PLEDGE AND SECURITY AGREEMENT
DATED AS OF JULY 22, 2004
AMONG
ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.
ACE GAMING, LLC
AND
CERTAIN SUBSIDIARIES OF
ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC., AS GRANTORS
AND
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
AS TRUSTEE
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS; GRANT OF SECURITY...................................1
1.1 GENERAL DEFINITIONS..............................................1
1.2 DEFINITIONS; INTERPRETATION......................................8
SECTION 2. GRANT OF SECURITY................................................8
2.1 GRANT OF SECURITY................................................8
2.2 CERTAIN LIMITED EXCLUSIONS.......................................9
SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE.................9
3.1 SECURITY FOR OBLIGATIONS.........................................9
3.2 CONTINUING LIABILITY UNDER COLLATERAL............................9
3.3 RELEASE.........................................................10
3.4 SUBORDINATION...................................................10
SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS....................10
4.1 GENERALLY.......................................................10
4.2 EQUIPMENT AND INVENTORY.........................................13
4.3 RECEIVABLES.....................................................14
4.4 INVESTMENT RELATED PROPERTY.....................................16
4.5 MATERIAL CONTRACTS..............................................22
4.6 LETTER OF CREDIT RIGHTS.........................................23
4.7 INTELLECTUAL PROPERTY...........................................24
4.8 COMMERCIAL TORT CLAIMS..........................................27
SECTION 5. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES;
ADDITIONAL GRANTORS...........................................27
5.1 ACCESS; RIGHT OF INSPECTION.....................................27
5.2 FURTHER ASSURANCES..............................................27
5.3 ADDITIONAL GRANTORS.............................................28
SECTION 6. SECURED PARTY APPOINTED ATTORNEY-IN-FACT........................28
6.1 POWER OF ATTORNEY...............................................28
6.2 NO DUTY ON THE PART OF SECURED PARTY............................29
6.3 RATIFICATION....................................................29
SECTION 7. REMEDIES........................................................29
7.1 GENERALLY.......................................................29
7.2 APPLICATION OF PROCEEDS.........................................31
7.3 SALES ON CREDIT.................................................31
7.4 DEPOSIT ACCOUNTS................................................31
7.5 INVESTMENT RELATED PROPERTY.....................................31
7.6 INTELLECTUAL PROPERTY...........................................32
7.7 COLLATERAL PROCEEDS.............................................33
7.8 TAX REFUNDS.....................................................34
SECTION 8. SECURED PARTY...................................................34
SECTION 9. CONTINUING SECURITY INTEREST; TRANSFER OF NOTES.................34
SECTION 10. STANDARD OF CARE; SECURED PARTY MAY PERFORM....................35
SECTION 11. MISCELLANEOUS..................................................35
SECTION 12. Casino Control Act.............................................36
SECTION 13. Reimbursement of Legal Fees....................................36
SCHEDULE 4.1-- GENERAL INFORMATION
SCHEDULE 4.2 -- LOCATION OF EQUIPMENT AND INVENTORY
SCHEDULE 4.4-- INVESTMENT RELATED PROPERTY
SCHEDULE 4.5-- MATERIAL CONTRACTS
SCHEDULE 4.6-- DESCRIPTION OF LETTERS OF CREDIT
SCHEDULE 4.7-- INTELLECTUAL PROPERTY
SCHEDULE 4.8-- COMMERCIAL TORT CLAIMS
EXHIBIT A-- PLEDGE SUPPLEMENT
EXHIBIT B-- FORM OF ACCOUNT CONTROL AGREEMENT
EXHIBIT C-- FORM OF PERSONAL PROPERTY SECURITY INTEREST OPINION
This PLEDGE AND SECURITY AGREEMENT, dated as of July 22, 2004 (this
"AGREEMENT"), between ACE Gaming, LLC, a New Jersey limited liability company
("ACE"), Atlantic Coast Entertainment Holdings, Inc., a Delaware corporation
(the "COMPANY"), any Additional Grantor (as herein defined) (each, a "GRANTOR"),
and ▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as
trustee (in such capacity as trustee, the "SECURED PARTY"), for the Holders
under an Indenture dated as of July 22, 2004 among the Company , as issuer, the
Secured Party, as trustee, and ACE, as guarantor (such Indenture, as it may be
amended, supplemented, or otherwise modified from time to time in accordance
with its terms, the "INDENTURE").
RECITALS:
WHEREAS, each of the Company, the Secured Party, and ACE have entered
into the Indenture pursuant to which the Company will issue, and ACE will
guarantee, on the date hereof up to $110,000,000 aggregate principal amount of
3% Notes Due 2008 (the "NOTES");
WHEREAS, each Grantor has agreed to secure such Grantor's obligations
under the Indenture and the Notes as set forth herein, and subject to the
limitations set forth herein;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, each Grantor and the Secured Party
agree as follows:
SECTION 1. DEFINITIONS; GRANT OF SECURITY.
1.1 GENERAL DEFINITIONS. In this Agreement, the following terms shall
have the following meanings:
"ACCOUNT DEBTOR" shall mean each Person who is obligated on a
Receivable or any Supporting Obligation related thereto.
"ACCOUNTS" shall mean all "accounts" as defined in Article 9 of the
UCC.
"AGREEMENT" shall have the meaning set forth in the preamble.
"ADDITIONAL GRANTORS" shall have the meaning assigned in Section
5.3.
"ASSIGNED AGREEMENTS" shall mean all agreements and contracts to
which such Grantor is a party as of the date hereof, or to which such Grantor
becomes a party after the date hereof, including, without limitation, each
Material Contract, as each such agreement may be amended, supplemented or
otherwise modified from time to time.
"BANKRUPTCY CODE" means title 11 of the United States Code entitled
"Bankruptcy" as now and hereafter in effect, or any successor statute.
"B&B LICENSE AGREEMENT" means that certain License Agreement, dated
May 15, 2000, as amended, between B&B Parking, Inc., as lessor and ACE as
assignee of Greate Bay Hotel and Casino, Inc. as lessee, with respect to certain
property located in the City of Atlantic City, County of Atlantic and State of
New Jersey.
"CASINO CONTROL ACT" means the New Jersey Casino Control Act, N.J.
Stat. ▇▇▇. 5:12-1 et seq. (New Jersey Public Law 1977, C.110), and the
regulations promulgated thereunder, N.J.A.C. 19:40-1.1 et seq., as from time to
time amended, or any successor provision of law.
1
"CHATTEL PAPER" shall mean all "chattel paper" as defined in
Article 9 of the UCC, including, without limitation, "electronic chattel paper"
or "tangible chattel paper", as each term is defined in Article 9 of the UCC.
"COLLATERAL" shall have the meaning assigned in Section 2.1.
"COLLATERAL ACCOUNT" shall mean, initially, the account
numbered 7858014223 maintained by Commerce Bank in the name of "ACE Gaming,
LLC", and subsequently, any account established at a financial institution
designated by the Secured Party in the name of "ACE Gaming, LLC", together with
any and all successor, replacement or substituted accounts thereto.
"COLLATERAL RECORDS" shall mean books, records, ledger cards,
files, correspondence, customer lists, blueprints, technical specifications,
manuals, computer software, computer printouts, tapes, disks and related data
processing software and similar items that at any time evidence or contain
information relating to any of the Collateral or are otherwise necessary or
helpful in the collection thereof or realization thereupon.
"COLLATERAL SUPPORT" shall mean all property (real or
personal) assigned, hypothecated or otherwise securing any Collateral and shall
include any security agreement or other agreement granting a lien or security
interest in such real or personal property.
"COLLECTION ACCOUNT" shall mean any account established at a
financial institution, in the name of any Grantor, to which proceeds of
Receivables are generally deposited, together with any and all successor,
replacement or substituted accounts thereto.
"COMMERCIAL TORT CLAIMS" shall mean all "commercial tort
claims" as defined in Article 9 of the UCC, including, without limitation, all
commercial tort claims listed on Schedule 4.8 (as such schedule may be amended
or supplemented from time to time).
"COMMODITIES ACCOUNTS" (i) shall mean all "commodity accounts"
as defined in Article 9 of the UCC and (ii) shall include, without limitation,
all of the accounts listed on Schedule 4.4 under the heading "Commodities
Accounts" (as such schedule may be amended or supplemented from time to time).
"COMPANY" shall have the meaning set forth in the recitals.
"CONCENTRATION ACCOUNT" shall mean all of the accounts listed
on Schedule 4.4(A) under the heading "Deposit Accounts: Concentration Account"
(as such schedule may be amended or supplemented from time to time), together
with any and all successor, replacement or substituted accounts thereto.
"CONTROLLED FOREIGN CORPORATION" shall mean "controlled
foreign corporation" as defined in the Tax Code.
"COPYRIGHT LICENSES" shall mean any and all agreements
providing for the granting of any right in or to Copyrights (whether such
Grantor is licensee or licensor thereunder) including, without limitation, each
agreement referred to in Schedule 4.7(B) (as such schedule may be amended or
supplemented from time to time).
2
"COPYRIGHTS" shall mean all United States, state and foreign
copyrights, all mask works fixed in semi-conductor chip products (as defined
under 17 U.S.C. 901 of the U.S. Copyright Act), whether registered or
unregistered, now or hereafter in force throughout the world, all registrations
and applications therefor including, without limitation, the applications
referred to in Schedule 4.7(A) (as such schedule may be amended or supplemented
from time to time), all rights corresponding thereto throughout the world, all
extensions and renewals of any thereof, the right to ▇▇▇ for past, present and
future infringements of any of the foregoing, and all proceeds of the foregoing,
including, without limitation, licenses, royalties, income, payments, claims,
damages, and proceeds of suit.
"DEPOSIT ACCOUNTS" (i) shall mean all "deposit accounts" as
defined in Article 9 of the UCC and in any event shall include any demand, time,
savings, passbook or title account maintained with a depository institution and
(ii) shall include, without limitation, all of the accounts listed on Schedule
4.4 under the heading "Deposit Accounts" (as such schedule may be amended or
supplemented from time to time), including, without limitation, the Collateral
Account, the Concentration Account, the Collection Accounts, and the ZBA
Accounts.
"DOCUMENTS" shall mean all "documents" as defined in Article 9
of the UCC.
"EQUIPMENT" shall mean: (i) all "equipment" as defined in
Article 9 of the UCC, (ii) all machinery, manufacturing equipment, data
processing equipment, computers, office equipment, furnishings, furniture,
appliances, fixtures and tools (in each case, regardless of whether
characterized as equipment under the UCC), (iii) the "People-Mover" as such term
is defined in the Mortgage, (iv) all gaming equipment, slot machines, and gaming
tables, and (v) all accessions or additions thereto, all parts thereof, whether
or not at any time of determination incorporated or installed therein or
attached thereto, and all replacements therefor, wherever located, now or
hereafter existing, including any fixtures.
"EVENT OF DEFAULT" shall mean an Event of Default as defined
in the Indenture.
"GAMING RELATED ITEMS" shall mean all Accounts deriving solely
from gaming activities.
"GENERAL INTANGIBLES" (i) shall mean all "general intangibles"
as defined in Article 9 of the UCC and (ii) shall include, without limitation,
all interest rate or currency protection or hedging arrangements, all tax
refunds (including, but not limited to any abatements or refunds of real estate
taxes paid for prior periods as a result of successful prosecution or settlement
of an appeals procedure or otherwise), all tax claims, all licenses (including,
but not limited to the B&B License Agreement), permits, concessions and
authorizations, all Assigned Agreements and all Intellectual Property (in each
case, regardless of whether characterized as general intangibles under the UCC).
"GOODS" (i) shall mean all "goods" as defined in Article 9 of
the UCC and (ii) shall include, without limitation, all Inventory and Equipment
(in each case, regardless of whether characterized as goods under the UCC).
"GOVERNMENTAL AUTHORITY" means any federal, state, municipal,
national or other government, governmental department, commission, board,
bureau, court, agency or instrumentality or political subdivision thereof or any
entity or officer exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to any government or any court, in
each case whether associated with a state of the United States, the United
States, or a foreign entity or government.
"GRANTORS" shall have the meaning set forth in the preamble.
3
"HOLDER" shall have the meaning set forth in the Indenture.
"INSTRUMENTS" shall mean all "instruments" as defined in
Article 9 of the UCC.
"INDENTURE" shall have the meaning set forth in the recitals.
"INSURANCE" shall mean: (i) all insurance policies covering
any or all of the Collateral (regardless of whether the Secured Party is the
loss payee thereof) and (ii) any key man life insurance policies.
"INTELLECTUAL PROPERTY" shall mean, collectively, the
Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the
Trademarks, the Trademark Licenses (including, but not limited to, all licenses
granted under that certain License Agreement, made by and between Las Vegas
Sands, Inc. and Greate Bay Hotel and Casino, Inc., executed on or around the
date hereof), the Trade Secrets, and the Trade Secret Licenses and in any event
shall include all present and future rights, priorities and privileges relating
to intellectual property arising under United States, multinational or foreign
laws or otherwise.
"INVENTORY" shall mean: (i) all "inventory" as defined in
Article 9 of the UCC and (ii) all goods held for sale or lease or to be
furnished under contracts of service or so leased or furnished, all raw
materials, work in process, finished goods, and materials used or consumed in
the manufacture, packing, shipping, advertising, selling, leasing, furnishing or
production of such inventory or otherwise used or consumed in any Grantor's
business; all goods in which any Grantor has an interest in mass or a joint or
other interest or right of any kind; and all goods which are returned to or
repossessed by any Grantor, all computer programs embedded in any goods and all
accessions thereto and products thereof (in each case, regardless of whether
characterized as inventory under the UCC).
"INVESTMENT ACCOUNTS" shall mean the Securities Accounts,
Commodities Accounts and Deposit Accounts.
"INVESTMENT RELATED PROPERTY" shall mean: (i) all "investment
property" (as such term is defined in Article 9 of the UCC) and (ii) all of the
following (regardless of whether classified as investment property under the
UCC): all Pledged Equity Interests, Pledged Debt, the Investment Accounts and
certificates of deposit.
"LETTER OF CREDIT RIGHT" shall mean "letter-of-credit right"
as defined in Article 9 of the UCC.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse change
in the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of the Grantors (taken as a
whole), (b) the material impairment of the ability of the Grantors (taken as a
whole) to perform their Obligations, or of the Secured Party's ability to
enforce the Obligations or realize upon a material portion of the Collateral, or
(c) a material impairment of the priority of the liens with respect to a
material portion of the Collateral as a result of an action or failure to act on
the part of any Grantor.
"MATERIAL CONTRACTS" means any contract or other arrangement
to which a Grantor or any of its Subsidiaries is a party (other than the
Indenture and the Notes) for which breach, nonperformance, cancellation or
failure to renew could reasonably be expected to have a Material Adverse Effect.
"MONEY" shall mean "money" as defined in the UCC.
4
"NON-ASSIGNABLE CONTRACT" shall mean any agreement, contract
or license to which any Grantor is a party that by its terms purports to
restrict or prevent the assignment or granting of a security interest therein
(either by its terms or by any federal or state statutory prohibition or
otherwise irrespective of whether such prohibition or restriction is enforceable
under Sections 9-406 through 409 of the UCC).
"NOTES" shall have the meaning set forth in the Indenture.
"OBLIGATIONS" shall mean the principal, interest, fees and any
other obligations or liabilities of the Grantors under, arising from, in
connection with or relating to the Notes, the Indenture, the Security Documents
and this Agreement.
"PATENT LICENSES" shall mean all agreements providing for the
granting of any right in or to Patents (whether such Grantor is licensee or
licensor thereunder) including, without limitation, each agreement referred to
in Schedule 4.7(D) (as such schedule may be amended or supplemented from time to
time).
"PATENTS" shall mean all United States, state and foreign
patents and applications for letters patent throughout the world, including, but
not limited to each patent and patent application referred to in Schedule 4.7(C)
(as such schedule may be amended or supplemented from time to time), all
reissues, divisions, continuations, continuations-in-part, extensions, renewals,
and reexaminations of any of the foregoing, all rights corresponding thereto
throughout the world, and all proceeds of the foregoing including, without
limitation, licenses, royalties, income, payments, claims, damages, and proceeds
of suit and the right to ▇▇▇ for past, present and future infringements of any
of the foregoing.
"PLEDGED DEBT" shall mean all Indebtedness owed to such
Grantor, including, without limitation, all Indebtedness described on Schedule
4.4(A) under the heading "Pledged Debt" (as such schedule may be amended or
supplemented from time to time), issued by the obligors named therein, the
instruments evidencing such Indebtedness, and all interest, cash, instruments
and other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
Indebtedness.
"PLEDGED EQUITY INTERESTS" shall mean all Pledged Stock,
Pledged LLC Interests, Pledged Partnership Interests and Pledged Trust
Interests.
"PLEDGED LLC INTERESTS" shall mean all interests in any
limited liability company including, without limitation, all limited liability
company interests listed on Schedule 4.4(A) under the heading "Pledged LLC
Interests" (as such schedule may be amended or supplemented from time to time)
and the certificates, if any, representing such limited liability company
interests and any interest of such Grantor on the books and records of such
limited liability company or on the books and records of any securities
intermediary pertaining to such interest and all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such limited liability company
interests.
"PLEDGED PARTNERSHIP INTERESTS" shall mean all interests in
any general partnership, limited partnership, limited liability partnership or
other partnership including, without limitation, all partnership interests
listed on Schedule 4.4(A) under the heading "Pledged Partnership Interests" (as
such schedule may be amended or supplemented from time to time) and the
certificates, if any, representing such partnership interests and any interest
of such Grantor on the books and records of such partnership or on the books and
records of any securities intermediary pertaining to such interest and all
dividends,
5
distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such partnership
interests.
"PLEDGED TRUST INTERESTS" shall mean all interests in a
Delaware business trust or other trust including, without limitation, all trust
interests listed on Schedule 4.4(A) under the heading "Pledged Trust Interests"
(as such schedule may be amended or supplemented from time to time) and the
certificates, if any, representing such trust interests and any interest of such
Grantor on the books and records of such trust or on the books and records of
any securities intermediary pertaining to such interest and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such trust interests.
"PLEDGED STOCK" shall mean all shares of capital stock owned
by such Grantor, including, without limitation, all shares of capital stock
described on Schedule 4.4(A) under the heading "Pledged Stock" (as such schedule
may be amended or supplemented from time to time), and the certificates, if any,
representing such shares and any interest of such Grantor in the entries on the
books of the issuer of such shares or on the books of any securities
intermediary pertaining to such shares, and all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares.
