee, receiver, conservator, new
owner, manager or other agent or representative of such party, subject
to applicable law, will have 60 days from the date of any initial
declaration, commencement of proceedings or such assignment or
agreement to notify the other party (or parties), subject to applicable
law, that it is terminating this Agreement as of a date within such
60-day period. If the other party (or parties) is not so notified, this
Agreement will not be terminated but will continue in full force and
effect on all of the terms and conditions stated in this Agreement.
(d) Rights upon Termination. Upon the expiration or
termination of this Agreement for any reason, VLT and AWI will promptly
pay EDS for all Schedule A Services provided through the effective date
of such expiration or termination, as such amount may be subsequently
reconciled pursuant to Section 8 (a) hereof.
12. Notices. Whenever any notice is required or permitted
hereunder, such notice must be in writing and either (i) personally delivered,
(ii) mailed by certified mail (return receipt requested) or (iii) delivered by
recognized next-day courier. Any notice required or permitted to be delivered
hereunder will be deemed to be delivered (i) if personally delivered, on the
date that it is actually delivered, (ii) if mailed, whether actually received or
not, on the fifth business day after it is deposited in the United States mail
addressed to the person who is to receive it at the address that such person has
theretofore specified by written notice delivered in accordance herewith or
(iii) if delivered by courier, on the date it is actually delivered. Any party
may change, at any time and from time to time, by written notice to the other
parties, the address that it had previously specified for receiving notices.
Until changed in accordance herewith, the parties specify their respective
addresses as set forth below:
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VLT OR AWI:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
with copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
EDS:
Electronic Data Systems Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
with copy to:
▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
13. Confidentiality and Noncompetition.
(a) Confidentiality. Except as otherwise expressly
provided herein, VLT, AWI and EDS acknowledge and agree that all
confidential information and trade secrets communication by any party
to the other parties, whether before or after the Effective Date, shall
be and were received in strict confidence and shall be used only for
the purposes of carrying out the provisions of this Agreement, and
where appropriate, the provisions of the other agreements executed in
connection with or otherwise contemplated under the Master Settlement
Agreement. The foregoing shall not prevent any party from disclosing
information that (i) is or becomes generally available to the public
other than as a result directly or indirectly of a disclosure by such
party or by other persons to whom such party disclosed such
information, (ii) is or becomes available to such party on a
non-confidential basis from a source other than the other party or its
representatives, provided that such source is not bound by a
confidentiality agreement with the other party, (iii) is or has been
independently developed by such party without use of the other party's
(or parties')
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confidential information or (iv) is required to be disclosed pursuant
to a requirement of a governmental agency or law, provided that the
disclosing party provides the other party (or parties) with notice of
such requirement prior to any such disclosure.
(b) Noncompetition. During the period commencing on
the date hereof and ending on the earlier of (i) December 31, 1998 or
(ii) an event of default under the Master Settlement Agreement or any
of the documents executed in connection therewith, EDS agrees that it
will not use the EDS personnel performing any of the Terminated
Services or the Schedule A Services to provide any information
technology services to any entity in support of such entity's on-line
lottery operations. In addition, EDS agrees not to solicit or hire
Transfer Employees who accept VLT's and AWI's offer of employment prior
to the earlier of (i) December 31, 1998, or (ii) an event of default
under the Master Settlement Agreement or any of the documents executed
in connection therewith; provided, however, that EDS will not be
precluded from hiring any such person who has been terminated by VLT or
AWI prior to commencement of employment discussions between such person
and EDS. VLT and AWI agree not to solicit any employees of EDS who are
not Transfer Employees, without the prior written consent of EDS,
during such period; provided, however, that VLT and AWI will not be
precluded from hiring any such person who has been terminated by EDS
prior to commencement of employment discussions between such person and
VLT and AWI.
(c) Injunctive Relief. Notwithstanding the
limitations of Section 14(b), the parties hereto acknowledge that the
payment of monetary damages would not fully redress the breach by any
party of Section 13(b) or the last sentence of Section 5(a) hereof.
Accordingly, any party shall be entitled to an injunction enjoining or
restraining another party from any violation of Section 13(b) or the
last sentence of Section 5(a) and each party hereby consents to the
issuance of such injunction.
14. Indemnities and Liabilities.
(a) Indemnities. VLT and AWI shall not be liable to
EDS for any damage to person or property caused by the acts of EDS or
its employees and EDS agrees to indemnify, defend and hold harmless VLT
and AWI from all claims for any such damage. EDS shall not be liable to
VLT or AWI for any damage to person or property caused by the acts of
VLT, AWI or their employees and VLT and AWI agree to indemnify, defend
and hold harmless EDS from all claims for such damage.