"PLEDGE SUPPLEMENT" shall mean any supplement to this
agreement in substantially the form of Exhibit A.
"PROCEEDS" shall mean: (i) all "proceeds" as defined in
Article 9 of the UCC, (ii) payments or distributions made with respect to any
Investment Related Property and (iii) whatever is receivable or received when
Collateral or proceeds are sold, exchanged, collected or otherwise disposed of,
whether such disposition is voluntary or involuntary.
"RECEIVABLES" shall mean all rights to payment, whether or not
earned by performance, for goods or other property sold, leased, licensed,
assigned or otherwise disposed of, or services rendered or to be rendered,
including, without limitation all such rights constituting or evidenced by any
Account, Chattel Paper, Instrument, General Intangible or Investment Related
Property, together with all of Grantor's rights, if any, in any goods or other
property giving rise to such right to payment and all Collateral Support and
Supporting Obligations related thereto and all Receivables Records.
"RECEIVABLES RECORDS" shall mean (i) all original copies of
all documents, instruments or other writings or electronic records or other
Records evidencing the Receivables, (ii) all books, correspondence, credit or
other files, Records, ledger sheets or cards, invoices, and other papers
relating to Receivables, including, without limitation, all tapes, cards,
computer tapes, computer discs, computer runs, record keeping systems and other
papers and documents relating to the Receivables, whether in the possession or
under the control of Grantor or any computer bureau or agent from time to time
acting for Grantor or otherwise, (iii) all evidences of the filing of financing
statements and the registration of other instruments in connection therewith,
and amendments, supplements or other modifications thereto, notices to other
creditors or secured parties, and certificates, acknowledgments, or other
writings, including, without limitation, lien search reports, from filing or
other registration officers, (iv) all credit information, reports and memoranda
relating thereto and (v) all other written or nonwritten forms of information
related in any way to the foregoing or any Receivable.
"RECORD" shall have the meaning specified in Article 9 of the
UCC.
6
"SECURED OBLIGATIONS" shall have the meaning assigned in
Section 3.1.
"SECURED PARTY" shall have the meaning set forth in the
Recitals.
"SECURITIES ACCOUNTS" (i) shall mean all "securities accounts"
as defined in Article 8 of the UCC and (ii) shall include, without limitation,
all of the accounts listed on Schedule 4.4(A) under the heading "Securities
Accounts" (as such schedule may be amended or supplemented from time to time).
"SUPPORTING OBLIGATION" shall mean all "supporting
obligations" as defined in Article 9 of the UCC.
"TAX CODE" shall mean the United States Internal Revenue Code
of 1986, as amended from time to time.
"TRADEMARK LICENSES" shall mean any and all agreements
providing for the granting of any right in or to Trademarks (whether such
Grantor is licensee or licensor thereunder) including, without limitation, each
agreement referred to in Schedule 4.7(F) (as such schedule may be amended or
supplemented from time to time).
"TRADEMARKS" shall mean all United States, state and foreign
trademarks, trade names, corporate names, company names, business names,
fictitious business names, internet domain names, trade styles, service marks,
certification marks, collective marks, logos, other source or business
identifiers, designs and general intangibles of a like nature, all registrations
and applications for any of the foregoing including, but not limited to the
registrations and applications referred to in Schedule 4.7(E) (as such schedule
may be amended or supplemented from time to time), all extensions or renewals of
any of the foregoing, all of the goodwill of the business connected with the use
of and symbolized by the foregoing, the right to ▇▇▇ for past, present and
future infringement or dilution of any of the foregoing or for any injury to
goodwill, and all proceeds of the foregoing, including, without limitation,
licenses, royalties, income, payments, claims, damages, and proceeds of suit.
"TRADE SECRET LICENSES" shall mean any and all agreements
providing for the granting of any right in or to Trade Secrets (whether such
Grantor is licensee or licensor thereunder) including, without limitation, each
agreement referred to in Schedule 4.7(G) (as such schedule may be amended or
supplemented from time to time).
"TRADE SECRETS" shall mean all trade secrets and all other
confidential or proprietary information and know-how now or hereafter owned or
used in, or contemplated at any time for use in, the business of such Grantor
(all of the foregoing being collectively called a "Trade Secret"), whether or
not such Trade Secret has been reduced to a writing or other tangible form,
including all documents and things embodying, incorporating, or referring in any
way to such Trade Secret, the right to ▇▇▇ for past, present and future
infringement of any Trade Secret, and all proceeds of the foregoing, including,
without limitation, licenses, royalties, income, payments, claims, damages, and
proceeds of suit.
"UNITED STATES" shall mean the United States of America.
"ZBA ACCOUNTS" shall mean Deposit Accounts generally
maintaining a zero balance at the end of each Business Day and into which funds
are deposited only from the Concentration Account and from which funds are
withdrawn only to pay creditors, employees, and operating expenses of the
Grantors.
7
1.2 DEFINITIONS; INTERPRETATION. All capitalized terms used herein
(including the preamble and recitals hereto) and not otherwise defined herein
shall have the meanings ascribed thereto in the Indenture or, if not defined
therein, in the UCC. References to "Sections," "Exhibits" and "Schedules" shall
be to Sections, Exhibits and Schedules, as the case may be, of this Agreement
unless otherwise specifically provided. Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
Any of the terms defined herein may, unless the context otherwise requires, be
used in the singular or the plural, depending on the reference. The use herein
of the word "include" or "including", when following any general statement, term
or matter, shall not be construed to limit such statement, term or matter to the
specific items or matters set forth immediately following such word or to
similar items or matters, whether or not nonlimiting language (such as "without
limitation" or "but not limited to" or words of similar import) is used with
reference thereto, but rather shall be deemed to refer to all other items or
matters that fall within the broadest possible scope of such general statement,
term or matter. If any conflict or inconsistency exists at any time between this
Agreement and the Indenture, the Indenture shall govern. All references herein
to provisions of the UCC shall include all successor provisions under any
subsequent version or amendment to any Article of the UCC.
SECTION 2. GRANT OF SECURITY.
2.1 GRANT OF SECURITY. Each Grantor hereby assigns and transfers to the
Secured Party, and hereby grants to the Secured Party, a security interest and
continuing lien on all of such Grantor's right, title and interest in, to and
under all personal property of such Grantor including, but not limited to the
following, in each case whether now owned or existing or hereafter acquired or
arising and wherever located (all of which being hereinafter collectively
referred to as the "COLLATERAL"):
(a) Accounts;
(b) Chattel Paper;
(c) Documents;
(d) General Intangibles;
(e) Goods;
(f) Instruments;
(g) Insurance;
(h) Intellectual Property;
(i) Investment Related Property;
(j) Letter of Credit Rights;
(k) Money;
(l) Receivables and Receivable Records;
(m) Commercial Tort Claims;
8
(n) to the extent not otherwise included above, all Collateral
Records, Collateral Support and Supporting Obligations relating
to any of the foregoing; and
(o) to the extent not otherwise included above, all Proceeds,
products, accessions, rents and profits of or in respect of any
of the foregoing.
2.2 CERTAIN LIMITED EXCLUSIONS. Notwithstanding anything herein to the
contrary, in no event shall the security interest granted under Section 2.1
hereof attach to:
(a) any lease, license, contract, property rights or agreement to
which any Grantor is a party or any of its rights or interests thereunder if and
for so long as the grant of such security interest shall constitute or result in
(i) the abandonment, invalidation or unenforceability of any right, title or
interest of any Grantor therein or (ii) a breach or termination pursuant to the
terms of, or a default under, any such lease, license, contract, property rights
or agreement (other than to the extent that any such term would be rendered
ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any
successor provision or provisions) of any relevant jurisdiction or any other
applicable law (including the Bankruptcy Code) or principles of equity);
provided, however, that such security interest shall attach immediately at such
time as the condition causing such abandonment, invalidation or unenforceability
shall be remedied and to the extent severable, shall attach immediately to any
portion of such lease, license, contract, property rights or agreement that does
not result in any of the consequences specified in (i) or (ii) above;
(b) any of the outstanding capital stock of a Controlled Foreign
Corporation in excess of 65% of the voting power of all classes of capital stock
of such Controlled Foreign Corporation entitled to vote; provided, that
immediately upon the amendment of the Tax Code to allow the pledge of a greater
percentage of the voting power of capital stock in a Controlled Foreign
Corporation without adverse tax consequences, the Collateral shall include, and
the security interest granted by each Grantor shall attach to, such greater
percentage of capital stock of each Controlled Foreign Corporation; or
(c) any CRDA Investments (as defined in the Indenture); and
(d) any Gaming Related Items, provided that the security interest
granted under Section 2.1 hereof (i) shall attach to the Gaming Related Items to
the extent such attachment is not prohibited under the Casino Control Act; and
(ii) shall attach to the proceeds of Gaming Related Items to the extent such
attachment is not prohibited under the Casino Control Act.
SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE.
3.1 SECURITY FOR OBLIGATIONS. This Agreement secures, and the Collateral is
collateral security for, the prompt and complete payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. ss.362(a) (and any successor provision thereof)),
of all Obligations (the "SECURED OBLIGATIONS").
3.2 CONTINUING LIABILITY UNDER COLLATERAL. Notwithstanding anything herein
to the contrary, (i) each Grantor shall remain liable for all obligations under
the Collateral and nothing contained herein is intended or shall be a delegation
of duties to the Secured Party or any Holder, (ii) each Grantor shall remain
liable under each of the agreements included in the Collateral, including,
without limitation, any agreements relating to Pledged Partnership Interests or
Pledged LLC Interests, to perform all of the obligations undertaken by it
thereunder all in accordance with and pursuant to the terms and provisions
thereof and neither the Secured Party nor any Holder shall have any obligation
or liability under any of
9
such agreements by reason of or arising out of this Agreement or any other
document related thereto nor shall the Secured Party nor any Holder have any
obligation to make any inquiry as to the nature or sufficiency of any payment
received by it or have any obligation to take any action to collect or enforce
any rights under any agreement included in the Collateral, including, without
limitation, any agreements relating to Pledged Partnership Interests or Pledged
LLC Interests, and (iii) the exercise by the Secured Party of any of its rights
hereunder shall not release any Grantor from any of its duties or obligations
under the contracts and agreements included in the Collateral.
3.3 RELEASE. In accordance and subject to the terms and conditions of
Section 1017 of the Indenture, the Grantors may make any Asset Sale (as defined
in the Indenture) of Collateral and in connection therewith and subject to the
conditions and limitations set forth therein, may obtain from the Secured Party
a release of the Collateral subject to such Asset Sale, provided, however, that
Collateral Proceeds (as defined therein) (and any earnings thereon) may be
released from the Collateral Account only in accordance with Section 1404 of the
Indenture.
3.4 SUBORDINATION. Notwithstanding anything else herein to the contrary,
the Secured Party agrees, consents, and acknowledges for itself and on behalf of
the Holders that the Lien (as defined in the Indenture) of the Secured Party in
the Collateral shall be subject to the terms of the Indenture and subject and
inferior to any Lien to secure Working Capital Indebtedness (as defined in the
Indenture) whether incurred prior to, on or after the Issue Date and that Liens
to secure Working Capital Indebtedness shall for all purposes be and be deemed
to be superior to the Liens of the Secured Party under this Agreement and under
the Security Documents (as defined in the Indenture).
SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS.
4.1 GENERALLY.
(a) Representations and Warranties. Each Grantor hereby represents
and warrants to the Secured Party that:
(i) it owns the Collateral purported to be owned by it or otherwise
has the rights it purports to have in each item of Collateral and, as to
all Collateral whether now existing or hereafter acquired, will continue to
own or have such rights in each item of the Collateral, in each case free
and clear of any and all Liens, rights or claims of all other Persons other
than Permitted Liens, including, without limitation, liens arising as a
result of such Grantor becoming bound (as a result of merger or otherwise)
as debtor under a security agreement entered into by another Person;
(ii) it has indicated on Schedule 4.1(A) (as such schedule may be
amended or supplemented from time to time): (w) the type of organization of
such Grantor, (x) the jurisdiction of organization of such Grantor, (y) its
organizational identification number and (z) the jurisdiction where the
chief executive office or its sole place of business is, and for the
one-year period preceding the date hereof has been, located.
(iii) the full legal name of such Grantor is as set forth on
Schedule 4.1(A) and it has not done in the last five (5) years, and does
not do, business under any other name (including any trade-name or
fictitious business name) except for those names set forth on Schedule
4.1(B) (as such schedule may be amended or supplemented from time to
time);except as provided on Schedule 4.1(C), it has not changed its name,
jurisdiction of organization, chief
10
executive office or sole place of business or its corporate structure in
any way (e.g., by merger, consolidation, change in corporate form or
otherwise) within the past five (5) years;
(iv) it has not within the last five (5) years become bound
(whether as a result of merger or otherwise) as debtor under a security
agreement entered into by another Person, which has not heretofore been
terminated other than the agreements identified on Schedule 4.1(D) hereof
(as such schedule may be amended or supplemented from time to time);
(v) with respect to each agreement identified on Schedule 4.1(D),
it has indicated on Schedule 4.1(A) and Schedule 4.1(B) the information
required pursuant to Section 4.1(a)(ii), (iii) and (iv) with respect to the
debtor under each such agreement;
(vi) upon the filing of all UCC financing statements naming each
Grantor as debtor and the Secured Party as secured party and describing the
Collateral in the filing offices set forth opposite such Grantor's name on
Schedule 4.1(E) hereof (as such schedule may be amended or supplemented
from time to time) and other filings delivered by each Grantor, and the
delivery of an executed control agreement for the Collateral Account and
each Deposit Account (other than ZBA Accounts) listed in Schedule 4.4
hereof (as such schedule may be amended or supplemented from time to time)
in accordance with Section 4.4.4 hereof, the security interests granted to
the Secured Party hereunder in the Collateral (as such schedule may be
amended or supplemented from time to time), constitute valid and perfected
first priority Liens (subject only to Permitted Liens) on all of the
Collateral;
(vii) all actions and consents, including all filings, notices,
registrations and recordings necessary or desirable for the exercise by the
Secured Party of the voting or other rights provided for in this Agreement
or the exercise of remedies in respect of the Collateral have been made or
obtained;
(viii) other than the financing statements filed in favor of the
Secured Party, no effective UCC financing statement, fixture filing or
other instrument similar in effect under any applicable law covering all or
any part of the Collateral is on file in any filing or recording office
except for (x) financing statements for which proper termination statements
have been delivered to the Secured Party for filing and (y) financing
statements filed in connection with Permitted Liens;
(ix) no authorization, approval or other action by, and no notice
to or filing with, any Governmental Authority or regulatory body is
required for either (i) the pledge or grant by any Grantor of the Liens
purported to be created in favor of the Secured Party hereunder or (ii) the
exercise by Secured Party of any rights or remedies in respect of any
Collateral (whether specifically granted or created hereunder or created or
provided for by applicable law), except (A) for the filings contemplated by
clause (vii) above and (B) as may be required, in connection with the
disposition of any Investment Related Property, by laws generally affecting
the offering and sale of Securities;
(x) all information supplied by any Grantor with respect to any of
the Collateral (in each case taken as a whole with respect to any
particular Collateral) is accurate and complete in all material respects;
(xi) none of the Collateral constitutes, or is the Proceeds of,
"farm products" (as defined in the UCC);
11
(xii) it does not own any "as extracted collateral" (as defined in
the UCC) or any timber to be cut;
(xiii) such Grantor has not become bound as a debtor, either by
contract or by operation of law, by a security agreement previously entered
into by another Person; and
(xiv) such Grantor has been duly organized as an entity of the type
as set forth opposite such Grantor's name on Schedule 4.1(A) solely under
the laws of the jurisdiction as set forth opposite such Grantor's name on
Schedule 4.1(A) and remains duly existing as such. Such Grantor has not
filed any certificates of domestication, transfer or continuance in any
other jurisdiction.
(b) Covenants and Agreements. Each Grantor hereby covenants and agrees with
the Secured Party that from and after the date of this Agreement until the
payment in full of all Secured Obligations that:
(i) except for the security interest created by this Agreement, it
shall not create or suffer to exist any Lien upon or with respect to any of
the Collateral, except Permitted Liens, and such Grantor shall defend the
Collateral against all Persons at any time claiming any interest therein;
(ii) it shall not produce, use or permit any Collateral to be used
unlawfully or in violation of any provision of this Agreement, the
Indenture, or any applicable statute, regulation or ordinance or any policy
of insurance covering the Collateral;
(iii) it shall not change such Grantor's name, identity, corporate
structure (e.g., by merger, consolidation, change in corporate form or
otherwise) sole place of business, chief executive office, type of
organization, jurisdiction of organization, or state law identification
number required for UCC filings, if any, or establish any trade names
unless it shall have (a) notified the Secured Party in writing, by
executing and delivering to the Secured Party a completed Pledge
Supplement, substantially in the form of Exhibit A attached hereto,
together with all Supplements to Schedules thereto, at least thirty (30)
days prior to any such change or establishment, identifying such new
proposed name, identity, corporate structure, sole place of business, chief
executive office, jurisdiction of organization, state law identification
number, or trade name and providing such other information in connection
therewith as the Secured Party may reasonably request and (b) taken all
actions necessary or advisable to maintain the continuous validity,
perfection and the same or better priority of the Secured Party's security
interest in the Collateral intended to be granted and agreed to hereby;
(iv) if the Secured Party or any Holder gives value to enable
Grantor to acquire rights in or the use of any Collateral, it shall use
such value for such purposes and such Grantor further agrees that repayment
of any Obligation shall apply on a "first-in, first-out" basis so that the
portion of the value used to acquire rights in any Collateral shall be paid
in the chronological order such Grantor acquired rights therein;
(v) it shall pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the
Collateral, except to the extent the validity thereof is being contested in
good faith; provided, such Grantor shall in any event pay such taxes,
assessments, charges, levies or claims not later than five (5) days prior
to the date of any proposed sale under
12
any judgment, writ or warrant of attachment entered or filed against such
Grantor or any of the Collateral as a result of the failure to make such
payment;
(vi) upon such Grantor or any officer of such Grantor obtaining
knowledge thereof, it shall promptly notify the Secured Party in writing of
any event that may have a Material Adverse Effect on the value of the
Collateral or any portion thereof, the ability of any Grantor or the
Secured Party to dispose of the Collateral or any portion thereof, or the
rights and remedies of the Secured Party in relation thereto, including,
without limitation, the levy of any legal process against the Collateral or
any portion thereof;
(vii) it shall not take or permit any action which could impair the
Secured Party's rights in the Collateral; and
(viii) it shall not sell, transfer or assign (by operation of law
or otherwise) any Collateral except as set forth in Section 3.3 hereof and
Section 1017 of the Indenture.