(b) Limitation of Liability. If EDS shall be liable
to VLT or AWI on account of EDS' performance or nonperformance of its
obligations under this Agreement (including, without limitation, in
connection with its obligations under Section 14(a), whether arising by
negligence or gross negligence, willful misconduct or otherwise), the
aggregate amount of all damages recoverable against EDS for all events,
acts or omissions, shall not exceed in the aggregate $1.0 million and
the measure of damages shall not include
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any amounts for (i) indirect or consequential damages, such as loss of
anticipated profits or other economic loss, (ii) punitive damages of
any party, including third parties or (iii) any damages that could have
been avoided had the data furnished by EDS been verified before
utilization thereof. In addition, neither VLT nor AWI may assert any
cause of action against EDS that accrued more than one year prior to
the filing of a suit alleging such cause of action. In connection with
the conduct of any litigation with third parties relating to any
liability of EDS to VLT, AWI or to such third parties, EDS shall have
all rights (including the right to accept or reject settlement offers
and to participate in any such litigation) that are appropriate with
respect to its potential responsibilities or liabilities.
(c) Additional Parties. For purposes of this Section
14 each reference to a party shall be deemed to be a reference to such
party and its subsidiaries, affiliates, directors, officers, employees,
assigns, agents and representatives.
(d) Transfer Employees; EDS Employees During Post
Transition Period. Notwithstanding anything herein to the contrary, EDS
shall not be liable to VLT or AWI (i) for any damages or costs arising
out of or in connection with the rejection by any Transfer Employee of
VLT's or AWI's offer of employment or any Transfer Employee attrition
or (ii) for any damages or costs to person or property caused by the
acts or omissions of either of Messrs. Beach or ▇▇▇▇▇ during the
Post-Transition Period. VLT and AWI agree to indemnify, defend and hold
harmless (with respect to attorneys' fees or otherwise) EDS from all
claims for such damages or costs.
(e) Exclusive Remedies. The remedies of a party
provided for in this Section 14 are exclusive of any other remedies
which would otherwise be available to such party at law or in equity.
15. Arbitration.
(a) Any dispute, controversy or claim that relates in
any way to this Agreement shall be determined and settled in accordance
with the Commercial Arbitration Rules of the American Arbitration
Association.
(b) The arbitration shall be heard by a panel of
three arbitrators, each of whom shall be experienced in the resolution
of disputes, controversies or claims relating to information technology
services. One such arbitrator shall be selected by EDS, one such
arbitrator shall be selected by VLT and AWI and one such arbitrator
shall be selected by the arbitrators selected by EDS, VLT and AWI.
Resolution of disputes, controversies or claims shall be determined by
a majority vote of the arbitration panel. The decision of and award
rendered by the arbitrators shall be final and binding on the parties.
(c) VLT and AWI consent to the nonexclusive venue of
the arbitration in either Dallas County or Collin County, Texas.
▇-▇▇
▇▇
(▇) VLT and AWI, on the one hand, and EDS, on the
other hand, shall bear equally all fees, costs and expenses of the
arbitration, and each party shall bear its own legal expenses,
attorneys' fees and costs of all experts and witnesses; provided,
however, if the claim of either party is upheld by the arbitration
panel in all material respects, then, subject to Section 14(b) hereof,
the arbitration panel may apportion between the parties as the
arbitration panel may deem equitable the costs incurred by the
prevailing party.
16. Software.
(a) Grant. VLT and AWI grant to EDS for the term of
this Agreement, without charge to EDS, the right to access or otherwise
use the VLT/AWI Software (hereinafter defined) in order to provide the
Schedule A Services. In addition, VLT and AWI will cause to continue in
force all consents necessary to permit EDS to access or operate any
VLT/AWI Vendor Software (hereinafter defined) required for EDS to
provide the Schedule A Services and will pay all costs and expenses
associated with obtaining and maintaining such consents. The term
"Software" means computer programs, together with input and output
formats, source and object codes, program listings, data models, flow
charts, outlines, narrative descriptions, operating instructions and
supporting documentation, and includes the tangible media upon which
such programs and documentation are recorded, including all authorized
reproductions, corrections, updates, new releases and new versions of
such programs. The term "VLT/AWI Software" shall mean any Software that
is owned by VLT or AWI (and not proprietary to any other party) and is
operated by or on behalf of VLT or AWI. The term "VLT/AWI Vendor
Software" means any Software that is proprietary to any party other
than VLT or AWI and is operated by or on behalf of VLT or AWI.
(b) Title. Subject to the lien thereon granted under
that certain Security Agreement, Pledge and Assignment: Equipment,
Inventory, Securities and Intellectual Property of even date herewith,
among EDS, AWI and VLT, all Software developed by EDS for VLT under the
Master Services Agreement, all authorization letters and any other
authorizations thereunder, the Current Arrangements and this Agreement
will be owned by VLT and AWI; provided that EDS (i) will retain all
right, title and interest in and to all software development tools,
know-how, methodologies, processes, technologies or algorithms used in
providing either the Terminated Services or the Schedule A Services
which are based on trade secrets or proprietary information of EDS or
are otherwise owned or licensed by EDS (collectively, the "EDS
Development Tools"), (ii) will be free to use the ideas, concepts and
know-how which concern information services technology and which have
been or are developed in the course of performing the Terminated
Services or Schedule A Services and may be retained by EDS' employees
in intangible form and (iii) may acquire, license, develop for itself
or others, or have others develop for it, similar technology performing
the same or similar functions as technology contemplated by the Master
Services Agreement, all authorization letters and any other
authorizations thereunder, the Current Arrangements and this Agreement,
or market and distribute such
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technology, subject to Section 13 hereof. Notwithstanding anything to
the contrary in this Agreement, no licenses will be deemed to have been
granted by any party to any of its patents, trade secrets, trademarks
or copyrights.