4.2 EQUIPMENT AND INVENTORY.
(a) Representations and Warranties. Each Grantor represents and
warrants to the Secured Party that:
(i) all of the Equipment and Inventory included in the Collateral
is and has been kept for the past five (5) years only at the locations
specified in Schedule 4.2 (as such schedule may be amended or supplemented
from time to time);
(ii) any Goods now or hereafter produced by any Grantor included in
the Collateral have been and will be produced in compliance with the
requirements of the Fair Labor Standards Act, as amended; and
(iii) none of the Inventory or Equipment is in the possession of an
issuer of a negotiable document (as defined in Section 7-104 of the UCC)
therefor or otherwise in the possession of a bailee or a warehouseman.
(iv) the aggregate value of all motor vehicles owned by any Grantor
is less than $200,000.
(b) Covenants and Agreements. Each Grantor hereby covenants and agrees
with the Secured Party that from and after the date of this Agreement until the
payment in full of all Secured Obligations that:
(i) it shall keep the Equipment, Inventory and any Documents
evidencing any Equipment and Inventory in the locations specified on
Schedule 4.2 (as such schedule may be amended or supplemented from time to
time) unless it shall have (a) notified the Secured Party in writing, by
executing and delivering to the Secured Party a completed Pledge
Supplement, substantially in the form of Exhibit A attached hereto,
together with all Supplements to Schedules thereto, at least thirty (30)
days prior to any change in locations, identifying such new locations and
providing such other information in connection therewith as the Secured
Party may reasonably request and (b) taken all actions necessary or
advisable to maintain the continuous validity, perfection and the same or
better priority of the Secured Party's security interest in the Collateral
intended to be granted and agreed to hereby, or to enable the Secured Party
to exercise and enforce its rights and remedies hereunder, with respect to
such Equipment and Inventory;
13
(ii) it shall keep correct and accurate records of the Inventory,
itemizing and describing the kind, type and quantity of Inventory, such
Grantor's cost therefor and (where applicable) the current list prices for
the Inventory, in each case, in reasonable detail, as is customarily
maintained under similar circumstances by Persons of established reputation
engaged in similar business, and in any event in conformity with GAAP;
(iii) it shall not deliver any Document evidencing any Equipment
and Inventory to any Person other than the issuer of such Document to claim
the Goods evidenced therefor or the Secured Party;
(iv) if any Equipment or Inventory is in possession or control of
any third party, each Grantor shall join with the Secured Party in
notifying the third party of the Secured Party's security interest and
obtaining an acknowledgment from the third party that it is holding the
Equipment and Inventory for the benefit of the Secured Party; and
(v) with respect to any item of Equipment which is covered by a
certificate of title under a statute of any jurisdiction under the law of
which indication of a security interest on such certificate is required as
a condition of perfection thereof (A) provide information with respect to
any such Equipment in excess of $100,000 individually or $1,000,000 in the
aggregate, (B) execute and file with the registrar of motor vehicles or
other appropriate authority in such jurisdiction an application or other
document requesting the notation or other indication of the security
interest created hereunder on such certificate of title, and (C) deliver to
the Secured Party copies of all such applications or other documents filed
during such calendar quarter and copies of all such certificates of title
issued during such calendar quarter indicating the security interest
created hereunder in the items of Equipment covered thereby.
4.3 RECEIVABLES. Representations and Warranties. Each Grantor represents
and warrants to the Secured Party that:
(i) each Receivable has been created in the ordinary course and
represents an unsatisfied obligation of the Account Debtor and (a) is and
will be the legal, valid and binding obligation of the Account Debtor in
respect thereof, representing an unsatisfied obligation of such Account
Debtor, (b) is not and will not be subject to any setoffs, defenses, taxes,
counterclaims (except with respect to refunds, returns and allowances in
the ordinary course of business with respect to damaged merchandise) and
(c) is and will be in compliance with all applicable laws, whether federal,
state, local or foreign;
(ii) none of the Account Debtors in respect of any Receivable is
the government of the United States, any agency or instrumentality thereof,
any state or municipality or any foreign sovereign. No Receivable requires
the consent of the Account Debtor in respect thereof in connection with the
pledge hereunder, except any consent which has been obtained;
(iii) no Receivable is evidenced by, or constitutes, an Instrument
or Chattel Paper which has not been delivered to, or otherwise subjected to
the control of, the Secured Party to the extent required by, and in
accordance with, Section 4.3(c); and
(iv) each Grantor has delivered to the Secured Party a complete and
correct copy of each standard form of document under which a Receivable may
arise.
14
(b) Covenants and Agreements: Each Grantor hereby covenants and agrees with
the Secured Party that from and after the date of this Agreement until the
payment in full of all Secured Obligations that:
(i) it shall keep and maintain at its own cost and expense
satisfactory and complete records of the Receivables, including, but not
limited to, the originals of all documentation with respect to all
Receivables and records of all payments received and all credits granted on
the Receivables, all merchandise returned and all other dealings therewith;
(ii) it shall promptly transfer or cause to be transferred all
funds arising from the collection of all Receivables (1) to a Collection
Account listed on Schedule 4.4(A) hereto (as such schedule may be amended
or supplemented from time to time) and (2) in any event, no later than 2
Business Days after transfer to the Collection Account in clause (1) above,
to a Concentration Account listed on Schedule 4.4(A) hereto (as such
schedule may be amended or supplemented from time to time).
(iii) it shall ▇▇▇▇ conspicuously, in form and manner reasonably
satisfactory to the Secured Party, all Chattel Paper, Instruments and other
evidence of Receivables (other than any delivered to the Secured Party as
provided herein), as well as the Receivables Records with an appropriate
reference to the fact that the Secured Party has a security interest
therein;
(iv) it shall perform in all material respects all of its
obligations with respect to the Receivables;
(v) it shall not amend, modify, terminate or waive any provision of
any Receivable in any manner which could reasonably be expected to have a
Material Adverse Effect on the value of such Receivable as Collateral.
Other than in the ordinary course of business as generally conducted by it
on and prior to the date hereof, and except as otherwise provided in
subsection (v) below, following an Event of Default, such Grantor shall not
(w) grant any extension or renewal of the time of payment of any
Receivable, (x) compromise or settle any dispute, claim or legal proceeding
with respect to any Receivable for less than the total unpaid balance
thereof, (y) release, wholly or partially, any Person liable for the
payment thereof, or (z) allow any credit or discount thereon;
(vi) except as otherwise provided in this subsection, each Grantor
shall continue to collect all amounts due or to become due to such Grantor
under the Receivables and any Supporting Obligation and diligently exercise
each material right it may have under any Receivable, any Supporting
Obligation or Collateral Support, in each case, at its own expense, and in
connection with such collections and exercise, such Grantor shall take such
action as such Grantor or the Secured Party may deem necessary or
advisable. Notwithstanding the foregoing, the Secured Party shall have the
right at any time to notify, or require any Grantor to notify (and if so,
such Grantor shall so notify), any Account Debtor of the Secured Party's
security interest in the Receivables and any Supporting Obligation and, in
addition, at any time following the occurrence and during the continuation
of an Event of Default, the Secured Party may: (1) direct the Account
Debtors under any Receivables to make payment of all amounts due or to
become due to such Grantor thereunder directly to the Secured Party; (2)
notify, or require any Grantor to notify, each Person maintaining a lockbox
or similar arrangement to which Account Debtors under any Receivables have
been directed to make payment to remit all amounts representing collections
on checks and other payment items from time to time sent to or deposited in
such lockbox or other arrangement directly to the Secured Party; and (3)
enforce, at the expense of such Grantor, collection of any such Receivables
and to adjust, settle or compromise the amount
15
or payment thereof, in the same manner and to the same extent as such
Grantor might have done; provided, the Secured Party shall not take any of
the actions set forth in this sentence if and to the extent that such
action is prohibited under any federal or state law. If the Secured Party
notifies any Grantor that it has elected to collect the Receivables in
accordance with the preceding sentence, any payments of Receivables
received by such Grantor shall be forthwith (and in any event within two
(2) Business Days) deposited by such Grantor in the exact form received,
duly indorsed by such Grantor to the Secured Party if required, in a
Collection Account maintained under the sole dominion and control of the
Secured Party, and until so turned over, all amounts and proceeds
(including checks and other instruments) received by such Grantor in
respect of the Receivables, any Supporting Obligation or Collateral Support
shall be received in trust for the benefit of the Secured Party hereunder
and shall be segregated from other funds of such Grantor and such Grantor
shall not adjust, settle or compromise the amount or payment of any
Receivable, or release wholly or partly any Account Debtor or obligor
thereof, or allow any credit or discount thereon;
(vii) it shall use its best efforts to keep in full force and
effect any Supporting Obligation or Collateral Support relating to any
Receivable.
(c) Delivery and Control of Receivables. With respect to any Receivables
in excess of $100,000 individually or $1,000,000 in the aggregate that are
evidenced by, or constitute, Chattel Paper or Instruments, each Grantor shall
cause each originally executed copy thereof to be delivered to the Secured Party
(or its agent or designee) appropriately indorsed to the Secured Party or
indorsed in blank: (i) with respect to any such Receivables in existence on the
date hereof, on or prior to the date hereof and (ii) with respect to any such
Receivables hereafter arising, within ten (10) days of such Grantor acquiring
rights therein. With respect to any Receivables in excess of $100,000
individually or $1,000,000 in the aggregate which would constitute "electronic
chattel paper" under Article 9 of the UCC, each Grantor shall take all steps
necessary to give the Secured Party control over such Receivables (within the
meaning of Section 9-105 of the UCC): (i) with respect to any such Receivables
in existence on the date hereof, on or prior to the date hereof and (ii) with
respect to any such Receivables hereafter arising, within ten (10) days of such
Grantor acquiring rights therein. Any Receivable not otherwise required to be
delivered or subjected to the control of the Secured Party in accordance with
this subsection (c) shall be delivered or subjected to such control upon request
of the Secured Party.
4.4 INVESTMENT RELATED PROPERTY.
4.4.1 INVESTMENT RELATED PROPERTY GENERALLY
(a) Covenants and Agreements. Each Grantor hereby covenants and agrees
with the Secured Party that from and after the date of this Agreement until the
payment in full of all Secured Obligations that:
(i) in the event it acquires rights in any Investment Related
Property after the date hereof, it shall deliver to the Secured Party a
completed Pledge Supplement, substantially in the form of Exhibit A
attached hereto, together with all Supplements to Schedules thereto,
reflecting such new Investment Related Property and all other Investment
Related Property. Notwithstanding the foregoing, it is understood and
agreed that the security interest of the Secured Party shall attach to all
Investment Related Property immediately upon any Grantor's acquisition of
rights therein and shall not be affected by the failure of any Grantor to
deliver a supplement to Schedule 4.4 as required hereby;
16
(ii) in the event such Grantor receives any dividends, interest or
distributions on any Investment Related Property, or any securities or
other property upon the merger, consolidation, liquidation or dissolution
of any issuer of any Investment Related Property, then (a) such dividends,
interest or distributions and securities or other property shall be
included in the definition of Collateral without further action and (b)
such Grantor shall immediately take all steps, if any, necessary or
advisable to ensure the validity, perfection, priority and, if applicable,
control of the Secured Party over all of the foregoing, including, without
limitation, such Investment Related Property (including, without
limitation, delivery thereof to the Secured Party) and pending any such
action such Grantor shall be deemed to hold such dividends, interest,
distributions, securities or other property in trust for the benefit of the
Secured Party and shall be segregated from all other property of such
Grantor; and
(iii) each Grantor consents to the grant by each other Grantor of a
Security Interest in all Investment Related Property to the Secured Party.
(b) Delivery and Control.
Each Grantor agrees that, with respect to any Investment Related Property
in which it currently has rights it shall comply with the provisions of
this Section 4.4 on or before the Issue Date and that, with respect to any
Investment Related Property hereafter acquired by such Grantor it shall
comply with the provisions of this Section 4.4 immediately upon acquiring
rights therein, in each case in form and substance satisfactory to the
Secured Party. With respect to any Investment Related Property that is
represented by a certificate or that is an "instrument" (other than any
Investment Related Property credited to a Securities Account) it shall
cause such certificate or instrument to be delivered to the Secured Party,
indorsed in blank by an "effective indorsement" (as defined in Section
8-107 of the UCC), regardless of whether such certificate constitutes a
"certificated security" for purposes of the UCC. With respect to any
Investment Related Property that is an "uncertificated security" for
purposes of the UCC (other than any "uncertificated securities" credited to
a Securities Account), it shall cause the issuer of such uncertificated
security to either (i) register the Secured Party as the registered owner
thereof on the books and records of the issuer or (ii) execute an
uncertificated securities control agreement in form acceptable to the
Secured Party, pursuant to which such issuer agrees to comply with the
Secured Party's instructions with respect to such uncertificated security
without further consent by such Grantor.
(c) Voting and Distributions.
(i) So long as no Event of Default shall have occurred and be
continuing:
(1) except as otherwise provided under the covenants and agreements
relating to Investment Related Property in this Agreement or elsewhere
herein or in the Indenture, each Grantor shall be entitled to exercise
or refrain from exercising any and all voting and other consensual
rights pertaining to the Investment Related Property or any part
thereof for any purpose not inconsistent with the terms of this
Agreement or the Indenture; and
(2) the Secured Party shall promptly execute and deliver (or cause to be
executed and delivered) to each Grantor all proxies, and other
instruments as such Grantor may from time to time reasonably request
for the purpose of enabling such Grantor to exercise the voting and
other consensual rights when and to the extent which it is entitled to
exercise pursuant to clause (A) above;
17
(ii) Upon the occurrence and during the continuation of an Event
of Default:
(1) all rights of each Grantor to exercise or refrain from
exercising the voting and other consensual rights which
it would otherwise be entitled to exercise pursuant
hereto shall cease and all such rights shall thereupon
become vested in the Secured Party who shall thereupon
have the sole right to exercise such voting and other
consensual rights; and
(2) in order to permit the Secured Party to exercise the
voting and other consensual rights which it may be
entitled to exercise pursuant hereto and to receive all
dividends and other distributions which it may be
entitled to receive hereunder: (a) each Grantor shall
promptly execute and deliver (or cause to be executed
and delivered) to the Secured Party all proxies,
dividend payment orders and other instruments as the
Secured Party may from time to time reasonably request
and (b) the each Grantor acknowledges that the Secured
Party may utilize the power of attorney set forth in
Section 6.
4.4.2 PLEDGED EQUITY INTERESTS
(a) Representations and Warranties. Each Grantor hereby
represents and warrants to the Secured Party that:
(i) Schedule 4.4(A) (as such schedule may be amended or
supplemented from time to time) sets forth under the headings
"Pledged Stock, "Pledged LLC Interests," "Pledged Partnership
Interests" and "Pledged Trust Interests," respectively, all of
the Pledged Stock, Pledged LLC Interests, Pledged Partnership
Interests and Pledged Trust Interests owned by any Grantor and
such Pledged Equity Interests constitute the percentage of issued
and outstanding shares of stock, percentage of membership
interests, percentage of partnership interests or percentage of
beneficial interest of the respective issuers thereof indicated
on such Schedule;
(ii) except as set forth on Schedule 4.4(B), it has not
acquired any equity interests of another entity or substantially
all the assets of another entity within the past five (5) years;
(iii) it is the record and beneficial owner of the Pledged
Equity Interests free of all Liens, rights or claims of other
Persons other than Permitted Liens and there are no outstanding
warrants, options or other rights to purchase, or shareholder,
voting trust or similar agreements outstanding with respect to,
or property that is convertible into, or that requires the
issuance or sale of, any Pledged Equity Interests;
(iv) without limiting the generality of Section
4.1(a)(viii), no consent of any Person including any other
general or limited partner, any other member of a limited
liability company, any other shareholder or any other trust
beneficiary is necessary or desirable in connection with the
creation, perfection or first priority status of the security
interest of the Secured Party in any Pledged Equity Interests or
the exercise by the Secured Party of the voting or other rights
provided for in this Agreement or the exercise of remedies in
respect thereof;
(v) none of the Pledged LLC Interests nor Pledged
Partnership Interests are held in a securities account or
represent interests in issuers that are: (a) registered as
investment companies, (b) are dealt in or traded on securities
exchanges or markets, (c) have opted to be treated as securities
under the uniform commercial code of any jurisdiction;
18
(b) Covenants and Agreements. Each Grantor hereby covenants
and agrees with the Secured Party that from and after the date of this Agreement
until the payment in full of all Secured Obligations that:
(i) without the prior written consent of the Secured Party,
it shall not vote to enable or take any other action to: (a)
amend or terminate any partnership agreement, limited liability
company agreement, certificate of incorporation, by-laws or other
organizational documents in any way that materially changes the
rights of such Grantor with respect to any Investment Related
Property or adversely affects the validity, perfection or
priority of the Secured Party's security interest, (b) permit any
issuer of any Pledged Equity Interest to issue any additional
stock, partnership interests, limited liability company interests
or other equity interests of any nature or to issue securities
convertible into or granting the right of purchase or exchange
for any stock or other equity interest of any nature of such
issuer, (c) other than as permitted under the Indenture, permit
any issuer of any Pledged Equity Interest to dispose of all or a
material portion of their assets, (d) waive any default under or
breach of any terms of organizational document relating to the
issuer of any Pledged Equity Interest or the terms of any Pledged
Debt, or (e) cause any issuer of any Pledged Partnership
Interests or Pledged LLC Interests which are not securities (for
purposes of the UCC) on the date hereof to elect or otherwise
take any action to cause such Pledged Partnership Interests or
Pledged LLC Interests to be treated as securities for purposes of
the UCC; provided, however, notwithstanding the foregoing, if any
issuer of any Pledged Partnership Interests or Pledged LLC
Interests takes any such action in violation of the foregoing in
this clause (e), such Grantor shall promptly notify the Secured
Party in writing of any such election or action and, in such
event, shall take all steps necessary or advisable to establish
the Secured Party's "control" thereof;
(ii) it shall comply with all of its obligations under any
partnership agreement or limited liability company agreement
relating to Pledged Partnership Interests or Pledged LLC
Interests and shall enforce all of its rights with respect to any
Investment Related Property;
(iii) without the prior written consent of the Secured
Party, it shall not permit any issuer of any Pledged Equity
Interest to merge or consolidate unless (i) the surviving or
resulting entity becomes bound as a Grantor hereunder and the
security interest of the Secured Party in collateral in which
such new Grantor has or acquires rights is perfected by a filed
financing statement (that is not effective solely under section
9-508 of the UCC) and (ii) all the outstanding capital stock or
other equity interests of the surviving or resulting corporation,
limited liability company, partnership or other entity is, upon
such merger or consolidation, pledged hereunder and no cash,
securities or other property is distributed in respect of the
outstanding equity interests of any other constituent Grantors;
provided, that if the surviving or resulting Grantors upon any
such merger or consolidation involving an issuer which is a
Controlled Foreign Corporation, then such Grantor shall only be
required to pledge equity interests in accordance with Section
2.2;
(iv) each Grantor consents to the grant by each other
Grantor of a security interest in all Investment Related Property
to the Secured Party and, without limiting the foregoing,
consents to the transfer of any Pledged Partnership Interest and
any Pledged LLC Interest to the Secured Party or its nominee
following an Event of Default and to the substitution of the
Secured Party or its nominee as a partner in any partnership or
as a member in any limited liability company with all the rights
and powers related thereto; and
19
(v) it shall notify the Secured Party of any default under
any Pledged Debt that has caused, either in any case or in the
aggregate, a Material Adverse Effect.
(c) In addition, as provided in Section 4.4.1(c), the provisions
of Section 4.4.1(c) shall apply to Pledged Equity Interests.
4.4.3 PLEDGED DEBT
(a) Representations and Warranties. Each Grantor hereby
represents and warrants to the Secured Party that Schedule 4.4 (as such schedule
may be amended or supplemented from time to time) sets forth under the heading
"Pledged Debt" all of the Pledged Debt owned by any Grantor and all of such
Pledged Debt has been duly authorized, authenticated or issued, and delivered
and is the legal, valid and binding obligation of the issuers thereof and is not
in default and constitutes all of the issued and outstanding inter-company
Indebtedness evidenced by an instrument or certificated security of the
respective issuers thereof owing to such Grantor;
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees that it shall notify the Secured Party of any default under any Pledged
Debt that has caused, either in any case or in the aggregate, a Material Adverse
Effect.
4.4.4 INVESTMENT ACCOUNTS
(a) Representations and Warranties. Each Grantor hereby
represents and warrants to the Secured Party that:
(i) Schedule 4.4 hereto (as such schedule may be amended or
supplemented from time to time) sets forth under the headings
"Securities Accounts" and "Commodities Accounts," respectively,
all of the Securities Accounts and Commodities Accounts in which
each Grantor has an interest. Each Grantor is the sole
entitlement holder of each Securities Account and Commodities
Account opposite its name, and such Grantor has not consented to,
and is not otherwise aware of, any Person (other than the Secured
Party pursuant hereto) having "control" (within the meanings of
Sections 8-106 and 9-106 of the UCC) over, or any other interest
in, any such Securities Account or Commodity Account or any
securities or other property credited thereto;
(ii) Schedule 4.4(A) hereto (as such schedule may be amended
or supplemented from time to time) sets forth under the heading
"Deposit Accounts: Concentration Accounts" all of the
Concentration Accounts in which each Grantor has an interest, and
Schedule 4.4(A) hereto (as such schedule may be amended or
supplemented from time to time) sets forth under the headings
"Deposit Accounts: Collection Account", "Deposit Accounts:
Collateral Account", "Deposit Accounts: ZBA Accounts", and
"Deposit Accounts: Others," respectively, all Deposit Accounts
(other than Concentration Accounts) in which each Grantor has an
interest. Each Grantor is the sole account holder of each Deposit
Account listed on Schedule 4.4(A) opposite its name and such
Grantor has not consented to, and is not otherwise aware of, any
Person (other than the Trustee pursuant hereto) having either
sole dominion and control (within the meaning of common law) or
"control" (within the meaning of Section 9-104 of the UCC) over,
or any other interest in, any such Deposit Account or any money
or other property deposited therein; and
(iii) each Grantor has taken all actions necessary or
desirable, including those specified in Section 4.4(b) to: (a)
establish the Secured Party's "control" (within the meanings of
20
Sections 8-106 and 9-106 or 9-104, as applicable of the UCC) over
any portion of the Investment Related Property constituting
certificated securities, uncertificated securities, Securities
Accounts, securities entitlements, Concentration Accounts,
Collection Accounts or Commodities Accounts (each as defined
herein, or if not defined herein, as defined in the UCC); (b)
establish the Secured Party's "control" (within the meaning of
Section 9-104 of the UCC) over all Deposit Accounts (other than
ZBA Accounts); and (d) to deliver all Instruments to the Secured
Party.
(b) Covenants and Agreement. Each Grantor hereby covenants and
agrees with the Secured Party that from and after the date of this Agreement
until the payment in full of all Secured Obligations that it shall not close or
terminate any Deposit Account (other than ZBA Accounts) without the prior
consent of the Secured Party and unless a successor or replacement account has
been established with the consent of the Secured Party with respect to which
successor or replacement account such Grantor has taken all actions necessary to
comply with the provisions of Section 4.4.4(c). The Company hereby covenants and
agrees that the Deposit Account numbered 9429354435 held by Fleet National Bank
in the name of the Company, shall not, at any time, hold greater than $1,000.00.
(c) Delivery and Control
(i) Each Grantor agrees that, with respect to any Investment
Related Property in which it currently has rights it shall comply
with the provisions of this Section 4.4.4(c) on or before the
Issue Date and, with respect to any Investment Related Property
hereafter acquired by such Grantor, it shall comply with the
provisions of this Section 4.4.4(c) immediately upon acquiring
rights therein. With respect to any Investment Related Property
consisting of Securities Accounts, Securities Entitlements,
Commodities Accounts, or Deposit Accounts (other than ZBA
Accounts), it shall cause the securities intermediary or
depositary institution, as the case may be, maintaining such
Securities Account, Securities Entitlement, Commodities Accounts,
or Deposit Accounts (other than ZBA Accounts), to enter into an
agreement substantially in the form of Exhibit C hereto pursuant
to which it shall agree to comply with the Secured Party's
"entitlement orders" or "instructions", as the case may be,
without further consent by such Grantor. Each Grantor shall have
entered into such control agreement or agreements with respect
to: (i) any Securities Accounts, Securities Entitlements,
Commodities Accounts, or Deposit Accounts (other than ZBA
Accounts), that exist on the Issue Date, as of or prior to the
Issue Date, and (ii) any Securities Accounts, Securities
Entitlements, Commodities Accounts, or Deposit Accounts (other
than ZBA Accounts), that are created or acquired after the Issue
Date, as of or prior to the deposit or transfer of any such
Securities Entitlements or funds, whether constituting moneys or
investments, into such Securities Accounts, Concentration
Accounts, Commodities Accounts, or Deposit Accounts (other than
ZBA Accounts).
In addition to the foregoing, if any issuer of any Investment
Related Property is located in a jurisdiction outside of the
United States, each Grantor shall take such additional actions,
including, without limitation, causing the issuer to register the
pledge on its books and records or making such filings or
recordings, in each case as may be necessary or advisable, under
the laws of such issuer's jurisdiction to insure the validity,
perfection and priority of the security interest of the Secured
Party. Upon the occurrence of an Event of Default, the Secured
Party shall have the right, without notice to any Grantor, to
transfer all or any portion of the Investment Related Property to
its name or the name of its nominee or agent. In addition, the
Secured Party shall have the right at any time, without notice to
any Grantor, to exchange any certificates or instruments
representing any Investment Related Property for certificates or
instruments of smaller or larger denominations.
21
4.5 MATERIAL CONTRACTS.
(a) Representations and Warranties. Each Grantor hereby
represents and warrants to the Secured Party that:
(i) Schedule 4.5 (as such schedule may be amended or
supplemented from time to time) sets forth all of the Material
Contracts to which such Grantor has rights;
(ii) the Material Contracts have been duly authorized,
executed and delivered by all parties thereto, are in full force
and effect and are binding upon and enforceable against all
parties thereto in accordance with their respective terms. There
exists no default under any Material Contract by any party
thereto and neither such Grantor, nor to its best knowledge, any
other Person party thereto is likely to become in default
thereunder and no Person party thereto has any defenses,
counterclaims or right of set-off with respect to any Material
Contract. Each Person party to a Material Contract (other than
any Grantor), whose consent is required for assignment thereof,
has executed and delivered to the applicable Grantor a consent to
the assignment of such Material Contract to the Secured Party
pursuant to this Agreement; and
(iii) no Material Contract prohibits assignment or requires
consent of or notice to any Person in connection with the
assignment to the Secured Party hereunder, except such as has
been given or made.
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees that:
(i) in addition to any rights under the Section of this
Agreement relating to Receivables, the Secured Party may at any
time notify, or require any Grantor to so notify, the
counterparty on any Material Contract of the security interest of
the Secured Party therein; provided, the Secured Party shall not
take any of the actions set forth in this sentence if and to the
extent such action is prohibited under any federal or state law.
In addition, after the occurrence and during the continuance of
an Event of Default, the Secured Party may upon written notice to
the applicable Grantor, notify, or require any Grantor to notify,
the counterparty to make all payments under the Material
Contracts directly to the Secured Party;
(ii) each Grantor shall deliver promptly to the Secured
Party a copy of each material demand, notice or document received
by it relating in any way to any Material Contract;
(iii) each Grantor shall deliver promptly to the Secured
Party, and in any event within ten (10) Business Days, after (1)
any Material Contract of such Grantor is terminated or amended in
a manner that is materially adverse to such Grantor or (2) any
new Material Contract is entered into by such Grantor, a written
statement describing such event, with copies of such material
amendments or new contracts, delivered to the Secured Party (to
the extent such delivery is permitted by the terms of any such
Material Contract, provided, no prohibition on delivery shall be
effective if it were bargained for by such Grantor with the
intent of avoiding compliance with this Section 4.5(b)(iii)), and
an explanation of any actions being taken with respect thereto;
(iv) it shall perform in all material respects all of its
obligations with respect to the Material Contracts;
(v) it shall promptly and diligently exercise each material
right (except the right of termination) it may have under any
Material Contract, any Supporting Obligation or Collateral
Support, in each case, at its own expense, and in connection with
such collections and
22
exercise, such Grantor shall take such action as such Grantor or
the Secured Party may deem necessary or advisable;
(vi) it shall use its best efforts to keep in full force and
effect any Supporting Obligation or Collateral Support relating
to any Material Contract;
(vii) with respect to any agreement, contract or license to
which any Grantor is a party that prevents the assignment or
granting of a security interest therein (either by its terms or
by any federal or state statutory prohibition or otherwise) (any
such agreement, contract or license, a "NON-ASSIGNABLE
CONTRACT"), each Grantor shall, within thirty (30) days of the
date hereof with respect to any Non-Assignable Contract in effect
on the date hereof and within thirty (30) days after entering
into any Non-Assignable Contract after the Issue Date, request in
writing the consent of the counterparty or counterparties to the
Non-Assignable Contract pursuant to the terms of such
Non-Assignable Contract or applicable law to the assignment or
granting of a security interest in such Non-Assignable Contract
to Secured Party and use its best efforts to obtain such consent
as soon as practicable thereafter; and
(viii) At the request of the Secured Party at any time after
the date hereof, ACE shall execute and deliver a mortgage and
security agreement, in recordable form and otherwise in form and
substance acceptable to the Secured Party, pursuant to which ACE
grants to the Secured Party a first priority lien on and security
interest in ACE's right, title and interest as lessee/licensee
under the B&B License Agreement. In connection therewith, ACE
shall execute and/or deliver or cause to be executed and/or
delivered to the Secured Party such other documents and
agreements, including without limitation an affidavit of title, a
lessor's estoppel certificate from ACE's lessor/licensor and any
other documents that would normally and customarily be required
by a secured party receiving a leasehold mortgage in an
arm's-length transaction, as shall be reasonably required by the
Secured Party in order to effectuate, implement, confirm or
secure the arrangement evidenced by such mortgage and security
agreement. All costs in connection with such mortgage and
security agreement shall be paid by ACE.
4.6 LETTER OF CREDIT RIGHTS. (a) Representations and Warranties. Each
Grantor hereby represents and warrants to the Secured Party that:
(i) all material letters of credit to which such Grantor has
rights is listed on Schedule 4.6 (as such schedule may be amended or
supplemented from time to time) hereto; and
(ii) it has obtained the consent of each issuer of any material
letter of credit to the assignment of the proceeds of the letter of
credit to the Secured Party.
(b) Covenants and Agreements. Each Grantor hereby covenants and agrees
with the Secured Party that from and after the date of this Agreement until the
payment in full of all Secured Obligations that with respect to any material
letter of credit hereafter arising it shall obtain the consent of the issuer
thereof to the assignment of the proceeds of the letter of credit to the Secured
Party and shall deliver to the Secured Party a completed Pledge Supplement,
substantially in the form of Exhibit A attached hereto, together with all
Supplements to Schedules thereto.
23
4.7 INTELLECTUAL PROPERTY.
(a) Representations and Warranties. Except as disclosed in
Schedule 4.7(H) (as such schedule may be amended or supplemented from time to
time), each Grantor hereby represents and warrants to the Secured Party that:
(i) Schedule 4.7 (as such schedule may be amended or
supplemented from time to time) sets forth a true and complete
list of (i) all United States, state and foreign registrations of
and applications for Patents, Trademarks, and Copyrights owned by
each Grantor and (ii) all Patent Licenses, Trademark Licenses and
Copyright Licenses material to the business of such Grantor;
(ii) it is the sole and exclusive owner of the entire right,
title, and interest in and to all Intellectual Property on
Schedule 4.7 (as such schedule may be amended or supplemented
from time to time), and owns or has the valid right to use all
other Intellectual Property used in or necessary to conduct its
business, free and clear of all Liens, claims, encumbrances and
licenses, except for Permitted Liens and the licenses set forth
on Schedule 4.7(B), (D), (F) and (G) (as each may be amended or
supplemented from time to time);
(iii) all Intellectual Property is subsisting and has not
been adjudged invalid or unenforceable, in whole or in part, and
each Grantor has performed all acts and has paid all renewal,
maintenance, and other fees and taxes required to maintain each
and every registration and application of Intellectual Property
in full force and effect;
(iv) all Intellectual Property is valid and enforceable; no
holding, decision, or judgment has been rendered in any action or
proceeding before any court or administrative authority
challenging the validity of, such Grantor's right to register, or
such Grantor's rights to own or use, any Intellectual Property
and no such action or proceeding is pending or, to the best of
such Grantor's knowledge, threatened;
(v) all registrations and applications for Copyrights,
Patents and Trademarks are standing in the name of each Grantor,
and none of the Trademarks, Patents, Copyrights or Trade Secret
Collateral has been licensed by any Grantor to any affiliate or
third party, except as disclosed in Schedule 4.7(B), (D), (F), or
(G) (as each may be amended or supplemented from time to time);
(vi) each Grantor has been using appropriate statutory
notice of registration in connection with its use of registered
Trademarks, proper marking practices in connection with the use
of Patents, and appropriate notice of copyright in connection
with the publication of Copyrights material to the business of
such Grantor;
(vii) each Grantor uses adequate standards of quality in the
manufacture, distribution, and sale of all products sold and in
the provision of all services rendered under or in connection
with all Trademark Collateral and has taken all action necessary
to insure that all licensees of the Trademark Collateral owned by
such Grantor use such adequate standards of quality;
(viii) the conduct of such Grantor's business does not
infringe upon any trademark, patent, copyright, trade secret or
similar intellectual property right owned or controlled by a
third party; no claim has been made that the use of any
Intellectual Property owned or used by Grantor (or any of its
respective licensees) violates the asserted rights of any third
party;
24
(ix) to the best of each Grantor's knowledge, no third party
is infringing upon any Intellectual Property owned or used by
such Grantor, or any of its respective licensees;
(x) no settlement or consents, covenants not to ▇▇▇,
nonassertion assurances, or releases have been entered into by
Grantor or to which Grantor is bound that adversely effect
Grantor's rights to own or use any Intellectual Property; and
(xi) each Grantor has not made a previous assignment, sale,
transfer or agreement constituting a present or future
assignment, sale, transfer or agreement of any Intellectual
Property that has not been terminated or released. There is no
effective financing statement or other document or instrument now
executed, or on file or recorded in any public office, granting a
security interest in or otherwise encumbering any part of the
Intellectual Property, other than in favor of the Secured Party.