17. Miscellaneous.
(a) Governing Law. This Agreement shall be governed
by and construed and enforced in accordance with the laws of the State
of Delaware, without regard to any conflicts of laws principles that
would require the application of the laws of any other jurisdiction.
(b) Binding Effect. This Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the successors and
permitted assigns of the parties hereto. Nothing expressed or referred
to in this Agreement is intended or shall be construed to give any
person other than the parties to this Agreement, or their respective
successors or permitted assigns, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision
contained herein. The obligations of VLT and AWI under this Agreement
shall be joint and several.
(c) Entire Agreement. This Agreement (including the
Schedules and Exhibits hereto) constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter
hereof. All Schedules and Exhibits hereto are expressly made a part of
this Agreement.
(d) Severability. If any term, provision, covenant or
restriction of this agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set
forth herein shall remain in full force and effect and shall in no way
be affected, impaired or invalidated, and the parties hereto shall use
their reasonable efforts to find and employ a valid, legal, nonvoid and
enforceable alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention
of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such
that may be hereafter declared invalid, illegal, void or unenforceable.
(e) Headings. The headings in this Agreement are for
purposes of convenience of reference only and shall not be deemed to
affect the interpretation of any provision hereof.
(f) Counterparts. This Agreement may be executed in
multiple counterparts. The parties may sign any number of copies of
this Agreement. Each signed copy shall be an original, but all of them
together represent the same agreement.
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(g) Amendment. Notwithstanding any other provision
hereof, this Agreement may not be supplemented or amended from time to
time without the prior written consent of each of the parties hereto.
(h) Relationship of Parties. EDS, in furnishing
services to VLT and AWI hereunder, is acting solely as an independent
contractor. EDS does not undertake by this Agreement otherwise to
perform any obligation of VLT or AWI, whether regulatory or
contractual, or to assume any responsibility for VLT's or AWI's
business or operations. EDS shall not be considered or deemed to be an
agent, employee, joint venturer or partner of VLT or AWI, and no other
relationship is intended or created by and between EDS and VLT or AWI.
Except as otherwise expressly provided herein, EDS has the sole right
and obligation to supervise, manage, contract, direct, procure, perform
or cause to be performed, all services to be provided by EDS hereunder.
(i) Force Majeure. Each party shall be excused from
performance hereunder and the time of any performance shall be
extended, to the extent reasonably necessary under the circumstances,
to the extent that such party is prevented from performing in whole or
in part as a result of acts or omissions of the other party or any act
of God, war, civil disturbance, court order, labor dispute, third party
nonperformance (including, without limitation, any nonperformance of a
third party vendor or licensor), or any other cause beyond its
reasonable control, including, without limitation, failures or
fluctuations in electrical power, heat, light, air conditioning,
telecommunications equipment or lines or other equipment. Such
nonperformance shall not be a default hereunder or a ground for
termination hereof.
(j) Disclosure. Except as otherwise contemplated in
the Master Settlement Agreement, all general releases, announcements
and disclosures by VLT, AWI or EDS relating to this Agreement or its
subject matter, including, without limitation, promotional or marketing
material (but not including any disclosures required by legal,
accounting or regulatory requirements beyond the reasonable control of
VLT, AWI or EDS, as the case may be) shall be coordinated with and
approved by VLT, AWI and EDS prior to the release thereof.
(k) At-Will Employment. During the term of this
Agreement and thereafter, all EDS employees will retain their current
status as employees-at-will.
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IN WITNESS WHEREOF, EDS, VLT and AWI have duly executed and
delivered this Agreement as of the date first above written.
ELECTRONIC DATA SYSTEMS
CORPORATION
By:
-------------------------
Name:
Title:
VIDEO LOTTERY TECHNOLOGIES,
INC.
By:
Name:
Title:
AUTOMATED WAGERING
INTERNATIONAL, INC.