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees with the Secured Party that from and after the date of this Agreement
until the payment in full of all Secured Obligations that:
(i) it shall not do any act or omit to do any act whereby
any of the Intellectual Property which is material to the
business of Grantor may lapse, or become abandoned, dedicated to
the public, or unenforceable, or which would adversely affect the
validity, grant, or enforceability of the security interest
granted therein;
(ii) it shall not, with respect to any Trademarks which are
material to the business of any Grantor, cease the use of any of
such Trademarks or fail to maintain the level of the quality of
products sold and services rendered under any of such Trademark
at a level at least substantially consistent with the quality of
such products and services as of the date hereof, and each
Grantor shall take all steps necessary to insure that licensees
of such Trademarks use such consistent standards of quality;
(iii) it shall, within thirty (30) days of the creation or
acquisition of any copyrightable work which is material to the
business of Grantor, apply to register the Copyright in the
United States Copyright Office;
(iv) it shall promptly notify the Secured Party if it knows
or has reason to know that any item of the Intellectual Property
that is material to the business of any Grantor may become (a)
abandoned or dedicated to the public or placed in the public
domain, (b) invalid or unenforceable, or (c) subject to any
adverse determination or development (including the institution
of proceedings) in any action or proceeding in the United States
Patent and Trademark Office, the United States Copyright Office,
and state registry, any foreign counterpart of the foregoing, or
any court;
(v) it shall take all reasonable steps in the United States
Patent and Trademark Office, the United States Copyright Office,
any state registry or any foreign counterpart of the foregoing,
to pursue any application and maintain any registration of each
Trademark, Patent, and Copyright owned by any Grantor and
material to its business which is now or shall become included in
the Intellectual Property (except for such works with respect to
which such Grantor has determined in the exercise of its
commercially reasonable judgment that it shall not seek
registration) including, but not limited to, those items on
Schedule 4.7(A), (C) and (E) (as each may be amended or
supplemented from time to time);
25
(vi) in the event that any Intellectual Property owned by or
exclusively licensed to any Grantor is infringed,
misappropriated, or diluted by a third party, such Grantor shall
promptly take all reasonable actions to stop such infringement,
misappropriation, or dilution and protect its exclusive rights in
such Intellectual Property including, but not limited to, the
initiation of a suit for injunctive relief and to recover
damages;
(vii) it shall promptly (but in no event more than thirty
(30) days after any Grantor obtains knowledge thereof) report to
the Secured Party (i) the filing of any application to register
any Intellectual Property with the United States Patent and
Trademark Office, the United States Copyright Office, or any
state registry or foreign counterpart of the foregoing (whether
such application is filed by such Grantor or through any agent,
employee, licensee, or designee thereof) and (ii) the
registration of any Intellectual Property by any such office, in
each case by executing and delivering to the Secured Party a
completed Pledge Supplement, substantially in the form of Exhibit
A attached hereto, together with all Supplements to Schedules
thereto;
(viii) it shall, promptly upon the reasonable request of the
Secured Party, execute and deliver to the Secured Party any
document required to acknowledge, confirm, register, record, or
perfect the Secured Party's interest in any part of the
Intellectual Property, whether now owned or hereafter acquired;
(ix) except with the prior consent of the Secured Party or
as permitted under the Indenture, each Grantor shall not execute,
and there will not be on file in any public office, any financing
statement or other document or instruments, except financing
statements or other documents or instruments filed or to be filed
in favor of the Secured Party and each Grantor shall not sell,
assign, transfer, license, grant any option, or create or suffer
to exist any Lien upon or with respect to the Intellectual
Property, except for the Lien created by and under this Agreement
the Notes, the Indenture, and the other Security Documents (as
defined in the Indenture);
(x) it shall hereafter use commercially reasonable efforts
so as not to permit the inclusion in any contract to which it
hereafter becomes a party of any provision that could or might in
any way materially impair or prevent the creation of a security
interest in, or the assignment of, such Grantor's rights and
interests in any property included within the definitions of any
Intellectual Property acquired under such contracts;
(xi) it shall take all steps reasonably necessary to protect
the secrecy of all trade secrets relating to the products and
services sold or delivered under or in connection with the
Intellectual Property, including, without limitation, entering
into confidentiality agreements with employees and labeling and
restricting access to secret information and documents;
(xii) it shall use proper statutory notice in connection
with its use of any of the Intellectual Property; and
(xiii) it shall continue to collect, at its own expense, all
amounts due or to become due to such Grantor in respect of the
Intellectual Property or any portion thereof. In connection with
such collections, each Grantor may take (and, at the Secured
Party's reasonable direction, shall take) such action as such
Grantor or the Secured Party may deem reasonably necessary or
advisable to enforce collection of such amounts. Notwithstanding
the foregoing, the Secured Party shall have the right at any
time, to notify, or require any Grantor to notify, any obligors
with respect to any such amounts of the existence of the security
interest created hereby.
26
4.8 COMMERCIAL TORT CLAIMS
(a) Representations and Warranties. Each Grantor hereby
represents and warrants to the Secured Party that Schedule 4.8 (as such schedule
may be amended or supplemented from time to time) sets forth all Commercial Tort
Claims of each Grantor in excess of $100,000 individually or $1,000,000 in the
aggregate; and
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees with the Secured Party that from and after the date of this Agreement
until the payment in full of all Secured Obligations, the cancellation or
termination of the Commitments and the cancellation or expiration of all
outstanding letters of credit that with respect to any Commercial Tort Claim in
excess of $100,000 individually or $1,000,000 in the aggregate hereafter arising
it shall deliver to the Secured Party a completed Pledge Supplement,
substantially in the form of Exhibit A attached hereto, together with all
Supplements to Schedules thereto, identifying such new Commercial Tort Claims.
SECTION 5. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL
GRANTORS.
5.1 ACCESS; RIGHT OF INSPECTION. The Secured Party shall at all times have
full and free access during normal business hours to all the books,
correspondence and records of each Grantor, and the Secured Party and its
representatives may examine the same, take extracts therefrom and make
photocopies thereof, and each Grantor agrees to render to the Secured Party, at
such Grantor's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. The Secured Party and its
representatives shall at all times also have the right to enter any premises of
each Grantor and inspect any property of each Grantor where any of the
Collateral of such Grantor granted pursuant to this Agreement is located for the
purpose of inspecting the same, observing its use or otherwise protecting its
interests therein.
5.2 FURTHER ASSURANCES. (a) Each Grantor agrees that from time to time, at
the expense of such Grantor, that it shall promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Secured Party may reasonably request, in
order to create and/or maintain the validity, perfection or priority of and
protect any security interest granted or purported to be granted hereby or to
enable the Secured Party to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of the
foregoing, each Grantor shall:
(i) file such financing or continuation statements, or amendments
thereto, and execute and deliver such other agreements, instruments,
endorsements, powers of attorney or notices, as may be necessary or
desirable, or as the Secured Party may reasonably request, in order to
perfect and preserve the security interests granted or purported to be
granted hereby;
(ii) take all actions necessary to ensure the recordation of
appropriate evidence of the liens and security interest granted
hereunder in the Intellectual Property with any intellectual property
registry in which said Intellectual Property is registered or in which
an application for registration is pending including, without
limitation, the United States Patent and Trademark Office, the United
States Copyright Office, the various Secretaries of State, and the
foreign counterparts on any of the foregoing;
(iii) at any reasonable time, upon request by the Secured Party,
exhibit the Collateral to and allow inspection of the Collateral by
the Secured Party, or persons designated by the Secured Party; and
27
(iv) at the Secured Party's request, appear in and defend any
action or proceeding that may affect such Grantor's title to or the
Secured Party's security interest in all or any part of the
Collateral.
(b) Each Grantor hereby authorizes the Secured Party to file a
Record or Records, including, without limitation, financing or continuation
statements, and amendments thereto, in any jurisdictions and with any filing
offices as the Secured Party may determine, in its sole discretion, are
necessary or advisable to perfect the security interest granted to the Secured
Party herein. Such financing statements may describe the Collateral in the same
manner as described herein or may contain an indication or description of
collateral that describes such property in any other manner as the Secured Party
may determine, in its sole discretion, is necessary, advisable or prudent to
ensure the perfection of the security interest in the Collateral granted to the
Secured Party herein, including, without limitation, describing such property as
"all assets" or "all personal property, whether now owned or hereafter
acquired." Each Grantor shall furnish to the Secured Party from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Secured Party may
reasonably request, all in reasonable detail.
(c) Each Grantor hereby authorizes the Secured Party to modify
this Agreement after obtaining such Grantor's approval of or signature to such
modification by amending Schedule 4.7 (as such schedule may be amended or
supplemented from time to time) to include reference to any right, title or
interest in any existing Intellectual Property or any Intellectual Property
acquired or developed by any Grantor after the execution hereof or to delete any
reference to any right, title or interest in any Intellectual Property in which
any Grantor no longer has or claims any right, title or interest.
5.3 ADDITIONAL GRANTORS. From time to time subsequent to the date hereof,
additional Persons may become parties hereto as additional Grantors (each, an
"Additional Grantor"), by executing a counterpart agreement in form and
substance satisfactory to the Secured Party. Upon delivery of any such
counterpart agreement to the Secured Party, notice of which is hereby waived by
Grantors, each Additional Grantor shall be a Grantor and shall be as fully a
party hereto as if Additional Grantor were an original signatory hereto. Each
Grantor expressly agrees that its obligations arising hereunder shall not be
affected or diminished by the addition or release of any other Grantor
hereunder, nor by any election of Secured Party not to cause any Subsidiary of
Company to become an Additional Grantor hereunder. This Agreement shall be fully
effective as to any Grantor that is or becomes a party hereto regardless of
whether any other Person becomes or fails to become or ceases to be a Grantor
hereunder.
SECTION 6. SECURED PARTY APPOINTED ATTORNEY-IN-FACT.
6.1 POWER OF ATTORNEY. Each Grantor hereby irrevocably appoints the Secured
Party as such Grantor's attorney-in-fact, with full authority in the place and
stead of such Grantor and in the name of such Grantor, the Secured Party or
otherwise, from time to time in the Secured Party's discretion to take any
action and to execute any instrument that the Secured Party may deem reasonably
necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation, the following:
(a) upon the occurrence and during the continuance of any Event
of Default, to obtain and adjust insurance required to be maintained by such
Grantor or paid to the Secured Party pursuant to the Indenture;
(b) upon the occurrence and during the continuance of any Event
of Default, to ask for, demand, collect, ▇▇▇ for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
28
(c) upon the occurrence and during the continuance of any Event
of Default, to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (b) above;
(d) upon the occurrence and during the continuance of any Event
of Default, to file any claims or take any action or institute any proceedings
that 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 with
respect to any of the Collateral;
(e) to prepare and file any UCC financing statements against such
Grantor as debtor;
(f) to prepare, sign, and file for recordation in any
intellectual property registry, appropriate evidence of the lien and security
interest granted herein in the Intellectual Property in the name of such Grantor
as assignor;
(g) to take or cause to be taken all actions necessary to perform
or comply or cause performance or compliance with the terms of this Agreement,
including, without limitation, access to pay or discharge taxes or Liens (other
than Permitted Liens) levied or placed upon or threatened against the
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by the Secured Party in its sole discretion,
any such payments made by the Secured Party to become obligations of such
Grantor to the Secured Party, due and payable immediately without demand; and
(h) generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and completely
as though the Secured Party were the absolute owner thereof for all purposes,
and to do, at the Secured Party's option and such Grantor's expense, at any time
or from time to time, all acts and things that the Secured Party deems
reasonably necessary or desirable to protect, preserve or realize upon the
Collateral and the Secured Party's security interest therein in order to effect
the intent of this Agreement, all as fully and effectively as such Grantor might
do.
6.2 NO DUTY ON THE PART OF SECURED PARTY. The powers conferred on the
Secured Party hereunder are solely to protect the interests of the Secured
Parties in the Collateral and shall not impose any duty upon the Secured Party
to exercise any such powers. The Secured Party shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither it nor any of its officers, directors, employees or agents shall be
responsible to any Grantor for any act or failure to act hereunder, except for
its own gross negligence or willful misconduct.
6.3 RATIFICATION. Each Grantor hereby ratifies all that said attorneys
shall lawfully do or cause to be done by virtue hereof. All powers,
authorizations and agencies contained in this Agreement are coupled with an
interest and are irrevocable until this Agreement is terminated and the security
interest created hereby are released.
SECTION 7. REMEDIES.
7.1 GENERALLY.
(a) If any Event of Default shall have occurred and be
continuing, the Secured Party may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it at law or in equity, all the rights and remedies of a secured
party on default under the UCC (whether or not the UCC applies to the affected
Collateral) to collect, enforce or satisfy
29
any Secured Obligations then owing, whether by acceleration or otherwise, and
also may pursue any of the following separately, successively or simultaneously:
(i) require any Grantor to, and each Grantor hereby agrees that
it shall at its expense and promptly upon request of the Secured Party
forthwith, assemble all or part of the Collateral as directed by the
Secured Party and make it available to the Secured Party at a place to
be designated by the Secured Party that is reasonably convenient to
both parties;
(ii) enter onto the property where any Collateral is located and
take possession thereof with or without judicial process;
(iii) prior to the disposition of the Collateral, store, process,
repair or recondition the Collateral or otherwise prepare the
Collateral for disposition in any manner to the extent the Secured
Party deems appropriate; and
(iv) without notice except as specified below or under the UCC,
sell, assign, lease, license (on an exclusive or nonexclusive basis)
or otherwise dispose of the Collateral or any part thereof in one or
more parcels at public or private sale, at any of the Secured Party's
offices or elsewhere, for cash, on credit or for future delivery, at
such time or times and at such price or prices and upon such other
terms as the Secured Party may deem commercially reasonable.
(b) The Secured Party may be the purchaser of any or all of the
Collateral at any public or private (to the extent any portion of the Collateral
being privately sold is of a kind that is customarily sold on a recognized
market or the subject of widely distributed standard price quotations) sale in
accordance with the UCC and the Secured Party, as trustee for the Holders, shall
be entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Collateral sold at any such sale
made in accordance with the UCC, to use and apply any of the Secured Obligations
as a credit on account of the purchase price for any Collateral payable by the
Secured Party at such sale. Each purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of any
Grantor, and each Grantor hereby waives (to the extent permitted by applicable
law) all rights of redemption, stay and/or appraisal which it now has or may at
any time in the future have under any rule of law or statute now existing or
hereafter enacted. Each Grantor agrees that, to the extent notice of sale shall
be required by law, at least ten (10) days notice to such 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. Each Grantor agrees that it would not be commercially unreasonable
for the Secured Party to dispose of the Collateral or any portion thereof by
using Internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capability of doing so,
or that match buyers and sellers of assets. Each Grantor hereby waives any
claims against the Secured Party arising by reason of the fact that the price at
which any Collateral may have been sold at such a private sale was less than the
price which might have been obtained at a public sale, even if the Secured Party
accepts the first offer received and does not offer such Collateral to more than
one offeree. If the proceeds of any sale or other disposition of the Collateral
are insufficient to pay all the Secured Obligations, Grantors shall be liable
for the deficiency and the fees of any attorneys employed by the Secured Party
to collect such deficiency. Each Grantor further agrees that a breach of any of
the covenants contained in this Section will cause irreparable injury to the
Secured Party, that the Secured Party has no adequate remedy at law in respect
of such breach and, as a consequence, that each and every covenant contained in
this Section shall be specifically enforceable against such Grantor, and such
Grantor hereby waives and agrees not to assert any defenses against an
30
action for specific performance of such covenants except for a defense that no
default has occurred giving rise to the Secured Obligations becoming due and
payable prior to their stated maturities. Nothing in this Section shall in any
way alter the rights of the Secured Party hereunder.
(c) The Secured Party may sell the Collateral without giving any
warranties as to the Collateral. The Secured Party may specifically disclaim or
modify any warranties of title or the like. This procedure will not be
considered to adversely effect the commercial reasonableness of any sale of the
Collateral.
(d) If the Secured Party sells any of the Collateral on credit, the
Secured Obligations will be credited only with payments actually made by the
purchaser and received by the Secured Party and applied to the indebtedness of
the purchaser. In the event the purchaser fails to pay for the Collateral, the
Secured Party may resell the Collateral.
(e) The Secured Party shall have no obligation to marshal any of the
Collateral.
7.2 APPLICATION OF PROCEEDS. Except as expressly provided elsewhere in this
Agreement, all proceeds received by the Secured Party in respect of any sale,
any collection from, or other realization upon all or any part of the Collateral
shall be applied in full or in part by the Secured Party against, the Secured
Obligations in the order of priority set forth in Section 506 of the Indenture.
7.3 SALES ON CREDIT. If Secured Party sells any of the Collateral upon
credit, Grantor will be credited only with payments actually made by purchaser
and received by Secured Party and applied to indebtedness of the purchaser. In
the event the purchaser fails to pay for the Collateral, Secured Party may
resell the Collateral and Grantor shall be credited with proceeds of the sale.
7.4 DEPOSIT ACCOUNTS. If any Event of Default shall have occurred and be
continuing, the Secured Party may apply the balance from any Deposit Account or
instruct the bank at which any Deposit Account is maintained to pay the balance
of any Deposit Account to or for the benefit of the Secured Party.
7.5 INVESTMENT RELATED PROPERTY.
(a) Each Grantor recognizes that, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws, the
Secured Party may be compelled, with respect to any sale of all or any part of
the Investment Related Property conducted without prior registration or
qualification of such Investment Related Property under the Securities Act
and/or such state securities laws, to limit purchasers to those who will agree,
among other things, to acquire the Investment Related Property for their own
account, for investment and not with a view to the distribution or resale
thereof. Each Grantor acknowledges that any such private sale may be at prices
and on terms less favorable than those obtainable through a public sale without
such restrictions (including a public offering made pursuant to a registration
statement under the Securities Act) and, notwithstanding such circumstances,
each Grantor agrees that any such private sale shall be deemed to have been made
in a commercially reasonable manner and that the Secured Party shall have no
obligation to engage in public sales and no obligation to delay the sale of any
Investment Related Property for the period of time necessary to permit the
issuer thereof to register it for a form of public sale requiring registration
under the Securities Act or under applicable state securities laws, even if such
issuer would, or should, agree to so register it. If the Secured Party
determines to exercise its right to sell any or all of the Investment Related
Property, upon written request, each Grantor shall and shall cause each issuer
of any Pledged Stock to be sold hereunder, each partnership and each limited
liability company from time to time to furnish to the Secured Party all such
information as the Secured Party may request in order to determine the number
and nature of interest, shares or other instruments included in the Investment
Related Property which may be sold by
31
the Secured Party in exempt transactions under the Securities Act and the rules
and regulations of the Securities and Exchange Commission thereunder, as the
same are from time to time in effect.
(b) Upon the occurrence and during the continuation of an Event of
Default, the Secured Party shall have the right to apply the balance from any
Deposit Account or instruct the bank at which any Deposit Account is maintained
to pay the balance of any Deposit Account to or for the benefit of the Secured
Party.
7.6 INTELLECTUAL PROPERTY.
(a) Anything contained herein to the contrary notwithstanding, upon the
occurrence and during the continuation of an Event of Default:
(i) the Secured Party shall have the right (but not the obligation)
to bring suit or otherwise commence any action or proceeding in the
name of any Grantor, the Secured Party or otherwise, in the Secured
Party's sole discretion, to enforce any Intellectual Property, in which
event such Grantor shall, at the request of the Secured Party, do any
and all lawful acts and execute any and all documents required by the
Secured Party in aid of such enforcement and such Grantor shall
promptly, upon demand, reimburse and indemnify the Secured Party as
provided in Section 10 hereof in connection with the exercise of its
rights under this Section, and, to the extent that the Secured Party
shall elect not to bring suit to enforce any Intellectual Property as
provided in this Section, each Grantor agrees to use all reasonable
measures, whether by action, suit, proceeding or otherwise, to prevent
the infringement of any of the Intellectual Property by others and for
that purpose agrees to diligently maintain any action, suit or
proceeding against any Person so infringing as shall be necessary to
prevent such infringement;
(ii) upon written demand from the Secured Party, each Grantor shall
grant, assign, convey or otherwise transfer to the Secured Party all of
such Grantor's right, title and interest in and to the Intellectual
Property and shall execute and deliver to the Secured Party such
documents as are necessary or appropriate to carry out the intent and
purposes of this Agreement;
(iii) each Grantor agrees that such an assignment and/or recording
shall be applied to reduce the Secured Obligations outstanding only to
the extent that the Secured Party receives cash proceeds in respect of
the sale of, or other realization upon, the Intellectual Property;
(iv) within five (5) Business Days after written notice from the
Secured Party, each Grantor shall make available to the Secured Party,
to the extent within such Grantor's power and authority, such personnel
in such Grantor's employ on the date of such Event of Default as the
Secured Party may reasonably designate, by name, title or job
responsibility, to permit such Grantor to continue, directly or
indirectly, to produce, advertise and sell the products and services
sold or delivered by such Grantor under or in connection with the
Trademarks, Trademark Licenses, such persons to be available to perform
their prior functions on the Secured Party's behalf and to be
compensated by the Secured Party at such Grantor's expense on a per
diem, pro-rata basis consistent with the salary and benefit structure
applicable to each as of the date of such Event of Default; and
(v) the Secured Party shall have the right to notify, or require
each Grantor to notify, any obligors with respect to amounts due or to
become due to such Grantor in respect of the Intellectual Property, of
the existence of the security interest created herein, to direct such
obligors to make payment of all such amounts directly to the Secured
Party, and, upon such
32
notification and at the expense of such Grantor, to enforce collection
of any such amounts and to adjust, settle or compromise the amount or
payment thereof, in the same manner and to the same extent as such
Grantor might have done;
(1) all amounts and proceeds (including checks and other instruments)
received by Grantor in respect of amounts due to such Grantor in
respect of the Collateral or any portion thereof shall be
received in trust for the benefit of the Secured Party hereunder,
shall be segregated from other funds of such Grantor and shall be
forthwith paid over or delivered to the Secured Party in the same
form as so received (with any necessary endorsement) to be held
as cash Collateral and applied as provided by Section 7.7 hereof;
and
(2) Grantor shall not adjust, settle or compromise the amount or
payment of any such amount or release wholly or partly any
obligor with respect thereto or allow any credit or discount
thereon.
(b) If (i) an Event of Default shall have occurred and, by reason
of cure, waiver, modification, amendment or otherwise, no longer be continuing,
(ii) no other Event of Default shall have occurred and be continuing, (iii) an
assignment or other transfer to the Secured Party of any rights, title and
interests in and to the Intellectual Property shall have been previously made
and shall have become absolute and effective, and (iv) the Secured Obligations
shall not have become immediately due and payable, upon the written request of
any Grantor, the Secured Party shall promptly execute and deliver to such
Grantor, at such Grantor's sole cost and expense, such assignments or other
transfer as may be necessary to reassign to such Grantor any such rights, title
and interests as may have been assigned to the Secured Party as aforesaid,
subject to any disposition thereof that may have been made by the Secured Party;
provided, after giving effect to such reassignment, the Secured Party's security
interest granted pursuant hereto, as well as all other rights and remedies of
the Secured Party granted hereunder, shall continue to be in full force and
effect; and provided further, the rights, title and interests so reassigned
shall be free and clear of any Liens granted by or on behalf of the Secured
Party and the Secured Parties.
(c) Solely for the purpose of enabling the Secured Party to
exercise rights and remedies under this Section 7 and at such time as the
Secured Party shall be lawfully entitled to exercise such rights and remedies,
each Grantor hereby grants to the Secured Party, to the extent it has the right
to do so, an irrevocable, nonexclusive license (exercisable without payment of
royalty or other compensation to such Grantor), subject, in the case of
Trademarks, to sufficient rights to quality control and inspection in favor of
such Grantor to avoid the risk of invalidation of said Trademarks, to use,
operate under, license, or sublicense any Intellectual Property now owned or
hereafter acquired by such Grantor, and wherever the same may be located.
7.7 COLLATERAL PROCEEDS.
(a) In addition to the rights of the Secured Party specified in Section 4.3
with respect to payments of Receivables, subject to and as permitted by the
terms of the Indenture, the Grantors and any Subsidiary (as defined in the
Indenture), as the case may be, shall, to the extent provided by Section 1404 of
the Indenture, cause Net Cash Proceeds of any Asset Sale pursuant to Section
1017 of the Indenture that involves the sale of Collateral or any Event of Loss
(as defined in the Indenture) pursuant to Section 1018 of the Indenture that
involves a loss of Collateral to be deposited in the Collateral Account on the
Business Day on which such Net Cash Proceeds are received by the Grantor or such
Subsidiary. Subject to and as permitted by the terms of the Indenture and the
terms of any release or subordination contemplated by Section 1405 of the
Indenture, Collateral Proceeds (as defined in the Indenture) (including any
earnings thereon) may be released from the Collateral Account at the times and
upon the conditions set forth in Section 1404 of the Indenture.
33
(b) The Secured Party will upon the written instructions of ACE from time
to time, subject to the provisions of Section 7.7(c) below and the provisions
hereof, including without limitation, Sections 7.5(a) and 7.7(c), instruct the
financial institution at which the Collateral Account is maintained to (i)
invest amounts on deposit in the Collateral Account in such cash equivalents in
the name of the Trustee as ACE may select and (ii) invest interest paid on such
cash equivalents referred to in clause (i) above, and reinvest other proceeds of
any such cash equivalents that may mature or be sold in each case in such cash
equivalents in the name of the Trustee, as to which all actions required by
Section 4.4(b) shall have been taken as ACE may select (the cash equivalents
referred to in clauses (i) and (ii) above, being, collectively, the "COLLATERAL
INVESTMENTS").
(c) Interest and proceeds that are not invested or reinvested in Collateral
Investments as provided in Section 7.7(b) shall be deposited and held in the
Collateral Account.
7.8 TAX REFUNDS The Grantors shall take all actions, as of and following
the Issue Date, that the Secured Party may deem necessary or desirable to
arrange for all of Grantors' tax refunds (including but not limited to any
abatements or refunds of real estate taxes paid for prior periods as a result of
successful prosecution or settlement of an appeals procedure or otherwise) to be
delivered directly to the Secured Party for the benefit of the Holders,
including, without limitation, executing and delivering any and all documents,
instruments, and agreements required under the Tax Code or applicable state or
local law therefor, and shall not take any action to adversely impact the
Secured Party's security interest in such tax refunds or for the distribution of
the tax refunds directly to the Secured Party for the benefit of the Holders.
SECTION 8. SECURED PARTY.
The Secured Party acts as the trustee on behalf of the Holders as set forth
in the Indenture. The Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including,
without limitation, the release or substitution of Collateral), solely in
accordance with this Agreement and the Indenture. In furtherance of the
foregoing provisions of this Section, each Holder, by its acceptance of the
benefits hereof, agrees that it shall have no right individually to realize upon
any of the Collateral hereunder, it being understood and agreed by such Holder
that all rights and remedies hereunder may be exercised solely by the Secured
Party for the benefit of the Holders in accordance with the terms of this
Section. The Secured Party may resign as trustee or be removed and a successor
trustee may be appointed, all in accordance with Sections 608, 609, and 610 of
the Indenture.
SECTION 9. CONTINUING SECURITY INTEREST; TRANSFER OF NOTES.
This Agreement shall create a continuing security interest in the
Collateral and shall remain in full force and effect until the payment in full
of all Secured Obligations, be binding upon each Grantor, its successors and
assigns, and inure, together with the rights and remedies of the Secured Party
hereunder, to the benefit of the Secured Party and its successors, transferees
and assigns, for the benefit and on behalf of the Holders. Without limiting the
generality of the foregoing, any Secured Party may assign or otherwise transfer
any Secured Obligations held by it to any other Person subject to and in
compliance with the terms of the Indenture, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to the
Secured Party herein or otherwise. Upon the payment in full of all Secured
Obligations, the security interest granted hereby shall terminate hereunder and
of record and all rights to the Collateral shall revert to Grantors. Upon any
such termination the Secured Party shall, at Grantors' expense, execute and
deliver to Grantors such documents as Grantors shall reasonably request to
evidence such termination.
34
SECTION 10. STANDARD OF CARE; SECURED PARTY MAY PERFORM.
(a) The powers conferred on the Secured Party hereunder are solely
to protect its interest, for the benefit and on behalf of the Holders, in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the exercise of reasonable care in the custody of any Collateral in
its possession, duties imposed under the Trust Indenture Act of 1939, and the
accounting for moneys 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 prior parties or any other rights pertaining to any
Collateral. The Secured Party shall be deemed to have exercised reasonable care
in the custody and preservation of Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which the Secured
Party accords its own property. Neither the Secured Party nor any of its
directors, officers, employees or agents shall be liable for failure to demand,
collect or realize upon all or any part of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of any Grantor or otherwise. If any Grantor fails to
perform any agreement contained herein, the Secured Party may itself perform, or
cause performance of, such agreement, and the expenses of the Secured Party
incurred in connection therewith shall be payable by each Grantor under Section
1408 of the Indenture.
SECTION 11. MISCELLANEOUS.
Any notice required or permitted to be given under this Agreement shall
be given in accordance with Section 105 of the Indenture. No failure or delay on
the part of the Secured Party in the exercise of any power, right or privilege
hereunder or under the Indenture, the Notes or the Security Documents shall
impair such power, right or privilege or be construed to be a waiver of any
default or acquiescence therein, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other power, right or privilege. The terms and provisions of this Agreement
are in addition to and not in limitation of the provisions contained in the
Notes, the Indenture, and the other Security Documents (as defined in the
Indenture). All rights and remedies existing under this Agreement and the Notes,
the Indenture, and the other Security Documents (as defined in the Indenture)
are cumulative to, and not exclusive of, any rights or remedies otherwise
available. In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby. All covenants hereunder shall be given independent
effect so that if a particular action or condition is not permitted by any of
such covenants, the fact that it would be permitted by an exception to, or would
otherwise be within the limitations of, another covenant shall not avoid the
occurrence of a Default or an Event of Default (as each term is defined in the
Indenture) if such action is taken or condition exists. This Agreement shall be
binding upon and inure to the benefit of the Secured Party and Grantors and
their respective successors and assigns. No Grantor shall, without the prior
written consent of the Secured Party given in accordance with the Indenture,
assign any right, duty or obligation hereunder. This Agreement and the Notes,
the Indenture, and the other Security Documents (as defined in the Indenture)
embody the entire agreement and understanding between Grantors and the Secured
Party and supersede all prior agreements and understandings between such parties
relating to the subject matter hereof and thereof. Accordingly, this Agreement,
the Notes, the Indenture, and the other Security Documents (as defined in the
Indenture) 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. This Agreement may be executed in one or more
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached
35
from multiple separate counterparts and attached to a single counterpart so that
all signature pages are physically attached to the same document.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS
CONFLICTS OF LAW PROVISIONS (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW
YORK GENERAL OBLIGATION LAW).
SECTION 12. CASINO CONTROL ACT
Notwithstanding the provisions of Section 11 hereof, each of the
provisions of this Agreement is subject to and shall be enforced in compliance
with the provisions of the Casino Control Act, to the extent applicable, and the
regulations promulgated thereunder, unless such provisions are in conflict with
the Trust Indenture Act of 1939, as amended from time to time ("TIA"), in which
case the TIA shall control.
SECTION 13. REIMBURSEMENT OF LEGAL FEES
In addition to the Grantors' obligations to compensate and reimburse
the Trustee as set forth in Section 606 of the Indenture, the Grantors agree to
reimburse the Requisite Lenders (as defined in the Indenture) for all legal fees
and expenses incurred by ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Israels LLP and ▇▇▇▇▇ & Samson PC
in connection with the preparation, negotiation, execution, and delivery of this
Agreement and the Security Documents.
36
IN WITNESS WHEREOF, each Grantor and the Secured Party have caused
this Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
GRANTORS:
ATLANTIC COAST ENTERTAINMENT
HOLDINGS, INC.
By:
-----------------------------
Name:
Title:
Address: Sands Hotel & Casino, Indiana Avenue and
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
ACE GAMING, LLC
By:
-----------------------------
Name:
Title:
Address: Sands Hotel & Casino, Indiana Avenue and
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇
SECURED PARTY:
WELL FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
By:
-----------------------------
Name:
Title:
Address: Sixth and Marquette
MAC ▇▇▇▇▇-▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
37
SCHEDULE 4.1
TO PLEDGE AND SECURITY AGREEMENT
GENERAL INFORMATION
(A) Full Legal Name, Type of Organization, Jurisdiction of Organization,
Chief Executive Office/Sole Place of Business (or Residence if Grantor
is a Natural Person) and Organizational Identification Number of each
Grantor:
Chief Executive
Office/Sole Place of
Business (or
Type of Jurisdiction of Residence if Grantor
Full Legal Name Organization Organization is a Natural Person) Organization I.D.#
--------------- ------------ ------------ -------------------- ------------------
ACE Gaming, LLC Limited New Jersey Sands Hotel & Casino ▇▇-▇▇▇▇▇▇▇
Liability Indiana Avenue &
Company ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Atlantic Coast Corporation Delaware Sands Hotel & Casino ▇▇-▇▇▇▇▇▇▇
Holdings Indiana Avenue &
Entertainment, Inc. ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
(B) Other Names (including any Trade-Name or Fictitious Business Name) under
which each Grantor has conducted business for the past five (5) years:
SANDS HOTEL & CASINO.
(C) Changes in Name, Jurisdiction of Organization, Chief Executive Office or
Sole Place of Business (or Principal Residence if Grantor is a Natural
Person) and Corporate Structure within past five (5) years: NONE
(D) Agreements pursuant to which any Grantor is found as debtor within past
five (5) years: NONE
SCHEDULE 4.1-1
(E) Financing Statements:
Name of Grantor Filing Jurisdiction(s)
--------------- ----------------------
ACE Gaming, LLC. (UCC-1) New Jersey
Atlantic Coast Entertainment (UCC-1) Delaware
Holdings, Inc.
SCHEDULE 4.1-2
SCHEDULE 4.2
TO PLEDGE AND SECURITY AGREEMENT
Name of Grantor Location of Equipment and Inventory
--------------- -----------------------------------
ACE Gaming, LLC Sands Hotel & Casino - Indiana Avenue and
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Warehouse Location:
Radio Road
Mystic Island
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Atlantic Coast Entertainment
Holdings, Inc. Sands Hotel & Casino - Indiana Avenue and
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Warehouse Location:
Radio Road
Mystic Island
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SCHEDULE 4.2-1
SCHEDULE 4.4
TO PLEDGE AND SECURITY AGREEMENT
INVESTMENT RELATED PROPERTY
(A)(1) Pledged Stock: NONE
=============== ========== ============ ================ =============== ========== ============ =================
% OF
STOCK NO. OF OUTSTANDING
STOCK CLASS OF CERTIFICATED CERTIFICATE PLEDGED STOCK OF THE
GRANTOR ISSUER STOCK (Y/N) NO. PAR VALUE STOCK STOCK ISSUER
=============== ========== ============ ================ =============== ========== ============ =================
=============== ========== ============ ================ =============== ========== ============ =================
(2) Pledged LLC Interests:
===================== =================== ==================== ================== ================== ==================
% OF OUTSTANDING
LLC INTERESTS OF
LIMITED LIABILITY CERTIFICATE NO. NO. OF PLEDGED THE LIMITED
GRANTOR COMPANY CERTIFICATED (Y/N) (IF ANY) UNITS LIABILITY COMPANY
===================== =================== ==================== ================== ================== ==================
Atlantic Coast Ace Gaming, LLC N - - 100%
Entertainment
Holdings, Inc.
===================== =================== ==================== ================== ================== ==================
(3) Pledged Partnership Interests: NONE
==================== ================== =================== =================== ====================== =====================
TYPE OF
PARTNERSHIP % OF OUTSTANDING
INTERESTS (E.G., PARTNERSHIP
GENERAL OR CERTIFICATE NO. INTERESTS OF THE
GRANTOR PARTNERSHIP LIMITED) CERTIFICATED (Y/N) (IF ANY) PARTNERSHIP
==================== ================== =================== =================== ====================== =====================
==================== ================== =================== =================== ====================== =====================
(4) Pledged Trust Interests: NONE
===================== ================== ============== =================== ===================== ==========================
CLASS OF
TRUST CERTIFICATE NO. % OF OUTSTANDING TRUST
GRANTOR TRUST INTERESTS CERTIFICATED (Y/N) (IF ANY) INTERESTS OF THE TRUST
===================== ================== ============== =================== ===================== ==========================
===================== ================== ============== =================== ===================== ==========================
SCHEDULE 4.4-1
(5) Pledged Debt: NONE
===================== ================== ======================== ===================== ================= ==================
ORIGINAL PRINCIPAL OUTSTANDING
GRANTOR ISSUER AMOUNT PRINCIPAL BALANCE ISSUE DATE MATURITY DATE
--------------------- ------------------ ------------------------ --------------------- ----------------- ------------------
===================== ================== ======================== ===================== ================= ==================
(6) Securities Account: NONE
========================== ======================= ===================================== ===================================
SHARE OF SECURITIES
GRANTOR/ACCOUNT NAME INTERMEDIARY ACCOUNT NUMBER DESCRIPTION
-------------------------- ----------------------- ------------------------------------- -----------------------------------
========================== ======================= ===================================== ===================================
(7) Commodities Accounts: NONE
========================== ======================= ===================================== ===================================
NAME OF COMMODITIES
GRANTOR/ACCOUNT NAME INTERMEDIARY ACCOUNT NUMBER DESCRIPTION
-------------------------- ----------------------- ------------------------------------- -----------------------------------
========================== ======================= ===================================== ===================================
(8) (a) Deposit Accounts: Concentration Account
========================== ======================= ===================================== ===================================
NAME OF DEPOSITARY
GRANTOR/ACCOUNT NAME BANK ACCOUNT NUMBER DESCRIPTION
-------------------------- ----------------------- ------------------------------------- -----------------------------------
ACE Gaming, LLC Fleet Bank NA ▇▇▇▇▇▇▇▇▇▇ Sands Hotel Concentration Account
New Jersey
========================== ======================= ===================================== ===================================
(b) Deposit Accounts: Collection Account
========================== ======================= ===================================== ===================================
NAME OF DEPOSITARY
GRANTOR/ACCOUNT NAME BANK ACCOUNT NUMBER ACCOUNT NAME/DESCRIPTION
-------------------------- ----------------------- ------------------------------------- -----------------------------------
ACE Gaming, LLC Fleet Bank NA ▇▇▇▇▇▇▇▇▇▇ ACE-Hotel Depository Account
New Jersey
ACE-Casino Depository A/C
Fleet Bank NA ▇▇▇▇▇▇▇▇▇▇
New Jersey
SCHEDULE 4.4-2
-------------------------- ----------------------- ------------------------------------- -----------------------------------
ACE-Credit Card Activity
ACE Gaming, LLC Fleet ▇▇▇▇▇▇▇▇▇▇
ACE-Casino Returns
Fleet 9429372350
ACE-Hotel Returns
Fleet 9429372369
========================== ======================= ===================================== ===================================
(c) Deposit Accounts: Collateral Account
========================== ======================= ===================================== ===================================
NAME OF DEPOSITARY
GRANTOR/ACCOUNT NAME BANK ACCOUNT NUMBER DESCRIPTION
-------------------------- ----------------------- ------------------------------------- -----------------------------------
ACE Gaming, LLC Commerce Bank 7858014223 Cash Collateral Account - ▇▇▇▇▇
Fargo
========================== ======================= ===================================== ===================================
SCHEDULE 4.4-3
(d) Deposit Accounts: ZBA Accounts
========================== ======================= ===================================== ===================================
NAME OF DEPOSITARY
GRANTOR/ACCOUNT NAME BANK ACCOUNT NUMBER DESCRIPTION
-------------------------- ----------------------- ------------------------------------- -----------------------------------
ACE Gaming, LLC Fleet Maine N.A. 0080237373 ACE-Accounts Payable
Fleet Maine N.A. 0080237381 ACE-Case Account
Fleet Bank N.A., 9429372393 ACE-Retirement Account
New Jersey
Fleet Bank N.A., 9429372385 ACE-Tax Account
New Jersey
Fleet Bank N.A., 9429372406 ACE-Postage Account
New Jersey
Fleet Bank N.A., 9429372377 ACE-Lottery
New Jersey
========================== ======================= ===================================== ===================================
(e) Deposit Accounts: Others
========================== ======================= ===================================== ===================================
NAME OF DEPOSITARY
GRANTOR/ACCOUNT NAME BANK ACCOUNT NUMBER DESCRIPTION
-------------------------- ----------------------- ------------------------------------- -----------------------------------
ACE Gaming, LLC Commerce Bank 7857989557 ACE-Payroll Account
Commerce Bank 7857989540 ACE-Customer Claims
Commerce Bank 7857989532 ACE-Customer Reimbursement
ACE-Legal Department
Commerce Bank 7857989565
Atlantic Coast Fleet 9429354435
Entertainment Holdings,
Inc.