By:
Name:
Title
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96
EXHIBIT I-1
STOCK POWER
KNOW ALL MEN BY THESE PRESENTS, that EDS VLT Holdings, Inc., a
Nevada corporation ("Holdings"), for value received, hereby sells, assigns and
transfers unto Video Lottery Technologies, Inc., a Delaware corporation ("VLT"),
(i) 545,454 shares of common stock, par value $.01 per share (the "Common
Shares"), of VLT, standing in the name of Holdings on the books of VLT
represented by Certificate No. VLC 00002697 and (ii) 1,912,728 shares of Series
A Junior Preferred Stock, par value $.01 per share (collectively with the Common
Shares, the "VLT Shares"), of VLT, standing in the name of Holdings on the books
of VLT represented by Certificate No.1, and hereby constitutes and appoints VLT
as Holdings' true and lawful attorney, irrevocably, for and in Holdings' name
and stead to sell, assign, transfer, hypothecate, pledge and make over all or
any part of the VLT Shares and for that purpose to make and execute all
necessary acts of assignment and transfer thereof.
IN WITNESS WHEREOF, Holdings has executed this Stock Power as
of January 30, 1997.
EDS VLT HOLDINGS, INC.
By:
Name:
Title:
I-1
97
EXHIBIT I-2
STOCK POWER
KNOW ALL MEN BY THESE PRESENTS, that Video Lottery
Technologies, Inc., a Delaware corporation ("VLT"), for value received, hereby
sells, assigns and transfers unto _____________________________________________,
(i) 545,454 shares of common stock, par value $.01 per share (the "Common
Shares"), of VLT, standing in the name of VLT on the books of VLT represented by
Certificate No. VLC-00002697 and (ii) 1,912,728 shares of Series A Junior
Preferred Stock, par value $.01 per share (collectively with the Common Shares,
the "VLT Shares"), of VLT, standing in the name of VLT on the books of VLT
represented by Certificate No. 1, and hereby constitutes and appoints
__________________________________ ________________________________ as VLT's
true and lawful attorney, irrevocably, for and in VLT's name and stead to sell,
assign, transfer, hypothecate, pledge and make over all or any part of the VLT
Shares and for that purpose to make and execute all necessary acts of assignment
and transfer thereof.
IN WITNESS WHEREOF, VLT has executed this Stock Power as of
January 30, 1997.
VIDEO LOTTERY TECHNOLOGIES, INC.
By:
Name:
Title:
I-2
98
EXHIBIT J
SOURCE CODE ESCROW AGREEMENT
Account Number ______________
This Agreement (this "Agreement") is effective this 30th day
of January, 1997, among Data Securities International, Inc. ("Agent"), Video
Lottery Technologies, Inc., a Delaware corporation ("VLT") and Automated
Wagering International, Inc., a Delaware corporation ("AWI"), (VLT and AWI
collectively referred to as "Depositor") and Electronic Data Systems
Corporation, a Delaware corporation ("Preferred Beneficiary").
A. Depositor and Preferred Beneficiary have entered into a
Security Agreement, Pledge and Assignment: Equipment, Inventory, Securities and
Intellectual Property, of even date herewith ("the Security Agreement"),
pursuant to which Depositor will grant a security interest in, among other
things, the source codes and related products and materials relating to, and
used in connection with, the software known as "MasterLink(R)" (the "Source
Code").
B. Depositor desires to avoid disclosure of the Source Code
except under certain limited circumstances.
C. Depositor and Preferred Beneficiary desire to establish an
escrow with Agent to provide for the retention, administration and controlled
access of the Source Code.
D. Agent has consented to act as escrow agent and to receive
and hold the current version and any future versions of the Source Code.
ARTICLE 1 -- DEPOSITS
1.1 Obligation to Make Deposit. As soon as practicable with
respect to each component, but no later than thirty (30) days from the date of
this Agreement, Depositor shall deliver to Agent the proprietary information and
other materials (the "Deposit Materials") identified on Exhibit A hereto.
1.2 Identification of Tangible Media. Prior to the delivery of
the Deposit Materials to Agent, Depositor shall conspicuously label for
identification each document, magnetic tape, disk, or other tangible media upon
which the Deposit Materials are written or stored. Additionally, Depositor shall
complete Exhibit B to this Agreement by listing each such tangible media by the
item label description, the type of media and the quantity. Exhibit B must be
signed by Depositor and delivered to Agent with the Deposit Materials. Unless
and until Depositor makes the initial deposit with Agent, Agent shall have no
obligation with respect to this Agreement, except
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the obligation to notify the parties regarding the status of the deposit account
as required in Section 2.2 below.
1.3 Deposit Inspection. Upon Agent's receipt of the Deposit
Materials and Exhibit B, Agent will, within five business days thereof, conduct
and complete a deposit inspection by visually matching the labeling of the
tangible media containing the Deposit Materials to the item descriptions and
quantity listed on Exhibit B. In addition to the deposit inspection, Preferred
Beneficiary may elect to cause a verification of the Deposit Materials in
accordance with Section 1.6 below.