========================== ======================= ===================================== ===================================
SCHEDULE 4.4-4
(B)
Name of Grantor Date of Acquisition Description of Acquisition
ACE Gaming, LLC July 22, 2004 Tier 2 Assets as defined in that
certain Contribution Agreement ,
by and among GB Holdings, Inc.
and Greate Bay Hotel and Casino,
Inc. as Transferors (defined
therein) and ACE and the Company
as Transferees (defined therein)
Atlantic Coast July 22, 2004 Tier 1 Assets as defined in that
Entertainment certain Contribution Agreement ,
Holdings, Inc. by and among GB Holdings, Inc.
and Greate Bay Hotel and Casino,
Inc. as Transferors (defined
therein) and ACE and the Company
as Transferees (defined therein)
SCHEDULE 4.4-5
SCHEDULE 4.5
TO PLEDGE AND SECURITY AGREEMENT
Name of Grantor Description of Material Contract
--------------- --------------------------------
Ace Gaming, LLC NONE
Atlantic Coast Entertainment Holdings, Inc. NONE
SCHEDULE 4.5-1
SCHEDULE 4.6
TO PLEDGE AND SECURITY AGREEMENT
Name of Grantor Description of Letters of Credit
--------------- --------------------------------
Ace Gaming, LLC NONE
Atlantic Coast Entertainment Holdings, Inc. NONE
SCHEDULE 4.6-1
SCHEDULE 4.7
TO PLEDGE AND SECURITY AGREEMENT
INTELLECTUAL PROPERTY
(A) Copyrights - NONE
(B) Copyright Licenses - NONE
(C) Patents - NONE
(D) Patent Licenses - NONE
(E) Trademarks
FEDERAL TRADEMARKS
Ace Gaming, LLC:
--------- --------------- --------------------- ------------------ ----------------------------------------
SERIAL NUMBER REG. NUMBER WORD ▇▇▇▇ NOTE:
--------- --------------- --------------------- ------------------ ----------------------------------------
1 78229774 SANDS Pre-existing duty to assign trademark
application to Las Vegas Sands, Inc.
upon request of Las Vegas Sands, Inc.
per License Agreement dated on or
around the date hereof (described
below in (F)).
--------- --------------- --------------------- ------------------ ----------------------------------------
2 78216312 2856962 FASTPAY
--------- --------------- --------------------- ------------------ ----------------------------------------
Atlantic Coast Holdings Entertainment, Inc.: NONE.
NEW JERSEY STATE TRADEMARKS
Ace Gaming, LLC:
------------------------- ----------------------
WORD ▇▇▇▇ SERIAL NOS.
------------------------- ----------------------
THE PLAZA CLUB 00065830
00065831
00065832
------------------------- ----------------------
THE FOOD COURT 00460812
00460813
00460814
------------------------- ----------------------
SCHEDULE 4.7-1
Atlantic Coast Holdings Entertainment, Inc.: NONE.
COMMON LAW TRADEMARKS:
ACE Gaming, LLC:
WORD ▇▇▇▇
Swingers
Atlantic Coast Holdings Entertainment, Inc.: NONE.
(F) Trademark Licenses
ACE Gaming, LLC (by Assignment, on or around the date hereof, from
Graete Bay Hotel and Casino, Inc. to ACE Gaming, LLC):
License Agreement, dated on or around the date hereof, between Las
Vegas Sands, Inc. and Greate Bay Hotel and Casino, Inc. wherein Las
Vegas Sands, Inc. grants an exclusive license to use the ▇▇▇▇▇ ▇▇▇▇ as
shown in US Trademark Registration No. 1,209,102 and is the subject of
a new application to register the ▇▇▇▇ "SANDS" [stylized] ▇▇. ▇▇, ▇▇▇,
▇▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Holdings Entertainment, Inc.: NONE.
(G) Trade Secret Licenses - NONE
(H) Intellectual Property Matters - NONE
SCHEDULE 4.7-2
SCHEDULE 4.8
TO PLEDGE AND SECURITY AGREEMENT
Name of Grantor Commercial Tort Claims
--------------- ----------------------
Ace Gaming, LLC NONE.
Atlantic Coast Entertainment Holdings, Inc. NONE.
SCHEDULE 4.8-1
EXHIBIT A
TO PLEDGE AND SECURITY AGREEMENT
PLEDGE SUPPLEMENT
This PLEDGE SUPPLEMENT, dated [MM/DD/YY], is delivered pursuant to the
Pledge and Security Agreement, dated as of [MM/DD/YY] (as it may be from time to
time amended, restated, modified or supplemented, the "SECURITY AGREEMENT"),
among [NAME OF COMPANY], the other Grantors named therein, and [NAME OF
TRUSTEE], as the Secured Party. Capitalized terms used herein not otherwise
defined herein shall have the meanings ascribed thereto in the Security
Agreement.
Grantor hereby confirms the grant to the Secured Party set forth in the
Security Agreement of, and does hereby grant to the Secured Party, a security
interest in all of Grantor's right, title and interest in and to all Collateral
to secure the Secured Obligations, in each case whether now or hereafter
existing or in which Grantor now has or hereafter acquires an interest and
wherever the same may be located. Grantor represents and warrants that the
attached Supplements to Schedules accurately and completely set forth all
additional information required pursuant to the Security Agreement and hereby
agrees that such Supplements to Schedules shall constitute part of the Schedules
to the Security Agreement.
IN WITNESS WHEREOF, Grantor has caused this Pledge Supplement to be
duly executed and delivered by its duly authorized officer as of [MM/DD/YY].
[NAME OF GRANTOR]
By:_____________________________
Name:
Title:
EXHIBIT A-1
SUPPLEMENT TO SCHEDULE 4.1
TO PLEDGE AND SECURITY AGREEMENT
Additional Information:
(A) Full Legal Name, Type of Organization, Jurisdiction of Organization,
Chief Executive Office/Sole Place of Business (or Residence if Grantor
is a Natural Person) and Organizational Identification Number of each
Grantor:
Chief Executive
Office/Sole Place of
Business (or
Jurisdiction of Residence if Grantor
Full Legal Name Type of Organization Organization is a Natural Person) Organization I.D.#
--------------- -------------------- ------------ -------------------- ------------------
(B) Other Names (including any Trade-Name or Fictitious Business Name)
under which each Grantor has conducted business for the past five (5)
years:
Name of Grantor Description of Agreement
--------------- ------------------------
(C) Changes in Name, Jurisdiction of Organization, Chief Executive Office
or Sole Place of Business (or Principal Residence if Grantor is a
Natural Person) and Corporate Structure within past five (5) years:
Full Legal Name Trade Name or Fictitious Business Name
--------------- --------------------------------------
(D) Agreements pursuant to which any Grantor is found as debtor within past
five (5) years:
Name of Grantor Date of Change Description of Change
--------------- -------------- ---------------------
EXHIBIT 1.1
(E) Financing Statements:
Name of Grantor Filing Jurisdiction(s)
--------------- ----------------------
EXHIBIT 1.2
SUPPLEMENT TO SCHEDULE 4.2
TO PLEDGE AND SECURITY AGREEMENT
Additional Information:
Name of Grantor Location of Equipment and Inventory
--------------- -----------------------------------
EXHIBIT 1.3
SUPPLEMENT TO SCHEDULE 4.4
TO PLEDGE AND SECURITY AGREEMENT
Additional Information:
(A)
Pledged Stock:
Pledged Partnership Interests:
Pledged LLC Interests:
Pledged Trust Interests:
Pledged Debt:
Securities Account:
Commodities Accounts:
Deposit Accounts:
(B)
Name of Grantor Date of Acquisition Description of Acquisition
--------------- ------------------- --------------------------
EXHIBIT 1.4
SUPPLEMENT TO SCHEDULE 4.5
TO PLEDGE AND SECURITY AGREEMENT
Additional Information:
Name of Grantor Description of Material Contract
--------------- --------------------------------
EXHIBIT 1.5
SUPPLEMENT TO SCHEDULE 4.6
TO PLEDGE AND SECURITY AGREEMENT
Additional Information:
Name of Grantor Description of Letters of Credit
--------------- --------------------------------
EXHIBIT 1.6
SUPPLEMENT TO SCHEDULE 4.7
TO PLEDGE AND SECURITY AGREEMENT
Additional Information:
(A) Copyrights
(B) Copyright Licenses
(C) Patents
(D) Patent Licenses
(E) Trademarks
(F) Trademark Licenses
(G) Trade Secret Licenses
(H) Intellectual Property Matters
EXHIBIT 1.7
SUPPLEMENT TO SCHEDULE 4.8
TO PLEDGE AND SECURITY AGREEMENT
Additional Information:
Name of Grantor Commercial Tort Claims
--------------- ----------------------
EXHIBIT 1.8
EXHIBIT B
TO PLEDGE AND SECURITY AGREEMENT
FORM OF ACCOUNT CONTROL AGREEMENT
This Account Control Agreement dated as of __________, 200[ ] among
________________ (the "Debtor"), ▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION, as
trustee (the "Trustee") for the Holders under an Indenture dated as of July 22,
2004 among Atlantic Coast Entertainment Holdings, Inc., a Delaware corporation
(the "Company"), as issuer, the Secured Party, as trustee, and ACE Gaming, LLC,
a New Jersey limited liability company, as a ("ACE"), as guarantor (the
"Indenture"), and ____________ in its capacity as a "securities intermediary"
(as defined in Section 8-102 of the UCC and a "bank" as defined in Section 9-102
of the UCC (in such capacities, the "Financial Institution"). Capitalized terms
used but not defined herein shall have the meaning assigned in the Pledge and
Security Agreement dated as of July 22, 2004 between the Debtor, the other
grantors therein and the Trustee (the "Security Agreement"). All references
herein to the "UCC" shall mean the Uniform Commercial Code as in effect in the
State of New York.
1. ESTABLISHMENT OF COLLATERAL ACCOUNTS. The Financial Institution hereby
confirms and agrees that:
(a) The Financial Institution has established the following accounts:
(i) the "[IDENTIFY EXACT TITLE OF ACCOUNT]" with account number
[IDENTIFY ACCOUNT NUMBER] in the name "[IDENTIFY EXACT TITLE OF
ACCOUNT]" in the name of "[identify name of account holder]" (the
"_____ Account");
(ii) the "[identify exact title of account]" with account number
[identify account number] in the name "[identify exact title of
account]" in the name of "[identify name of account holder]" (the
"_____ Account"); and
(iii) the "[IDENTIFY EXACT TITLE OF ACCOUNT]" with account number
[IDENTIFY ACCOUNT NUMBER] in the name "[IDENTIFY EXACT TITLE OF
ACCOUNT]" in the name of "[identify name of account holder]" (the
"_____ Account").
Each such account and any successor account, being referred to herein
individually as a "Pledged Account" and collectively as the "Pledged Accounts."
The Financial Institution shall not change the name or account number of any
Pledged Account without the prior written consent of the Secured Party1;
(b) Each of the Pledged Accounts are either a "securities account" (as
defined in Section 8-501 of the UCC) or a "deposit account" as defined
in Section 9-102(a)(29) of the UCC). The Financial Intermediary
acknowledges and agrees that the ____ Account[s] are intended to be
deposit accounts and the _________ Account[s] are intended to be
securities accounts. Notwithstanding such intention, as used herein
"Deposit Account" shall mean any Pledged Account which is determined
to be a "deposit account" (within the meaning of Section 9-102(a)(29)
of the UCC and "Securities Account" shall mean any Pledged Account
which is determined to be a "securities account" (within the meaning
of Section 8-501 of the UCC .
(c) All securities or other property underlying any financial assets
credited to any Securities Account shall be registered in the name of
the Financial Institution, indorsed to the Financial Institution or in
blank or credited to another securities account maintained in the name
of the Financial Institution and in no case will any financial asset
credited to any Securities Account be registered in the name of the
Debtor, payable to the order of the Debtor or specially indorsed to
the Debtor except to the extent the foregoing have been specially
indorsed to the Financial Institution or in blank;
(d) All property delivered to the Financial Institution pursuant to the
Security Agreement will be promptly credited to one of the Pledged
Accounts.
2. "FINANCIAL ASSETS" ELECTION. The Financial Institution hereby agrees that
each item of property (whether investment property, financial asset,
security, instrument or cash) credited to any Pledged Account that is a
Securities Account shall be treated as a "financial asset" within the
meaning of Section 8-102(a)(9) of the UCC.
3. CONTROL OF THE PLEDGED ACCOUNTS. If at any time the Financial Institution
shall receive any order from the Trustee directing transfer or redemption
of any financial asset relating to a Pledged Account or any instruction
originated by the Trustee directing the disposition of funds in a Pledged
Account, the Financial Institution shall comply with such entitlement order
or instruction without further consent by the Debtor or any other person.
4. SUBORDINATION OF LIEN; WAIVER OF SET-OFF. In the event that the Financial
Institution has or subsequently obtains by agreement, by operation of law
or otherwise a security interest in any Pledged Account or any security
entitlement or cash credited thereto, the Financial Institution hereby
agrees that such security interest shall be subordinate to the security
interest of the Trustee. The financial assets, money and other items
credited to any Pledged Account will not be subject to deduction, set-off,
banker's lien, or any other right in favor of any person other than the
Secured Party (except that the Financial Institution may set off (i) all
amounts due to the Financial Institution in respect of customary fees and
expenses for the routine maintenance and operation of the respective
Pledged Account and (ii) the face amount of any checks which have been
credited to such Pledged Account but are subsequently returned unpaid
because of uncollected or insufficient funds).
5. CHOICE OF LAW. This Agreement shall each be governed by the laws of the
State of New York. Regardless of any provision in any other agreement, for
purposes of the UCC, New York shall be deemed to be the Financial
Institution's jurisdiction (within the meaning of Section 9-304 of the
UCC and Section 8-110 of the UCC). The Pledged Accounts shall be governed
by the laws of the State of New York.
6. CONFLICT WITH OTHER AGREEMENTS.
(a) In the event of any conflict between this Agreement (or any portion
thereof) and any other agreement now existing or hereafter entered
into, the terms of this Agreement shall prevail;
(b) No amendment or modification of this Agreement or waiver of any right
hereunder shall be binding on any party hereto unless it is in writing
and is signed by all of the parties hereto;
(c) The Financial Institution hereby confirms and agrees that:
(i) There are no other agreements entered into between the Financial
Institution and the Debtor with respect to any Pledged Account
[EXCEPT FOR [IDENTIFY OTHER AGREEMENTS] (THE "ACCOUNT
AGREEMENTS")];
(ii) It has not entered into, and until the termination of the this
agreement will not enter into, any agreement with any other
person relating the Pledged Accounts and/or any financial assets
credited thereto pursuant to which it has agreed to comply with
entitlement orders (as defined in Section 8-102(a)(8) of the UCC)
or instructions (within the meaning of Section 9-104 of the UCC)
of such other person; and
(iii) It has not entered into, and until the termination of this
agreement will not enter into, any agreement with the Debtor or
the Trustee purporting to limit or condition the obligation of
the Financial Institution to comply with entitlement orders or
instructions.
7. ADVERSE CLAIMS. Except for the claims and interest of the Trustee and of
the Debtor in the Pledged Accounts, the Financial Institution does not know
of any lien on or claim to, or interest in, any Pledged Account or in any
"financial asset" (as defined in Section 8-102(a) of the UCC) credited
thereto. If any person asserts any lien, encumbrance or adverse claim
(including any writ, garnishment, judgment, warrant of attachment,
execution or similar process) against the Pledged Accounts or in any
financial asset carried therein, the Financial Institution will promptly
notify the Trustee and the Debtor thereof.
8. MAINTENANCE OF ACCOUNTS. In addition to, and not in lieu of, the obligation
of the Financial Institution to honor entitlement orders and instructions
as set forth in Section 3 hereof, the Financial Institution agrees to
maintain the Pledged Accounts as follows:
(a) Notice of Sole Control. If at any time the Trustee delivers to the
Financial Institution a Notice of Sole Control in substantially the
form set forth in Exhibit A hereto, the Financial Institution agrees
that after receipt of such notice, it will take all instruction with
respect to the Pledged Accounts solely from the Trustee and shall not
comply with instructions or entitlement orders of any other person.
(b) Statements and Confirmations. The Financial Institution will promptly
send copies of all statements, confirmations and other correspondence
concerning (i) any Securities Account and/or any financial assets
credited thereto and (ii) any Deposit Account, simultaneously to each
of the Debtor and the Trustee at the address for each set forth in
Section 12 of this Agreement.
(c) Tax Reporting. All items of income, gain, expense and loss recognized
in any Securities Account and all interest, if any, relating to any
Deposit Account, shall be reported to the Internal Revenue Service and
all state and local taxing authorities under the name and taxpayer
identification number of the Debtor.