1.4 Acceptance of Deposit. At completion of the deposit
inspection, if Agent determines that the labeling of the tangible media matches
the item descriptions and quantity on Exhibit B, Agent will date and sign
Exhibit B and mail a copy thereof to Depositor and Preferred Beneficiary. If
Agent determines that the labeling does not match the item descriptions or
quantity on Exhibit B, Agent will (a) note the discrepancies in writing on
Exhibit B; (b) date and sign Exhibit B with the exceptions noted; and (c)
provide a copy of Exhibit B to Depositor and Preferred Beneficiary. Agent's
acceptance of the deposit occurs upon the signing of Exhibit B by Agent.
Delivery of the signed Exhibit B to Preferred Beneficiary is Preferred
Beneficiary's notice that the Deposit Materials have been received and accepted
by Agent.
1.5 Depositor's Representations. Depositor represents as
follows:
a. Depositor lawfully possesses all of the
Deposit Materials to be deposited with the
Agent;
b. With respect to all of the Deposit
Materials, Depositor has the right and
authority to grant to Agent the rights as
provided in this Agreement, including the
right of Agent to copy third party
materials;
c. With respect to all of the Deposit
Materials, Depositor has the right and
authority to grant to Preferred Beneficiary
the rights as provided in this Agreement;
provided, however, that Preferred
Beneficiary's right to possess and use those
Deposit Materials consisting of components
and tools identified with an asterisk on
Exhibit A, which have been licensed by
Depositor from third parties (the "Licensed
Deposit Materials"), is subject to the
Preferred Beneficiary's receipt of any
requisite consents from such third party
licensors;
d. Depositor has the right, pursuant to valid
and enforceable license agreements, to use
the Licensed Deposit Materials in the manner
currently being used by Depositor;
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e. The Deposit Materials (other than the
Licensed Deposit Materials) are not subject
to any lien or other encumbrance other than
the liens and encumbrances arising from the
Security Agreement;
f. The Deposit Materials include (i) all
proprietary information, machine readable
source code, and human readable source code
related to the Source Code and (ii) all
components, devices, programming, system
documentation, user documentation, hardware
documentation, compilers, assemblers, tools,
higher level or proprietary languages, test
procedures, test data and test results and
other materials to develop, compile,
assemble, maintain, and implement the Source
Code.
g. The Deposit Materials consist of the
proprietary information and other materials
identified on Exhibit A; and
h. The Deposit Materials are readable and
useable in their current form or, if the
Deposit Materials are encrypted, the
decryption tools and decryption keys have
also been deposited.
1.6 Verification. Agent shall perform a Level One Verification
(as defined herein) of the Deposit Materials upon the initial deposit and for
each Update (as defined herein). A verification determines, in different levels
of detail, the accuracy, completeness, sufficiency and quality of the Deposit
Materials. A "Level One Verification" is defined as follows: Agent will cause a
technically qualified Agent employee to evaluate the Deposit Materials in order
to identify (a) the hardware and software configurations reasonably necessary to
maintain the Deposit Materials; (b) the hardware and software configurations
reasonably necessary to compile the Deposit Materials; and (c) the compilation
instructions. Agent will then prepare and deliver to Depositor and Preferred
Beneficiary a report describing the information so identified. It shall be the
responsibility of the Depositor, and not Agent, to assure that the Deposit
Materials contain the information so identified in Agent's report.
Preferred Beneficiary shall have the right, at Preferred
Beneficiary's expense, to cause higher levels of verification of any Deposit
Materials. Preferred Beneficiary shall give reasonable notice to Depositor of
the performance of such higher level verification. Depositor may be present
during such verification, provided that Depositor does not cause any
unreasonable delay in the performance of such verification. If a verification is
elected after the Deposit Materials have been delivered to Agent, then Agent, or
at Preferred Beneficiary's election an independent person or company ("Outside
Consultant") selected by Preferred Beneficiary and Depositor, may perform the
verification. Upon Agent's receipt of written instructions from Preferred
Beneficiary and Depositor, Agent shall deliver to Consultant, at Preferred
Beneficiary's expense, copies of all or any portion of the Deposit Materials
(the "Copied Deposit Materials"). The Copied Deposit Materials shall be returned
to Agent upon Consultant's completion of the higher level verification,
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together with a copy of Consultant's verification report and a new Exhibit B
signed by Depositor (the "Verification Update"). Such Verification Updates shall
be added to the existing deposit. The processing of each Verification Update
shall be in accordance with Sections 1.2 through 1.6 hereof.
1.7 Deposit Updates. Depositor shall update the Deposit
Materials (an "Update") once every calendar quarter with the latest version of
all Deposit Materials, including all enhancements, modifications, improvements
or additions to any of the Deposit Materials (regardless of developing party)
associated with the version of the Source Code containing the most advanced
fully tested functionality. Such Updates will be added to the existing deposit.
All deposit Updates shall be listed on a new Exhibit B and the new Exhibit B
shall be signed by Depositor. The processing of all deposit Updates shall be in
accordance with Sections 1.2 through 1.6 above. All references in this Agreement
to the Deposit Materials shall include the initial Deposit Materials, any
Updates and any Verification Updates.