(d) Voting Rights. Until such time as the Financial Institution receives a
Notice of Sole Control pursuant to subsection (a) of this Section 8,
the Debtor shall direct the Financial Institution with respect to the
voting of any financial assets credited to the Pledged Accounts.
(e) Permitted Investments. Until such time as the Financial Institution
receives a Notice of Sole Control signed by the Trustee, the Debtor
shall direct the Financial Institution with respect to the selection
of investments to be made for any Pledged Account that is a securities
account; provided, however, that the Financial Institution shall not
honor any instruction to purchase any investments other than
investments of a type describe on Exhibit B hereto.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE FINANCIAL INSTITUTION. The
Financial Institution hereby makes the following representations,
warranties and covenants:
(a) The Pledged Accounts have each been established as set forth in
Section 1 and such Pledged Accounts will be maintained in the manner
set forth herein until termination of this Agreement; and
(b) This Account Control Agreement is the valid and legally binding
obligations of the Financial Institution.
10. INDEMNIFICATION OF FINANCIAL INSTITUTION. The Debtor and the Trustee hereby
agree that (a) the Financial Institution is released from any and all
liabilities to the Debtor and the Trustee arising from the terms of this
agreement and the compliance of the Financial Institution with the terms
hereof, except to the extent that such liabilities arise from the Financial
Institution's negligence
Exhibit C-C-12
and (b) the Debtor, its successors and assigns shall at all times indemnify
and save harmless the Financial Institution from and against any and all
claims, actions and suits of others arising out of the terms of this
agreement or the compliance of the Financial Institution with the terms
hereof, except to the extent that such arises from the Financial
Institution's negligence, and from and against any and all liabilities,
losses, damages, costs, charges, counsel fees and other expenses of every
nature and character arising by reason of the same, until the termination
of this agreement.
11. SUCCESSORS; ASSIGNMENT. The terms of this Agreement shall be binding upon,
and shall inure to the benefit of, the parties hereto and their respective
corporate successors or heirs and personal representatives who obtain such
rights solely by operation of law. The Trustee may assign its rights
hereunder only with the express written consent of the Financial
Institution and by sending written notice of such assignment to the Debtor.
12. NOTICES. Any notice, request or other communication required or permitted
to be given under this Agreement shall be in writing and deemed to have
been properly given when delivered in person, or when sent by telecopy or
other electronic means and electronic confirmation of error free receipt is
received or two days after being sent by certified or registered United
States mail, return receipt requested, postage prepaid, addressed to the
party at the address set forth below.
Debtor:
Trustee:
Financial Institution:
Any party may change his address for notices in the manner set
forth above.
13. TERMINATION. The obligations of the Financial Institution to the Trustee
pursuant to this Control Agreement shall continue in effect until the
security interests of the Trustee in each of the Pledged Accounts have been
terminated pursuant to the terms of the Security Agreement and the Trustee
has notified the Financial Institution of such termination in writing. The
Trustee agrees to provide Notice of Termination in substantially the form
of Exhibit C hereto to the Financial Institution upon the request of the
Debtor on or after the termination of the Trustee's security interest in
the Pledged Accounts pursuant to the terms of the Security Agreement. The
termination of this Control Agreement shall not terminate the Pledged
Accounts or alter the obligations of the Financial Institution to the
Debtor pursuant to any other agreement with respect to the Pledged
Accounts.
Exhibit C-C-13
14. COUNTERPARTS. This Agreement may be executed in any number of counterparts,
all of which shall constitute one and the same instrument, and any party
hereto may execute this Agreement by signing and delivering one or more
counterparts.
[NAME OF DEBTOR]
By:
-----------------------------
Name:
Title:
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION
as Trustee
By:
-----------------------------
Name:
Title:
[NAME OF INSTITUTION SERVING AS
FINANCIAL INSTITUTION]
By:
-----------------------------
Name:
Title:
Exhibit C-C-14
Exhibit A
[Letterhead of Trustee]
[Date]
[Name and Address of Financial Institution]
Attention: __________________
Re: Notice of Sole Control
Ladies and Gentlemen:
As referenced in the Account Control Agreement, dated _______,
200_, among [insert name of the Debtor], you and the undersigned (a copy of
which is attached) we hereby give you notice of our sole control over each of
the Pledged Accounts and all financial assets or funds credited thereto. You are
hereby instructed not to accept any direction, instructions or entitlement
orders or instructions with respect to the Pledged Accounts or the financial
assets or funds credited thereto from any person other than the undersigned,
unless otherwise ordered by a court of competent jurisdiction.
You are instructed to deliver a copy of this notice by
facsimile transmission to [insert name of the Debtor].
Very truly yours,
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION
as Trustee
By: ______________________
Name:
Title:
cc: [Name of Debtor]
Exhibit C-C-15
Exhibit B
Permitted Investments
Exhibit C-C-16
Exhibit C
[Letterhead of Trustee]
[Date]
[Name and Address of Financial Institution]
Attention:
Re: Termination of Account
Control Agreement
You are hereby notified that the Account Control Agreement
between you, [THE DEBTOR] and the undersigned (a copy of which is attached) is
terminated and you have no further obligations to the undersigned pursuant to
such Agreement. Notwithstanding any previous instructions to you, you are hereby
instructed to accept all future directions with respect to account number(s)
______________ from [THE DEBTOR]. This notice terminates any obligations you may
have to the undersigned with respect to such account, however nothing contained
in this notice shall alter any obligations which you may otherwise owe to [THE
DEBTOR] pursuant to any other agreement.
You are instructed to deliver a copy of this notice by
facsimile transmission to [insert name of Debtor].
Very truly yours,
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION
As Trustee
By: ______________________
Name:
Title:
cc: [Name of Debtor]
Exhibit C-C-17
EXHIBIT C
TO PLEDGE AND SECURITY AGREEMENT
FORM OF PERSONAL PROPERTY SECURITY INTEREST OPINION
[INSERT DATE]
[INSERT FULL NAME AND ADDRESS OF THE TRUSTEE]
RE: ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.
Ladies and Gentlemen:
We have acted as special counsel to Atlantic Coast
Entertainment Holdings, Inc., a Delaware corporation (the "Company"), each of
the Company's subsidiaries listed on Schedule 1 hereto (each of the Company and
such subsidiaries, a "Grantor" and, collectively, the "Grantors"), in connection
with the preparation, execution and delivery of the Pledge and Security
Agreement, dated [the date hereof] (the "Security Agreement"), between each of
the Grantors and ▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION, as trustee (the
"Trustee") for the Holders under an Indenture dated as of July 22, 2004 among
Atlantic Coast Entertainment Holdings, Inc., a Delaware corporation (the
"Company"), as issuer, the Secured Party, as trustee, and ACE Gaming, LLC, a New
Jersey limited liability company, as a ("ACE"), as guarantor (the
"Indenture")This opinion is being delivered pursuant to Section [ ] of the
Security Agreement.
In our examination we have assumed the genuineness of all
signatures including endorsements, the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as facsimile, electronic,
certified or photostatic copies, and the authenticity of the originals of such
copies. As to any facts material to this opinion which we did not independently
establish or verify, we have relied upon statements and representations of the
Grantors and their officers and other representatives and of public officials,
including the facts and conclusions set forth therein.
In rendering the opinions set forth herein, we have examined
and relied on originals or copies of the following:
(a) the Security Agreement;
(b) [the letter, dated [INSERT DATE] from each Grantor to the
Trustee authorizing the filing of UCC financing statements (the "Authorization
Letter");]
(c) an acknowledgment copy of a financing statement bearing
file date _____ and file number _____ [ALTERNATIVELY: an unfiled copy of a
financing statement] [ALTERNATIVELY: a print out of a confirmation of an
electronic data transmission of financing statement information, bearing file
date_____ and file number_____] identifying the name of each Grantor listed on
Schedule 2
Exhibit C-C-18
hereto, as debtor and "▇▇▇▇▇ Fargo Bank, National Association, as Trustee", as
secured party, which was filed [ALTERNATIVELY: we understand will be filed
within ten (10) days of the transfer of the security interest] in the filing
office identified opposite each Grantor's name on Schedule 2 hereto (such filing
office(s), the "Filing Office(s)" and such financing statement, the "Financing
Statement(s)");
(d) the account agreement dated as of ________ between
[IDENTIFY NAME OF APPLICABLE GRANTOR] and the Financial Institution pursuant to
which the Pledged Account (as such terms are defined below) was established;
(e) a certified copy of the organization document identified on
Schedule 3 hereto as to each Grantor's existence in such state (the "Secretary
of State Certificates"); and
(f) such other documents as we have deemed necessary or
appropriate as a basis for the opinions set forth below.
Capitalized terms used herein and not otherwise defined herein
shall have the same meanings as set forth in the Security Agreement. As used
herein:
(i) "UCC" means (a) the New York UCC, (b) the Filing State UCC,
and (c) the [IDENTIFY NAME OF STATE OF FINANCIAL INSTITUTION'S JURISDICTION AS
IDENTIFIED IN (VIII) BELOW] UCC (in each case as such term is defined below), as
applicable.
(ii) "UCC Collateral" means the Collateral (as such term is
defined in the Security Agreement) to the extent such collateral is of a type
subject to Article 9 of the UCC.
(iii) "Delaware UCC" means the Uniform Commercial Code as in
effect on the date hereof in the State of Delaware (without regard to laws
referenced in Section 9-201 thereof).
(iv) "New York UCC" means the Uniform Commercial Code as in
effect on the date hereof in the State of New York (without regard to laws
referenced in Section 9-201 thereof).
(v) "Filing State" means [IDENTIFY NAME OF STATE(S) WHERE THE
FINANCING STATEMENTS ARE FILED].
(vi) "Filing State UCC" means the Uniform Commercial Code as in
effect on the date hereof in the Filing State (without regard to laws referenced
in Section 9-201 thereof).
(vii) "Possessory Certificates" means the certificates
identified on Schedule 4 hereto.
(viii) "[IDENTIFY NAME OF STATE OF FINANCIAL INSTITUTION'S
JURISDICTION] UCC" means the Uniform Commercial Code as in effect on the date
hereof in the State of [IDENTIFY NAME OF STATE OF FINANCIAL INSTITUTION'S
JURISDICTION] (without regard to laws referenced in Section 9-201 thereof).
(ix) "Pledged Account" means account number [INSERT ACCOUNT
NUMBER] established at [INSERT NAME OF FINANCIAL INSTITUTION THAT ESTABLISHED
THE PLEDGED ACCOUNT] in the name of [INSERT EXACT NAME ON ACCOUNT].
Exhibit C-C-19
(x) "Financial Institution" means [INSERT NAME OF FINANCIAL
INSTITUTION THAT ESTABLISHED THE PLEDGED ACCOUNT].
We express no opinion with respect to any laws other than the
UCC and, for purposes of opinion paragraph 5, [INSERT CORPORATE LAW OF FILING
STATE, E.G., THE DELAWARE GENERAL CORPORATION LAW].
We have this date delivered to you our opinion with respect to
the enforceability of the Security Agreement and certain other transaction
agreements. We call to your attention that the opinions set forth herein with
respect to the security interest of the Trustee are subject to the
qualifications contained in such other opinion.
Based upon the foregoing and subject to the limitations,
qualifications, exceptions and assumptions set forth herein, we are of the
opinion that:
1. Under the Delaware UCC, the provisions of the Security
Agreement are effective to create a valid security interest in each Grantor's
rights in the UCC Collateral in favor of the Trustee to secure the Secured
Obligations (as defined in the Security Agreement).
2. [TO BE GIVEN BY LOCAL COUNSEL, IF APPROPRIATE] Pursuant to
the [Authorization Letter][Security Agreement], each Grantor has authorized for
purposes of Section 9-509 of the Filing State UCC the filing of the Financing
Statement naming such Grantor as debtor and identifying the UCC Collateral.
3. [TO BE GIVEN BY LOCAL COUNSEL, IF APPROPRIATE] Each of the
Financing Statements includes not only all of the types of information required
by Section 9-502(a) of the Filing State UCC but also the types of information
without which the Filing Office may refuse to accept the Financing Statements
pursuant to Section 9-516 of the Filing State UCC.
4. [TO BE GIVEN BY LOCAL COUNSEL, IF APPROPRIATE] Under the
Filing State UCC, the security interest of the Trustee will be perfected in each
of the Grantor's rights in all UCC Collateral upon the later of the attachment
of the security interest and the filing of the Financing Statements in the
Filing Office, we express no opinion, with respect to (i) money, (ii) deposit
accounts, (iii) letter of credit rights (iv) goods covered by a certificate of
title statute, (v) as-extracted collateral, timber to be cut, (vi) any property
subject to a statute, regulation or treaty of the United States whose
requirements for a security interest's obtaining priority over the rights of a
lien creditor with respect to the property preempt Section 9-310(a) of the
Filing State UCC or (vii) any goods subject to a negotiable document of title.
5. [TO BE GIVEN BY LOCAL COUNSEL, IF APPROPRIATE] You have
asked whether each Grantor is a "registered organization" as defined in the
Filing State UCC. Pursuant to [IDENTIFY SECTION REFERENCE OF APPLICABLE
CORPORATE LAW, E.G., SS.SS.101(A) AND 103(6) OF THE DELAWARE GENERAL CORPORATION
LAW], the [SECRETARY OF STATE] of the Filing State is required to maintain a
public record showing each Grantor to have been organized. Based on our review
of the Secretary of State Certificates, we are of the opinion that under the
Filing State UCC and the [INSERT CORPORATE LAW OF FILING STATE], each Grantor is
a "registered organization."
6. Assuming that none of the Trustee or any Secured Party has
notice of any adverse claims with respect to the Possessory Certificates and
that such certificates are indorsed in blank
Exhibit C-C-20
or by an effective indorsement to the Trustee, the Trustee will acquire such
Possessory Certificates (and the shares represented thereby) free of any adverse
claims under Section 8-303 of the New York UCC upon the later of the attachment
of the security interest and the delivery of such Possessory Certificates to the
Trustee. As used herein, "notice of adverse claim" has the meaning set forth in
Section 8-105 of the UCC and includes, without limitation, any adverse claim
that the Trustee or any Secured Party would discover upon any investigation
which such person has a duty, imposed by statute or regulation, to investigate.
7. Under the [IDENTIFY NAME OF STATE OF FINANCIAL INSTITUTION'S
JURISDICTION] UCC, the provisions of the Control Agreement are effective to
perfect the security interest of the Trustee in [IDENTIFY NAME OF APPLICABLE
GRANTOR]'s rights in the Pledged Account.
Our opinions are subject to the following qualifications:
(a) We have assumed that each Grantor owns, or with respect to
after-acquired property will own, the UCC Collateral granted by it, and we
express no opinion as to the nature or extent of each Grantor's rights in any of
the applicable UCC Collateral and we note that with respect to any
after-acquired property, the security interest will not attach until such
Grantor acquires ownership thereof.
(b) Our opinion with respect to proceeds is subject to the
limitations set forth in Section 9-315 of the UCC and, in addition, we call to
your attention that in the case of certain types of proceeds, other parties such
as holders in due course, protected purchasers of securities, persons who obtain
control over securities entitlements and buyers in the ordinary course of
business may acquire a superior interest or may take their interest free of the
security interest of a secured party.
(c) We express no opinion with respect to commercial tort
claims.
(d) We express no opinion with respect to any goods which are
accessions to, or commingled or processed with, other goods to the extent that
the security interest is limited by Section 9-335 or 9-336 of the UCC.
(e) We note that we have delivered to you our opinion with
respect to each Grantor's status as a "registered organization." Except to the
extent that this determination is an element of your choice of law analysis, we
express no opinion with respect to the choice of law governing perfection, the
effect of perfection and non-perfection or priority of the security interest.
(f) For purposes of our opinion paragraph 5, we have assumed
that each Grantor is and will remain "organized solely" (within the meaning of
Section 9-102(a)(70) of the UCC) under the laws of the State of the Filing
State.
(g) We express no opinion with respect to the nature or extent
of the securities intermediary's rights in, or title to, the securities or other
financial assets underlying any "security entitlement" now or hereafter credited
to a securities account. Furthermore, we express no opinion with respect to any
property or assets now or hereafter credited to a securities account that is not
a "financial asset" and we express no opinion whether or to what extent any
particular item of property credited to such securities account is a "financial
asset". We note that to the extent the securities intermediary maintains any
financial asset in a "clearing corporation" (as defined in Section 8-102(5) of
the UCC),
Exhibit C-C-21
pursuant to Section 8-111 of the UCC, the rules of such clearing corporation may
affect the rights of the securities intermediary.
(h) We have assumed that the Control Agreement is the legal,
valid, binding and enforceable obligation of each of the parties thereto other
than the applicable Grantor.
(i) We have assumed that the Pledged Account is either a
"deposit account" (as defined in the UCC) and the Financial Institution is an
organization that is engaged in the business of banking or (ii) is a "securities
account"(as defined in the UCC) and the Financial Institution in the ordinary
course of its business maintains securities accounts for customers and is acting
in that capacity.
(j) We call to your attention that pursuant to Section 9-340 of
the UCC, a bank with which a deposit account is maintained may continue to
exercise any right of recoupment or set-off against a secured party that holds a
security interest in the deposit account.
This opinion is being furnished only to you in connection with the
Security Agreement and is solely for your benefit and is not to be used,
circulated, quoted or otherwise referred to for any other purpose or relied upon
by any other person or entity for any purpose without our prior written consent
except that subsidiaries of the Company who subsequently become assignees
pursuant to Section __ of the Notes or the Indenture may rely on it as if it was
addressed to the Trustee for their benefit.
Very truly yours,
Exhibit C-C-22
SCHEDULE 1
List of Subsidiaries of Atlantic Coast Entertainment Holdings, Inc.
---------------------------------------- ---------------------------------------
FULL NAME OF GRANTOR Jurisdiction of Organization
---------------------------------------- ---------------------------------------
Exhibit D-A-1
SCHEDULE 2
Schedule Information on face of Financial Statements
Full Name of Full Name of Filing
Grantor Secured Party Filing Office Jurisdiction File Number File Date
Exhibit D-A-2
SCHEDULE 3
Certificates of Organization
Type of Organization Public Office(r)
Full Name of Grantor Document State of Organization Date of Certificates Issuing Certificates
Exhibit D-A-3
SCHEDULE 4
Possessory Certificates
Issuer Certificate Numbers Registered Owner Number of Shares Certificate Date
Exhibit D-A-4