Agent shall notify Depositor in writing quarterly of
Depositor's obligation to make deposits of Updates. Within 30 days of receipt of
each such notice, Depositor shall certify in writing to Agent that it has made a
deposit of any Updates as required in the immediately preceding paragraph. After
the 30 days, Agent shall notify Preferred Beneficiary that Agent has received
(a) an Update deposit from Depositor; or (b) no response from Depositor.
1.8 Maintenance of Deposit Materials. Each Exhibit B received
by Agent will be held and maintained separately within the escrow account. An
independent record will be created by Agent which will document the activity for
each Exhibit B.
1.9 Removal of Deposit Materials. None of the Deposit
Materials may be removed except on written instructions signed by Depositor and
Preferred Beneficiary, or as otherwise provided in this Agreement.
ARTICLE 2 -- CONFIDENTIALITY AND RECORD KEEPING
2.1 Confidentiality. Agent shall maintain the Deposit
Materials in a secure, environmentally safe, locked facility which is accessible
only to authorized representatives of Agent. Agent shall have the obligation to
reasonably protect the confidentiality of the Deposit Materials. Except as
provided in this Agreement, Agent shall not disclose, transfer, make available,
or use the Deposit Materials. Agent shall not disclose the content of this
Agreement to any third party. If Agent receives a subpoena or other order of a
court or other judicial tribunal pertaining to the disclosure or release of the
Deposit Materials, Agent will immediately notify the parties to this Agreement.
It shall be the responsibility of Depositor and/or Preferred Beneficiary to
challenge any such order; provided, however, that Agent does not waive its
rights to present its position with respect to any such order. Agent will not be
required to disobey any court or other judicial tribunal order. (See Section 7.4
below for notices of requested orders.)
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2.2 Status Reports. Agent will issue to Depositor and
Preferred Beneficiary a report profiling the account history at least
semi-annually. Agent may provide copies of the account history pertaining to
this Agreement upon the request of any party to this Agreement.
2.3 Audit Rights. During the term of this Agreement, Depositor
and Preferred Beneficiary shall each have the right to inspect the written
records of Agent pertaining to this Agreement. Any inspection shall be held
during normal business hours and following reasonable prior notice.
ARTICLE 3 -- GRANT OF RIGHTS TO AGENT
3.1 Title to Media. Depositor hereby transfers to Agent the
title to the media upon which the proprietary information and materials are
written or stored. However, this transfer does not include the ownership of the
proprietary information and materials contained on the media such as any
copyright, trade secret, patent or other intellectual property rights.
3.2 Right to Make Copies. Agent shall have the right to make
copies of the Deposit Materials as reasonably necessary to perform this
Agreement. Agent shall copy all copyright, nondisclosure, and other proprietary
notices and titles contained on the Deposit Materials onto any copies made by
Agent. With all Deposit Materials submitted to Agent, Depositor shall provide
any and all instructions as may be necessary to duplicate the Deposit Materials
including but not limited to the hardware and/or software needed.
3.3 Right to Transfer Upon Release. Depositor hereby grants to
Agent the right to transfer the Deposit Materials to Preferred Beneficiary upon
any release of the Deposit Materials for use by Preferred Beneficiary in
accordance with Section 4.5. Except upon such a release or as otherwise provided
in this Agreement, Agent shall not transfer the Deposit Materials.
ARTICLE 4 -- RELEASE OF DEPOSIT
4.1 Release Conditions. As used in this Agreement, "Release
Conditions" shall mean any of the following:
a. Depositor's failure to carry out obligations
imposed on it pursuant to the Security
Agreement or the Note (as defined in the
Security Agreement);
b. the occurrence of an "Event of Default" or
"Default" as defined in the Security
Agreement or the Note; or
c. Depositor's failure to continue to do
business in the ordinary course.
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4.2 Filing For Release. If Preferred Beneficiary reasonably
believes that a Release Condition has occurred, Preferred Beneficiary may
provide to Agent written notice of the occurrence of the Release Condition and a
request for the release of the Deposit Materials. Upon receipt of such notice,
Agent shall provide a copy of the notice to Depositor, by certified mail, return
receipt requested, or by commercial express mail.
4.3 Contrary Instructions. From the date Agent mails the
notice to Depositor requesting release of the Deposit Materials, Depositor shall
have ten business days to deliver to Agent Contrary Instructions (as defined
herein). "Contrary Instructions" shall mean the written representation by
Depositor that a Release Condition has not occurred or has been cured, supported
by satisfactory evidence to such effect. Upon receipt of Contrary Instructions,
Agent shall send a copy to Preferred Beneficiary by certified mail, return
receipt requested, or by commercial express mail. Subject to Section 5.2, Agent
will continue to store the Deposit Materials without release pending (a) joint
instructions from Depositor and Preferred Beneficiary; or (b) order of a court.
4.4 Release of Deposit. If Agent does not receive Contrary
Instructions from the Depositor, Agent is authorized to release the Deposit
Materials to the Preferred Beneficiary or, if more than one beneficiary is
registered to the deposit, to release a copy of the Deposit Materials to the
Preferred Beneficiary. However, Agent is entitled to receive any fees due Agent
before making the release. This Agreement will terminate upon the release of the
Deposit Materials held by Agent.
4.5 Right to Use Following Release. Upon release of the
Deposit Materials in accordance with this Article 4, Preferred Beneficiary shall
have the right to use the Deposit Materials for the sole purpose of continuing
the benefits afforded to Preferred Beneficiary by the Security Agreement,
subject to the receipt of any requisite consents from any third party licensors
with respect to the Licensed Deposit Materials noted on Exhibit A.
ARTICLE 5 -- TERM AND TERMINATION
5.1 Term of Agreement. The initial term of this Agreement is
for a period of one year. Thereafter, this Agreement shall automatically renew
from year-to-year unless (a) Depositor and Preferred Beneficiary jointly
instruct Agent in writing that the Agreement is terminated; or (b) the Agreement
is terminated by Agent for nonpayment in accordance with Section 5.2. If the
Deposit Materials are subject to another escrow agreement with Agent, Agent
reserves the right, after the initial one year term, to adjust the anniversary
date of this Agreement to match the then prevailing anniversary date of such
other escrow arrangements.
5.2 Termination for Nonpayment. In the event of the nonpayment
of fees owed to Agent, Agent shall provide written notice of delinquency to all
parties to this Agreement. Any party to this Agreement shall have the right to
make the payment to Agent to cure the default. If the past due payment is not
received in full by Agent within thirty days of the date of such notice, then
Agent shall have the right to terminate this Agreement at any time thereafter by
sending
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written notice of termination to all parties. Agent shall have no obligation to
take any action under this Agreement so long as any past due payment owing to
Agent remains unpaid.
5.3 Disposition of Deposit Materials Upon Termination. Upon
termination of this Agreement by joint instruction of Depositor and Preferred
Beneficiary; Agent shall destroy, return, or otherwise deliver the Deposit
Materials in accordance with Depositor's instructions. Subject to Agent's rights
under Section 5.2, upon termination for nonpayment, Agent shall promptly return
the Deposit Materials to Depositor. Agent shall have no obligation to return or
destroy the Deposit Materials if the Deposit Materials are subject to another
escrow agreement with Agent. Agent and Preferred Beneficiary shall be obligated
to maintain the confidentiality of the Deposit Materials solely upon termination
of this Agreement pursuant to Section 5.1 hereto.
5.4 Survival of Terms Following Termination. Upon termination
of this Agreement, the following provisions of this Agreement shall survive:
a. Depositor's Representations (Section 1.5);
b. The obligations of confidentiality with
respect to the Deposit Materials;
c. The rights granted in the Sections entitled
Right to Transfer Upon Release (Section 3.3)
and Right to Use Following Release (Section
4.5), if a release of the Deposit Materials
has occurred prior to termination;
d. The obligation to pay Agent any fees and
expenses due;
e. The provisions of Article 7; and
f. Any provisions in this Agreement which
specifically state they survive the
termination or expiration of this Agreement.
ARTICLE 6 -- AGENT'S FEES
6.1 Fee Schedule. Agent is entitled to be paid its standard
fees and expenses applicable to the services provided as set forth on Exhibit D
hereto. Agent shall notify the parties at least 90 days prior to any increase in
fees. Any such increase in fees will be effective as of the first day of the
following renewal year. For any service not listed on Agent's standard fee
schedule, Agent will provide a quote prior to rendering the service, if
requested. Depositor hereby agrees to pay all escrow fees due hereunder.
6.2 Payment Terms. Agent shall not be required to perform any
service unless the payment for such service and any past due balances owed to
Agent are paid in full. All other
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fees are due within 15 days from the date of invoice. If invoiced fees are not
paid within 15 days from the date of invoice, Agent may terminate this Agreement
in accordance with Section 5.2. Late fees on past due amounts shall accrue at
the rate of one and one-half percent per month (18% per annum) from the date of
the invoice.
ARTICLE 7 -- LIABILITY AND DISPUTES
7.1 Right to Rely on Instructions. Agent may act in reliance
upon any instruction, instrument, or signature believed by Agent in good faith
to be genuine. Unless otherwise instructed by an officer of a party to this
Agreement, Agent may assume that any officer of a party to this Agreement who
gives any written notice, request, or instruction has the authority to do so.
Agent shall not be responsible for failure to act as a result of causes beyond
the reasonable control of Agent.
7.2 Indemnification. Agent shall be responsible to perform its
obligations under this Agreement and to act in a reasonable and prudent manner
with regard to this escrow arrangement. Provided Agent has acted in the manner
stated in the preceding sentence, Depositor and Preferred Beneficiary each agree
to indemnify, defend and hold harmless Agent from any and all claims, actions,
damages, arbitration fees and expenses, costs, attorney's fees and other
liabilities incurred by Agent relating in any way to this escrow arrangement.
Any such expense in the preceding sentence as between Depositor and Preferred
Beneficiary shall be borne one half by Depositor and one half by Preferred
Beneficiary. Nothing in this paragraph shall constitute a waiver of any claim
which Depositor or Preferred Beneficiary may have against the other for
contribution arising from their joint obligations to hold Agent harmless
hereunder.
7.3 Controlling Law. This Agreement is to be governed and
construed in accordance with the laws of the State of Delaware, without regard
to its conflict of law provisions.
7.4 Notice of Requested Order. If any party intends to obtain
an order from any court of competent jurisdiction which may direct Agent to
take, or refrain from taking any action, that party shall:
a. Give Agent reasonable prior notice of the
hearing;
b. Include in any such order that, as a
precondition to Agent's obligation, Agent be
paid in full for any past due fees and be
paid for the reasonable value of the
services to be rendered pursuant to such
order; and
c. Ensure that Agent not be required to deliver
the original (as opposed to a copy) of the
Deposit Materials if Agent may need to
retain the original in its possession to
fulfill any of its other duties.
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7.5 Disputes and Interpleader. In the event of any dispute
between any of Depositor, Primary Beneficiary and/or Agent relating to the
delivery of the Deposit Materials by Agent or to any other matter arising out of
this Agreement, Agent may submit the matter to any court of competent
jurisdiction in an interpleader or similar action. Any and all costs incurred by
Agent in connection therewith, including reasonable attorneys' fees and costs,
shall be borne 50% by each of Depositor and Preferred Beneficiary.
ARTICLE 8 -- GENERAL PROVISIONS
8.1 Entire Agreement. This Agreement, which includes the
Exhibits described herein, embodies the entire understanding among the parties
with respect to its subject matter and supersedes all previous communications,
representations or understandings, either oral or written. Unless otherwise
provided in this Agreement, no amendment or modification of this Agreement shall
be valid or binding unless signed by all the parties hereto (except that Exhibit
A need not be signed by Agent and Exhibit B need not be signed by Preferred
Beneficiary).
8.2 Notices. All notices, invoices, payments, deposits and
other documents and communications shall be given to the parties at the
addresses specified in Exhibit C attached hereto. It shall be the responsibility
of the parties to notify each other as provided in this Section in the event of
a change of address. The parties shall have the right to rely on the last known
address of the other parties. Unless otherwise provided in this Agreement, all
documents and communications may be delivered by First Class mail.
8.3 Severability. In the event any provision of this Agreement
is found to be invalid, voidable or unenforceable, the parties agree that unless
it materially affects the entire intent and purpose of this Agreement, such
invalidity, voidability or unenforceability shall affect neither the validity of
this Agreement nor the remaining provisions herein, and the provision in
question shall be deemed to be replaced with a valid and enforceable provision
most closely reflecting the intent and purpose of the original provision.
8.4 Successors. This Agreement shall be binding upon and shall
inure to the benefit of the successors and assigns of the parties. However,
Agent shall have no obligation in performing this Agreement to recognize any
successor or assign of Depositor or Preferred Beneficiary unless Agent receives
clear, authoritative and conclusive written evidence of the change of parties.
8.5 Designation. The Depositor hereby designates ▇▇▇▇▇ ▇▇▇▇▇,
Manager of Corporate Services of VLT, to act on behalf of the Depositor in all
respects regarding the terms hereunder of this Agreement.
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DEPOSITOR PREFERRED BENEFICIARY
VIDEO LOTTERY TECHNOLOGIES, INC. ELECTRONIC DATA SYSTEMS
CORPORATION
By: By:
Name: Name:
Title: Title:
Date: Date:
AGENT
AUTOMATED WAGERING DATA SECURITIES INTERNATIONAL,
INTERNATIONAL, INC. INC.
By: By:
Name: Name:
Title: Title:
Date: Date:
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EXHIBIT A
MATERIALS TO BE DEPOSITED
Account Number ______________
Depositor represents to Preferred Beneficiary that Deposit Materials delivered
to Agent shall consist of (i) all proprietary information, machine readable
source code, and human readable source code related to the Source Code and (ii)
all components, devices, programming, system documentation, user documentation,
hardware documentation, compilers, assemblers, tools, higher level or
proprietary languages, test procedures, test data and test results and other
materials to develop, compile, assemble, maintain, and implement the Source
Code. The Depositor will provide the Deposit Materials on industry standard
media.
The Source Code contains the components listed in Attachment A to this Exhibit
A.
DEPOSITOR PREFERRED BENEFICIARY
--------- ---------------------
VIDEO LOTTERY TECHNOLOGIES, INC. ELECTRONIC DATA SYSTEMS
CORPORATION
By: By:
Name: Name:
Title: Title:
Date: Date:
AUTOMATED WAGERING
INTERNATIONAL, INC.
By:
Name:
Title:
Date:
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